Hard data shows US recovery in trouble
Posted on 25 February 2010 with no comments from readers
The worst new housing starts for 23 years in January, consumer confidence way below expectations and a build in oil inventories, this is not the stuff of a US economic recovery.
How much more does it take before Wall Street pays attention and stops listening to the spin doctor Bernanke? So he thinks interest rates will remain low for a long period. That is also bad news because if the economy was really getting stronger then he would put them up straight away.
Facts not talk
But let us focus on the figures not the waffle on the hill. Housebuilding is a backbone of the US economy and a major consumer of commodities. Think how much material goes into a house. If houses are not being sold then less new ones will be built. The economy goes down.
Then consumer confidence. Let us not forget that 70 per cent of GDP in the USA is consumer spending. If consumers are saving and not spending there is less demand for goods, services and imports from China. The economy goes down.
Oil is another basic indicator of economic health. Economies in recession use less of it, inventories rise and eventually prices fall when speculators get scared. The economy goes down.
You have to wonder what piece of economic data will be enough to rattle the bulls on Wall Street. Consider the outlook for housing, consumer confidence and oil.
Mortgage resets are set to surge into the millions over the next couple of years, crimping any possibility of a meaningful housing recovery. House prices will go lower not higher.
Consumer spending
Consumer confidence is clearly under pressure. There is the fear and reality for many of unemployment. The savings rate has gone back up so less goods and services will be bought.
Then there are oil prices whose rebound since December 2008 is now about to be tested by weakening demand. The retracement pattern is typical of a rebound from an oversold position and would normally now move lower in any case.
So let us not get carried away by overconfident noises in the corridors of power. They have misled us before and are doing the same again now.
STOP PRESS: Orders for U.S. durable goods excluding transportation fell 0.6 percent in January, the biggest drop since August, the Commerce Department said. The average forecast of economists surveyed by Bloomberg was for an increase of 1 percent.
Meanwhile, the Labor Department said first-time claims for unemployment insurance rose by 22,000 to a seasonally adjusted 496,000. Economists polled by Thomson Reuters had forecast a drop in claims to 455,000.
no Comments posted by readers:
“How much more does it take before Wall Street pays attention and stops listening to the spin doctor Bernanke?” I guessed you got it wrong. Wall Street don’t listen to Bernanke, Bernanke reports to Wall Street.
And the stock market went up. Take a guess who is buying stocks with that data. The Fed, or some people who can pay higher taxes to help reduce the deficit?
Bernanke has got to be one of the most arrogant humans alive; yet, if you study his comments to the Congress over the past 3 years, he has been dead wrong every time. EVERY TIME!
Unfounded and Unjustifiable Confidence:
Of course, inquiring minds would like to know what gives him this unfounded confidence are a number of things; here’s a few examples:
1. He deludes himself into thinking that he knows more about the “Great Depression” than any other human being, and how to cure it (i.e. keep printing money!)
2. Using his agents, GS and JPM, to prop up stock and bond markets, while suppressing the gold price
3. Getting creative (and illegal) ideas from GS & JPM on how to handle various financial problems that impact the global financial community. After giving such advice, GS and JPM then place their bets “the other way”, in order to profit from the inevitable.
In reality, he is likely muttering to himself: dammit, this QE money printing is supposed to work, but it isn’t!
In Summary:
Bernanke is nothing more than a Keynesian clown who does not know what he is doing. Ditto for the US Administration. In reality, the US government is nothing more than a malignant cancer on the backs of its citizens.
Printing money does work but only works when you give it to the people. They have given it to the banks and the banks are not giving it to the people. We have a problem with where the printed money is going. Banks are not giving the consumers the credit that they used to give. They are closing up credit cards,reducing credit limits,increasing APR rates on everything so in return we see poor retail sales numbers in the future along with higher unemployment numbers.
The US of course do what they do in the Gulf and blame all this on foreign expats,not give out green cards or citizenships and send everyone back to their countries like some are doing in the Gulf States lol.. Then unemployment numbers will drop,salaries will increase and spending will climb lol. We saw how this worked in Dubai.