Thread: World Economic Outlook Poll

Things sure don't look good at the moment in the markets. Where is this all going and how fast? Could Socal be right?



"Shares in Asia have fallen as investors reflected fears in Europe that the region's debt crisis could spread to Italy and Spain."

BBC News - Stock markets fall on fears eurozone debts may spread

Great video of Warren Buffet on CNBC chatting.

Originally Posted by Hampsha

Things sure don't look good at the moment in the markets. Where is this all going and how fast? Could Socal be right?

There will be continued turbulence in US markets until the debt ceiling is raised. Guys like Socal can short the US$ and make tons of money- or lose their shirts.

The next big hit to the economy? | The Lookout - Yahoo! News

The recovery is weak now--but it could be headed for a major hit that will leave it even weaker.

At the start of 2012, the extended unemployment benefits approved by Congress in December 2010, which cover a maximum of 99 weeks per person, will expire. Though the benefits are hardly lavish--a little more than $300 a week for most recipients--their total impact on the economy is huge, because so many Americans are currently taking advantage of them. Moody's Analytics estimates that when the benefits expire,$37 billion will be taken out of the economy, the New York Times reports. That's enough to exert a significant slowing effect--at a time when the recovery is already a long way from robust.

Government benefits that go to poorer Americans, like unemployment insurance, tend to boost consumer spending more than other kinds of stimulus, because people living paycheck to paycheck have little choice but to spend the money, rather than saving it. So the disappearance of jobless benefits will take money out of circulation when economic growth is seeking to gain some traction.

Indeed, economists say that the withdrawal of jobless benefits will create a major ripple effect on growth as a whole. Consumer spending accounts for around 60-70 percent of U.S. economic activity, economists say. But with so many Americans having lost wealth in the housing bust, spending has been tepid for a while, preventing the recovery from gaining any momentum. Now, the end of the extended benefits will likely soon put a further crimp in spending.

And that, of course, leaves out the role the benefits play on an individual level, providing a crucial lifeline to millions of struggling Americans.

Full NY Times story here...
http://www.nytimes.com/2011/07/11/bu...pagewanted=all

Originally Posted by Hampsha

Could Socal be right?

I seriously doubt that, even though a broken clock can be right at least twice a day

Doesn't look too good for the US.

Return of the Gold Standard as world order unravels - Telegraph

When all this peaks, some people out there are going to loose big. Even if the gold price isn't a bubble, when things snap it will deliver pain just like a bubble usually does. Seem to be a lot of experts on both sides saying the other side is completely off.

We are in a countdown to the beginning of August. What will the dems and reps come up with to deal with the US? Whatever they come up with should say something about the future of gold and America. Sometimes I think the that the shock doctrine people are driving down the dollar for short term gain. The Repubs seem to be helping them spread the doom and fear.

I guess we can all look for phantom indicators, but realization is setting in that this stagnant if not downward trend in US jobs market is a longer term thing. That's bad news for almost everyone - including the Chinese who hold much of the US debt. In other words, it's just bad and bad.

yep, but for the poorest and richest how much does the quality of life actually change really.

Originally Posted by Tom Sawyer

Asians are buying gold and property at home and abroad which in turn is creating false demand (e.g. bubbles). When a stablizing factor returns to currencies, the gold bubble will pop. If the Asian economies and jobs markets contract (e.g. Chinese esp.) their domestic and overseas demand will collapse - they'll need to sell and prices will be driven down. It's not rocket science - and never was.

Central banks are buying gold. The system is moving back to gold. There is no bubble in gold.You know nothing about central banking or economics if you compare gold to property.

Just when average people think they have this bubble thing figured out, they get caught on the wrong side again. The bubble is in digital money and government bonds.

Lately, I've found this guy to be a bit interesting. He predicted Iceland's collapse two years before it happened. He's got some interesting comments on Europe and the US in this clip from today, Aug 11.

Nouriel Roubini says 50% chance of another recession

Karl Marx was right: 'capitalism can destroy itself' , says economist Nouriel Roubini


ECONOMIST Nouriel Roubini, in an interview with The Wall Street Journal today, reached back into history and paraphrased another well-known economist, to best explain what he thought of today's roiled global economy.

"Karl Marx was right, at some point capitalism can destroy itself," said Professor Roubini, who is best known for his dire outlook on economic developments which has earned him the nickname “Dr Doom”.

"Markets are not working," currently, he said.
Prof Roubini, in the wide-ranging interview, said the global economy was at the precipice of falling into a collective recession, led by the US, the euro zone and Japan, and governments were doing exactly the wrong things to prevent that.
To that end, developed economies like the US and countries in the euro zone were implementing austerity programs in order to try to fix their debt-damaged economies when they should be enacting more monetary stimulus.


Because of that, he predicted the world had a 50 per cent chance of falling into a recession, and that the next 2-3 months would reveal which way the global economy would head.
"We are at stall speed right now, and we do not know if we are going to go up, or down," he said. The world is also operating right now, "in the fog of uncertainty," he said.
Many market analysts feel last week's US credit downgrade unleashed this latest round of market volatility, but Prof Roubini said he didn't disagree with Standard & Poor's premise that the US was on an unsustainable fiscal path and that Washington gridlock made it hard to achieve fiscal improvements.
Also, "we have destroyed our sovereign sustainability," in the US by moving from the healthy surplus of the beginning Bush years to the $US1.3 trillion ($1.25 trillion) deficit reality of 2011, with entitlements being expanded, two wars being fought, financial institutions being bailed out, and low taxes being kept, he said.
In some ways, he said, financial institutions had also become even too big to fail in the last few years, which threatened the US economy which no longer has the financial backstop to deal with such potential failures.
"There is a risk that this is the second leg of what happened during the Great Depression," he said.
Prof Roubini also predicted that "there could be QE3, QE4, QE5," in the US over the next few years.
"Now is not the time for risky assets," and that included the euro, he said.
Over a five-year horizon, it is possible that Italy or Spain could choose to leave the euro zone, if they think it would benefit them and they feel they are losing access to markets by being part of the euro zone.
"It's better to be safe than sorry and I'm putting most of my money in cash," with US Treasuries a smart bet, he said.

Karl Marx was right: 'capitalism can destroy itself' , says economist Nouriel Roubini | The Australian

Originally Posted by jamescollister

Went back to OZ for Xmas with the wife and kids, could not believe the prices of food etc. OZ now is less than 70 grand a year if you have kids.

OZ is becoming insane, I work with young guys that have 350K mortgages, ain't unusual. Nearly all work a second job and the ones with kids are up against it.

Myself have no mortgage and my monthly visa card trots home regularly at 2K , I'm happy if it comes in lower which ain't very often . This is for living costs plus regular bills only and not much fat in there for entertainment.

I'll be living a very nice lifestyle in Thailand on that, cant wait.

Originally Posted by Thormaturge

Sometimes I wonder whether European politicians are all mad.

Taking money from productive countries and sinking it into failing economies is a huge waste, and as we have seen with Greece it doesn't cure the problem. All we have done is shift the debt.

Either countries such as Greece, Spain, Ireland and Italy start producing something everyone else wants to buy, in order to repay the debt, or we inflate our way out of trouble. Holding down inflation and shuffling the debt about just prolongs the problem.

It just seems to me that we either allow inflation to take hold or we face financial collapse. Either way you want to be sitting on something physical rather than cash or stocks.

The sooner Bernanke announces QE3 the better for everyone. I know it is Mickey Mouse money but it is either that or everyone takes a paycut.

Stocks are more physical then cash or bonds. They at least give you a share in something physical. Metals is the best but stocks are certainly better then bonds or cash. reasonably priced real estate at this point is good too.

^
I agree that land is a good buy but not any form of buildings since prices are still inflated and further correction is likely.

When buildings are somewhere closer to the value of the labour and materials used to construct them then we may see prices stabilise. Anything above that level is speculation. The property bubble hasn't burst, it is simply deflating slowly.

As for shares, you don't want to be sitting on shares in a company that is cash rich when he value of that cash is being deflated...but then do you want shares in a company without cash either?

Where I vote for "Asia looks good but the west is in trouble."

Joking dont need to reply

Originally Posted by Thormaturge

Taking money from productive countries and sinking it into failing economies is a huge waste, and as we have seen with Greece

agreed .... and paraphrasing

Taking money from productive people (white males) and sinking it into unproductive people (negros, spics, women libbers) is a huge waste, as we have seen with The US. The Lyndon B. Johnson great society is not looking so great.

Along way from having any real ideal about what's going on, but think they should have let the system collapse when the GFC hit. We would be well on our way to recovery by now.
Terry 57 be careful when you move here, things are booming in many areas and the cheap living may start to be not so cheap over the next few years.Jim

Originally Posted by baldrick

but Prof Roubini said he didn't disagree with Standard & Poor's premise that the US was on an unsustainable fiscal path and that Washington gridlock made it hard to achieve fiscal improvements.

Along with the Dagong rating agency

Originally Posted by terry57

Nearly all work a second job

Is that not the norm for fire fighters - the second job?

Originally Posted by Thormaturge

^
I agree that land is a good buy but not any form of buildings since prices are still inflated and further correction is likely.

When buildings are somewhere closer to the value of the labour and materials used to construct them then we may see prices stabilise. Anything above that level is speculation. The property bubble hasn't burst, it is simply deflating slowly.

As for shares, you don't want to be sitting on shares in a company that is cash rich when he value of that cash is being deflated...but then do you want shares in a company without cash either?

Agree. You have to find real estate markets that have had very high interest rates for the last few years. Argentina has had high rates for the last 10 years so real estate is cheap. The Philippines is cheap too.

Shares in mining companies, utilities or blue chips will will at least stay intact and keep you out of currency risk.

I'd sooner put it on the gee gee's

At least you get a run for your doe

A Friday August 12 clip from from Fox Business. Jim Rogers discussing Europe and the markets in general.

Originally Posted by socal

Central banks are buying gold.

Do you have a link to that?