World View: Worldwide Economic Slump Deepens and Accelerates

This morning’s key headlines from GenerationalDynamics.com.

• Hong Kong’s growing hostility to mainland China evident from Hu Jintao’s visit
• NATO chief OKs Turkey’s military buildup on Syria’s border, amid military defections
• Russia’s foreign minister ‘delighted’ at failure of Syria crisis talks
• Eurozone unemployment climbs to record high
• Manufacturing activity falls as worldwide economic slump deepens
• China’s manufacturing indexes slip to seven-month lows
• ECB says Greece must fulfill austerity requirements ‘100 Percent’
• Finland and Netherlands will block bond bailout program

Hong Kong’s growing hostility to mainland China evident from Hu Jintao’s visit

As we reported yesterday, China’s president Hu Jintao visited Hong Kong on Sunday to celebrate the 15th anniversary of the handover of Hong Kong by Britain to China. Reports indicate that, far from being a happy celebration, the events sharpened the anger of Hong Kong residents against the mainland:

• A journalist tried to ask Hu a question about Tiananmen Square, and he was jailed, something that infuriated the journalist fraternity.
• Hu introduced Hong Kong’s new Chief Executive from the mainland, C.Y. Leung. Leung insulted many present by giving his inaugural address in Mandarin, the language of the mainland, rather than in Cantonese, which is the first language of more than 90 percent of Hong Kong’s people.
• Some 100,000 protesters joined a pro-democracy march from Victoria Park to the shoreline of Victoria Harbor. (These are, of course, British names.)
• Many of the protesters carried old British-era Hong Kong flags, which carry the British Union flag in one corner. It has become a symbol not so much of nostalgia for the British as a banner for those demanding real autonomy.
• There was a huge contingent of Falun Gong protesters. The Falun Gong sprang up in mainland China in the wake of the 1989 Tiananmen Square massacre, and had millions of adherents before Beijing crushed them. Since around 2000, anyone belonging to the Falun Gong on the mainland is subject to arrest and torture.
• A public opinion poll shows 64% of those polled thought that Hong Kong had become a worse place since the handover.

In China’s last generational crisis civil war, Mao’s Communist Revolution that climaxed in 1949, and those who were able to escape to Formosa (Taiwan) did so by passing through Hong Kong. It’s likely that Hong Kong will again play a pivotal role in China’s next crisis civil war. Asia Sentinel

NATO chief OKs Turkey’s military buildup on Syria’s border, amid military defections

NATO Secretary-General Anders Fogh Rasmussen said that he was not concerned that Turkey’s military buildup on the border with Syria would lead to a larger military confrontation. He said, “I find it quite normal that Turkey takes necessary steps to protect its population and its territory.” One of Turkey’s objectives in the military buildup is the protection of Syrians crossing the border into Turkey as refugees. In total, 293 Syrians fled across the border from Syria into Turkey on Monday. They included 85 Syrian military officers, including one general, one colonel, and other officers who fled with their families on Monday night. There are now more than 35,000 Syrian refugees living in camps on the Turkish side of their border. Zaman (Istanbul) and Zaman

Russia’s foreign minister ‘delighted’ at failure of Syria crisis talks

Saturday’s international meeting on the crisis in Syria was a total failure, as we reported two days ago. But Russia’s Foreign Minister Sergei Lavrov says that he’s “delighted” at the outcome of the crisis talks, because it accomplished nothing, and was a complete waste of time. Day-Press News (Syria)

Eurozone unemployment climbs to record high

The 17-nation eurozone is continuing its fiscal crisis and deflationary spiral, as the jobless rate rose to 11.1% in May, the highest since 1995, when they first began tracking it. Spain’s unemployment rate rose to 24.6%. Bloomberg

Manufacturing activity falls as worldwide economic slump deepens

Manufacturing activity in June shrank for the first time in three years, with new orders particularly hard hit. Manufacturing activity in Europe and China is falling as well, with the second quarter being the worst for the eurozone in three years. Market Watch

China’s manufacturing indexes slip to seven-month lows

China, the worlds biggest exporter, showed the steepest decline in overseas orders since the global financial crisis of several years ago. At the same time, South Korea cut its estimate for exports, underscoring the deepening slump throughout Asia. The U.S., Europe and China are now locked together in a downward spiral, as slowdowns in each region feed into slowdowns in other regions. Political pressure is growing for more “money printing” in all three regions, but it may be, by the Law of Diminishing Returns, that new stimulus measures will have little or no effect. Generational Dynamics predicts that, at some point, this recessionary plunge will trigger a full-scale panic and major global crisis. Bloomberg

ECB says Greece must fulfill austerity requirements ‘100 Percent’

Joerg Asmusse of the executive board of the European Central Bank (ECB) says that Greece must fulfill the targets of its austerity and reform program “100 percent” to stay in the eurozone. Greek officials had hoped to get some relief from the austerity measures, but this statement appears to slam the door. He added that Greece wouldn’t even be given more time to comply, saying that any extension would lead to a need for more external financial help — “that means that the other 16 eurozone states and the IMF would then have to provide more financing.” AP

Finland and Netherlands will block bond bailout program

Part of last week’s eurozone financial agreement was to allow the European Central Bank and bailout fund purchase bonds from Spain and Italy on the open market, in order to push down the yields (interest rates). The lower interest rates would allow Spain and Italy to go deeper into debt. However, under the eurozone treaties, those bond purchases would require unanimous consent of all 17 euro countries. Finland has announced it will block the bond purchases, and the Netherlands has indicated that it might block them as well. Reuters