Europe is not alone in its economic despair

The economic cornerstones, the US, the European Union and Asia, historically enjoyed economic development that was not completely in sync. We always spoke of the “economic locomotive” of one pulling the laggard(s) out of recession and back on to the tracks of solid GDP growth. There were some exceptions where all showed signs of weakness, but not many.

Then along came globalisation and something went awry.

Economic commentators continued to look for the locomotives during the first decade of the 21^st century and spoke of coupling and de-coupling of the various economies but things had changed. The world had changed dramatically with the result that regional economies were now more integrated with each other and subsequently more dependent on others for their economic well-being.

Neither the American nor the German locomotive had the traction to pull anyone else along, they were struggling with their own issues. China was never a real locomotive in global terms as it depended on exports; at best it pulled the rest of Asia along.

Globalisation shifted both consumer goods production and financial institutions to a global playing field. If one economy faltered, the rest went to their knees. We saw this in 2009 and we are seeing it again in 2012. The economic cycle seems to be shorter.

Europe, with its austerity measures, high sovereign debt, financial disarray, high unemployment and lack of political cohesiveness is in serious trouble with no growth expected this year or next.

The US is growing but at a much reduced rate to what had been expected, and now both China and India are heading into a crisis mode. Domestic growth has stalled, exports have collapsed and stimulus measures are not working. Both imports and exports are declining thereby impacting the rest of Asia.

The consumer, the measuring rod for the West, is hunkering down so expect to see traffic volumes continuing to decline.

Seems to me that the problem goes deeper than the locomotives: it’s the tracks that need fixing.