World markets opened lower as they absorbed the shock of a 7 percent decline in China’s Shanghai Index.
Appearing on Breitbart Radio Monday morning, international financial analyst Tony Nash said China was “clearly in an industrial recession,” posing increasing risk to financial markets around the globe.
“What you have in China right now is a lot of overcapacity within the industrial sector,” Nash, Global Vice President of Delta Economics told Breitbart Executive Chairman Stephen K. Bannon. “China is clearly in an industrial recession and markets are simply catching up to that.”
Nash said the contraction in the market “is really catching up with some of the industrial recession China’s had in the last two or three years.”
Markets in the United States ended 2015 flat, with both the S&P 500 and the Dow Index down slightly for the year. Futures in the U.S. markets, though, suggested a big sell-off when trading resumes Monday for the new year.
Nash pointed out that since the Great Recession in 2007-2009, China had been seen as a source for economic growth to lift the world economy out of its trough. With China’s economy taking a recalibrating pause, at best, Nash said traders aren’t certain where future growth will appear.
“With the realization that there is an industrial recession in China,” Nash said, “the other shoe is dropping and people are saying ‘where is the demand coming from?'”
Nash noted that the risks in the market aren’t just coming from China, but also uncertainty and rising tensions in the Middle East.
Still, the realization that China is in a slowdown can’t be overstated. The risks to the global economy are certainly increasing, but, now, there doesn’t seem to be any longer any positive growth story to balance those risks.
“The other shoe is dropping,” unfortunately, is an expression that explains much of the geo-political, and economic, world today.
Hear the entire interview: