An old saying goes that when the U.S. economy sneezes, the world’s economy catches a cold. This is plainly less true in an age of globalization, and these days Europe’s economic Parkinson’s Disease seems to be having some kind of collateral effect on prospects here, which is one reason why President Obama would really like it if Angela Merkel would relent on monetary rectitude.
Meanwhile, China may or may not some day come to be the world’s largest economy, though I recall all the smart liberals like James Fallows and Clyde Prestowitz who assured us in the late 1980s that unless the U.S. emulated Japan’s awesomely intelligent industrial policy, Japan was sure to pass the U.S. to become the world’s largest economy by the year 2000. Somehow all those smart liberals are still with us, though suffering a case of selective amnesia about their ridiculous Japan predictions. The lesson for today is that the “China-Is-Awesome” chorus (paging Tom Friedman!) might want to consider the 10 warning signs of economic trouble in China compiled by the Also Sprach Analysis blog, such as:
—Steel production is falling fast, and steel traders are abandoning the business;
—Imported coal is piling up on the docks;
—Cotton inventory is rising;
—Macao casino revenue has flatlined;
—There are multiple signs of stress in the banking sector.
There’s more. We noted the potential problems in China last month. But I’m sure it’s all George W. Bush’s fault.