Friday, November 06, 2009

Do these figures "do it" for you?

The writer calls these "chart-porn," but I was under the impression that porn was supposed to get you excited, not depressed. Those Brits are strange sometimes.

UK Telegraph Online
Everything you need to know about the economy in four pictures
By Edmund Conway
Economics. Last updated: November 5th, 2009

...This first one is courtesy of Paul Krugman - the story of the crisis in one picture.

The lines represent world industrial production – the blue being in the 1930s and the red the current trajectory. The story is clear: the opening months of this crisis were as bad, if not worse, than the Great Depression in terms of the collapse of economic activity (for which ind production is a pretty good proxy). Since then, the massive injection of stimulus from central banks and from governments all around the world has helped arrest that decline.

The actual different between the two has absolutely nothing whatsoever to do with any stimulus or government monetary policy - it has to do with the existence of China as an industrial power, nothing more or less. China has a bigger internal market than all the West put together. They don't actually need us, as they are fast figuring out.

...Of course, it’s far too early to sit back and relax. I fear there could be a further dip in the future as the stimulus wears off, or is reversed, but it is reassuring that, throughout the world, the plan is having at least some success.

Except, it seems in Britain, at least according to this chart from the National Institute for Economic and Social Research.

This is the path of Britain’s economic output throughout this crisis, compared with previous recessions. As you can see, NIESR’s latest calculations, which take into account UK performance in October, show we’re still sinking deeper...

...As we all know, the Bank of England is creating money (it doesn’t like to call it “printing” but the net result is the same) like gangbusters...Now, what alarms many of you, and rightly so, is the fact that it is using this money to buy Government debt.

You may recall, the Federal Reserve in the US is doing the same, printing money and then using it to buy T-bills and other investments that foreign governments and institutional investors are refusing to buy.

...[This type of subversive policy] raises suspicions that it is considering monetising the deficit (printing money to fund government borrowing – what the Weimar did in the 1920s and Mugabe in the 2000s)...

And we all know how well that turned out. The US, is of course, doing the exact same thing [chart courtesy of Shadown Government Statistics] and will have the exact same results.

Which is why China, India and other G20 players are dumping US cash assets like the hot potato they are. And our "growth" in GDP isn't all that "real," either. It's a reflection of the rising worthlessness of the Dollar and the usual government magical sleight of hand accounting methods:

Is having slightly less negative GDP really an improvement? I think not.

No comments: