, 11 tweets, 6 min read Read on Twitter
Some argue that the #US economy could decouple from the steepening downturn in the global #economy . This is a serious misconception.

The fact is that, for the first time since the early 1900s, the US has not been the most influential player in the global business cycle. 1/
When the global financial crash reverberated through the global economy in late 2008, the Chinese leaders enacted stimulus that would break all records.

The idea, most likely, was to carry the Chinese economy through the slump of the global economy, but the slump never ended. 2/
The bank bailouts of 2008 combined with zero-interest and quantitative easing policies by the central banks forced the business cycle into expansion mode prematurely. Unprofitable banks and firms were kept operating, and the global economy “zombified”. 3/
gnseconomics.com/en_US/2019/03/…
In late 2014 and early 2015, China tried to unwind the stimulus programs. But the weak global economy could not provide the needed support.

The Chinese housing market and global trade started to fall, and industrial production started to decline across the globe. 4/
In the US, the index of industrial production fell by more than six percentage points in just four months (from November 2015 to March 2016) erasing gains for the previous 17 months. The GDP growth nearly stagnated for three quarters. 5/
Frightened by the prospects of a recession (and the social and political uncertainties a recession would entail) the Chinese leadership enacted another vast stimulus program, this time through the “shadow banking” sector.

Its size triple in just during one year (2016). 6/
The stimulus in China has focused mostly on infrastructure investments and banks pushing cheap credit to the #economy. This has led the Chinese debt-to-GDP ratio to an utterly unsustainable trajectory and made its forced investments increasingly unproductive. 7/
For the #US, this implies four things.

First, the current stock market boom has no solid basis, but it will falter after the #China stimulus recedes, which may already be occurring. 8/
Second, because the #FederalReserve has few stimulus options left, and because the global economy is now driven by China, it will be impotent in the face of global recession.

Third, the #tradewar can only change the timing of the #recession , not it's outcome. 9/
Fourth, recession is likely to morph into a global depression.

So, this time around, it will truly be different for the US #economy .

#Recession is coming. 10/10
@SaraEisen @carlquintanilla @DiMartinoBooth @educofin
gnseconomics.com/en_US/2019/03/…
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