Sign of the times

I saw this sign in Tsim Sha Tsui (TST). It's an area of Hong Kong with shopping and lots of Indian watch sellers (no joke). Every block there's some guy asking whether I need a fake timex, rolex, tag heuer or Armani suit. Just in case you can't read it, the sign says "Global Recession, Crazy Sale, Up to 80% off".

For the non-economists (most my finance/economist friends know this already), the crisis has definitely hit Asia pretty hard. I guess all those people who thought East Asia would not be affected by the crisis were wrong. The Chinese government says that due to the size of China, China needs to grow above 8% in order to maintain positive growth (as in still being able to pull Chinese citizens out of poverty). 8% seems a little high for me. Regardless, most economists do not see that happening this year, even with China's attempts at curbing the loss of manufacturing jobs with public works spending.

I think if China's economy was in a later stage of development (maybe 20 years from now), with a strong level of domestic demand for goods and services similar to the United States (which will happen soon although China's marginal propensity to save will naturally be higher than the US), this global contagion would not have hit Asia too hard. As an export led industry focused on US consumption, most Asian countries are getting hit really hard. In Japan alone, exports are down 45%. Korea, China and all Asian countries are in a similar shape.

Like I wrote a few weeks ago, it's easy to divert to economic nationalism when things go south. However, if we see higher trade barriers in countries, the short answer is this global recession will be prolonged. This flat world could soon be rigid once again.

As for me, I'm looking forward to riding out this severe L-shaped recession in law school. It's probably the best time to go to school (if you have ever thought about going back and your job is insecure, I'd throw a few applications out). I can probably name 12 of my friends who are unemployed and actively seeking a job. There is just nothing available.

The 20-30 somethings are getting hit the hardest, which is natural when you think about it. I mean, if the totem pole needs to be shortened, most likely you start from the ugly bottom, not the intricate top where all the intellectual experience-capital is.

However riding out the recession in school is a double-edged sword too. For me, application rates to law schools are at the highest rates in decades. More applications means more competitive applicants, which means I'm pretty "f - ed." It's just plain harder to get into a good law school now than at any point in the last 30 years. And most analysts have raw data to back that statement up. It's something to think about, and it's definitely really frustrating.