It's BAD, it's STILL very bad REPRISE thread (13 months on)
Discussion
I think i prefer my job, to making sandals - thanks all the same!
my company is doing very well, i dont pay too much tax, prices havent shot up, my rent is reasonable and interest rates are still pretty low.
Banks are still paying bonuses, people are still buying goods, and the low pound is good for exports.
Government debt could get nasty, but that all depends if banks and China stops giving us the benefit of the doubt on bonds. And it really isnt in there interest to do so.
I think we'll carry on much the same.
my company is doing very well, i dont pay too much tax, prices havent shot up, my rent is reasonable and interest rates are still pretty low.
Banks are still paying bonuses, people are still buying goods, and the low pound is good for exports.
Government debt could get nasty, but that all depends if banks and China stops giving us the benefit of the doubt on bonds. And it really isnt in there interest to do so.
I think we'll carry on much the same.
Wadeski said:
I think i prefer my job, to making sandals - thanks all the same!
my company is doing very well, i dont pay too much tax, prices havent shot up, my rent is reasonable and interest rates are still pretty low.
Banks are still paying bonuses, people are still buying goods, and the low pound is good for exports.
Government debt could get nasty, but that all depends if banks and China stops giving us the benefit of the doubt on bonds. And it really isnt in there interest to do so.
I think we'll carry on much the same.
Are you Egyptian?my company is doing very well, i dont pay too much tax, prices havent shot up, my rent is reasonable and interest rates are still pretty low.
Banks are still paying bonuses, people are still buying goods, and the low pound is good for exports.
Government debt could get nasty, but that all depends if banks and China stops giving us the benefit of the doubt on bonds. And it really isnt in there interest to do so.
I think we'll carry on much the same.
Bing o said:
Wadeski said:
I think i prefer my job, to making sandals - thanks all the same!
my company is doing very well, i dont pay too much tax, prices havent shot up, my rent is reasonable and interest rates are still pretty low.
Banks are still paying bonuses, people are still buying goods, and the low pound is good for exports.
Government debt could get nasty, but that all depends if banks and China stops giving us the benefit of the doubt on bonds. And it really isnt in there interest to do so.
I think we'll carry on much the same.
Are you Egyptian?my company is doing very well, i dont pay too much tax, prices havent shot up, my rent is reasonable and interest rates are still pretty low.
Banks are still paying bonuses, people are still buying goods, and the low pound is good for exports.
Government debt could get nasty, but that all depends if banks and China stops giving us the benefit of the doubt on bonds. And it really isnt in there interest to do so.
I think we'll carry on much the same.
http://www.moneyweek.com/news-and-charts/economics...
You are going to start paying more tax, getting far less services, paying more rent as interest rate rise to meet the demands of the bond vigilantes, the low pound is the value of your savings being destoryed and your costs rising due to inflation.
Some jolly thoughts on EU money printing.
http://www.zerohedge.com/article/summary-biggest-b...
I particularly like this bit :-
http://www.zerohedge.com/article/summary-biggest-b...
I particularly like this bit :-
zerohedge said:
The race to the currency devaluation bottom is now in its final lap. And gold is the only alternative to the now imminent collapse of the fiat system: the world had a chance to take writedowns on losses, punish those who took risk and failed, and refused to do so. There is now no risk left, but it only means that eventually all the risk will come back and lead all capital markets to zero. The result will be the end of Keynesian economics as we know it.
RichardD said:
Some jolly thoughts on EU money printing.
http://www.zerohedge.com/article/summary-biggest-b...
I particularly like this bit :-
Well at least a few dead Austrians will be happy.http://www.zerohedge.com/article/summary-biggest-b...
I particularly like this bit :-
zerohedge said:
The race to the currency devaluation bottom is now in its final lap. And gold is the only alternative to the now imminent collapse of the fiat system: the world had a chance to take writedowns on losses, punish those who took risk and failed, and refused to do so. There is now no risk left, but it only means that eventually all the risk will come back and lead all capital markets to zero. The result will be the end of Keynesian economics as we know it.
Fittster said:
...as interest rate rise to meet the demands of the bond vigilantes, the low pound is the value of your savings being destoryed and your costs rising due to inflation.
A thought, if the Fed, ECB, BofE and BofJ all organise a balanced smallish scale money printing exercise to pay the interest on the debt is it possible to bypass the bond markets / vigilantes? In effect a big state run money pyramid scheme
Adam Posen, a member of the Bank's Monetary Policy Committee, said that although Britain and the US were unlikely to face repeated recessions, in many senses their plight was "scarier" than Japan's. The warning is of particular significance because Mr Posen - an American economist - was recruited to the MPC partly because he is a renowned Japan expert.
In speech at the London School of Economics, he said: "The UK worryingly combines a couple of financial parallels to Japan with far less room for fiscal action to compensate for them than Japan had."
Britain faces an uncomfortable trio of obstacles, none of which faced Japan in the 1980s or 1990s. Unlike Japan, Britain has to sell a large proportion of its debt to overseas investors, who are more likely to exit the market if they become scared of Britain's fiscal prospects. The UK also faces the challenge of having to boost a troubled manufacturing sector if it is to recover sufficiently. Unlike Japan, it does not have the luxury of having a worldwide market with a large and growing appetite for exports.
He also warned that the banking system's continued troubles would undermine companies' abilities to raise funds, and pointed out that businesses already appeared to be hoarding savings - something which happened in Japan.
Using a film analogy, Mr Posen said that it was possible that there could be UK "remake" of the Japanese episode.
"Unfortunately, the ironic twist for this upcoming film is that in some ways the remake might be scarier than the original. That risk arises not only because the original Great Recession was not quite so scary as previously thought on close viewing, but because Japan actually had various resources with which to manage its situation while the UK and other economies are not similarly endowed.
http://www.telegraph.co.uk/finance/financetopics/f...
In speech at the London School of Economics, he said: "The UK worryingly combines a couple of financial parallels to Japan with far less room for fiscal action to compensate for them than Japan had."
Britain faces an uncomfortable trio of obstacles, none of which faced Japan in the 1980s or 1990s. Unlike Japan, Britain has to sell a large proportion of its debt to overseas investors, who are more likely to exit the market if they become scared of Britain's fiscal prospects. The UK also faces the challenge of having to boost a troubled manufacturing sector if it is to recover sufficiently. Unlike Japan, it does not have the luxury of having a worldwide market with a large and growing appetite for exports.
He also warned that the banking system's continued troubles would undermine companies' abilities to raise funds, and pointed out that businesses already appeared to be hoarding savings - something which happened in Japan.
Using a film analogy, Mr Posen said that it was possible that there could be UK "remake" of the Japanese episode.
"Unfortunately, the ironic twist for this upcoming film is that in some ways the remake might be scarier than the original. That risk arises not only because the original Great Recession was not quite so scary as previously thought on close viewing, but because Japan actually had various resources with which to manage its situation while the UK and other economies are not similarly endowed.
http://www.telegraph.co.uk/finance/financetopics/f...
Fittster said:
Bing o said:
Wadeski said:
I think i prefer my job, to making sandals - thanks all the same!
my company is doing very well, i dont pay too much tax, prices havent shot up, my rent is reasonable and interest rates are still pretty low.
Banks are still paying bonuses, people are still buying goods, and the low pound is good for exports.
Government debt could get nasty, but that all depends if banks and China stops giving us the benefit of the doubt on bonds. And it really isnt in there interest to do so.
I think we'll carry on much the same.
Are you Egyptian?my company is doing very well, i dont pay too much tax, prices havent shot up, my rent is reasonable and interest rates are still pretty low.
Banks are still paying bonuses, people are still buying goods, and the low pound is good for exports.
Government debt could get nasty, but that all depends if banks and China stops giving us the benefit of the doubt on bonds. And it really isnt in there interest to do so.
I think we'll carry on much the same.
http://www.moneyweek.com/news-and-charts/economics...
You are going to start paying more tax, getting far less services, paying more rent as interest rate rise to meet the demands of the bond vigilantes, the low pound is the value of your savings being destoryed and your costs rising due to inflation.
Money printy printy going on in Europe?
ECB injects €10bn into debt market
http://www.ft.com/cms/s/0/38dadb50-6796-11df-a932-...
ECB injects €10bn into debt market
http://www.ft.com/cms/s/0/38dadb50-6796-11df-a932-...
FT said:
With a combined €2,400bn in the outstanding government debt of Portugal, Greece, Spain, Italy and Ireland, the ECB may have to buy up to €600bn, investors say.
Hmm, the Keynesians are running low on ammo and the baddies keep coming!
"Federal Reserve chairman Ben Bernanke is waging an epochal battle behind the scenes for control of US monetary policy, struggling to overcome resistance from regional Fed hawks for further possible stimulus to prevent a deflationary spiral.
Fed watchers say Mr Bernanke and his close allies at the Board in Washington are worried by signs that the US recovery is running out of steam. The ECRI leading indicator published by the Economic Cycle Research Institute has collapsed to a 45-week low of -5.7 in the most precipitous slide for half a century. Such a reading typically portends contraction within three months or so.
Key members of the five-man Board are quietly mulling a fresh burst of asset purchases, if necessary by pushing the Fed's balance sheet from $2.4 trillion (£1.6 trillion) to uncharted levels of $5 trillion. But they are certain to face intense scepticism from regional hardliners. The dispute has echoes of the early 1930s when the Chicago Fed stymied rescue efforts.
"We're heading towards a double-dip recession," said Chris Whalen, a former Fed official and now head of Institutional Risk Analystics. "The party is over from fiscal support. These hard-money men are fighting the last war: they don't recognise that money velocity has slowed and we are going into deflation. The only default option left is to crank up the printing presses again."
Mr Bernanke is so worried about the chemistry of the Fed's voting body – the Federal Open Market Committee (FOMC) – that he has persuaded vice-chairman Don Kohn to delay retirement until Janet Yellen has been confirmed by the Senate to take over his post. Mr Kohn has been a key architect of the Fed's emergency policies. He was due to step down this week after 40 years at the institution, depriving Mr Bernanke of a formidable ally in policy circles.
The Fed's statement this week shows growing doubts about the health of the recovery. Growth is no longer "strengthening": it is "proceeding". Financial conditions are now "less supportive" due to Europe's debt crisis.
The subtle tweaks in language have been enough to set bond markets alight. The yield on 10-year Treasuries has fallen to 3.08pc, the lowest since the gloom of April 2009. Futures contracts have ruled out tightening until well into next year.
Yet the statement may understate the level of angst at the Board. New home sales crashed 33pc in May to an all-time low of 300,000 after the homebuyer tax-credit expired, confirming fears that the housing market has been propped up by subsidies. Unemployment is stuck at 9.7pc. Manufacturing capacity use is at 71.9pc. The Fed's "trimmed mean" index of core inflation is 0.6pc on a six-month basis, a record low.
"The US recovery is in imminent danger of stalling," said Stephen Lewis, from Monument Securities. "Growth could be negative again as soon as the fourth quarter. There is no easy way out since fiscal stimulus has already been pushed as far as it can credibly go without endangering US credit-worthiness."
Rob Carnell, global strategist at ING, said the Obama fiscal boost peaked in the first few months of this year. It will swing from a net stimulus of 2pc of GDP in 2010 to a net withdrawal of 2pc in 2011. "This is very substantial fiscal drag. On top of this the US Treasury is talking of a 'Just War' against the banks, which will further crimp lending. It is absolutely the wrong moment to do this."
Kansas Fed chief Thomas Hoenig dissented from Fed calls for ultra-low rates to stay for an "extended period", arguing that loose money risks asset bubbles and fresh imbalances. He recently called for interest rates to be raised to 1pc by the autumn.
While he has been the loudest critic, he is not alone. Philadelphia chief Charles Plosser says the Fed has blurred the lines of monetary and fiscal policy by purchasing bonds, acting as a Treasury without a legal mandate. Together with Richmond chief Jeffrey Lacker they represent a powerful block of opinion in the media and Congress.
Mr Bernanke has fought off calls from FOMC hawks for moves to drain stimulus by selling some of the Fed's $1.75 trillion of Treasuries, mortgage securities and agency bonds bought during the crisis. But there is little chance that he can secure their backing for further purchases at this point. "He just has to wait until everybody can see the economy is nearing the abyss," said one Fed watcher.
Gabriel Stein, from Lombard Street Research, said the US is still stuck in a quagmire because Mr Bernanke has mismanaged the quantitative easing policy, purchasing the bonds from banks rather than from the non-bank private sector.
"This does nothing to expand the broad money supply. The trouble is that the Fed does not understand broad money and ascribes no importance to it," he said. The result is a collapse of M3, which has contracted at an annual rate of 7.6pc over the last three months.
Mr Bernanke focuses instead on loan growth but this has failed to gain full traction in a cultural climate of debt repayment. The Fed is pushing on the proverbial string. The jury is out on whether or not his untested doctrine of "creditism" will work.
"We are now walking on deflationary quicksand," said Albert Edwards from Societe Generale.
http://www.telegraph.co.uk/finance/economics/78529...
"Federal Reserve chairman Ben Bernanke is waging an epochal battle behind the scenes for control of US monetary policy, struggling to overcome resistance from regional Fed hawks for further possible stimulus to prevent a deflationary spiral.
Fed watchers say Mr Bernanke and his close allies at the Board in Washington are worried by signs that the US recovery is running out of steam. The ECRI leading indicator published by the Economic Cycle Research Institute has collapsed to a 45-week low of -5.7 in the most precipitous slide for half a century. Such a reading typically portends contraction within three months or so.
Key members of the five-man Board are quietly mulling a fresh burst of asset purchases, if necessary by pushing the Fed's balance sheet from $2.4 trillion (£1.6 trillion) to uncharted levels of $5 trillion. But they are certain to face intense scepticism from regional hardliners. The dispute has echoes of the early 1930s when the Chicago Fed stymied rescue efforts.
"We're heading towards a double-dip recession," said Chris Whalen, a former Fed official and now head of Institutional Risk Analystics. "The party is over from fiscal support. These hard-money men are fighting the last war: they don't recognise that money velocity has slowed and we are going into deflation. The only default option left is to crank up the printing presses again."
Mr Bernanke is so worried about the chemistry of the Fed's voting body – the Federal Open Market Committee (FOMC) – that he has persuaded vice-chairman Don Kohn to delay retirement until Janet Yellen has been confirmed by the Senate to take over his post. Mr Kohn has been a key architect of the Fed's emergency policies. He was due to step down this week after 40 years at the institution, depriving Mr Bernanke of a formidable ally in policy circles.
The Fed's statement this week shows growing doubts about the health of the recovery. Growth is no longer "strengthening": it is "proceeding". Financial conditions are now "less supportive" due to Europe's debt crisis.
The subtle tweaks in language have been enough to set bond markets alight. The yield on 10-year Treasuries has fallen to 3.08pc, the lowest since the gloom of April 2009. Futures contracts have ruled out tightening until well into next year.
Yet the statement may understate the level of angst at the Board. New home sales crashed 33pc in May to an all-time low of 300,000 after the homebuyer tax-credit expired, confirming fears that the housing market has been propped up by subsidies. Unemployment is stuck at 9.7pc. Manufacturing capacity use is at 71.9pc. The Fed's "trimmed mean" index of core inflation is 0.6pc on a six-month basis, a record low.
"The US recovery is in imminent danger of stalling," said Stephen Lewis, from Monument Securities. "Growth could be negative again as soon as the fourth quarter. There is no easy way out since fiscal stimulus has already been pushed as far as it can credibly go without endangering US credit-worthiness."
Rob Carnell, global strategist at ING, said the Obama fiscal boost peaked in the first few months of this year. It will swing from a net stimulus of 2pc of GDP in 2010 to a net withdrawal of 2pc in 2011. "This is very substantial fiscal drag. On top of this the US Treasury is talking of a 'Just War' against the banks, which will further crimp lending. It is absolutely the wrong moment to do this."
Kansas Fed chief Thomas Hoenig dissented from Fed calls for ultra-low rates to stay for an "extended period", arguing that loose money risks asset bubbles and fresh imbalances. He recently called for interest rates to be raised to 1pc by the autumn.
While he has been the loudest critic, he is not alone. Philadelphia chief Charles Plosser says the Fed has blurred the lines of monetary and fiscal policy by purchasing bonds, acting as a Treasury without a legal mandate. Together with Richmond chief Jeffrey Lacker they represent a powerful block of opinion in the media and Congress.
Mr Bernanke has fought off calls from FOMC hawks for moves to drain stimulus by selling some of the Fed's $1.75 trillion of Treasuries, mortgage securities and agency bonds bought during the crisis. But there is little chance that he can secure their backing for further purchases at this point. "He just has to wait until everybody can see the economy is nearing the abyss," said one Fed watcher.
Gabriel Stein, from Lombard Street Research, said the US is still stuck in a quagmire because Mr Bernanke has mismanaged the quantitative easing policy, purchasing the bonds from banks rather than from the non-bank private sector.
"This does nothing to expand the broad money supply. The trouble is that the Fed does not understand broad money and ascribes no importance to it," he said. The result is a collapse of M3, which has contracted at an annual rate of 7.6pc over the last three months.
Mr Bernanke focuses instead on loan growth but this has failed to gain full traction in a cultural climate of debt repayment. The Fed is pushing on the proverbial string. The jury is out on whether or not his untested doctrine of "creditism" will work.
"We are now walking on deflationary quicksand," said Albert Edwards from Societe Generale.
http://www.telegraph.co.uk/finance/economics/78529...
Is it getting interesting again?
"U.S. Treasuries rose on Tuesday, pushing two-year note yields to the lowest on record as stocks tumbled globally on worries over euro-zone debt problems and potential for a U.S. double-dip recession.
The price of the 30-year Treasury bond rose a full point. Benchmark 10-year Treasury note yields fell below 3 percent for the first time in 14 months, and three-month euro Libor, or the price that European banks charge each other for short-term loans, rose to an eight-month high.
The move flattened the Treasury curve, with the spread between yields on two-year notes and 10-year notes narrowing to 235 basis points"
reuters
"The Baltic Dry Index is trading 32% lower than a year earlier. It has fallen for 21 straight days and is likely to drop to as low as 2,000 in Q3. Commodity shipping costs too have fallen for 21 days in a row and are likely to fall as much as 20% in Q3."
"Gold rebounded on Tuesday as a global rout in equities and sharply lower commodities prompted investors to pile in amid renewed fears about European credit contagion."
reuters
| FTSE100 | 4914.22 | down -157.46 | -3.10% |
| Dax | 5952.03 | down -205.19 | -3.33% |
| Cac 40 | 3432.99 | down -143.46 | -4.01% |
| Dow Jones | 9870.30 | down -268.22 | -2.65% |
| Nasdaq | 2135.18 | down -85.47 | -3.85% |
"U.S. Treasuries rose on Tuesday, pushing two-year note yields to the lowest on record as stocks tumbled globally on worries over euro-zone debt problems and potential for a U.S. double-dip recession.
The price of the 30-year Treasury bond rose a full point. Benchmark 10-year Treasury note yields fell below 3 percent for the first time in 14 months, and three-month euro Libor, or the price that European banks charge each other for short-term loans, rose to an eight-month high.
The move flattened the Treasury curve, with the spread between yields on two-year notes and 10-year notes narrowing to 235 basis points"
reuters
"The Baltic Dry Index is trading 32% lower than a year earlier. It has fallen for 21 straight days and is likely to drop to as low as 2,000 in Q3. Commodity shipping costs too have fallen for 21 days in a row and are likely to fall as much as 20% in Q3."
"Gold rebounded on Tuesday as a global rout in equities and sharply lower commodities prompted investors to pile in amid renewed fears about European credit contagion."
reuters
From the Telegraph:
“Bernanke began putting the script into action after the credit system seized up in 2008, purchasing $1.75 trillion of Treasuries, mortgage securities, and agency bonds to shore up the US credit system. He stopped far short of the $5 trillion balance sheet quietly pencilled in by the Fed Board as the upper limit for quantitative easing (QE).”
“Investors basking in Wall Street’s V-shaped rally had assumed that this bizarre episode was over. So did the Fed, which has been shutting liquidity spigots one by one. But the latest batch of data is disturbing. The ECRI leading indicator produced by the Economic Cycle Research Institute plummeted yet again last week to -6.9, pointing to contraction in the US by the end of the year. It is dropping faster than at any time in the post-War era…
“…Andrew Roberts, credit chief at RBS, is advising clients to read the Bernanke text very closely because the Fed is soon going to have to the pull the lever on ‘monster’ quantitative easing (QE). ‘We cannot stress enough how strongly we believe that a cliff-edge may be around the corner, for the global banking system (particularly in Europe) and for the global economy. Think the unthinkable,’ he said in a note to investors.”
“Bernanke began putting the script into action after the credit system seized up in 2008, purchasing $1.75 trillion of Treasuries, mortgage securities, and agency bonds to shore up the US credit system. He stopped far short of the $5 trillion balance sheet quietly pencilled in by the Fed Board as the upper limit for quantitative easing (QE).”
“Investors basking in Wall Street’s V-shaped rally had assumed that this bizarre episode was over. So did the Fed, which has been shutting liquidity spigots one by one. But the latest batch of data is disturbing. The ECRI leading indicator produced by the Economic Cycle Research Institute plummeted yet again last week to -6.9, pointing to contraction in the US by the end of the year. It is dropping faster than at any time in the post-War era…
“…Andrew Roberts, credit chief at RBS, is advising clients to read the Bernanke text very closely because the Fed is soon going to have to the pull the lever on ‘monster’ quantitative easing (QE). ‘We cannot stress enough how strongly we believe that a cliff-edge may be around the corner, for the global banking system (particularly in Europe) and for the global economy. Think the unthinkable,’ he said in a note to investors.”
Wow, things are even worse than I thought, we may have reached the Minsky moment! I've no idea what that is but I'll drop it in conversation tomorrow so I appear knowledgeable to impressionable people:
"Royal Bank of Scotland strategist Andrew Roberts said he sensed a "Minsky moment" approaching - the point identified by economist Hyman Minsky when investors start to panic.
"We are seeing a snowball effect of negative news," he said. "It's all rather messy out there. In the last few days there has been a tangible shift from complacency to a realisation that maybe things aren't looking all that good.
"This is almost identical to two years ago – complacency giving way to the abundant risks out here."
"Royal Bank of Scotland strategist Andrew Roberts said he sensed a "Minsky moment" approaching - the point identified by economist Hyman Minsky when investors start to panic.
"We are seeing a snowball effect of negative news," he said. "It's all rather messy out there. In the last few days there has been a tangible shift from complacency to a realisation that maybe things aren't looking all that good.
"This is almost identical to two years ago – complacency giving way to the abundant risks out here."
"The economy is still in the gravitational pull of the Great Recession," said Robert Reich, former US labour secretary. "All the booster rockets for getting us beyond it are failing."
"Home sales are down. Retail sales are down. Factory orders in May suffered their biggest tumble since March of last year. So what are we doing about it? Less than nothing," he said.
California is tightening faster than Greece. State workers have seen a 14pc fall in earnings this year due to forced furloughs. Governor Arnold Schwarzenegger is cutting pay for 200,000 state workers to the minimum wage of $7.25 an hour to cover his $19bn (£15bn) deficit.
Can Illinois be far behind? The state has a deficit of $12bn and is $5bn in arrears to schools, nursing homes, child care centres, and prisons. "It is getting worse every single day," said state comptroller Daniel Hynes. "We are not paying bills for absolutely essential services. That is obscene."
Roughly a million Americans have dropped out of the jobs market altogether over the past two months. That is the only reason why the headline unemployment rate is not exploding to a post-war high.
Let us be honest. The US is still trapped in depression a full 18 months into zero interest rates, quantitative easing (QE), and fiscal stimulus that has pushed the budget deficit above 10pc of GDP.
The share of the US working-age population with jobs in June actually fell from 58.7pc to 58.5pc. This is the real stress indicator. The ratio was 63pc three years ago. Eight million jobs have been lost.
The average time needed to find a job has risen to a record 35.2 weeks. Nothing like this has been seen before in the post-war era. Jeff Weniger, of Harris Private Bank, said this compares with a peak of 21.2 weeks in the Volcker recession of the early 1980s.
"Legions of individuals have been left with stale skills, and little prospect of finding meaningful work, and benefits that are being exhausted. By our math the crop of people who are unemployed but not receiving a check amounts to 9.2m."
Republicans on Capitol Hill are filibustering a bill to extend the dole for up to 1.2m jobless facing an imminent cut-off. Dean Heller from Vermont called them "hobos". This really is starting to feel like 1932.
The housing market is already crumbling as government props are pulled away. The expiry of homebuyers' tax credit led to a 30pc fall in the number of buyers signing contracts in May. "It is cataclysmic," said David Bloom from HSBC.
Federal tax rises are automatically baked into the pie. The Congressional Budget Office said fiscal policy will swing from a net +2pc of GDP to -2pc by late 2011. The states and counties may have to cut as much as $180bn.
Investors are starting to chew over the awful possibility that America's recovery will stall just as Asia hits the buffers. China's manufacturing index has been falling since January, with a downward lurch in June to 50.4, just above the break-even line of 50. Momentum seems to be flagging everywhere, whether in Australian building permits, Turkish exports, or Japanese industrial output.
On Friday, Jacques Cailloux from RBS put out a "double-dip alert" for Europe. "The risk is rising fast. Absent an effect policy intervention to tackle the debt crisis on the periphery over coming months, the European economy will double dip in 2011," he said.
telegraph
"Home sales are down. Retail sales are down. Factory orders in May suffered their biggest tumble since March of last year. So what are we doing about it? Less than nothing," he said.
California is tightening faster than Greece. State workers have seen a 14pc fall in earnings this year due to forced furloughs. Governor Arnold Schwarzenegger is cutting pay for 200,000 state workers to the minimum wage of $7.25 an hour to cover his $19bn (£15bn) deficit.
Can Illinois be far behind? The state has a deficit of $12bn and is $5bn in arrears to schools, nursing homes, child care centres, and prisons. "It is getting worse every single day," said state comptroller Daniel Hynes. "We are not paying bills for absolutely essential services. That is obscene."
Roughly a million Americans have dropped out of the jobs market altogether over the past two months. That is the only reason why the headline unemployment rate is not exploding to a post-war high.
Let us be honest. The US is still trapped in depression a full 18 months into zero interest rates, quantitative easing (QE), and fiscal stimulus that has pushed the budget deficit above 10pc of GDP.
The share of the US working-age population with jobs in June actually fell from 58.7pc to 58.5pc. This is the real stress indicator. The ratio was 63pc three years ago. Eight million jobs have been lost.
The average time needed to find a job has risen to a record 35.2 weeks. Nothing like this has been seen before in the post-war era. Jeff Weniger, of Harris Private Bank, said this compares with a peak of 21.2 weeks in the Volcker recession of the early 1980s.
"Legions of individuals have been left with stale skills, and little prospect of finding meaningful work, and benefits that are being exhausted. By our math the crop of people who are unemployed but not receiving a check amounts to 9.2m."
Republicans on Capitol Hill are filibustering a bill to extend the dole for up to 1.2m jobless facing an imminent cut-off. Dean Heller from Vermont called them "hobos". This really is starting to feel like 1932.
The housing market is already crumbling as government props are pulled away. The expiry of homebuyers' tax credit led to a 30pc fall in the number of buyers signing contracts in May. "It is cataclysmic," said David Bloom from HSBC.
Federal tax rises are automatically baked into the pie. The Congressional Budget Office said fiscal policy will swing from a net +2pc of GDP to -2pc by late 2011. The states and counties may have to cut as much as $180bn.
Investors are starting to chew over the awful possibility that America's recovery will stall just as Asia hits the buffers. China's manufacturing index has been falling since January, with a downward lurch in June to 50.4, just above the break-even line of 50. Momentum seems to be flagging everywhere, whether in Australian building permits, Turkish exports, or Japanese industrial output.
On Friday, Jacques Cailloux from RBS put out a "double-dip alert" for Europe. "The risk is rising fast. Absent an effect policy intervention to tackle the debt crisis on the periphery over coming months, the European economy will double dip in 2011," he said.
telegraph
anonymous said:
[redacted]
I don't think they have a choice but to increase QE. They need to keep things alive long enough to get into an upward cycle and it's the only tool left.Once in an upward cycle then rates will head north, probably rapidly, and take out every single mortgage owner who is on the limit, but the uptrend will allow the supply to be taken up.
I do see a very large number of homes passing from over stretched 30+, via the banks and into the hands of the sub 30s.
BRITAIN’S DEBT: THE UNTOLD STORY
The Independent
Sean O'Grady, Economics Editor
Wednesday 14 July 2010
The true scale of Britain's national indebtedness was laid bare by the Office for National Statistics yesterday: almost £4 trillion, or £4,000bn, about four times higher than previously acknowledged.
It quantifies the burden that will be placed on future generations, and it is the ONS's first attempt to draw together the "off-balance-sheet" liabilities that have been accumulated by the state. The figures imply a huge "intergenerational transfer" – broadly in favour of today's "baby boomer" generation at the expense of younger people and future generations.
http://www.independent.co.uk/news/uk/politics/brit...
The Independent
Sean O'Grady, Economics Editor
Wednesday 14 July 2010
The true scale of Britain's national indebtedness was laid bare by the Office for National Statistics yesterday: almost £4 trillion, or £4,000bn, about four times higher than previously acknowledged.
It quantifies the burden that will be placed on future generations, and it is the ONS's first attempt to draw together the "off-balance-sheet" liabilities that have been accumulated by the state. The figures imply a huge "intergenerational transfer" – broadly in favour of today's "baby boomer" generation at the expense of younger people and future generations.
http://www.independent.co.uk/news/uk/politics/brit...
turbobloke said:
BRITAIN’S DEBT: THE UNTOLD STORY
The Independent
Sean O'Grady, Economics Editor
Wednesday 14 July 2010
The true scale of Britain's national indebtedness was laid bare by the Office for National Statistics yesterday: almost £4 trillion, or £4,000bn, about four times higher than previously acknowledged.
It quantifies the burden that will be placed on future generations, and it is the ONS's first attempt to draw together the "off-balance-sheet" liabilities that have been accumulated by the state. The figures imply a huge "intergenerational transfer" – broadly in favour of today's "baby boomer" generation at the expense of younger people and future generations.
http://www.independent.co.uk/news/uk/politics/brit...
At last! The elephant we've alll spotted in the room, is being (slowly) brought to the attention of the masses. Sadly, by the time the masses truly grasp the issue, it'll be way too late.The Independent
Sean O'Grady, Economics Editor
Wednesday 14 July 2010
The true scale of Britain's national indebtedness was laid bare by the Office for National Statistics yesterday: almost £4 trillion, or £4,000bn, about four times higher than previously acknowledged.
It quantifies the burden that will be placed on future generations, and it is the ONS's first attempt to draw together the "off-balance-sheet" liabilities that have been accumulated by the state. The figures imply a huge "intergenerational transfer" – broadly in favour of today's "baby boomer" generation at the expense of younger people and future generations.
http://www.independent.co.uk/news/uk/politics/brit...
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