ACCELERATING DOWNHILL

Why China and Germany need to do more to boost demand? EVERYONE knows that the financial system took a downward dive in mid-September. The failure of Lehman Brothers turned the rich worlds credit crunch into a global calamity, as the international banking system came close to collapse and even the most basic functions of finance, such as trade credit, seized up. To stop this financial breakdown sending the world economy into a tailspin, politicians scrambled with bank rescue packages and promises of fiscal stimulus.

Unfortunately, it seems increasingly clear that they failed. Just as the financial crisis went global at the end of 2008, so large chunks of the world economy went into free-fall. Industry is in grave trouble. Around the world factory output is plunging at its fastest pace in decades as the consequences of slumping demand have rattled along the supply chain. In the three months to November American industrial production fell at an annualized rate of 16% compared with the three months before. Over the same period Japans fell by 21% and Germanys by 15%. Some emerging economies have done even worse. South Koreas factory output fell at an annualised rate of 25% in the three months to November, about as fast as in its financial crisis a decade ago.
GLOSSARY

Chunk = a roughly cut piece Downward = moving towards a lower position Failure = when someone or something does not succeed Output = an amount of something produced by a person, machine, factory, country,etc

Supply chain = the system of people and things that are involved in getting a product from the place where it is made to the person who buys it Tailspin = when something starts to fail or lose value and gets more and more out of control, when a plane turns round and round as it falls quickly towards the ground To boost = to improve or increase something (for more similar verbs, see Table 1)

To plunge = when someone or something does not succeed To rattle = to worry someone