Look Out Below! Economic News Worsens

(10 am. – promoted by ek hornbeck)

As the media and the blogosphere focus on the dangers in the Paulson putsch proposal and the war of maneuver between the campaigns, stuff is happening that may render it all insignificant.

You may have seen a short news clip of the huge lines outside of Bank of East Asia offices in Hong Kong. Already it’s the biggest bank run since the one that resulted in the nationalization of Northern Rock in the UK last year, a lot earlier in this mess.

But did you read that Société Générale has told its customers to dump their stock holdings in China-related firms, pronto?

So what, I hear you ask. Why is this any worse than the rest of the economic bad news rattling our way?

A bit of background may help–SocGen is the sixth largest publicly-traded company in France by market capitalization and the third largest bank/financial services company in the whole Eurozone. They swing a big butt in world finance.

Their main global strategist, a dude named Albert Edwards, argues that most Western observers are counting on Asia, and China in particular to remain resilient and help keep the global economy perking. He argues that

The collapse of emerging market economies will shake investors to the core. The great unwind has only just begun.

In essence he is predicting a massive recession–a decline in global GDP. He points out that a liquidity squeeze could hit financial companies that are heavily exposed in Latin America as well as Asia, vastly intensifying the ongoing downward spiral of the credit crisis.

A good short summary of his argument can be found in this Telegraph article–and in the closing prices in the world’s stock markets.

crossposted at DKos

9 comments

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    • dennis on September 25, 2008 at 12:07 am
      Author

    Iraq Moratorium Day #13 is in the front page sweet slot (thanks to ek hornbeck), so I don’t feel quite as guilty for going off-message here.

    But I echo him in urging you to check out the Iraq Moratorium website at our new url:

    http://iraqmoratorium.org

    Hey, you can even order some snappy new IM merch there.  

    • pfiore8 on September 25, 2008 at 12:09 am

    what else is new?

    greed begets greed and the end result is pain. but it never stops us. we get up, dust ourselves off, and go right back at it.

    rats on cocaine. that’s what we are.

    and now. i wonder. really. what are we? how base. primal. primitive. elemental. a consciousness without a rudder. three year olds dressed in $3,000 suits playing masters of the universe.

    really. who. what. the fuck are we?  

  1. I think its important that we keep trying to educate ourselves about the scope of all of this. I’ve certainly learned more about the financial markets this past week than I ever wanted to know.

  2. capitalism will fuck up the planet less next year.

    Now if we could only do away with the entire system before it does away with us!

  3. ..and if it falls as far as we have, the ride will be worse than the 30s, because of the population growth and the migration to the cities. The world has, to a large part, moved from the agrarian model to an urban one. That spells disaster. It is very simple, no food. The industrial nations might go third world in the blink of an eye.

    Thanks Dennis, for the very important world view. We, as Americans, have a tendency to be, just a touch, myopic.

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