A sober article in the UK Telegraph today underlines a concern I have shared for many months now: How can the global economy decouple and bounce along happily without the US and Europe when so much of global demand over the past 5-year expansion cycle has come from our western world over-consumption?:

"The rising economies of Asia are too small and deformed to rescue world growth as America, Britain, Australia, and Club Med face their day of debt reckoning. China may make matters worse, not better.

The seven pillars of global demand over the last year - measured by current account deficits - have been the United States ($793bn) (£388bn), Spain ($126bn), Britain ($87bn), Australian ($50bn) Italy ($48bn), Greece ($42bn), and Turkey ($34bn). Most are facing a housing bust. All are in trouble.

China cannot possibly step into the breach. Jahangir Aziz and Xiangming Li argue in a new IMF paper that China's economy is now so geared to the US and EU markets that a 1pc fall in external demand will lead to a 4.5pc slide in exports and 0.75pc fall in GDP.

Assumptions that it will weather a global shock are "likely to be wrong, perhaps dramatically."

Some of the strongest voices for the decoupling argument have not surprisingly come from the investment sales firms that have reaped record profits the past few years from selling the global growth story.
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This clip offers an oasis. Dive in.   more »

Thanks to Michael Campbell for having me on Money Talks this weekend.   more »