Dark Bilious Vapors

But how could I deny that I possess these hands and this body, and withal escape being classed with persons in a state of insanity, whose brains are so disordered and clouded by dark bilious vapors....
--Rene Descartes, Meditations on First Philosophy: Meditation I

Home » Archives » October 2004 » Your "Oh, shit!" moment of the day....

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10/26/2004: Your "Oh, shit!" moment of the day....

can be found here.

Cutting our global forecast. As the odds of a full-blown oil shock rise, we have little choice other than to cut our global growth forecast; our first revision is a relatively small one -- we are reducing our 3.9% estimate of world GDP growth for 2005 by 0.3 percentage point to 3.6%.

Global "stall speed". The annual growth numbers mask important shifts in our forecast of the quarterly pattern of world economic growth; in the first quarter of 2005, our new forecast puts combined growth for the US, Europe, and Japan at just 1.5% -- a "stall speed" that could easily give way to outright recession.

Two-engine vulnerability. With China's authorities reluctant to deploy traditional measures of policy restraint, an overheated Chinese economy is veering toward a boom-bust endgame; the September US labor market surveys underscore the tough pressures bearing down on over-extended, energy-shocked American consumers.

Tough combination. There are two key preconditions to a recession -- the stall speed and a shock; for a two-engine world that is lacking in alternative growth offsets, the downside risks of an oil shock are even more serious -- prompting me to maintain my view that there is a 40% probability of global recession in 2005.
Let me repeat that....

"...there is a 40% probability of global recession in 2005."

And how much you want to bet Bush will blame Clinton for it?

Len on 10.26.04 @ 12:29 PM CST

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