Everything said here, I have been saying for the past couple of years to anyone who would listen although most disagreed with me. I just find no surprises at all, in fact I think it's going to get a whole lot worse while, as the press love to say, "governments continue kicking the can down the road". There are only two alternatives, debase the currencies as almost every country is trying to do to stay competitive, or default. The former is more acceptable politically than the latter.
Either way there is going to be a lot of social unrest as the population suffers more pain and governments will be in the firing line. We are in for a number of years with a lower standard of living generally.

Here's an overview of European debt at a glance:

http://edition.cnn.com/2011/BUSINESS/06/19/europe.debt.explainer/index.html?hpt=hp_t2

You've got to get over this Keynesian "stimulus" nonsense Saul. It hasn't worked and it won't.

A reduction in taxes, privatisation of government assets and winding back of expenditure to match revenue are the only things that will help. Yes, there will be short term pain and political heat, but it offers a long term solution.

As an economist you should be worried about good economic outcomes, not politics.

And what about the Chinese economy. Doesn't it have some little reliance on exports to the North Atlantic economies? What's the implication to the Chinese economy of failing exports to the North Atlantic economies?

And what would be the effect of falling export earnings have on the Chinese yuan and housing bubble?

Damn them all! They should all follow Australia's lead and enact a carbon dioxide tax. That would be a great fix.

Economists have never had access to so much economic data worldwide yet the world economy has never been in such a negative mess. Why is this so?

Why are some economists advocating carbon tax in one sided 'debate' while real debate is gagged and suppressed?

Why are economists not advocating a national Australia northern wet season water harvesting scheme to guarantee supply to drought stricken southern food and fibre production areas?

Why is new food and fibre and business from a new aqua-duct water supply system not underway to generate tax revenue?

Why has ocean algae plant matter not been measured and assessed in AGW climate change science and carbon tax justification due diligence?

The state of the world economy is already precarious and the situation must worsen because real solutions to real negative economic influences are not taking place.

JFAus
You seem to running the same old assumptions about governmnent policy creating wealth that has caused all the problems that Saul is talking about. Such measures only appear to produce net benefits by the simple methodology of ignoring the opportunity costs, as if the economy were a magic lamp, and only government has the magic power to rub it.

Saul
"Perhaps the most worrying thing about the possibility of simultaneous recessions on both sides of the North Atlantic is that, were they to eventuate, governments and central banks would have very few options for ameliorating them, in the way that they sought (and were able to) moderate the length and depth of the recessions induced by the financial crisis of 2008."

That assumes that the deteriorating economic outlook for North Atlantic economies has nothing to do with monetary policy in reaction to the financial crisis in 2008.

The part that you keep not getting is
a) that government is not capable of creating wealth by lowering interest rates, and
b) it is monetary policy causes first the artificial booms, and then the recessions.

All that Keynesian "stimulations" achieve is an artifical boom in the short run (fueled by consuming capital) followed by a recession. Printing money or lowering interest rates only postponed the day of reckoning, and make the eventual crunch worse when it comes. Interest rates are already at near zero, and the massive injections in the US didn't work did they? What next? Paying people to borrow money? That is the topsy-turvey world of Keynesian understanding, so beloved by politicians playing Santa Claus with other people's money. There is a symbiosis between governments and Keynesian economists, preaching to the masses this guff about the printing press being the source of human welfare.

“If one assumes that there exists above and beyond the individual’s actions an imperishable entity aiming at its own ends, different from those of mortal men, one has already constructed the concept of a superhuman being.”
Ludwig von Mises

Keynesianism is just a nutty state religion that has never worked.