Barton Biggs: Head for the Hills!

Conspirator
User avatar
Posts: 2203
Joined: Mon Oct 13, 2008 12:33 am
Location: Earth

PostFri Aug 27, 2010 8:13 am » by Reinaul


Snapshot of economy about to get a lot bleaker
Government likely to confirm what many already know: the economy is on life support

WASHINGTON (AP) -- The government is about to confirm what many people have felt for some time: The economy barely has a pulse.

The Commerce Department on Friday will revise its estimate for economic growth in the April-to-June period and Wall Street economists forecast it will be cut almost in half, to a 1.4 percent annual rate from 2.4 percent.

That's a sharp slowdown from the first quarter, when the economy grew at a 3.7 percent annual rate, and economists say it's a taste of the weakness to come. The current quarter isn't expected to be much better, with many economists forecasting growth of only 1.7 percent.

Such slow growth won't feel much like an economic recovery and won't lead to much hiring. The unemployment rate, now at 9.5 percent, could even rise by the end of the year.

"The economy is going to limp along for the next few months," said Gus Faucher, an economist at Moody's Analytics. There's even a one in three chance it could slip back into recession, he said.

Many temporary factors that boosted the economy earlier this year are fading. Companies built up their inventories after cutting them sharply in the recession to match slower sales. The increase provided a boost to manufacturers, but now many companies' stockpiles are in line with sales and don't need to grow as much.

In addition, the impact of the government's $862 billion fiscal stimulus program is lessening.

That leaves the private sector to pick up the slack. But businesses are cutting back on their spending on machines, computers and software, according to a government report earlier this week. And the housing sector is slumping again after a popular home buyer's tax credit expired in April.

"What we're seeing is that the hand-off to the private sector is not looking as robust as we had previously hoped," said Ben Herzon, an economist at Macroeconomic Advisors.

Many analysts say the uncertainty surrounding the economy is holding back consumers from spending and companies from investing and hiring.

Consumers can't be sure their jobs are safe, with unemployment so high. Business executives don't know if sales and profits will grow enough to justify adding jobs. And potential changes to tax laws at the end of this year and other policy reforms also make it hard to plan ahead, economists say.

"People have been overwhelmed by uncertainty," said Ethan Harris, an economist at Bank of America Merrill Lynch.

A big reason the government will mark down its estimate of last quarter's gross domestic product is that imports surged much more in June than expected. GDP is the broadest measure of the economy's output and covers everything from auto production to haircuts.

Imports rose by 3 percent to just over $200 billion in June, while exports fell to $150.5 billion, pushing the trade gap to almost $50 billion, the biggest in nearly two years. Friday's report may show that the higher imports knocked as much as 3 percentage points off second quarter growth, economists at Goldman Sachs estimate.

But trade isn't likely to be as big a drag in the current quarter. With businesses slowing their spending on inventories and capital equipment, imports are likely to slow.

Housing, which added to the economy's growth in the second quarter, is now likely dragging it down. The homebuyer's tax credit boosted home sales in the spring, raising real estate brokers' commissions.

But home sales fell sharply in July, and new home construction also declined. That will weigh on economic growth this quarter, but its impact won't be as bad as earlier in the recession. That's because housing has shrunk so sharply.

It made up more than 6 percent of the economy at the height of the boom in 2005, but now accounts for only 2.5 percent.

High unemployment is making it harder for people to make their mortgage payments and stay in their homes.

About 9.9 percent of homeowners had missed at least one mortgage payment as of June 30, the Mortgage Bankers Association said Thursday. That number, adjusted for seasonal factors, was close to a record high of more than 10 percent at the end of April.

Friday's report is the second of three estimates the government issues for each quarter's GDP.

http://finance.yahoo.com/news/Snapshot- ... 1.html?x=0
“The important thing is not to stop questioning.”
-Albert Einstein

Be Your Own Messiah

Conspirator
User avatar
Posts: 2203
Joined: Mon Oct 13, 2008 12:33 am
Location: Earth

PostFri Aug 27, 2010 8:17 am » by Reinaul


This Is Not a Recovery
By PAUL KRUGMAN
Published: August 26, 2010



What will Ben Bernanke, the Fed chairman, say in his big speech Friday in Jackson Hole, Wyo.? Will he hint at new steps to boost the economy? Stay tuned.

But we can safely predict what he and other officials will say about where we are right now: that the economy is continuing to recover, albeit more slowly than they would like. Unfortunately, that’s not true: this isn’t a recovery, in any sense that matters. And policy makers should be doing everything they can to change that fact.

The small sliver of truth in claims of continuing recovery is the fact that G.D.P. is still rising: we’re not in a classic recession, in which everything goes down. But so what?

The important question is whether growth is fast enough to bring down sky-high unemployment. We need about 2.5 percent growth just to keep unemployment from rising, and much faster growth to bring it significantly down. Yet growth is currently running somewhere between 1 and 2 percent, with a good chance that it will slow even further in the months ahead. Will the economy actually enter a double dip, with G.D.P. shrinking? Who cares? If unemployment rises for the rest of this year, which seems likely, it won’t matter whether the G.D.P. numbers are slightly positive or slightly negative.

All of this is obvious. Yet policy makers are in denial.

After its last monetary policy meeting, the Fed released a statement declaring that it “anticipates a gradual return to higher levels of resource utilization” — Fedspeak for falling unemployment. Nothing in the data supports that kind of optimism. Meanwhile, Tim Geithner, the Treasury secretary, says that “we’re on the road to recovery.” No, we aren’t.

Why are people who know better sugar-coating economic reality? The answer, I’m sorry to say, is that it’s all about evading responsibility.

In the case of the Fed, admitting that the economy isn’t recovering would put the institution under pressure to do more. And so far, at least, the Fed seems more afraid of the possible loss of face if it tries to help the economy and fails than it is of the costs to the American people if it does nothing, and settles for a recovery that isn’t.

In the case of the Obama administration, officials seem loath to admit that the original stimulus was too small. True, it was enough to limit the depth of the slump — a recent analysis by the Congressional Budget Office says unemployment would probably be well into double digits now without the stimulus — but it wasn’t big enough to bring unemployment down significantly.

Now, it’s arguable that even in early 2009, when President Obama was at the peak of his popularity, he couldn’t have gotten a bigger plan through the Senate. And he certainly couldn’t pass a supplemental stimulus now. So officials could, with considerable justification, place the onus for the non-recovery on Republican obstructionism. But they’ve chosen, instead, to draw smiley faces on a grim picture, convincing nobody. And the likely result in November — big gains for the obstructionists — will paralyze policy for years to come.

So what should officials be doing, aside from telling the truth about the economy?

The Fed has a number of options. It can buy more long-term and private debt; it can push down long-term interest rates by announcing its intention to keep short-term rates low; it can raise its medium-term target for inflation, making it less attractive for businesses to simply sit on their cash. Nobody can be sure how well these measures would work, but it’s better to try something that might not work than to make excuses while workers suffer.

The administration has less freedom of action, since it can’t get legislation past the Republican blockade. But it still has options. It can revamp its deeply unsuccessful attempt to aid troubled homeowners. It can use Fannie Mae and Freddie Mac, the government-sponsored lenders, to engineer mortgage refinancing that puts money in the hands of American families — yes, Republicans will howl, but they’re doing that anyway. It can finally get serious about confronting China over its currency manipulation: how many times do the Chinese have to promise to change their policies, then renege, before the administration decides that it’s time to act?

Which of these options should policy makers pursue? If I had my way, all of them.

I know what some players both at the Fed and in the administration will say: they’ll warn about the risks of doing anything unconventional. But we’ve already seen the consequences of playing it safe, and waiting for recovery to happen all by itself: it’s landed us in what looks increasingly like a permanent state of stagnation and high unemployment. It’s time to admit that what we have now isn’t a recovery, and do whatever we can to change that situation.

http://www.nytimes.com/2010/08/27/opini ... yt&emc=rss
“The important thing is not to stop questioning.”
-Albert Einstein

Be Your Own Messiah

Master Conspirator
User avatar
Posts: 10861
Joined: Thu Sep 03, 2009 12:36 am

PostFri Aug 27, 2010 10:58 am » by Lowsix


Yeah Reinaul, watch americas markets tomorrow.
Seriously if it takes a hard hit into 9000 tomorrow,
that will be the scramble signal.

Theyre predicting BOND market defaults.
Which means that the last bastion of safety
where everyone tossed their money to keep
it out of the market, doesnt have the meney to
pay back all of these low interest short term bonds.

And thats gonna scare the fuck out of china and japan
because they are all invested to the hilt in them..

ugh..good grief..

man they seriously sold us down the river
to avoid the short term sharp pain,
for a long term catastrophic pain..

I never understood the shit....

Ron Paul was right, shoulda taken the hit upfront.



Several calm guys, are saying 5000...

that's bad.
Image
warløckmitbladderinfection wrote:blasphemous new gehenna inhabitant makes god sad...

Conspirator
User avatar
Posts: 4805
Joined: Sat Jan 09, 2010 4:27 am

PostFri Aug 27, 2010 6:02 pm » by sockpuppet


lowsix wrote:ugh..good grief..

man they seriously sold us down the river
to avoid the short term sharp pain,
for a long term catastrophic pain..

I never understood the shit....

Ron Paul was right, shoulda taken the hit upfront.




Yep! It happens all the time; greedy people fear for their money invested in failing sectors whose futures should be left to the Market to decide (not men in ties), so they beg for the men in ties to change the rules in order to prop up redundant, useless, poorly-managed or exploitive companies that not only protect the greedy men's money, but help use it to steal everyone else's.

Round and round it goes.
Skype: nnboogies
http://www.youtube.com/watch?v=ouyVS6HOFeo


Previous

  • Related topics
    Replies
    Views
    Last post
Visit Disclose.tv on Facebook