A global recession will hit China badly - it is the factory of the world.
The rest of the world has just woken up to the fact that they have allowed China to control them.
Just-in-time-inventory is a bit like many failed financial products/schemes - it depends on many assumptions. When any one of the assumptions fails then a domino effect ensues.
Global tourism is worth just over 10% of global GDP - it has just dropped close to 1/20th of what it was.
The multiplier effect (eg airline staff laid off/on unpaid leave) is between 3 to 5 times depending on the country. Taxis at the airports/ports lose trade, the petrol they would have bought is no more, the car wash places loses trade, the lost earnings of the taxi driver see them cut back...
Now think about the dry cleaners etc etc.
Australia is the most reliant country in the world on China, and is seen as the global play on growth. But we're also very heavily dependent on both tourism & 'exporting education' aka foreign students in Australia.
Does the term '3 strikes and you're out' resonate.
Australia also has the highest (or 2nd highest depending on the source) personal debt (love those mortgages), and supposedly (ACOSS survey) 3 out of 4 households having less than $1,000 in savings.
Perfect storm has hit just at the time when it could be argued that we have the poorest set of politicians in Govt & Opposition at every level in Australia AND at the time when we've got the lowest level of trust in them (Sport Rorts, Regional Recovery Funds, illegal political donations, unsolicited proposals reaping billions for developers at the community's expense etc etc).
DESPITE having the biggest boost in exports in modern Australian history - we did not have a big enough TRADE surplus to pay 30% of the interest on our existing foreign debt AKA we went further backwards. Indeed the more LPG we export the worse our overseas debt becomes due to the 'structuring' of the Qld LPG finances.
A favourite expression doing the rounds in 1987, "Never try catching a falling knife"
Perhaps the 'can' cannot be kicked down the road any further?
Typically over 90 cents in every dollar spent in retail goes overseas, so just as the cash splash back in the GFC saw sales of big screen TVs increase 3 fold and keep many Chinese factories going - the latest version will likely have a similar but different effect. Possibly not big screen TVs but spent on anything other than fresh F&V or meat and it will be at least 80 cents per dollar overseas.
Given the high degree of overseas overship of food brands these days - it may be worse. I deliberately left out increased alcohol sales as that is even worse.
