Practically speaking, that is. Initial claims are rough. The official number for this week is 386K, but last week's number was revised up to 392K, perilously close to new recession levels. The four week moving average creeps ever higher on a like-to-like basis.
I do not believe at this time that this claims number indicates that we fell through the ice - I think it reflects the disproportionate contribution of school system employment. The big question now is auto sales - if they stay high enough to keep inventory moving through and production up, then we skip through the summer. If not, the real weakness in the economy takes over.
Final US GDP Q1 was released. Not much in the way of surprises. Although real gross private domestic investment was low in the quarter, it increased. Also Gross Domestic Income came in at over 3% in comparison to GDP's 1.9%. However corporate profits after inventory valuation and capital consumption adjustments shifted sharply negative (Table 11), dropping by over 4%. Cash flow also went negative, dropping by over 5%. That should tell you all you need to know about why the second quarter economy has been slowing and claims are creeping up.
US growth is slowing and becoming more regionalized. The manufacturing surveys tell us that. Later today we will get Kansas. So far in June Philly was a recessionary shocker and Dallas was the best economic date of your life. Those should be the two extremes. The big fall in Chicago PMI at the beginning of the month makes the Kansas survey more important.
Housing is a bit of a help right now, although not much. Lord knows mortgage rates are a hefty economic stimulus. Anything below 4% is pretty much economic crack. We can only hope this does not end with us chewing each other's faces off in a drug-induced economic zombie attack.
The first day of the Euro summit to solve absolutely nothing is today. Presumably the real remaining question is what the ECB will do in response to what will come out of this summit. ECB has been pleading for action but won't get it, and you have to think they will act. Merkel has said "Nein!" Everyone else south is humming "Du, du hasst, du hasst mich" in response, although everyone north is quietly sending Germany love notes with hearts and flowers. Finland especially. If Merkel stands they will send die gnaedige Frau flowers and chocolates.
ECB could throw money into the banks to keep Spain and Italy alive. Optimism is not running high, and Spanish 10 year yields touched 7% again today in response. Euro is probably weakening in response. German unemployment rose a tad last month and rose more this month - it is obvious that Europe is tipping into deeper recession, and the Euro is weakening. However Mr. Market will not be that enthused, because the more ECB dumps money into the banks, the more the risk retracts to the countries in question. Short yields are a huge problem for both Spain and Italy.
India is preparing to spend a lot of money on roads to try to boost growth. They don't have the money to spend, so the currency will probably continue to weaken. Also, the monsoon has been bad so far. If this continues India's economic and fiscal difficulties could mount rapidly.
Oh yeah, isn't the US AG supposed to get cited for contempt this week? Nothing like chaos to make an election season fun!
Well, well, well. What would Candide say about this worst-of-all-possible-worlds scenario?
Words fail us. The Eurozone is heading for the rocks at blinding speed, and all the proposed solutions will solve nothing. That's why they are in trouble - they keep coming up with proposals that cannot possibly work. By now the proposals (such as Eurobonds) are getting insane enough to come close to outright rejection, which will speed up the financial flux cycle for Euro sovereign debt.
Ignore all the verbiage. What happened last week made it clear that if Germany does agree to Eurobonds, the German sovereign bond yields are going to rapidly jack up, and if Germany doesn't agree, Italy and Spain will continue to march toward the abyss.
So either way Doom Is Certain, because no matter what happens this week, the Germans will never agree to cover enough Eurobonds to bail out Italy, and Italy is that mammoth in Euroraum. This week's Schauspiel is about the timing of the collapse, not whether collapse can be avoided.
Germany is now going into recession. Manufacturing is too low, and the bad construction PMI means that no internal forces can keep the services sector up.
But what about the US? Are we doomed to recession this year, or can we continue to skip? It really depends on cars. A relatively minor downshift in the auto production trajectory is showing up pretty strongly as an economic negative (see CFNAI). But this was minor. If car sales fall a bit more, things get rough quickly.
Over the last few months, we have followed a very similar trajectory to 2011, and the reason is somewhat similar. Autos. Auto production. See Philly Fed.
The cause, however, is quite different and should give everyone pause. Extremely easy credit has been sustaining car sales, in part because used-car prices were so high that they sustained bad loans because bad loan losses were very limited. This may have worn itself out based on auto advertising I am hearing. If so, then we are in for a sustained deceleration in sales and auto production will shift toward a minor negative in the next few months.Last month's downward sales surprise hinted at this.
If that does happen, then all the negatives, which include external and internal factors (Euro tragedy and global deceleration, the domestic erosion of real incomes due to inflation, political uncertainty causing caution in business spending) start to pull us steadily down. Even if car sales stay up for the next few months, we probably will see some tax increases next year and therefore will go into frank recession then.
The current pace of unemployment initial claims implies that we are close to a controlled flight into terrain. If the Obama administration were not so witless it could have proposed something politically plausible to Congress to keep the economy up this year. But state and local funding is politically unfeasible, and in any case it would not work. State and local finances are so challenged by retirements that throwing more money in just slows the pace of cuts rather than forestalling cuts, much less boosting hiring.
In terms of Fed intervention, not much is currently possible. The core rate of inflation remains high, because US margins were compressed. Gas prices aren't coming down nearly fast enough to give money back to the consumer, and grocery prices are too high for the six-month expected spending in households to be covered by incomes alone. So there is very little of a counter trend innate in this economy. The Fed already has historic lows on mortgages. If the Fed were to launch another asset-buying program, it would immediately boost consumer inflation and cause further economic weakness, so I think even the normal Fed suspects will hold on this until after prices come down far more and core inflation begins to fall off.
Treasuries remain your friend.There is mild support on manufacturing from insourcing, some support in fracking/energy, and a basic North American (Canada, US, Mexico) strength that really does help us. So far rail seems to confirm that we are staying above the surface. However, last year's summer slowdown was exogenous, and this year's summer slowdown was endogenous, and so the end of year will not see the same type of acceleration out of the abyss. Last year the result was basically to move about one percentage point of growth toward the end of the year. This year it looks like we will just lose three quarters of a percent of real GDP growth. Since we were looking at 2%, that's a very dangerous position indeed.
ROW: Here things get grim.
The Euro-rim is deeply impacted. There are trade financing issues now for some countries. Needless to say structural demand issues are emerging and will not be quickly resolved. European car registrations are now down about 8.7% YoY. Commercial registrations are down 11%. Auto factories are going to be closing. At least one should be closing in Germany. This has legs
China is in deep, and sliding further into the abyss. In Q1 the economy was supposed to resurge in Q2 per CW. Well, it's almost the end of Q2 and we are hearing that the economy will resurge in Q3, but no data whatsoever supports that theory, and instead it looks like inventory overhangs are developing on the domestic side.And worse, some of the efforts to stimulate will probably increase overcapacity. China has a much steeper potential decline than anyone is admitting right now. The smaller manufacturers are being hurt by margin compression. The financing problems that developed last year were largely due to poor profits rather than an evaporation of money, and therefore they are very difficult to redress. Government efforts are largely aimed at slowing the decline. The epic flood of money that sustained very strong Chinese growth over the last decade is just quietly contracting for very strong fundamental reasons, and this must continue. Asset inflation cannot carry business financing any longer. You can use accumulated power production as a proxy for real Chinese GDP; the last accumulated was a 4.7% over 2011. Go to the very bottom of this release.
India: Clearly in trouble, because inflation is running much higher than GDP increases, and the fiscal gap is far too high to offer easy alternatives to the government. The central bank is struggling with high inflation and is limited in its stimulative capacity, and currency trends make it very difficult to cope with the fiscal gap or to control inflation internally. These forces really aren't showing up in the PMI data yet, but India will be struggling for a couple of years. The weak currency will tend to support manufacturing, but the trade gap is a genuine problem.
Hopping around to various countries:
Australia. Household debt did its damndest, and now the internal forces in the Australian economy are quite negative. Thus Australia is more dependent than ever on the Asian economies. Oops!
Singapore.http://www.singstat.gov.sg/ It's hanging in there, but things are getting tougher. A strong Asian expansion is not in the cards; Singapore net growth over the last year has fallen to the point that inflation is close to outstepping growth, so a bad year is to be expected. It probably won't be excruciating, but it will be weakening.
Indonesia: So far this year it has been supported by rising costs in China, which tend to shift a little more over to Indonesia. Growth is not brilliant, but they began this year marginally better than in 2011. I think the trajectory will shift lower in the second half, but that they'll hold up until the end of the year. Lower oil prices have the potential to help them.
Overall, I think the global economy would do okay if it were not for the Euro trauma. It wouldn't be stellar, but it would be okay if it weren't absorbing so much nonsense money all the time.
However the apparently chaotic nature of what is due to evolve in Europe over the next two years poses many questions for global trade. European banks have traditionally had tremendous involvement in external financing, and I have to believe that the massive uncertainty developing around Italy's fate is going to have long term effects on capital flows internationally.
It's kind of depressing to think of Obama going off to the G-20 meeting after having made a bunch of campaign speeches trying to blame all our problems on Europe. It's gonna be a real lovefest. Just hugs and kisses all around. In the annals of doofus diplomacy, this is a star billing.
Speaking of depressing, have you seen David Rosenberg's 50 odd charts about the general crappiness of the economy? Here they are!
Doubling down on depressing, JOLTS for April was released today:
That is not a good sign. And the employment data since confirms a general weakening in employment.
I have spent a lot of time over the last week thinking about Europe's situation. It's rough, to be sure. I don't see much of a way out for several countries. Germany simply doesn't have enough money to cover the holes. They may be able to muddle through with some sort of a dual currency arrangement in a few countries, but what they are doing now is ultimately futile.
So I read some reports, crunch some numbers, watch a few Rammstein videos on Youtube, think about the younger people caught in the mess, and then do it all again.
The German economy looks to be crumpling. The last Bundesbank monthly (not available in English) claimed that things could get better in the second half, but the big fold up in construction PMI tells me that it won't. The fact that the weakness was centered in new orders indicates that this has legs. The Germans have an additional problem in that they need to raise electricity prices (the funding for solar feed-in tariffs). To keep that down to a reasonable level, they need to cut feed-in tariffs again. The German parliament won't do it.
The poor Spaniards borrowed short-term for 5%. They're not open for funding, really. The Euro bank bailout deal has to be changed to make Spanish government bonds FIRST in line, not second. If that is done, maybe the Spanish government can access funding at a more reasonable cost. Maybe. It depends on the details. The ECB can essentially throw more money at the banks. But do they have collateral?
O' Sonne. There is nothing like sunlight on signature loans for housing loans to people who no longer are living in the housing to create a Euroerdämmerung.
Italy is still the big mammoth in the Euroraum. That big pile of something in the center of the Euroraum is not a Yoko Ono art exhibit. Oh no. Italy borrowed three years at 5%, and the three year bond is holding close to 5%. No way is that workable with debt over 120% of GDP, and a contracting GDP.
What I have on the US shows that we are still skipping, but that we could shortly hear the last "plop". Food costs are too high for the gas prices to kick in much in the way of impetus. Weakness keeps extending upwards through the income ladder. We're very close to snowballing on the weakness.
Today's retail sales report shows the source of US economic weakness - poor household incomes. The prior month was revised from a small gain to a small drop, and retail sales dropped again in May.
May car sales were reported down, but with the magic of seasonal adjustments, in May's retail report they show a strong 1% month over month gain. Make of that what you will. The weakness in today's report is squarely on the backs of household spending, with groceries, pharmacies, restaurants, sporting/hobby, general merchandise and Lowe's-type retail showing drops.
The early Easter shifted some spending into April, so May was always expected to be a bit weak. The revision of April sales to a small loss is therefore significant.
Ex-MV, May's month over month change is -0.4. April's revised ex-MV is -0.3.
Producer prices showed a nice trend in intermediate and crude goods, but core finished (ex food and energy) prices increased 0.2% on the month in May. This is lagged pricing increases from earlier cut margins.
The pattern of pricing in grocery stores that I see indicates a very weak US economy and the need for a much greater drop in pricing on the materials side to restore the consumer's ability to buy. This didn't come about quickly and it won't redress quickly.
Anyway, all the nonsense about Europe's problems hurting the US is grating. Our economic problems are internal, not external. It is very possible that the net effect so far of Europe's problems has been strongly positive for the US economy, and it is certain that it is weakly positive for the US. The collapse in mortgage rates is helping us and will continue to help us. Thirty-year fixed mortgage rates below 4% are a central banker's stimulative wet dream. They are having mass orgasms at the Fed.
Yesterday's three-year Treasury auction wasn't that hot (most of it at dealers, yields a bit higher than expected), so today's 10-year auction should be interesting, albeit strongly supported by today's retail report. The six-month auction on Monday had coverage over 5 - very strong - and a low yield. So panic money.
NFIB was okay on Tuesday. There's nothing better it could be, and much waits until the election.
Eventually, Europe will hurt us. But not today. Not next month. What is hurting us now are fundamentals, and price drops are the only cure.
Italy is currently being sandbagged by Mr. Market - it paid close to 4% to sell one year sovereigns at the auction today. OUCH! Note that most of the reporting about Italy's debt position is badly off. They ended 2011 at 123% or 124% of GDP. Tax receipts have been lagging despite tax increases, and the economy has been contracting, both of which upset the debt cart. They'll end 2012 at around 127% or 128% of GDP, it appears. The jig is almost up there.
Greece votes next week. Let's just say that the first reaction of the Greeks to the news of the apparently merciful Spanish bank bailout was fury, and a demand that the Greek terms be modified. This was met with harsh German rebuffs, so the political parties pushing for a renegotiation on debt terms have been strongly externally supported by recent events.
At least not by Mr. Market. Spanish 10 year. Italian 10 year. ECB can continue to offer the internal banks money to invest in their own sovereign bonds, but it's not as if outside money is rushing through the door.
Can ANYONE figure out how Spain escapes another downgrade and how those banks can ever access external private funds after this? If Spain has to sign the note, doesn't that shove up their Maastricht debt?
Meanwhile, back at the US reality ranch, our fearless leader claimed on Friday that the private sector was thriving but that the problem was with government jobs. Oh, really. Since January of 2006, the US economy has essentially gain NO private sector jobs and NO government sector jobs. The recent shortfall of government jobs is just bringing the government jobs back in line with the private sector:
Now if you are lying on the floor groaning, thinking "No net job creation in over six years?????" your sentiments are entirely understandable. Also the screaming, wailing and gnashing of teeth.
However fixing this by borrowing more money to add jobs that cannot be maintained long term is about as crazy a plan as plans get. It reminded me of this scene in a modern classic. I do believe this pretty much conveys the average American's reaction to Obama's presser:
A little more background as to how the balance of government and private spending and revenue has shifted over the years:
This graph expresses all numbers as a ratio of GDP. The purple line is total government revenues (federal, state & local.) The pink line is government spending.The orange and red are two different measures of federal receipts. The blue line is state and local government revenues. Obviously, a constrained private sector cannot continually keep paying larger and large state and local taxes without hurting the economy!
This graph shows revenue splits. Purple and orange are the same. The green line is state and local. The bottom blue line is corporate tax receipts. The yellow line is receipts from social insurance taxes. The green line is state and local receipts.
This graph shows all this in relation to federal debt held by the public. We're running out of room.
Seen in this light, the process of communalizing the debt of the EU's members states brings to full circle a project that the French have always viewed as something directed more against Germany than at uniting the Continent. Nicolas Sarkozy, Hollande's predecessor, believed that the best way to pursue this traditional goal was by using the novel approach of fostering a sense of solidarity with German Chancellor Angela Merkel. But Hollande is returning to the tried-and-true method of weakening the Germans by undermining their economic strength.
The next stage in the crisis will be blatant blackmail. With their refusal to accept money from the bailout fund to recapitalize their banks, the Spanish are not far from causing the entire system to explode. They clearly figure that the Germans will lose their nerve and agree to rehabilitate their banks for them without demanding any guarantee in return that things will take a lasting turn for the better.
A total squall of wrath, but the article is making many real points.
Today's initial claims report shows that continuing claims are beginning to creep up. This is far more relevant than the headline claims, which weren't good anyway at 377K, with last week being revised up to 389K. Four week moving average at 377,750.
Right now I am sure that we are in a skipping recession, not a true recession. However we may be right on the line for a real one. Continuing claims have far more to do with job creation trends than job losses, and I think job creation is slowing very rapidly.
The Euro trauma is probably the best thing for the US economy; lower prices are clearly needed to prevent falling through the floor.
As Mark says, going into a recession with 8% unemployment is an unpleasant prospect. China and India are making easing moves, but this is going to be close if we manage to stagger through.
Average inventory carried at Chinese dealerships bloated to a level exceeding two months of sales by the end of May, compared with more than 45 days at the end of April, Luo Lei, deputy secretary general of the state-backed China Automobile Dealers Association, said in an interview yesterday. That’s forcing dealers to deepen discounts and sell cars at a loss to meet mandatory sales targets set by automakers, he said.
In the showrooms, surging inventory will lead to intense price competition, forcing out weaker dealerships that can’t absorb losses, Luo said. There were about 21,000 dealership outlets in China as of the end of 2011, compared with 16,000 the year before, according to Luo.
The increase in dealerships alone would greatly swell reported car sales because of stocking. The problem is that the Chinese consumer apparently isn't absorbing the inventory.
I keep reading that incentives and discounts on the less-popular models are in place, and I know that some cities are starting incentive programs again. Also, the domestics have been hurt - there's a lot of truth to this blog post. The shift to the up-end market clearly seen last year is continuing, and it doesn't say much for the auto market in China.
The first article implies that perhaps some of the foreign reported car sales are illusory.
Voters in two major California cities overwhelmingly approved cuts to retirement benefits for city workers in what supporters said was a mandate that may lead to similar ballot initiatives in other states and cities that are struggling with mounting pension obligations.
In San Diego, 66 percent voted in favor of Proposition B, while 34 percent were opposed. Nearly 97 percent of precincts were tallied by early Wednesday.
The landslide was even bigger in San Jose, the nation's 10th-largest city. With all precincts counted, 70 percent were in favor of Measure B and 30 percent were opposed.
There will now be lawsuits, but courts are more accepting of initiative-based cuts. Both of these measures affect current participants as well as future participants.
I don't have any good economic news, but a new study is out claiming that high blood caffeine levels are correlated with not developing Alzheimer's in older adults:
Researchers from the University of South Florida and the University of Miami say the case control study provides the first direct evidence that caffeine/coffee intake is associated with a reduced risk of dementia or delayed onset. Their findings will appear in the online version of an article to be published June 5 in the Journal of Alzheimer's Disease. The collaborative study involved 124 people, ages 65 to 88, in Tampa and Miami.
"These intriguing results suggest that older adults with mild memory impairment who drink moderate levels of coffee -- about 3 cups a day -- will not convert to Alzheimer's disease -- or at least will experience a substantial delay before converting to Alzheimer's," said study lead author Dr. Chuanhai Cao, a neuroscientist at the USF College of Pharmacy and the USF Health Byrd Alzheimer's Institute. "The results from this study, along with our earlier studies in Alzheimer's mice, are very consistent in indicating that moderate daily caffeine/coffee intake throughout adulthood should appreciably protect against Alzheimer's disease later in life."
Go for it, baby! Just slurp the precious, life-giving fluid down.
“Based on these numbers, it would not be surprising to see GDP for the region contract by 0.5% in the second quarter, though an even steeper decline could be seen if the June data disappoint.
“There is some convergence among member countries, but unfortunately only in the sense that all of the largest are now experiencing downturns.
Yippee. There aren't really bright spots here. Spain services have been bouncing off a floor for quite a while now, and if they can stay in the bounce zone, Spain will begin to recover next year. Germany falls into the output contraction zone in May. France is in deep contraction. Italy is in a very deep contraction, and in fact the market is overrating their debt.
As this wears on, the risk of falling through another floor increases.
The headline on factory orders is -0.6 for April, but March was revised down to -2.1. With unfilled orders, -1.5.
Shipments - 0.3; ex-transportation -0.8. All this is, of course, unexpected.
Further note: This is more serious than it would at first appear, because this data is for April, and the general downshift in May manufacturing surveys combined with the very poor May Chicago PMI implies that May's report will show further weakness. Weak May auto sales don't generate a lot of optimism either.
I'm reading Q2 projections above 2% for GDP, and I'll be darned if I can figure out where they're coming from. Even presuming strong contribution from consumer spending, it's hard to see how we can make it into the 2s.
Shipments in autos/light trucks were very strong in April, but as we know sales aren't quite keeping pace. Heavy trucks shipments were down in March and April.
Further, further note: BIS quarterly report is out; cross border lending is contracting pretty hard, and it looks a lot like 2008. See page 4 in this release. Whole quarterly review here. For most people, it is an infallible cure for insomnia.This covers Q4 2011:
During the fourth quarter of 2011, BIS reporting banks recorded their largest fall in aggregate cross-border claims since the drop following the Lehman Brothers collapse three years earlier. The decline was worldwide, although it was driven by the deleveraging of banks headquartered in the euro area.
Cross-border lending to non-banks also fell, but the drop in claims on banks was sharper.
Cross-border lending fell around the globe. BIS reporters' cross-border claims on both banks and non-banks in developed economies shrank by $630 billion. Euro area banks accounted for most of this decline. Cross-border claims on emerging market economies fell by $75 billion, or 2.4%. The decline was concentrated on Asia-Pacific in general and on banks in China in particular. For China, this was the first overall decrease since the opening quarter of 2009. Among all developing countries, only those in Latin America and the Caribbean saw an increase in cross-border claims.
The notional amount of outstanding over-the-counter (OTC) derivatives fell by 8% in the second half of 2011, while a rise in price volatility drove up the market value by 40%. Gross credit exposures rose 32%. After accounting for netting and posted collateral and adjusting for the double-counting of collateral in the industry data, the BIS estimates that credit exposures between counterparties in the bilateral OTC derivatives market increased slightly, to at least $2.1 trillion.
Well, I've been saving this one for the right day, and this is the right day:
Europe, The Final Countdown:
Although, let us face it, any speech given at anything purporting to call itself the "Festival of Economics" is a fertile ground for mental masturbation. Festivals and economics just do not go together. Still, here it is.
In particular, his observation that the de facto process of separating the Euro currencies by country is well underway is important. Because Germany cannot foot the bill for a European bank deposit guaranty scheme, Soros' suggested fix is impossible.
To keep the Eurozone, Berlusconi's suggestion is probably more feasible. Allow countries to issue their own scrip, and go to a dual currency system. The Bundesbank would hugely prefer that solution, and it may be the only one now possible.
Ain't it purty? Ward's on May auto sales - Surprisingly Bad! Refreshing to see that the author doesn't blame it on Greece. Sousanis is an honest man and it's a good article that covers the topic.
What does another Operation Twist give you in the way of stimulus with rates already in this territory? A 10 year at 1.47 is just unbelievably low. Yes, yes, everyone's already talking The Big Stim, but short of buy, buy, buying stuff which is already heavily bought, what's the Fed to do? Letting asset prices fall, along with commodities, would provide far more in the way of real stimulus than anything else could possibly do.
I really don't know what happens next. The world needs quality real assets to provide reserves for the banking system. The world is running out of those assets. What do we do now? There is no banking without those reserves, and there isn't enough gold in the world to pick up the slack. Look at those German yields.
Well, we've talked about this in some detail this year, but May auto sales are definitely not going to be anything to cheer about. And I have never yet known a US auto buyer who worried about whether the Greeks were going to stay in the Euro when considering buying a car, so that excuse is not available.
This is important - autos have been one of the factors holding up the economy.
So Neil is wondering whether commodities take a dead cat bounce? Nah.
China is the big factor here. India is slumping badly, but China looks to have a very steep incline to fight with no real underlying positive factors. The only thing the authorities can do is cut taxes and give local governments a lot of money to spend, and this is both a costly and risky measure.
PMIs for Asia show a widening weakness; China is pulling the whole area down now. Markit PMI China. The May final number was 48.4, a drop from April. Chinese manufacturers are slowly shedding jobs. We know that auto inventories seem to be rising past the consumption rate, and other Chinese data confirm that the Chinese economy moved into what would be called contraction in any other economy about February. Taiwan and South Korea are being impacted now. Lower rates of industrial production in Japan are somewhat related to the Chinese slowdown.
India's economy is slowing, but manufacturing looks much better. Far Asia now is probably dominated by the weakness of two industrial giants - Japan and China. The problems there were producing some shift to the mid-Asian economies like Thailand and Malaysia, but that may now have stopped - Indonesian PMI came in at a disappointing 48.1.
The European region is in a state of such weakness that it will exaggerate the problems in the Far East. The final European manufacturing PMI came in at 45.1. Not a typo. It's now very widely based - see for example the Czech collapse to 47.6, which is not surprising given that Germany splatted against the wall at 45.2, which of course means that the legs were kicked out from under Poland, which contracted at 48.9.
There's no place to generate demand growth. The only thing that can do it is a sustained drop in real prices which will raise real incomes. The economies showing relative strength are slowly being pulled down by these waves of weakness sloshing back and forth across the economic oceans of the world. The economies showing the most weakness are due to be hit by additional incoming demand bombs.
It's gone. It's over. Further, it's highly doubtful that governments can come up with the money to refund it, and the Chinese government is saying it won't.