Telegraph: Economic Doomsday Is Here

The inevitable collapse of China is finally happening and with it comes economic doomsday — but we should welcome it.

The Telegraph has an excellent account of what is happening in the world economy: “Doomsday clock for global market crash strikes one minute to midnight as central banks lose control.”

Here is a video that illustrates the report:

The article begins with an obvious whitewash:

When the banking crisis crippled global markets seven years ago, central bankers stepped in as lenders of last resort. Profligate private-sector loans were moved on to the public-sector balance sheet and vast money-printing gave the global economy room to heal.

No it didn’t. The whole point of the article, even if the writer doesn’t want to admit it, is that the global economy has not healed.

Time is now rapidly running out. From China to Brazil, the central banks have lost control and at the same time the global economy is grinding to a halt. It is only a matter of time before stock markets collapse under the weight of their lofty expectations and record valuations.

The main reason given is that China is finally failing. China blew a tremendous debt bubble that not only “stimulated” their own economy but stimulated the world and let them disguise the damage. But it was unsustainable growth and now it is collapsing.

The China slowdown has sent shock waves through commodity markets. The Bloomberg Global Commodity index, which tracks the prices of 22 commodity prices, fell to levels last seen at the beginning of this century.

The oil price is the purest barometer of world growth as it is the fuel that drives nearly all industry and production around the globe.

Brent crude, the global benchmark for oil, has begun falling once again after a brief rally earlier in the year. It is now hovering above multi-year lows at about $50 per barrel.

This is painful. But notice that we see the real chance of economic healing here. When prices fall, people can afford more things. They then are able to use them to produce cheaper economic goods—thus creating new jobs to service new customers. This is how economies recover from inflationary booms and their inevitable busts.

[See also, “Jeb Bush Cannot Make Economic Prosperity.”]

Sadly, politicians tend to be personally tied to those whose fortunes are collapsing and are more loyal to them than to the general economy. So they interfere in the market and keep prices and wages from resetting so that the economy can rebuild for everyone.

The Telegraph contains a lot more fascinating information—most of which is very bad news. Obviously, we may all be facing tougher times. The important thing to remember is that the government forced this situation on us and it needs to get out of the way so that the economy can heal. We must vociferously protest the government posing as our savior from a failed economy.