Depression started in the first half of 2007

[WhiskeyGirl]

As the world falls into depression, the Chinese are not exempt. In business, the Chinese have a reputation for discretion and for sticking to the logic of their position.
One should, therefore, always pay attention if a leading Chinese businessman speaks more frankly than one might expect.

In recent weeks there have been suggestions that the West may be pulled out of the recession by Chinese help. China has one strong qualification for this role: the country has a lot of money, with about $2trillion of currency reserves.

They also run a surplus on foreign trade. The Chinese have the capacity to invest.

Last week, Mr Lou Jiwei made an important speech in Hong Kong. Unfortunately, it dispels any illusion that China will audition for the role of the knight in shining armour who might rescue the West from the dragon of recession.

Mr Lou told the Clinton Global Initiative Conference: ‘Right now we do not have the courage to invest in financial institutions because we do not know what problems they may have...the policies of the developed nations on their financial institutions are not clear. Until they are clear, I don’t dare to invest in them. What if they go bust?

If they go bust, the US government will continue to bail them out.

...I see little reason for governments, who were reluctant to accept the ‘R’ word of recession, still refusing to use the ‘D’ word of depression. In its universality, intensity and momentum, the recession of 2008 is the worst slowdown of the world economy since the Thirties. That is a depression.

This depression started in the first half of 2007. There had been preliminary signs of weakening confidence, and it was not until early August that a fully fledged housing and banking crisis emerged in America, followed immediately by Britain.

Other countries, particularly in Europe, had a similar bubble in housing prices, but that had not yet burst.

The depression has spread from North America and Britain to most of the rest of the world, to Europe, to Japan, to the oil and commodity-producing countries. As their exports to America fall, China’s growth rate has fallen, too.

Recovery will eventually come, but it is probably two or three years away.

http://www.dailymail.co.uk/news/article-1092473/WILLIAM-REES-MOGG-We-recession-bailing.html