Understanding economics in a downturn

The importance of improved understanding of world economics and financial issues is bigger than ever.

The global economy is awful.
Capital, once abundant, is now scarce. And even so-called "safe" investments like U.S. Treasury bonds are no sure bet.

It is hard to find much in the way of positive economic news. "The double helix of the global economy-U.S. consumption and Chinese production-is coming completely unraveled. To the extent that the entire dynamic was a product of cheap money and global imbalances, you wouldn't expect it to survive a contraction in global credit. But its collapse is pretty breathtaking," writes Bill Bonner from The Daily Reckoning Australia.

United States:
  • Worst holiday shopping season in 40 years
  • The International Council of Shopping Centres in New York predicts 73,000 U.S. stores may shut in the first half of 2009
  • Over 148,000 stores shut their doors last year
  • With U.S. consumer demand collapsing, the number of Chinese factories cranking out "stuff" is set to decline as well.
There are estimates that 10,000 of the 60,000 factories in China owned by Hong Kong interests have closed or will close in the coming months.

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