The other highly significant events of the past five days are the plunging fortunes of Volkswagen (diesel cars) and Glencore (miners). These are losses of $10 to $40 billion in extent and these are beginning to be measurable on the same balance scales as countries margins of trade.
Then consider what is actually driving the whole economy forward in terms of value of goods. There continues to be high consumer goods (status goods) rate of trade — but not growth — between the Advanced World and also between the AW and the rich of the Third World. But there is no uniquely new consumer good on the horizon. So we can’t have the sort of annual growth rate of 2% to 3% as we were having in the 1960s, ’70’s and ’80’s that central banks are desperately calling for.
Then there is the extraordinary growth of the 3rd, 4th, 5th generation mobile phones. These are not status goods and don’t empower economic growth. They are the equivalent if the massive growth in domestic power tools in the 1980s and ’90s.. They are superb life tools. Like PCs, they’re useful to run businesses but not to actually produce wealth themselves. They are going through a phase of extraordinary profits but how much longer are they going to improve and justify their high prices to teenagers (though note they are low priced goods compared with status goods). Huawei, already a large world class manufacturer with a high reputation for quality electrical goods is moving soon onto 4th generation mobiles — all adding to a gentle, but powerful pulling down effect on the underbelly of the world economy, something that was already apparent 20 years ago and growth economists simply can’t understand.