| SlayerRondo said: Allot of those countries need a real recession that purges the weaker elements of their economy. Recessions and companies failing are part of a healthy economy as they free up resources for more effective/efficient people to utilize. You can only prop up the weaker companies with special privileges and bailouts for so long. |
Zombie firms are a problem, but the alternative is severely painful.
Economics is demand-driven, after all. If you "let" General Motors go bust, for instance, that's a ripple effect that could put millions out of work, which means millions of people scraping by and buying only the bare essentials; not buying cars, not buying houses, not buying TVs or movie tickets or good restaurant meals. This creates a further knock-on effect as other car companies now have to contract.
Supply side economics doesn't solve this because no matter how easy you make investment, people are NOT going to invest if there's no demand for a product or service due to the depressed economy. They'll invest in safe things like financial instruments or Sovereign Debt (which is why, despite effectively negative shadow interest rates on Treasury bonds, people still buy 'em because it's safer than plugging it into an auto startup).
This is not to say that supply side is useless: an economy with low barriers to investment and entrepreneurship is going to be more nimble than an economy with high barriers, but when you have a slump, money in people's pockets is what unsticks the system. Governments all over the world are scared of "handouts", however, or stuck in pigheaded belt-tightening loops which simply make the process worse (lay off government workers and guess what? That's less people who can buy consumer goods, so less demand for capital investment from companies providing consumer goods, etc. The lower taxes in no way make up for that, especially because in a lot of these cases those taxes simply are diverted into debt payment and not actually lowered).
For the OP:
The U.S. economy is making its way back, although the return of people to the labor force is going to keep the unemployment rate steady and keep wages stagnant for a while, because it will be some time before labor force participation is corrected.
Europe is going to go through a long run of stasis unless Germany gets their head out of their collective kiester and lets QE and stimulus happen.
Japan, however, seems to have realized their error in the increased sales tax, though it remains to be seen if they can divert in time.
China will cool off, but hopefully not shrink.
Russia needs to diversify NOW or risk losing all momentum entirely.
Monster Hunter: pissing me off since 2010.
