1 China manufacturing slows for third month (BBC) Chinese manufacturing has contracted for the third month in a row, according to the government’s latest factory survey. The Purchasing Managers’ Index (PMI) showed a reading of 49.8 for October, unchanged from last month. A figure below 50 indicates that factory activity contracted.
The most recent growth figures showed the country’s economy growing at a rate of 6.9%, the weakest rate since the financial crisis. It has been hit by a stock market slump and a global slowdown in demand. Economists had expected October’s PMI to show a pick-up to a reading of 50.
The government is trying to move away from being an export-led economy to a more consumer and services-led one. It has been taking action to try to spur growth, including cutting interest rates five times so far this year. Economists at ANZ Bank said the latest PMI survey indicated there could be further measures to come.
2 The next giant financial crash may have begun (Paul Mason in The Guardian) Many indicators in global finance are pointing downwards – and some even think the crash has begun. Let’s assemble the evidence. First, the unsustainable debt. Since 2007, the pile of debt in the world has grown by $57tn (£37tn). That’s a compound annual growth rate of 5.3%, significantly beating GDP. Debts have doubled in the so-called emerging markets, while rising by just over a third in the developed world.
This summer, the Bank for International Settlements (BIS) pointed out that certain major economies were seeing a sharp rise in debt-to-GDP ratios, which were well outside historic norms. In China, the rest of Asia and Brazil, private-sector borrowing has risen so quickly that BIS’s dashboard of risk is flashing red. In two thirds of all cases, red warnings such as this are followed by a major banking crisis within three years.
The underlying cause of this debt glut is the $12tn of free or cheap money created by central banks since 2009, combined with near-zero interest rates. When the real price of money is close to zero, people borrow and worry about the consequences later.
Next, let’s look at the price of real things. Oil collapsed first, in mid-2014, falling from $110 a barrel to $49 now. Next came commodities. Copper cost $4.50 a pound in 2011, but was half that in September. Inflation across the entire G7 is barely above zero, and deflation stalks the southern eurozone. World trade volumes have contracted tangibly since December 2014.
China – the engine of the post-2009 global recovery – is slowing markedly. Japan just revised its growth projections down, despite being in the middle of a massive money-printing programme. The eurozone is stagnant. In the US, growth, which recovered well under QE, has faltered after the withdrawal of QE.
It is in the world of geopolitics that the danger of elite groupthink is clearest. The economic danger becomes clear if you understand that printing $12tn incentivises every country to dump the final cost of anti-crisis measures on someone else. But there is now also clear geopolitical risk.
The oil price collapsed because the Saudis wanted to stymie the US fracking industry. Right now, although Russian and American diplomats are capable of sitting together in Vienna, their strike-attack pilots do not communicate as they attack their variously selected enemies on the ground in Syria. Europe, weakened by the Greek crisis, its cross-border institutions thrown into chaos by the refugee crisis, looks incapable of doing anything to anybody.
So, the biggest risk to the world, despite its growing seriousness, is not the deflation of a bubble. It is the risk of that becoming intertwined with geopolitics. Any politician who minimises or ignores this risk is doing what the purblind economists did in the run up to 2008.
3 Knowing your career assets (Kim Thompson in San Francisco Chronicle) Talking about your strengths and accomplishments can be perceived as trivial matters when in reality they are the foundation of your success. The lack of self-knowledge toward your skills often keeps talented people from progressing forward.
What are career assets? Think of them as an accumulation of your interests, values and personality. Everyone has accomplishments whether it is graduating from college or contributing to the success of a project but few people can recall specifics of what they did to accomplish their goals.
Knowing your career assets does more than help you land a better job — it helps boost your confidence and develops awareness. When you can readily identify the skills you use in “getting along with others and giving presentations”, you send a perception of energy and satisfaction.
One reason why people struggle with knowing their career assets could be the fear of bragging or seeming arrogant. People who are arrogant are often defensive and clueless about their areas of weakness whereas confident people will readily admit their shortcomings and strive to improve. Talking about what you did well is not bragging, rather it’s about the facts.
If you want to broaden your career assets, a good place to begin in helping you identify your skills and accomplishments is with a self-reflection exercise. Here are some questions that will help you become more in tune with your values, strengths and interests:
Name one of your most successful projects and the skills used to make it successful. What would you do if you knew you couldn’t fail? Choose five core values that describe you the most. What strengths would you describe as your “go to” strengths, the ones you use regularly? Answer the lottery question, “What would you do if money was not an issue”?