PMIs for Asia show a widening weakness; China is pulling the whole area down now. Markit PMI China.  The May final number was 48.4, a drop from April. Chinese manufacturers are slowly shedding jobs. We know that auto inventories seem to be rising past the consumption rate, and other Chinese data confirm that the Chinese economy moved into what would be called contraction in any other economy about February. Taiwan and South Korea are being impacted now. Lower rates of industrial production in Japan are somewhat related to the Chinese slowdown.

India's economy is slowing, but manufacturing looks much better. Far Asia now is probably dominated by the weakness of two industrial giants - Japan and China. The problems there were producing some shift to the mid-Asian economies like Thailand and Malaysia, but that may now have stopped - Indonesian PMI came in at a disappointing 48.1. 

The European region is in a state of such weakness that it will exaggerate the problems in the Far East. The final European manufacturing PMI came in at 45.1. Not a typo. It's now very widely based - see for example the Czech collapse to 47.6, which is not surprising given that Germany splatted against the wall at 45.2, which of course means that the legs were kicked out from under Poland, which contracted at 48.9.

Now on the consumer side in Europe, stuff like Italy's retail collapse is baked in. Germany's retail picture is one of the best in Europe, but look at the graph. This is pretty soggy saggy best-in-region stuff. France reminds us that Germany is comparatively much better, because France is in the pits! Euro retail PMI in May was at 43.3, which of course is going to push a wave of weakness right through the Asian economies.

There's no place to generate demand growth. The only thing that can do it is a sustained drop in real prices which will raise real incomes. The economies showing relative strength are slowly being pulled down by these waves of weakness sloshing back and forth across the economic oceans of the world. The economies showing the most weakness are due to be hit by additional incoming demand bombs.

It's gone. It's over. Further, it's highly doubtful that governments can come up with the money to refund it, and the Chinese government is saying it won't.