Chinese Manufacturing Contracts, Gauge Hits 32-Month Low; Soft-Landing Nonsense; Global Recession is Here

The global recession has begun. Europe is undeniably in recession, the US is on the way, and Chinese manufacturing just entered contraction.

MarketWatch reports China manufacturing gauge shows contraction

HSBC’s preliminary China manufacturing survey fell to a 32-month low in November, well below analysts’ forecasts, with the reading signaling the sector is now contracting.

The Purchasing Managers Index printed at 48.0 on a 100 point scale, reversing from a mildly expansionary reading of 51.0 in October, HSBC reported Wednesday.

Consensus forecasts for had called for a 50.1 result, just above the 50 level that separates expansion from contraction, according to CNBC.

“As inflation is likely to decelerate at a faster-than-expected pace, it will leave more room for Beijing to step up selective easing measures, which should gradually filter through to keep China on track for a soft landing,” HSBC economist Hongbin Qu said in comments accompanying the flash PMI release.

Soft-Landing Nonsense

Everyone is looking for the Fed, the ECB, and the Chinese Central Bank to steer the global economy to the proverbial "soft-landing".

Yet the fact remains, trillions of dollars have been spent already, hoping to forestall another recession. Every action has added to debt in the US, UK, Japan, and Europe, and created a huge inflationary construction boom in China.

Crude is still hugging $100 a barrel. Food prices are up. Is the Fed going to launch another round of QE into that? I doubt it. I doubt China does either, especially with a regime change coming up.

Is Congress going to approve stimulus changes that would help Obama get re-elected? The idea is laughable.

Crash Landing

Should central banks step in, watch for gold, crude, and oil prices to rise, and little else to happen. Central banks and world governments have applied so much totally useless Keynesian and Monetarist stimulus to prevent the inevitable, there may be no landing at all (soft or hard), until a global crash.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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