Yesterday the New York Times reported that Europe's financial woes are hurting their economy more than expected:
After a brief respite following the announcement last week of a nearly $1 trillion bailout plan for Europe, fear in the financial markets is building again, this time over worries that the Continent’s biggest banks face strains that will hobble European economies....Bourses and bank shares in Europe plunged on Friday because of these fears, with Wall Street following suit. Shares were also down in Tokyo and Australia in early trading on Monday.
Today they report that Europe's financial woes are hurting China more than expected:
The pain of the European debt crisis is spreading, with the plummeting euro making Chinese companies less competitive in Europe, their largest market, and complicating any move to break the Chinese currency’s peg to the dollar.
....Some economists warn that there may be much worse to come. The biggest reason Chinese exports plunged early last year was not weakening demand in industrialized countries but a sudden, temporary disappearance of trade finance. The availability of trade finance could easily become a serious problem again soon, said Dong Tao, the chief Asia economist at Credit Suisse....The Shanghai stock market plunged Monday, with the composite index falling 5.1 percent on worries about global demand as well as concerns about possible further moves in China to limit a steep rise in real estate prices this spring.
If Europe and China both go down, the United States is going down too. So we'd all better pray that the political and central banking leaders in Europe and China get a handle on this. Ours may have made plenty of mistakes back in 2007-08, but in the end they did the right things. They're not in charge this time around, though, and there are, it turns out, worse things than bailing out a bunch of fat cat bankers. For example, not bailing out a bunch of fat cat bankers. Buckle your seat belts.