THE GLOBAL CONSEQUENCES OF WESTERN DELEVERAGING
Overproduction is the Achilles heel of Capitalism. The emerging markets' miracle has been based on the willingness of the rich Western (more particularly American) consumer to consume. First the wealth of the Western consumer got exhausted and, then, his ability to borrow money to continue the consumption. In other words, the West can no longer continue to consume all the emerging markets are anxious to produce. The result? A slow of exports may lead to a slow in economic growth in Asia. When combined with a drop in Chinese housing price may have unsettling consequences for the totalitarian Chinese regime. Walter Russell Mead is correct to call a study predicting a significant decline in Chinese growth, The Most Important Story of the Day especially when he is careful to caution that economists are as good in predicting future trends weathermen predicting rain.
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