The global slump is worsening as the US and Japanese, and possibly part of Europe, lurch further into the mire.
The European Central Bank signalled yesterday that its recent spate of cuts will stop at next week's monthly meeting as it considers the state of the eurozone economy.
German unemployment jumped as the slump started hurting the wider economy.
But for the badly damaged US and Japanese economies, the news wasn't good and won't improve.
Figures out today in Japan are expected to show another big fall in industrial production in December to go with the record 8.5% slump in November, and the 35% drop in exports in December.
A report yesterday from the government said that Japan's retail sales posted the largest decline in almost four years as the slump bites harder and the economy slides deeper into the red.
Sales in December fell 2.7% from the same month of 2007, the biggest drop since February 2005, the Trade Ministry said yesterday.
Several Japanese companies, led by Sony, reported prospective losses and held out the threat of worse to come this year, and job losses.
In the US new home sales fell further in a surprise and durable goods orders dropped in december for the 5th month in a row and fell over 2008 as a whole.
Jobless claims hit a new record last week and Ford had a record loss for the December quarter and for 2008 a whole it fell into the red to the tune of $US14.6 billion.
The news yesterday confirmed the gloomy commentary from the International Monetary Fund and the Fed.
Later today the US he government releases the first estimate of the December quarter's economic performance. While historical, it will be dramatic.
There won't be any growth: economists are saying the figures will show an economy shrinking at an annual rate of at least 4% and probably above 5.5%.
The GDP estimates will be updated twice over the next six weeks or so as more figures come in on exports, consumer spending, income and credit: all have been weak to rotten in the past four months and showing signs of worsening.
Now we have the latest statement from the Fed and commentary in various 4th quarter profit reports from leading US companies, telling that the downturn not only accelerated in December, but has deepened this month in some cases.
Indeed the New York Times Company said its advertising fell 18% in the December quarter and that this sharp fall (which worsened in the month of December) "had accelerated into this month" according to the company's CEO on a conference call.
US job losses have worsened dramatically: over 150,000 recorded in the last 10 days, with tens of thousands more going in Europe, the UK, Australia, Japan and elsewhere.
And, yesterday more gloom. Big manufacturers, textron and the 3M Company are among the manufacturers lowering 2009 profits and slashing capital spending in the year ahead, which will be further bad news.
If there was any lingering doubt (such as in the collective heads of some in politics, business and the economics profession that the global economy is heading south and dragging Australia with it, then reports and statements from the US Federal Reserve, the International Monetary Fund and the International Labour Organisation, should put that right.
The trio of commentaries from some of the world's major economic oversight and policy bodies makes clear the global slump is not ending, despite attempts in the US sharemarket to call a bounce with the $US825 billion Obama boost package heading for its first Congressional vote which it passed easily.
It's now off to the US Senate where the will be a bigger fight, with a bunch of Republican senators still in denial over their part in the disaster and determined to frustrate and delay the spending and tax cut package.
The Fed's statement in Washington after a two day meeting, was long, detailed, and if anything more gloomy than the December meeting's statement where rates were cut to 0%-0.25% and a start made on a major quantitative easing to try and restart the slumping economy.
"The Committee continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.
"Information received since the Committee met in December suggests that the economy has weakened further.
"Industrial production, housing starts, and employment have continued to decline steeply, as consumers and businesses have cut back spending. Furthermore, global demand appears to be slowing significantly.
"Conditions in some financial markets have improved, in part reflecting government efforts to provide liquidity and strengthen financial institutions; nevertheless, credit conditions for households and firms remain extremely tight.
The Committee anticipates that a gradual recovery in economic activity will begin later this year, but the downside risks to that outlook are significant.
"In light of the declines in the prices of energy and other commodities in recent months and the prospects for considerable economic slack, the Committee expects that inflation pressures will remain subdued in coming quarters.
"Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term."
And this is very important: the Fed gathers comments and anecdotal evidence from across the country for briefing notes for its meeting. That's later turned into the 'Beige Book" and released.
It's the viewers of businesses across the spectrum from all parts of the US. November and December's were gloomy enough.
The updates picked up for this week's meeting must have been worse for the Fed to note in the statement that "Information received since the Committee met in December suggests that the economy has weakened further".
The Fed went on to explain that it will try virtually anything that will stop the slump, stabilise lending, economic activity and demand and try to get growth back on track.
"The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability."
The Fed said it is "prepared to purchase longer-term Treasury securities if evolving circumstances indicate that such transactions would be particularly effective in improving conditions in private credit markets."
For those in Australia who reckon we are heading for an almighty crash, the Reserve Bank is still cutting rates (as it will do by up to 1% perhaps 1.25% next Tuesday), not doing what the Fed and the Banks of Japan and England will be doing in gearing up their balance sheets and buying government bonds to boost lending.
We are a long way from that, but as the IMF pointed out, the global economy is sliding towards outright negative growth this year: the Fund puts world growth at a tiny 0.50%. The word "catastrophe" was used by the IMF in its commentary. If that doesn't force doubters to think again, then they are truly thick.
The 2009 growth forecast of 0.50% is such a small margin that you can say the world economy will contract this year for the first time in 60 years.
That's also down 1.5% on the forecast late year and is despite the trillions of dollars already spent and or being committed in bank bailouts and stimulus packages in the US, Japan, Germany, Europe, the UK, Australia and elsewhere.
Rather than fruitless spending, imagine what the forecast would have been without it and what the IMF (and Fed) would have now been saying in their reports and commentaries.
That's a message that the Federal Opposition here and a growing number of in-denial US Republican members of Congress, don't get or even begin to understand the extent of the crisis.
The IMF said this will mean "Monetary and fiscal policies need to become even more supportive of aggregate demand and sustain this stance over the foreseeable future, while developing strategies to ensure long-term fiscal sustainability.
Moreover, international cooperation will be critical in designing and implementing these policies in order to avoid destabilizing distortions."
In other words, governments will have to lift their levels of spending in stimulus packages (in a fiscally responsible way) and take heed of what other governments are doing.
And it's why the world economic outlook update from the IMF should be required reading for all doubters.
The Fund says advanced countries like Australia will contract this year and in trying to counter that, will average budget deficits of around 7% of Gross Domestic Product.
That would mean a deficit here of around $A80 billion, out of a total budget of $A300 billion and GDP of over $A1.1 trillion.
But Australia's budgetary position is much sounder that the rest of the advanced world: we started the crunch with a surplus and more growth (even though it is vanishing) and no domestic debt to speak of.
So the NAB's estimate on Tuesday of a deficit of $A40 billion or so is probably more appropriate.
The IMF raised its estimate of the potential deterioration in US originated credit assets held by banks and others from $US1.4 trillion last October to $US2.2 trillion now; that's a jump of more than 50%.
The IMF is now forecasting that the global recession will be much deeper and more protracted than previously envisaged.
The fund forecast that while global growth is now expected to fall to 0.5% this year, with advanced economies expected to suffer their deepest recession since World War II, the advanced economies are expected to see their economies contract by 2% - the first annual contraction in the post war period.
That means the economies of all our major trading partners, bar China and India, will be shrinking this year: India and China will slow, with the latter's GDP estimated to rise 6.7%, which is just under the 6.8% growth seen in the December quarter.
That was the slowest growth for the best part of a decade and down two percentage points from the update late last year.
And the human cost, already evident in the surge of jobless in the US, the UK and Europe, especially in countries like Spain? The International Labour Organisation put that in perspective overnight:
The ILO said the world slump would lead to a "dramatic increase" in unemployment this year, which would certainly lead to 18 million - 30 million additional unemployed and more than 50 million "if the situation continues to deteriorate".
An extra 50 million jobless would take the number unemployed to 230 million, or 7.1% of the world's labour force.
And that's the nub of the argument at the heart of those who oppose government stimulus spending here and abroad: at least 18 million extra people out of work, most not able to get jobs, homes lost, finances and families under pressure if we do something.
Tax cuts might play a part, but we can better value by targeting the spending towards education, infrastructure and the like: we should be using the crisis to step up our investment in our future, as well as providing taxpayers with some relief.
And who cares if we spend money on imported products and services. Don't we want China, India, Japan, etc to buy our products?
If nothing extra is spent, or is badly spent, or neutered by opponents so it becomes inefficient, then an extra 30 odd million people could lose their jobs this year around the world, including quite a few in this country.
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