A few days back The OECD A Bureaucratic Organization You Should Know posted its yearly Outlook designed to keep bureaucrats in their jobs. You can read the entire thingy searching for "OECD Economic Outlook - Moving forward in difficult times". However, we would recommend you so only if you can't sleep and heavy sedation is not working. But you don't actually have to. Luckily enough there is sort of an executive summary which will serve us well. However, to make it understandable, we will add our translation. To task.
The OECD says:
Global growth prospects have clouded this year.
Translation: we don’t have a clue what's going on.
A further sharp slowdown in emerging market economies (EMEs) is weighing on global activity and trade
Translation: poor countries are progressively screwed which makes it difficult to sell them trinkets manufactured in rich countries.
…subdued investment and productivity growth is checking the momentum of the recovery in the advanced economies.
Translation: the increased investment and production that we forecasted in previous years is not happening. This is affecting the theoretical recovery that we also forecasted previous years. But just because our forecasts are not worth the paper they are printed on, it is not our fault! Let's blame it on the "subdued" economic activity. Yeah… that one!
Supportive macroeconomic policies and lower commodity prices are projected to strengthen global growth gradually through 2016 and 2017, but this outcome is far from certain given rising downside risks and vulnerabilities, and uncertainties about the path of policies and the response of trade and investment.
Translation: governments will begin to borrow and spend like crazy and this should "reactivate" economies. As a consequence of this mindless spending and because raw materials are cheap, this will make it possible for rich countries to buy cheap and manufacture trinkets to sell to poor countries. Don't worry, be happy. But let's not get ahead of ourselves. As this forecast is worth less than a fart in a wire basket during hurricane season in the Atlantic while undergoing a tsunami, we need to CYA (Cover-Your-Ass). Thus, we will hedge by saying that eeeeeeverything is going to be just fine unless people decide not to borrow up to their eyebrows as government propaganda mills will so strongly "suggest". There. Mission accomplished.
The outlook for the EMEs is a key source of global uncertainty at present, given their large contribution to global trade and GDP growth.
Translation: poor countries are currently screwed and we don't have a clue what will happen in the future.
In China, ensuring a smooth rebalancing of the economy, whilst avoiding a sharp reduction in GDP growth and containing financial stability risks, presents challenges. A more significant slowdown in Chinese domestic demand could hit financial market confidence and the growth prospects of many economies, including the advanced economies.
Translation: China is in deep doo-doo. They are trying to switch from an export-oriented economy (which in the medium to long term does not work i.e. Mercantilism) into an internal-market oriented economy which is more stable. Problem is, as money is coming from exports and Chinese people are not that rich, switching will decrease profits and with it wealth. This will drop the general economic activity and pop many gigantic bubbles that fiat money printing created, not the least the stock market bubble and the real estate bubble (yes, they also have those in China). Thus as we don't have a clue what will happen, it will make us look very intelligent and wise if we hedge our forecast by saying that if China goes down the toilet so will the world. There. See? Forecasting is not all that difficult!
For EMEs more broadly, challenges have increased, reflecting weaker commodity prices, tighter credit conditions and lower potential output growth, with the risk that capital outflows and sharp currency depreciations may expose financial vulnerabilities.
Translation: poor countries are down the toilet. Prices of raw materials have dropped. Interest rates are high (in large part due to inflation -printing- and uncertainties). Because of this, anybody in their right mind would not increase manufacturing because people simply won't buy. To make things even more interesting, people will not only cease investing in poor countries, but they will take their money and run fulfilling the first rule of investment: when investing, make sure of the Return Of Your Investment before considering the Return On Investment. Because of this, interest rates will go even higher. But in order to combat this anti-social behaviour, governments will step in and depreciate the currency so that people can export more which will lead to financial catastrophes (see Currency Wars II). Perhaps. Maybe. Yeah… definitively maybe!
Growth would also be hit in the euro area, as well as Japan, where the short-run impact of past stimulus has proved weaker than anticipated and uncertainty remains about future policy choices.
Translation: Standard monetary mumbo-jumbo and voodoo "economic" measures pushed by Central Banks (i.e. printing, borrowing, QE, negative interest rates and so on) are not working. Darn! And we were so hopping that Keynesianism will bail us out. Passing this point we don't have a clue what else we can do and thus we will pass the buck back to them thus washing our hands from this forecast. After all, it isn't as if we are writing an economic forecast, is it? Oh… wait…
There are increasing signs that the anticipated path of potential output may fail to materialise in many economies, requiring a reassessment of monetary and fiscal policy
Translation: all the data we have indicates that our previous forecasts were also up there with astrology, tea leaves reading and squirrel entrails glancing. Darn! And we so hoped that this time our methods would work. Nevermind. Let's forecast that our theoretical economic improvement will most likely go down the drain but never-you-mind because new economic strategies will have to be created by Central Banks. And, oh, let's forget what we just said in the previous paragraph that we don't have a clue what else can be done. Yeah… That sounds about right. Oh… and let's pass the buck to governments with this thingy about "reassessing"… "strategies"… yeah… lets. After all, they don't actually pay us to come up with actual, working economic solutions, do they?
The risk of such an outcome underlines the importance of implementing productivity-raising structural policies, alongside measures to reduce persisting negative supply effects from past demand weakness in labour markets and capital investment, whilst ensuring that macroeconomic policies continue to support growth and stability.
Translation: Do something! Yes! You! We are telling you that you must increase productivity, increase supply, increase purchases, decrease unemployment and increase investment while ensuring stable economic growth. There. So simple and you are not doing anything about it. How dare you? And while you are at it, don't forget our order or cafe latte macchiato with goat whipped cream and a twist of organic orange peel. Geeeezzzzz… do we have to tell you what to do all the time? Get on with it, will you? What? You are all tapped out of ideas and taxing, borrowing and printing does not work any longer? So what? Not our problem. We are in the business of forecasting, not in the business of solving problems. Geeeezzzz… what a tool!
Early and decisive actions to spur reductions in greenhouse gas emissions via predictable paths of policy including tax reforms, or public investment programmes, or action on research and development might also help to support short-term growth and improve longer-term prospects,
Translation: OK. OK. If you really insist we will tell you what to do. Reduce greenhouse emissions, increase taxes, borrow, print and spend in "public works" and/or "research". You know, the socialist way. You must "stimulate" the economy. People need to be told what to do. There. Simple right? The fact that this is all bogus and does not work is a vicious rumor. If you don't believe us just look at how prosperous the USSR is. Oh… wait…
CONCLUSION
The OECD has come up with yet another meaningless, useless, pointless Outlook. Yes, the document may be meaningless, useless and pointless but it darn sure ensures that OECD employees, those tireless economic wizards that brought you so much wealth and prosperity, retain their well-deserved jobs. All the 311 pages of it. Mission accomplished. You are screwed (economically speaking) but you should be happy because the OECD forecast forecasts that eeeeeeverything is going to be just OK. Mabye. Perhaps. If the prevailing winds are with us and our cat does not get a cold.
But then again there are all sorts of points of view in life. And perhaps you enjoy masochism and "light" reading. Fair enough. Give the OECD a read. Store it. Keep it. Re-read it a year from now. Compare it to reality and then tell us that we are exaggerating. And no. When that time comes, you are not allowed to take antidepressants. Fair is fair. You must suffer with the rest of us.
Note: please see the Glossary if you are unfamiliar with certain words.
