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.

Saul you just don't get it do you? Keynesian economics is a complete failure and no matter what central banks and governments do, things will continue to get worse. The U.S. never got out of the GFC recession (my take, really a depression) and its basis for stating it did are based on false data that has been manipulated to show that things have improved.

If you look at real data, jobs, both permanent and part-time have been in decline in the U.S since 2007, housing continues to decline and will never, repeat, never recover, there is too much debt and forcing more debt never solves any problems. Government spending will not save the day, growth is waning globally and with our key finite resources (see oil) now in terminal decline, economic growth as sprouted by all governments and economists can't go on.

Europe is a basket case waiting to blow and once it does it will follow the U.S. to the bottom of the pit. Demand destruction in these two areas will have a massive impact on China (which by the way is a powder keg of its own making) as the U.S and Europe are China's two biggest markets. Once this occurs China will not be importing the resources from Australia in any where near the same levels as current. Australia is a bit player in a game of Russion Roulette and we will lose like everyone else.

Get used to the bade news, it's not going to get better and the sooner main stream economists and governments realise this the better.

Growth will never return to pre 2007 levels, its down from here on it, get used to it and learn to adapt.

Peter H,
Is it wrong to assume it is still government duty to develop infrastructure to allow productive business to generate wealth for people and the nation?
Why just stimulate lending institutions? There is need for adequate cash at the bottom of the economy in order for consumers to spend, including to repay mortgages.
Should it be assumed a modern day carbon tax is the best way to provide government with revenue?
If Australians were not so dumbed down it would be seen the whole ocean of this planet is nearly empty of food and that world food supply is therefore now unsustainable, and that alternative affordable food production and supply should be the priority.
Why was fish removed from the CPI

"Is it wrong to assume it is still government duty to develop infrastructure to allow productive business to generate wealth for people and the nation?"

I think that's a good question, which should be answered in the negative for several reasons, but before I show reason why, could you please let me know what you say is the definitive difference between infrastructure and other capital goods?

"Why just stimulate lending institutions?"

That assumes we (translation: the state) should.

" There is need for adequate cash at the bottom of the economy in order for consumers to spend, including to repay mortgages."

A need decided by whom?
Cash that government will get from ... a moonbeam?
Is there some fountain of cash somewhere that we can just drain for purposes of creating net social utility? Oh goodie.

"Should it be assumed a modern day carbon tax is the best way to provide government with revenue?"

Didn't see that one coming. That was way left field.

"... that world food supply is therefore now unsustainable, and that alternative affordable food production and supply should be the priority..."
If it's true that government can be presumed to produce food better than the private sector, what did you have in mind ... the collectivisation of agriculture

I think Saul and the other Keynesians have finally realised that the system is stuffed.We are in another great depression caused basically by the US Federal Reserve.This is why Ron Paul wrote the book called,'End the Fed'

Private Central Banks do not have a god given right to create from nothing all the money to equal out increases in productivity and inflation as debt.They have stolen all our money and created the worthless derivative bubble which they continue to inflate via their "quantative sleazing" Yes Saul,they are delaying the inevitable and making the ultimate collapse even bigger.

Google Prof Michael Hudson.He knows the economic reality.

Peter H,

I think a relative definitive difference between infrastructure and capital goods can be understood by comparing a new national Australia water harvesting and delivery system compared to imported wind farm generators.

Some lending institutions were impacted by the shortage of cash caused by economic downturn beyond their or their customers control,
so stimulus was perhaps due to avert collapse and chaos.

Need for adequate cash at the bottom of the now two or three tier economy is yet to be understood by economists, as needed. The dumbing down is obstructing new information and delaying development of knowledge, including from reaching understanding of economists.

A moonbeam? No. There is need for international fiscal policy to adapt to present day influence presently unseen. For example (you) economists do not know the cause of what is described as the world economic crisis, the 'meltdown'.

Obviously government does not drive the tractors but government does now declare who gets to own the water and at what cost to the private sector and eventually food consumers. Food is now reaching a cost unaffordable to more and more people. Unsustainable economics.

That water trading caper is a bit nifty is it not, a "moonbeam" spike into the food economy for government to raise revenue. Similar to carbon tax and GST.

I do understand governments require new sources of revenue, especially for example to offset downturn in nicotine drug sale revenue. But surely new revenue should come from new productivity, that for example new reliable water infrastructure could develop.

The $30 plus billion NBN will allow doctors face to face consultation with patients but what will it produce food or manufactured goods for local consumption and export? Where is the optic fibre cable manufactured?

Meanwhile government is selling the farm to aware offshore interests, $200 million plus property excluded. Really, how many properties are worth 200 million? Moonbean economic advice perhaps, like carbon warming the planet.

Someone please answer.

Why has AGW climate and aka carbon tax science not measured and assessed the photosynthetic warmth aspect of sewage nutrient proliferated micro algae warming the ocean?

JF Aus.The main reason for Govts requiring increases in taxes is to service debt to private banks.When we sold off all our Govt banks that used to create from nothing some of the money for increases in growth+ population + inflation,our Govts had to increase taxes to pay for debt to private banks.Private Banks always had most of this power,now they have all of the power.

Greed is not good,nor is this present cartel power of the finance system.

Arjay,
I am not sure greed is the only problem. I experience arrogance, ego, pseudo elitism and even stupidity blocking input of key information and understanding. Crime could also be involved with the one sided 'science' trying to justify a carbon tax and ETS to provide R&D resources and eventually revenue, fees and commissions. Government seems to be purposely not seeing the nutrient fed algae bleaching coral on the Great Barier Reef, government unjustifiably sees carbon emissions causing the damage that includes devastation of world seafood sustainability. Either way the economic 'management' of the world money system is failing when it should be thriving.

JF Aust.It is lust for power under the cloak of environmentalism.The elites are using guilt via environmentalism to instigate global communism for the masses,while they live the life of excesses as they've always done.
See 'Fall of the Republic ' by Alex Jones http://www.youtube.com/watch?v=VebOTc-7shU This will tie together the GFC,the wars and the ruse of environmentalism that's being used to bring in Bob Brown's Global Governance.( New World Order)

http://forum.onlineopinion.com.au/thread.asp?article=12615#218198

Arjay, good video, thanks, i wonder why they keep calling it GFC#2, there never were any "green shoots" GFC#1 never went away, the banksters just wasted trillions trying to fool us into thinking it did.

Keynes is just another Fabian Socialist, like all the others creating poverty, working towards the NWO.

All very sad. Those that still believe that infinite growth is possible
in a finite world are either madmen or economists.

When will they learn that growth is ending.

Bazz,
What about consolidating growth to date, for example by mitigating damage. China is even attempting population reduction.
A problem seems to be that the financial system that is fueled by growth. Achievable solutions can be challenging and interesting to find and implement.

Snake said:
We are in for a number of years with a lower standard of living Generally.

Correction; it is permanent. A bumpy downward slope.

JF Aus said:
yet the world economy has never been in such a negative mess. Why is this so?

That is because they do understand what is happening.
Remember economists are money people and they think that money makes
the world go round.
Well I have news for them, it is not money, it is energy stupid !

If someone thinks the you can have infinite growth on a finite planet
then they are either a madman or an economist !

JF Aus asks about growth.
Well I am no real expert, but I have read a number of books on the problem.
To get any GDP you have to produce something of value.
You can only do that by using energy.
Growth up till now was generated by borrowing money to buy new plant
to make the new wijets, which you then sold and paid back the loan.
However, and this is where we are now, what if the cost of the energy
went so high that it ate up all the money you could get for the wijets ?
This is where the US and Eu banks are now. Their borrowers are not
paying their loans off.
Thats a bit rough but that general idea.
Now that energy has got so expensive it is eating the GDP of
countries which is why you hear so much bleating about poor growth
from most countries, except China.
There is a theory of peak economy and peak oil.
When oil gets too expensive the economy peaks and somewhat later
oil will start its decline. We are between those two earth shaking points now.

Bazz,

Economists know what is happening to a considerable degree but they don't know all. If they did they could make more national wealth and business profit. I can explain but there is not the space here. However a good present day example of knowledge blackout is the one sided AGW carbon emissions and pro tax debate that is shutting out other information of substance.