(NaturalNews) Economic experts and long-time investors continue to sound the alarm that the global economy is not all it is made out to be and in fact has been teetering on the edge for some time.
While no one has a crystal ball, experts see signs of danger, especially if certain conditions occur. One of them is Daniel Ameduri, who – in a recent report to subscribers of the Weekly Wealth Digest, offered via the Future Money Trends website and republished by The Daily Sheeple – noted that the global economy has yet to really recover from the “Great Recession” of 2008.
“For the past 7 years, the world has been living through a really ugly experiment, hyper-Keynesian economics,” Ameduri begins. “Included are stimuli, low interest rates, quantitative easing, and plenty of fraud to go around, from government statistics to the lack of honest accounting.”
He notes that for a number of years as well the world’s investors had a lot of confidence in China’s growth, and for good reason: Beijing was delivering an average of 8 percent growth per year for a decade, but now, that growth is slowing, much to the chagrin of investors.
Collapse in commodities is fueling this decline
But importantly, Ameduri noted, the Chinese economic model was looked upon as perhaps one that the world could follow: a centrally planned, state-run economy sprinkled with elements of capitalism.
China’s growth in particular fueled the growth of commodities consumption. However, much of it was an illusion, said Ameduri, noting that “ghost cities and $50 billion bridges to nowhere were all part of an economy and job market built on air.”
Now, reality is setting in; annual economic growth in China has slowed to 6.9 percent this year and is expected to trend downward, something investors need to understand. The fact is “that we have no idea what will be China’s new normal, because even once they hit bottom, they’ve already built cities for the next 20 years,” Ameduri wrote.
“Think of the harm this has done to a construction worker looking to enter the workforce in 5 years. What’s the point? The cities of 2025 were built in 2010,” he said in his report.
“Here in the U.S., oil companies since 2009 have borrowed at artificially low interest rates in order to produce higher-cost oil from fracking, which has now helped flood the world in oil,” Ameduri continued. “Only now we have lower oil prices, higher interest rates for the oil frackers, and an almost certain default, as these companies can’t pay the debt back, especially with lower oil prices that, for the most part, are unprofitable for unconventional drillers.”
“No silver bullet”
The oil companies have attempted to resolve the deficits by ramping up production, but that has only made the problem worse, Ameduri said.
“All around the world, stock markets are crashing. Brazil is in a depression, China and Europe are in recession, and Canada and the U.S. look to be entering an official recession in 2016,” he wrote.
And while all of this economic turmoil has central planners seeking solutions after making things “ten times worse” than in 2008, Ameduri said there is “no silver bullet” that can “fix this.”
Already there are major ramifications from the collapse of commodities. Companies that deal in commodities, like Anglo-American, are laying off tens of thousands of people, and all from great-paying jobs. In China, more than 100,000 coal workers are going to be let go.
“We are living through a moment where all the trillions of dollars in misallocation and debt are unwinding, so we are going to live through a nasty deflation, but at the same point in time, we must also consider how central planners will respond,” Ameduri noted.
“This is why there is no foolproof way to protect and profit forward – there are only strategies to hedge through this crisis.”