The market price of stocks is way off, says British financial journalist Ambrose Evans-Pritchard.
“If you look at the sheer scale of global stimulus this year, what shocks is how little has been achieved,” Evans-Pritchard writes in the U.K. Telegraph.
China's exports were down 23 percent last month and Japan's were down 36 percent, Evans-Pritchard notes.
Moreover, industrial production has dropped by 23 percent in Japan, 18 percent in Italy, 17 percent in Germany, 13 percent in France and Russia, and 11 percent in the U.S.
“Call this a V-shaped recovery if you want,” Pritchard says.
“Markets are pricing in economic growth that is not occurring.”
The reason, Evans-Pritchard says, is that private spending has slumped in the deficit countries of the Anglosphere, Club Med, and Eastern Europe but has not risen enough in the surplus countries (Eastern Asia and Germany) to compensate.
“Excess capacity remains near post-war highs across the world,” he observes.
“Yes, money entrails can mislead. The gurus squabble like Trotskyists. But you ignore the data at your peril.”
The recession has taught Chinese exporters the dangers of over-focusing on export sales, and many companies are now concentrating more on domestic rather than foreign sales.
"The lesson we learned from the financial crisis is not to put all your eggs in one basket. We relied too much on the U.S. market," Tom Tseng, general manager of Chinese bicycle manufacturer Tandem Industries, told The Wall Street Journal.
"If we had started domestic sales earlier, our business wouldn't have declined so much this year."
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