In a quick follow up to the "Middle Class Consumers" journal entry. A change is afoot and it will be a good thing:
- Bloomberg. Consumer confidence sank to the lowest level in at least 41 years this month as Americans grew more concerned about keeping their jobs and paying their mortgages, raising the risk they’ll spend less next year.
Bloomberg. The decline in U.S. manufacturing deepened in December as demand for such products as cars, appliances and furniture reached the lowest level since at least 1948, signaling further cutbacks in factory jobs and production this year... Separate figures today showed business at European factories contracted in December by the most on record.
Time for some "Yankee" ingenuity re: resilient communities.
A couple thoughts:
- If similar data on manufacturing is showing up in Asia (and there are signs that it is, although the data is of poor quality), it will be a disaster there soon. In short, it's impossible to be a mercantilist if there isn't a large/affluent market to exploit. Back in 2006, I weighed in on the topic of China and economic failure (see the brief "When China Derails"). We still haven't seen much on China's potential collapse in military/intelligence analysis, although it is growing at the edges of the commercial analytical world. What does this mean? In a couple of years we are likely to see "blue ribbon" panels bemoaning a "failure of imagination" in regards to China, despite tens of billions being spent on gov't analysis/intelligence. Hilarious cycle.
- Here in the west, the crisis we are seeing might have started in the shadow banking sector with the collapse of subprime mortgages. However, the unexpected happened: it revealed the US/Euro middle class as insolvent and forced a shift in behavior (towards something new). That insolvency and shift in behavior will sink chances of economic recovery from gov't stimulus (you don't add debt in a debt driven crisis) and financial sector bailouts.