Contrary to media assertions, the recession continues and that is starting to weigh on the price of oil as it dropped to a six-week low on Friday, and will plunge again after the Labor Day weekend.
The problem is the so-called stimulus money is gone, which had masked the real condition of the economy, and that is causing the jobless claims numbers to rise to levels which reflect that, along with the falling manufacturing numbers, as represented by the release of the general economic index by the Federal Reserve Bank of Philadelphia, which showed a plunge of 7.7 percent this month.
Again, while seeming to be a contraction, things are just returning to what they've in reality been since the recession began as the stimulus money effects leave the economy.
The government and Federal Reserve were hoping to buy time through spending the hundreds of billions so the private sector could rebound and take their place as creators of jobs and economic growth.
But the stimulus produced a false signal which had CEOs even hailing the economic turnaround, when they were in fact the beneficiaries of taxpayer dollars, rather than demand from the marketplace.
No matter how you look at it though, we're in for a rough ride economically, as there's nothing out there to indicate we're even close to beginning a recovery, and in fact the failure of government interference is being revealed publicly to all, yet the Federal Reserve has give us their assurance they're ready to do and spend what it takes to shore up the recessionary economy again, which will cause even more devastation over the long term.
Crude oil prices and inventory are predictably responding, as the oil inventory of the U.S. surged to its highest level since 1990, according to an Energy Department report.
That means consumers are staying close to home and continuing to cut back on spending.
When taking into account the fundamentals, crude oil prices are still considered too high, and the possibility of increased demand is falling by the wayside. Nothing indicates that will change anytime soon.
In other ominous and understated economic news, Axel Weber, a council member of the European Central Bank, said the European economy may need intervention from the central bank through the end of 2010. That's not surprising, as there was no way the sovereign debt crisis, which has largely been ignored by the media after it was allegedly taken care of, has been resolved, as the sheer size of the problem couldn't be taken care of with a few debt offerings, no matter what the size of them were.
While the austerity measures taken by some nations were a good move, it staggers the mind to think they could go back to throwing money out into the economy of the region through central banks, making the problem even worse than it is.
With oil prices looking to the economy to signal where things are at, the answer is it's in bad shape, with no prospects it's going to turn around in the near future.
That means consumption, at least in the U.S., the world's largest oil consumer, will continue to fall, and oil prices should follow that lead.
In the peak July traveling season, joblessness and higher gas prices held consumption down, keeping demand relatively unchanged at a time it should have been soaring. Gasoline deliveries even fell slightly from last year, averaging 9.257 million barrels in July 2010, in comparison to 9.26 million in July 2009.
Stockpiles in the U.S. rose to 1.13 billion for the week ending August 13, gaining 5.3 million.
Showing posts with label Economic Fears. Show all posts
Showing posts with label Economic Fears. Show all posts
Monday, August 23, 2010
Friday, August 20, 2010
Barrick (NYSE:ABX) Chairman Sees Gold Prices Going Higher
Citing the weak economic conditions, Barrick Gold Corp. (NYSE:ABX) Peter Munk said gold prices have a better chance of going higher than falling in the future.
Munk added that he sees no reason for the company to hedge at this time, as it's not likely there'll be major declines in gold prices because of the instability in the global economy, which pushes up rather than lowers the value of gold.
Even in healthy economic conditions gold tends to move upward in the fall season, add the deteriorating global economy and in the near term there will be a big push for gold, which while eventually leveling off, will continue on an upward trajectory for some time to come.
The countries and central banks around the world have for the most part made every wrong decision they could have to battle the ongoing recession, and even though they're saying the possibility of a double dip could happen, the reality is outrageous amounts of money spent on stimulus plans only masked and hid the recession, it did nothing to change it, as the results obviously reveal.
Already the Federal Reserve has stated they're ready to begin "quantitative easing" again (print money, buy Treasuries), and that will play into the increased value of gold as investors flock to it to protect their assets.
Munk added that he sees no reason for the company to hedge at this time, as it's not likely there'll be major declines in gold prices because of the instability in the global economy, which pushes up rather than lowers the value of gold.
Even in healthy economic conditions gold tends to move upward in the fall season, add the deteriorating global economy and in the near term there will be a big push for gold, which while eventually leveling off, will continue on an upward trajectory for some time to come.
The countries and central banks around the world have for the most part made every wrong decision they could have to battle the ongoing recession, and even though they're saying the possibility of a double dip could happen, the reality is outrageous amounts of money spent on stimulus plans only masked and hid the recession, it did nothing to change it, as the results obviously reveal.
Already the Federal Reserve has stated they're ready to begin "quantitative easing" again (print money, buy Treasuries), and that will play into the increased value of gold as investors flock to it to protect their assets.
Thursday, August 12, 2010
Investors Flee to Gold For Safety as Economy is in Shambles
Very few people seem willing to admit the U.S. and global economy is under extreme pressure. Investors know it though, and fled to gold as a safe haven today, pushing gold futures up to their highest level in eight weeks.
The words "unexpected" continue to come from economic writers concerning jobless claims rising, Europe not being as strong as asserted, and China's production falling.
Even today economic writers use terms like the "recovery is slowing," as if there ever really was an economic recovery.
Jobless claims climbed to a five-month high today, while industrial production in Europe and China both fell. In the case of China, it plummeted to an 11-month low.
This doesn't include the horrid sovereign debt crisis of Europe, which is being ignored or covered up by the mainstream press, who seem to believe a few turns of the knob over and everything was magically turned around.
Governments and the press seem to be attempting to hold up the global economy by wishful thinking and Disney-like hopes and dreams, rather than the harsh realities that should be brought out into the open so it can be understood and prepared for by people.
The fact that the Federal Reserve "changed it mind" concerning dropping its monetary stimulus points to the real condition of the economy. They committed to doing whatever it takes to deal with the weak economic conditions recently, again revealing there are extreme concerns about what is really happening.
Gold investors should rejoice, as the Treasury and Federal Reserve can't help themselves. They're going to continue to print money and buy U.S. debt in efforts to artificially prop up the economy.
What don't they get about it not working in the recent past? How much they going spend? Two trillion this time?
Either way, they are going to do the very predictable, and we can count on that. That means gold prices are going to take off again, as they have today.
The words "unexpected" continue to come from economic writers concerning jobless claims rising, Europe not being as strong as asserted, and China's production falling.
Even today economic writers use terms like the "recovery is slowing," as if there ever really was an economic recovery.
Jobless claims climbed to a five-month high today, while industrial production in Europe and China both fell. In the case of China, it plummeted to an 11-month low.
This doesn't include the horrid sovereign debt crisis of Europe, which is being ignored or covered up by the mainstream press, who seem to believe a few turns of the knob over and everything was magically turned around.
Governments and the press seem to be attempting to hold up the global economy by wishful thinking and Disney-like hopes and dreams, rather than the harsh realities that should be brought out into the open so it can be understood and prepared for by people.
The fact that the Federal Reserve "changed it mind" concerning dropping its monetary stimulus points to the real condition of the economy. They committed to doing whatever it takes to deal with the weak economic conditions recently, again revealing there are extreme concerns about what is really happening.
Gold investors should rejoice, as the Treasury and Federal Reserve can't help themselves. They're going to continue to print money and buy U.S. debt in efforts to artificially prop up the economy.
What don't they get about it not working in the recent past? How much they going spend? Two trillion this time?
Either way, they are going to do the very predictable, and we can count on that. That means gold prices are going to take off again, as they have today.
Friday, July 2, 2010
US Economy Loses Another 125,000 Jobs in June
As another 125,000 jobs were lost in the American economy in June, questions concerning whether or not the recession has ever ended continue to grow.
The attempt to spin the fall in the unemployment rate from 9.7 percent to 9.5 percent as a positive was neglected by most, as it only signaled people quit looking for jobs, not that jobs were being created.
All this is after over a $1 trillion was thrown out their to "stimulate" the economy. That has completely failed, and the assertion it would have been worse if it hadn't been done isn't provable, and probably false.
What has really happened is it allowed things to extend longer than they should have, and so what should have been allowed to fail wasn't allowed to fail, and now we're going to have to start dealing with the real economy, which is being revealed to be as weak as ever.
One example of that is the tax credit for new home buyers, which after it ran out showed there was little real demand, and consequently sales plunged by about a third once the program ended.
This is why the government and Federal Reserve need to quit interfering and allow the markets to adjust and take care of business, as they know how to adopt strategy and adapt to the economic realities they face, and government interference only skews the market and makes it harder to analyze and work within because of the huge influx of money which shouldn't have been there in the first place.
Once it runs out, like it has now, the market can than look at the real conditions out there and respond accordingly. This is why stimulus programs have historically extended difficult economic times, as they get in the way of those that know how to respond to and handle them: business.
So when it is said that the recovery isn't as strong as expected, that's really not true. What's true is the illusion and fantasy created by distributing printed money into the marketplace has crumbled, and the real condition of the economy is being revealed.
This is why the private sector is creating very little jobs and the government is, as it's simply spending money hiring workers they don't need in able to make the economy look stronger than it is.
The problem with that of course is there are few new jobs and real wealth being created in the private sector to pay for those government jobs, which pay far above market wages as it is, even though they aren't needed in the first place.
As Margaret Thatcher wisely said years ago, the problem with socialism is eventually you run out of someone else's money.
That's what's happening now, as the Obama administration attempted to play that game in hopes the private sector would pick up in job creation. Now that it hasn't, they've created all these government jobs no one can pay for, and now face the problem of further debt because of it.
The attempt to spin the fall in the unemployment rate from 9.7 percent to 9.5 percent as a positive was neglected by most, as it only signaled people quit looking for jobs, not that jobs were being created.
All this is after over a $1 trillion was thrown out their to "stimulate" the economy. That has completely failed, and the assertion it would have been worse if it hadn't been done isn't provable, and probably false.
What has really happened is it allowed things to extend longer than they should have, and so what should have been allowed to fail wasn't allowed to fail, and now we're going to have to start dealing with the real economy, which is being revealed to be as weak as ever.
One example of that is the tax credit for new home buyers, which after it ran out showed there was little real demand, and consequently sales plunged by about a third once the program ended.
This is why the government and Federal Reserve need to quit interfering and allow the markets to adjust and take care of business, as they know how to adopt strategy and adapt to the economic realities they face, and government interference only skews the market and makes it harder to analyze and work within because of the huge influx of money which shouldn't have been there in the first place.
Once it runs out, like it has now, the market can than look at the real conditions out there and respond accordingly. This is why stimulus programs have historically extended difficult economic times, as they get in the way of those that know how to respond to and handle them: business.
So when it is said that the recovery isn't as strong as expected, that's really not true. What's true is the illusion and fantasy created by distributing printed money into the marketplace has crumbled, and the real condition of the economy is being revealed.
This is why the private sector is creating very little jobs and the government is, as it's simply spending money hiring workers they don't need in able to make the economy look stronger than it is.
The problem with that of course is there are few new jobs and real wealth being created in the private sector to pay for those government jobs, which pay far above market wages as it is, even though they aren't needed in the first place.
As Margaret Thatcher wisely said years ago, the problem with socialism is eventually you run out of someone else's money.
That's what's happening now, as the Obama administration attempted to play that game in hopes the private sector would pick up in job creation. Now that it hasn't, they've created all these government jobs no one can pay for, and now face the problem of further debt because of it.
Gas Prices Drop as Fourth of July Weekend Arrives
With the economy in the U.S. extremely weak, and economic data continually bringing bad news, Americans continue to tighten up their spending habits and as a result demand for gasoline has fallen, along with the prices.
Travelers over the Fourth of July weekend should be happy, as prices dropped slightly from last week, at a time when demand usually pushes prices up in a big way.
Gas prices on a national average dropped 0.4 cent on Friday to $2.75 a gallon. Although that's higher than last year at this time, it's far below projections of $3 a gallon analysts had been calling for in the spring months.
The lowest gas prices are expected to be in the Gulf Coast states, Texas, and the Midwest.
Since last week, gas prices have fallen on average by one-half a cent.
Travelers over the Fourth of July weekend should be happy, as prices dropped slightly from last week, at a time when demand usually pushes prices up in a big way.
Gas prices on a national average dropped 0.4 cent on Friday to $2.75 a gallon. Although that's higher than last year at this time, it's far below projections of $3 a gallon analysts had been calling for in the spring months.
The lowest gas prices are expected to be in the Gulf Coast states, Texas, and the Midwest.
Since last week, gas prices have fallen on average by one-half a cent.
Oil Prices Fall Before Busy Holiday Weekend
For the fourth day in a row, oil prices fell on Thursday, as concerns over the economy could keep people closer to home, not only on this busiest of summer travel times, but throughout the rest of the summer as well.
There's really little to justify any optimism in the economic conditions we face, a the majority of economic data confirms we're either slowing down in growth, or, which is more likely, really never experienced any real growth, other than the government printing money and artificially propping up certain segments of the market in hopes it would buy enough time for a recovery to happen.
The government has lost that bet, and consumers know they need to be careful how they spend their money in light of economic uncertainties, which continue on.
New housing starts have plummeted, construction is down, jobless claims are up and homebuyers signing contracts also dropped in May, confirming fears of how shaky the economy really is.
Travel is one of the few things consumers can manage, and we're probably going to see a lot less of it this summer season, and oil prices will remain under downward pressure as a result.
There's really little to justify any optimism in the economic conditions we face, a the majority of economic data confirms we're either slowing down in growth, or, which is more likely, really never experienced any real growth, other than the government printing money and artificially propping up certain segments of the market in hopes it would buy enough time for a recovery to happen.
The government has lost that bet, and consumers know they need to be careful how they spend their money in light of economic uncertainties, which continue on.
New housing starts have plummeted, construction is down, jobless claims are up and homebuyers signing contracts also dropped in May, confirming fears of how shaky the economy really is.
Travel is one of the few things consumers can manage, and we're probably going to see a lot less of it this summer season, and oil prices will remain under downward pressure as a result.
Monday, February 8, 2010
Marc Faber: US Bankrupt 10 Years
Marc Faber - US going bankrupt
Marc Faber states in about 10 years over 35 percent of tax revenues collected in the United States will have to be used to pay off the U.S. debt.
“Maximum within 10 years time more than 35% of tax revenues will have to be used to pay the interest on the government debt and then you are in trouble – because then there will be not enough money out of the budget to pay for other stuff. I’m convinced the US government will go bankrupt, but not tomorrow. And before they go bankrupt, they’ll print money, and then you get high inflation rates, you have a depression and eventually they’ll go to war,” said Faber
He also believes the credit rating of the U.S. could fall below its top rated 'A' status, especially if the economy grows much slower than estimates, and the more information that comes out, the more a reality that seems to be.
Inflation is coming, it's only a matter of when it becomes noticeable. Some prices are already significantly higher, but they're balanced by the drop in others. Pretty soon that scenario won't be able to survive in the realities ahead of us, and then the unthinkable will happen.
Marc Faber - US going bankrupt
Marc Faber states in about 10 years over 35 percent of tax revenues collected in the United States will have to be used to pay off the U.S. debt.
“Maximum within 10 years time more than 35% of tax revenues will have to be used to pay the interest on the government debt and then you are in trouble – because then there will be not enough money out of the budget to pay for other stuff. I’m convinced the US government will go bankrupt, but not tomorrow. And before they go bankrupt, they’ll print money, and then you get high inflation rates, you have a depression and eventually they’ll go to war,” said Faber
He also believes the credit rating of the U.S. could fall below its top rated 'A' status, especially if the economy grows much slower than estimates, and the more information that comes out, the more a reality that seems to be.
Inflation is coming, it's only a matter of when it becomes noticeable. Some prices are already significantly higher, but they're balanced by the drop in others. Pretty soon that scenario won't be able to survive in the realities ahead of us, and then the unthinkable will happen.
Marc Faber - US going bankrupt
Tuesday, February 2, 2010
Nouriel Roubini: American Economy Terrible Shape
Nouriel Roubini: American Economy Terrible
According to New York University professor Nouriel Roubini, the big numbers put up in the fourth-quarter were virtually meaningless, and the 5.7 percent economic growth was bad news when taking into consideration the actual facts relating to the data.
For example, most of the 5.7 percent "growth" is attributed to replenishing inventories, which when that is set aside, it only came to a little more than a growth rate of 2.2 percent, with Roubini saying he believes it'll be much worse in the last half of 2010, where he sees economic expansion at an anemic 1.5 percent growth rate.
Talking to Bloomberg Television from the World Economic Forum’s annual meeting in Davos, Switzerland, Nourini said concerning the growth numbers, “The headline number will look large and big, but actually when you dissect it, it’s very dismal and poor. I think we are in trouble.”
Almost all the growth was attributed to one time events according to Roubini, and he sees this as a disaster going forward for the country.
Bizarrely, even Roubini adds while we won't be technically in a recession, it'll feel like a recession. In other words, we're going to be in a recession but he doesn't want to admit it so he doesn't make the Obama administration look like the disaster they really are with the economy.
Along with replenishing inventory, just about the rest of what was called economic growth was artificial, being based on stimulus money rather than increased demand for products and services.
In even worse news, Roubini stated unemployment is going to rise beyond the official 10 percent now, generating more problems for Obama and society at large.
Nouriel Roubini: American Economy Terrible
According to New York University professor Nouriel Roubini, the big numbers put up in the fourth-quarter were virtually meaningless, and the 5.7 percent economic growth was bad news when taking into consideration the actual facts relating to the data.
For example, most of the 5.7 percent "growth" is attributed to replenishing inventories, which when that is set aside, it only came to a little more than a growth rate of 2.2 percent, with Roubini saying he believes it'll be much worse in the last half of 2010, where he sees economic expansion at an anemic 1.5 percent growth rate.
Talking to Bloomberg Television from the World Economic Forum’s annual meeting in Davos, Switzerland, Nourini said concerning the growth numbers, “The headline number will look large and big, but actually when you dissect it, it’s very dismal and poor. I think we are in trouble.”
Almost all the growth was attributed to one time events according to Roubini, and he sees this as a disaster going forward for the country.
Bizarrely, even Roubini adds while we won't be technically in a recession, it'll feel like a recession. In other words, we're going to be in a recession but he doesn't want to admit it so he doesn't make the Obama administration look like the disaster they really are with the economy.
Along with replenishing inventory, just about the rest of what was called economic growth was artificial, being based on stimulus money rather than increased demand for products and services.
In even worse news, Roubini stated unemployment is going to rise beyond the official 10 percent now, generating more problems for Obama and society at large.
Nouriel Roubini: American Economy Terrible
Wednesday, November 12, 2008
Henry Paulson Announcement Sends Investors Fleeing to Safety
With traders and investors in a risk-adverse mode, anything they're unsure of sends running for safety and cover, and it was no different today.
When U.S. Treasury Secretary Henry Paulson announced the Troubled Asset Relief Program (TARP) would now be adding those in the nonbanking sector to their focus, investors fleed to the U.S. dollar and yen for protection.
The underlying assumption being made was things may not be as fixable through TARP than they orginally thought, and unexpected problems may be hindering the effort.
Right after Paulson's remarks went across the news wires, the stampede to the yen and U.S. dollar began.
The dollar and yen remain the investment of choice for those seeking safety, although the yen is getting more activity and holding strong, as the dollar fell Wednesday to 94.61 yen from 97.60.
When U.S. Treasury Secretary Henry Paulson announced the Troubled Asset Relief Program (TARP) would now be adding those in the nonbanking sector to their focus, investors fleed to the U.S. dollar and yen for protection.
The underlying assumption being made was things may not be as fixable through TARP than they orginally thought, and unexpected problems may be hindering the effort.
Right after Paulson's remarks went across the news wires, the stampede to the yen and U.S. dollar began.
The dollar and yen remain the investment of choice for those seeking safety, although the yen is getting more activity and holding strong, as the dollar fell Wednesday to 94.61 yen from 97.60.
Monday, November 10, 2008
China to Offer Stimulus Package of $585 Billion over Next Two Years
While China will continue to grow at a rate enviable by most other nations, it has decided to offer their own version of a stimulus package in their own country worth over $585 billion.
China's growth is estimated to be at about 8.5 percent next year, down by 3 percent from last year.
Most of the package will target ten key areas in the country, and will focus on "transportation, rural infrastructure, low-income housing, electricity and water. Some of the funds will also be used to build up areas ravaged from natural disasters, particularly the May earthquake in the Sichuan province."
This is being done in an effort to strengthen the domestic market, as the country has primarily relied on exports for the majority of their past growth. That is what is slowing down, so they're going to prop things up until exports start to perform strongly again, which could take a couple years.
In an effort to generate more liquidity in the markets, China is also removing commercial bank ceilings in order to loosen up credit for rurul areas, technological innovation, small business and industrial mergers and acquisitions.
Another area they're targeting is their value-added tax, which will dramatically cut back on business costs to the tune of about $17.5 billion.
China's growth is estimated to be at about 8.5 percent next year, down by 3 percent from last year.
Most of the package will target ten key areas in the country, and will focus on "transportation, rural infrastructure, low-income housing, electricity and water. Some of the funds will also be used to build up areas ravaged from natural disasters, particularly the May earthquake in the Sichuan province."
This is being done in an effort to strengthen the domestic market, as the country has primarily relied on exports for the majority of their past growth. That is what is slowing down, so they're going to prop things up until exports start to perform strongly again, which could take a couple years.
In an effort to generate more liquidity in the markets, China is also removing commercial bank ceilings in order to loosen up credit for rurul areas, technological innovation, small business and industrial mergers and acquisitions.
Another area they're targeting is their value-added tax, which will dramatically cut back on business costs to the tune of about $17.5 billion.
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