I am amazed!

Within days of me writing my negative economic commentary I get a major brokerage firm to confirm my beliefs.   Stephen Roach, the highly-acclaimed economist at Morgan Stanley, is letting people know that they will likely be revising their economic forecasts DOWNWARD in the near future.  This only causes me to be more adamant about my belief that economic growth and corporate profits are likely to be impacted over the next 5-10 years due to excessive debt levels at the consumer, corporate and government levels. Comments made in the article below include:

http://www.morganstanley.com/GEFdata/digests/20020729-mon.html#anchor5

1. "the combination of negative wealth effects, dislocations in credit markets, and heightened volatility and uncertainty have put deteriorating financial market conditions on a collision course with recovery in the broader global economy"
2. "In an era of globalization, the world is more synchronous and, therefore, more prone to extremes. That’s the stuff of both virtuous and vicious circles."
3. "With America having accounted for approximately 40% of the cumulative growth in world GDP since late 1994 -- double its share of global output -- it’s not hard to figure out why people are concerned about US growth.  The world is still very much dependent on the US-led external demand of the global trade cycle"
4. Recent reports of a deteriorating capital-spending picture -- as evidenced by weakening trends in nondefense capital goods orders and shipments for June -- only underscore those concerns
5. Recent declines in European business confidence surveys -- especially for Italy, Belgium, and Germany -- underscore the linkage between financial market uncertainty and corporate sentiment
6. Japan still desperately needs banking reform and there is concern about the life insurance industry, which is required to pay high premiums vs. the domestic returns on Japanese bonds.  Japanese insurance companies who have invested overseas to attain higher results have been decimated by falling stock prices in the U.S. stock market.
7. In addition, there are now signs that Taiwan’s IT-led export boom is in trouble; at least, that’s the verdict from a host of economic indicators as well as from the recent profit warning of one of its biggest technology companies, TSMC (Taiwan Semiconductor Manufacturing Company). 

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