14 Signs That The World Economy Is Getting Weaker

The following are 14 signs from around the globe that the world economy is getting weaker….

#1 Things in China do not look good right now. The Shanghai Composite index fell to its lowest point in over 3 years earlier this week. Will the S&P 500 soon follow suit?

#2 The Bank of Japan has resorted to yet another round of money printing in a desperate attempt to try to bolster the faltering Japanese economy….

In Asia, the Bank of Japan has long been manufacturing money out of thin air. It has just announced an eighth round of money printing to prop up the ailing Japanese economy. The Bank of Japan is to purchase 10 trillion yen of bonds to add further liquidity into the financial system. Now it has 80 trillion yen of bonds in its portfolio, equivalent to 20 per cent of Japan’s gross domestic product.

#3 In Spain, violent demonstrations over the state of the Spanish economy just outside the national Parliament building in Madrid on Tuesday evening made headlines all over the globe. You can view video of police brutally beating young Spanish protesters during those demonstrations right here.

#4 As unemployment hovers around the 25 percent mark, foraging through garbage bins for food has become so rampant in Spain that one city has actually started putting locks on supermarket garbage bins “as a public health precaution“.

#5 Despite all of the money printing that the ECB has been doing, the yield on 10 year Spanish bonds has risen back up to about 6 percent again.

#6 The economic protests in Greece are getting completely and totally out of control. Just check out this descriptionof the “Day of Rage” that took place in Greece earlier this week….

Police fired stun grenades and tear gas at protesters yesterday as tens of thousands poured into the streets of Athens as part of a nationwide strike to challenge a new round of austerity measures that are expected to cut wages, pensions and healthcare once again.

Dozens of youths, some masking their faces with helmets and T-shirts, hurled Molotov cocktails and rocks at police who fired back in an effort to scatter the angry crowds around the parliament building. More than 50,000 people are believed to have participated in the mass walk-out in Athens alone.

#7 The unemployment rate in France has risen for 16 months in a row and is now the highest that it has been in over a decade.

#8 As I wrote about recently, the number of unemployed workers in Italy has increased by more than 37 percentover the past year.

#9 New orders for durable goods in the United States fell by a whopping 13.2 percent in August. That was the largest decline that we have seen since the middle of the last recession (January 2009).

#10 According to the Bureau of Economic Analysis, U.S. GDP only grew at a 1.3 percent annual rate during the second quarter of 2012 as opposed to the 1.7 percent annual rate previously reported.

#11 The U.S. Postal Service is about to experience its second financial default in just the past two months….

The U.S. Postal Service will default this week on a $5.6 billion congressionally mandated obligation to pre-fund retiree health benefits, marking the second time in two months the cash-strapped agency has done this.

#12 It looks like General Motors is on a path that will lead to bankruptcy (again).

#13 According to a recent survey conducted by State Street Global Advisors, 71 percent of “investors in a survey of 300 around the world, including the largest pension funds, asset managers and private banks, fear an imminent Lehman-like event.”

#14 According to a recent survey of American CEOs by Business Roundtable, the number of CEOs that plan to eliminate jobs has risen significantly from earlier this year….

The CEOs’ decline in confidence comes alongside a worsening employment outlook. Thirty-four percent of the 138 CEOs surveyed said in this quarter’s survey that they expected their companies to cut jobs in the next six months, compared to just 20 percent in the second quarter. Likewise, only 29 percent say they expect employment to grow in the next half year, down from 36 percent last quarter....

A 1 percent tax on billionaires around the world. A tax on all currency trading in the U.S. dollar, the euro, the Japanese yen and the British pound sterling. Another “tiny” tax on all financial transactions, including stock and bond trading, and trading in financial derivatives. New taxes on carbon emissions and on airline tickets. A royalty on all undersea mineral resources extracted more than 100 miles offshore of any nation’s territory.

The United Nations is at it again: finding new and “innovative” ways to create global taxes that would transfer hundreds of billions, and even trillions, of dollars from the rich nations of the world — especially the U.S. — to poorer ones, in line with U.N.-directed economic, social and environmental development...

The worldwide currency debasement war has now entered a new and more deadly phase. Central banks have escalated the combat plan to bring about the world’s weakest currency for their individual countries. On the heels of the Federal Reserve and European Central Bank’s promises of unlimited counterfeiting forever, the Bank of Japan announced last week that it would expand its purchase of Japanese Government Bonds (and other assets including equities) by 10 trillion Yen. This brings the latest round of BOJ intervention to a total of 80 trillion Yen!

The sad fact is that the developed world’s central banks are in a desperate battle of one-upmanship. The ill-founded goal is to wreck their currency’s value in relationship to other fiat currencies in order to boost manufacturing and stimulate economic growth. But once again these central bankers have their economics backwards.

A weak currency that is caused by printing money cannot create a more competitive market for a country’s exports because it increases the cost of goods sold in terms of the domestic currency. Central banks reduce the value of their currency by lowering interest rates and boosting the money supply. This causes aggregate prices to rise, especially on manufactured goods that are a key component of exports. While it is true that foreign currencies will have a more favorable exchange rate, the price of domestic goods and services will have increased in commensurate fashion—thus, offsetting the change in currency valuations. Therefore, there is no improvement in the balance of trade and no improvement in economic growth from competitive currency devaluation....

Boasting $3.2 trillion in foreign currency reserves, China has created a new fund aimed at financing takeover bids abroad. The fund also seeks to boost China’s currency in global financial markets.

In its drive to step up overseas investment, the Chinese government has set up a new fund worth 12 billion yuan ($1.9 billion), Shanghai International Group said in a statement Friday.

Shanghai International said it was responsible for running the fund, describing it as China’s “biggest ever fund of its kind.”

“The yuan-backed fund will help domestic companies go abroad in seeking more investment opportunities,” China’s central bank deputy governor Liu Shiyu was quoted by the official Shanghai Daily newspaper as saying.

The fund is planned to grow to 50 billion yuan, and can be boosted to 150 billion yuan through loans and bond issues.

Apart from financing overseas acquisitions, it is also intended to promote greater use of the Chinese currency yuan – also known as renminbi – in foreign transactions....