Thread: The strongest economy in the world

Roubini calls the bluff on the 5.7% GDP number.

Roubini Calls U.S. Growth ‘Dismal and Poor,’ Predicts Slowing

By Simon Kennedy and Erik Schatzker


Jan. 30 (Bloomberg) -- New York University Professor Nouriel Roubini, who anticipated the financial crisis, called the fourth quarter surge in U.S. economic growth “very dismal and poor” because it relied on temporary factors.


Roubini said more than half of the 5.7 percent expansion reported yesterday by the government was related to a replenishing of inventories and that consumption depended on monetary and fiscal stimulus. As these forces ebb, growth will slow to just 1.5 percent in the second half of 2010, he said.


“The headline number will look large and big, but actually when you dissect it, it’s very dismal and poor,” Roubini told Bloomberg Television in an interview at the World Economic Forum’s annual meeting in Davos, Switzerland. “I think we are in trouble.”



Roubini said while the world’s largest economy won’t relapse into recession, unemployment will rise from the current 10 percent, posing social and political challenges.



“It’s going to feel like a recession even if technically we’re not going to be in a recession,” he said.

Link: Roubini Calls U.S. Growth ?Dismal and Poor,? Predicts Slowing - Bloomberg.com

Originally Posted by Milkman

Here is the Ring of fire. The US, is squarely in it.

Where's China and India???

Originally Posted by Milkman

People are moving. 3000 per month leaving California.

What year is that for, Milkie?

Originally Posted by robuzo

Excellent piece by Simon Johnson, who now is part of the Huffpost business team
What part of 8 million net jobs lost since December 2007 do you still not understand?

5555555555 Yep, get that one last Bush year in there!!! Huff'n'Puff blogger -- says it all.

Originally Posted by crippen

The strongest economy in the world
"The American economy is the strongest in the world and growing faster than that of any other major industrialized country. It grew at an annual rate of 5.3 percent in the first quarter

??? Huh? What year is that all in? Milkie's got it right, below:

Originally Posted by Milkman

Roubini said more than half of the 5.7 percent expansion reported yesterday by the government was related to a replenishing of inventories and that consumption depended on monetary and fiscal stimulus.

Yep. And this crap that the number of job losses have dramatically diminished -- again, why? Because the number of bladdy businesses has also diminished apace and companies still in biz are keeping productivity up with fewer employees. Why expand in this sh*t economic climate when uncertainty about taxes and regulatory changes keeps any astute bizperson from expanding.
Obama needs to change or get the fek outta of the driver's seat.

Originally Posted by Jet Gorgon

Quote: Originally Posted by crippen The strongest economy in the world "The American economy is the strongest in the world and growing faster than that of any other major industrialized country. It grew at an annual rate of 5.3 percent in the first quarter
Jet replies:
??? Huh? What year is that all in? Milkie's got it right, below:

It's true, Jet. It was in all the papers.

Originally Posted by Jet Gorgon

Quote: Originally Posted by Milkman Roubini said more than half of the 5.7 percent expansion reported yesterday by the government was related to a replenishing of inventories and that consumption depended on monetary and fiscal stimulus.
Jet replies:
Yep. And this crap that the number of job losses have dramatically diminished -- again, why? Because the number of bladdy businesses has also diminished apace and companies still in biz are keeping productivity up with fewer employees. Why expand in this sh*t economic climate when uncertainty about taxes and regulatory changes keeps any astute bizperson from expanding. Obama needs to change or get the fek outta of the driver's seat.

So let me see if I understand your logic here, Jet. You declare that a reported fact is crap.

You support this with another denial, this time of an apparently slowly improving economy. The reason, you say, that the economy is in such sh*t is because of uncertainty about taxes and regulatory changes--nothing to do with the sh*t that hit the fan just over a year ago as Samson Bush and his Delilah, Cheney, ducked out of the way.

All leading to the grand finale: Obama neds to change and get out of the driver's seat.

Have I got it wrong? What did I miss here?

Just a little reality check for those out there who think Bush Whacking the economy one more time would be a good thing.

Obama's National Debt Impact
Upon Inauguration: $10,626,877,048,913
As of Jan 29, 2010: $12,278,635,997,967
Increased by:$1,651,758,949,054

http://www.theobamadebt.com/

A little more reality for y'all?




The largest budget ever... signed by a President mouthing platitudes about the evil of deficits as he runs up the largest deficit in history.

"The principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale." -- Thomas Jefferson

http://www.danegerus.com/weblog/Right.asp

This....could be big....and bad.

Moody's warns US of credit rating fears

By Michael Mackenzie and Gillian Tett, FT.com
February 4, 2010 -- Updated 0056 GMT (0856 HKT)



Credit rating agency is signalling warning bells on the credit worthiness of the United States.


STORY HIGHLIGHTS

• Moody's warned on Wednesday that the U.S. triple A sovereign credit rating is under pressure
• More robust growth or tougher actions on country's budget deficit needed
• Investor: "Everyone has reason to be concerned about the U.S. economy"

(FT) -- Moody's Investors Service fired off a warning on Wednesday that the triple A sovereign credit rating of the US would come under pressure unless economic growth was more robust than expected or tougher actions were taken to tackle the country's budget deficit.


In a move that follows intensifying concern among investors over the US deficit, Moody's said the country faced a trajectory of debt growth that was "clearly continuously upward".


Steven Hess, senior credit officer at Moody's, said the deficits projected in the budget outlook presented by the Obama administration outlook this week did not stabilise debt levels in relation to gross domestic product.


"Unless further measures are taken to reduce the budget deficit further or the economy rebounds more vigorously than expected, the federal financial picture as presented in the projections for the next decade will at some point put pressure on the triple A government bond rating," the rating agency added in an issuer note.

Link & Entire: Moody's warns US of credit rating fears - CNN.com

Get ready for the media reports tomorrow on Feb 5.

U.S. May Lose 824,000 Jobs as Employment Data Revised: Analysis Share Business Exchange

Feb. 3 (Bloomberg Multimedia) -- The U.S. may lose 824,000 jobs when the government releases its annual revision to employment data on Feb. 5, showing the labor market was in worse shape during the recession than known at the time.

Link & click here to see some graphs: Bloomberg.com: TV and Radio

Brezynski. This is 11 months old, but very relevant to today - even moreso today.

Also, today, AIG is giving out $100 million in bonuses this year.

I wonder if the Chinese will keep financing US debt after their recent disagreements over Taiwan and Tibet.

Originally Posted by Panda

I wonder if the Chinese will keep financing US debt after their recent disagreements over Taiwan and Tibet.

In a way China has to, to keep the Yuan cheap.

Its on again. The $US is going up, up up as everything else from gold, oil, other major currencies and stocks go down. Flight out of other investment choices and into $US paper money is a bad indicator for the world economy as shown during the 2008 crash. Ironically the faith in the $US that investors show most in troubled times is what is hurting US income through balance of trade as US exports become more expensive for the rest of the world. That in turn hurts US jobs, and reduces govt tax revenue which forces the US govt to print and borrow more paper money in order to keep up. It all seems like a vicious cycle in a downward spiral that benefits nobody.

Could this be the start of the dreaded "double dip" recession/depression as the stimulus programmes impact becomes depleted that some economic experts have predicted? With USAs spend/ borrow/print strategy, how much longer can the $US remain the last safe haven for investors when the wheels seem to be falling off the world economy? What happens when USA gets so far into debt that it becomes clear to investors USA can not repay it at the inflated $US trade value?

The worlds stored wealth, weather its held in gold, stocks, or paper currency has got to go somewhere when the world economy has a hiccough and needs to undergo a readjustment. At the moment that wealth flows out of investment in companies that produce the real things we need to live and into $US paper money. The current system we have with the $US paper money, unbacked by production and backed only by ever increasing debt as the worlds premium trading medium is fatally flawed and can not continue. It is the $US hegemony that is root cause of what we see happening now. A gross disparity in the value of currencies of countries, some of whom are nett producers and some of whom are nett borrowers.

The dynamics of trade and wealth creation dont change on the macro world scale anymore than they would, or have throughout history on a micro local scale. Its like the store keeper taking a cheque from a guy he knows is too broke to pay for his groceries.

The only way the world economy is going to get back in balance is to get rid of this failed experiment of the past 39 years with the $US as the worlds default trading currency and replace it with a production based medium.

Gold posts biggest one-day loss since 2008 | Reuters

Originally Posted by MrG

So let me see if I understand your logic here, Jet. You declare that a reported fact is crap.

You support this with another denial, this time of an apparently slowly improving economy. The reason, you say, that the economy is in such sh*t is because of uncertainty about taxes and regulatory changes--nothing to do with the sh*t that hit the fan just over a year ago as Samson Bush and his Delilah, Cheney, ducked out of the way.

All leading to the grand finale: Obama neds to change and get out of the driver's seat.

Have I got it wrong? What did I miss here?

Oh, brother. Guess you never had a biz. And, yep, typical libbie, keep on blaming Bush.

Originally Posted by Milkman

People are moving. 3000 per month leaving California.
What year is that for, Milkie? ...Jet....erm....it's this year. Now. And also in 2009, when it started.

I read several major newspapers per day. A couple of them are from California, such as the LA Times.

This has also been reported in the national news media.

Oh, sorry for asking. And be careful of saying you read several newspapers a day (as do I). Slack will be here wondering if your last name is Palin.

Originally Posted by MrG

Just a little reality check for those out there who think Bush Whacking the economy one more time would be a good thing.

Obama's National Debt Impact
Upon Inauguration: $10,626,877,048,913
As of Jan 29, 2010: $12,278,635,997,967
Increased by:$1,651,758,949,054

http://www.theobamadebt.com/

Oh, only up by $1.65 TRILLION in one year without creating any jobs or stimulating the economy. What a guy!

Originally Posted by Milkman

Originally Posted by Panda

I wonder if the Chinese will keep financing US debt after their recent disagreements over Taiwan and Tibet.

In a way China has to, to keep the Yuan cheap.

China has near a quarter of the worlds population of humans. Its an emerging economy on the world scale and doesn't yet have the ability to sustain growth through a domestic market. China lacks raw materials such as coal and iron ore to sustain its current growth through production and export of finished products. So its destined to always be an exporter of manufactured goods. Right now and in recent decades Chinas rise on the world economic stage has been due to a very large low paid work force (leaving political ideals out of it). If China was to float its currency there would be massive investment in the Yuan benefiting millions of Chinese, but at the same time costing the country their competitive edge in trade and throwing hundreds of millions out of work.

At this point in time China is undergoing a nation building exercise. Building infrastructure that will benefit not this generation, but future generations. Roads, dams, bridges, electricity generation etc... Just like all us so called developed countries did over hundreds of years. Only China is doing it in a very compressed time frame of only a couple of generations to catch up with us.

As far as floating currencies goes, its only been since 1971 when the US abandoned the gold standard and took over as the worlds default trading currency that free market floating currencies started to happen in the west. Before that governments controlled the trading value of their currencies.

The fact that China has decided to follow the wests path to prosperity by emulating their past successes in currency manipulation is certainly a sore point with many countries including USA. But how could anyone blame China for trying to fast track the standard of living for its citizens by using exactly the same strategies we ourselves used?

Panda, thank you for the thoughtful analysis.

Here is Marc Faber on US bankruptcy on Feb 5, 2010.
https://www.youtube.com/user/RussiaTo.../0/pAJeZaFdbJA

Its strange that while Americans seem to regard Obama as a left wing Libbie, most of the rest of the world still regard him as much to the right of centre. Just a matter of perspective I suppose depending on what you deem as a healthy balance between free enterprise and government involvement in services.
Personally, I believe that USA has moved too far to the right to the detriment of its citizens and to the benefit of big corporations who now have an undue influence on government. But thats just my own view as a non-US citizen. Its up to the US voters to decide how they want their country run. However, I do view the macro politics of USA with interest as it has a great affect on the rest of the world including my own country regarding world economics and of course warfare in various places.

Originally Posted by Panda

Obama is doing what any good Republican would do.

Originally Posted by Panda

Its strange that while Americans seem to regard Obama as a left wing Libbie, most of the rest of the world still regard him as much to the right of centre.I suppose depending on what you deem as a healthy balance between free enterpri se and government involvement in services. Personally, I believe that USA has moved too far to the right to the detriment of its citizens and to the benefit of big corporations who now have an undue influence on government.

We've seen it in other periods of history--50s McCarthyism being the latest when any half way progressive idea was "made suspect" and the other side made political hay. In terms of America's ideological thermostat, it's starting to move into the red. Considering what Fox, Limbaugh, et al are getting away with in terms of lies and name calling, it's getting worrisom. There doesn't seem to be a lie that can't be told or a low that can't be lowered by that crowd. Considering their wish for Obama's failure, they can't even claim to be a "loyal opposition".

One of the problems now is that, ever since Reagan, the perception of what is center has been moved so far to the right that even a slighty progressive idea is seen as way, way out there. Keep in mind that one of the oldes lies that is easy to convince Americans of is that if you're a liberal you're not a real American. And now the Supreme Court has just came out of the Radical Right closet leaving the country with a real reason to worry about it's future.

Up until that decision, I figured there was hope. Now it think a legitamate question is is Democracy in America still viable--and by Democracy I don't just mean the right to go put down your mark in some flawed, untrustworthy voting system. I mean the ability to own your government, as in Government of the People, For the People, by the People?

There is no sense of fair play in American politics. With the Patriot Act, no sense of security under the law. Considering the relentles nature of the Republican Right and the fecklessness of the Democratic opposition, we will soon be The United Oligarchy of America. IMO.

I suspect strongly that MrG is an American-hating Communist.

The Patriot Act was passed in record time by God-Fearing patriots, hence the title, and anyone opposing it would have been shot down as being un-patriotic and un-American. . . possibly condoning acts of terrorism or sift on crime.

Stacking the supreme court with politically active and openly biased members ensures that the dictate of the powerful remains at a status quo.

After all, the judiciary has to be seen to be partisan and acting on behalf of those that support the US as a whole . . . big corporates.

Please tell me that isn't a good thing.

Originally Posted by Jet Gorgon

Slack will be here wondering if your last name is Palin.

Moi?

A very good article by Paul Krugman. Basically, America is being paniced by talk of the federal deficit- but the plain fact is, it isn't that bad. Yes there are structural problems going forward- the biggest one being soaring and inadequately funded Healthcare costs. Yet the people who are making the biggest noise about the Federal deficit are mainly from the same camp as have, successfully so far, stalled Health care reform! He hits the nail on the head- the reason is political.

Fiscal Scare Tactics

True, there is a longer-term budget problem. Even a full economic recovery wouldn’t balance the budget, and it probably wouldn’t even reduce the deficit to a permanently sustainable level. So once the economic crisis is past, the U.S. government will have to increase its revenue and control its costs. And in the long run there’s no way to make the budget math work unless something is done about health care costs.

But there’s no reason to panic about budget prospects for the next few years, or even for the next decade. Consider, for example, what the latest budget proposal from the Obama administration says about interest payments on federal debt; according to the projections, a decade from now they’ll have risen to 3.5 percent of G.D.P. How scary is that? It’s about the same as interest costs under the first President Bush.

Why, then, all the hysteria? The answer is politics.

The main difference between last summer, when we were mostly (and appropriately) taking deficits in stride, and the current sense of panic is that deficit fear-mongering has become a key part of Republican political strategy, doing double duty: it damages President Obama’s image even as it cripples his policy agenda. And if the hypocrisy is breathtaking — politicians who voted for budget-busting tax cuts posing as apostles of fiscal rectitude, politicians demonizing attempts to rein in Medicare costs one day (death panels!), then denouncing excessive government spending the next — well, what else is new?

The trouble, however, is that it’s apparently hard for many people to tell the difference between cynical posturing and serious economic argument. And that is having tragic consequences.

Op-Ed Columnist - Fiscal Scare Tactics - NYTimes.com

Well worth reading the article in full. Cynical political partisanship is bringing your country down.

The overvaluation of the $US brought about by the $US hegemony as the worlds trading currency is what is killing US jobs and the USAs potential to get out of the current debt spiral.

Ironically, the worse the world economy gets the more investment wealth moves out of productive industry and into $US paper money, --- thus forcing its tradable value up even more.

The USA is in a unique position having custody and control of the worlds default trading currency. That is the difference between USAs financial position on the world stage and other countries who must buy $USs as a reserve of foreign exchange wealth. USA has relatitively little reserves of foreign exchange wealth. and although it still holds the worlds biggest reserves of gold, those gold reserves only amount to a fraction of its international debt at todays gold prices. The fact is that USA doesn't need to hold any reserve wealth when it can simply print it at will.
There are benefits and downsides to owning the worlds money mint. The benefits have been an overly strong currency with imported items being available to the public at relatively cheap prices. And there is the so called "money go round" where USA sends its $s overseas for cheap oil and in return those $USs are reinvested in the US market place. Sort of like selling the farm off piecemeal.

The downsides of course are a decline in export trade with domestic manufacturing becoming uncompetitive and the subsequent job losses as manufacturing goes offshore. Still, USA is a bountiful country blessed with natural resources, an innovative business ethic and a strong work ethic among its population. However, as the US trade balance has diminished to the now less than break even point over the past few decades, the US working class public have been lulled into a false sense of wealth and prosperity. Up till recently, there have still been enough jobs to go around and imported goods have been getting cheaper. The standard of living for the masses has been maintained despite the fact that wages in real terms have been in decline over the past few decades. The overvalued $US and the undervalued Chinese Yuan have masked any drop in purchasing power for the average US citizen. Then there is the low end economy where otherwise uncompetitive industries remain afloat by hiring and underpaying illegal migrant workers. Agriculture being the main culprit there. But jobs Americans wouldn't do for the pitiful pay rates. Still, these virtual slave labour immigrant workers add to USAs prosperity by keeping otherwise uncompetitive enterprises going against overseas competition and providing cheap produce for the domestic consumer market.

While real wages for the working class masses have been gradually declining the masses havent noticed it because thier purchasing power has been improving through cheaper imports thanks to the overvalued $US and undervalued Chinese Yuan. But in effect, working class wages and benefits have been cut to the bone in these good times. Unskilled workers in USA enjoy far lower wages and benefits than comparative workers in other developed countries, though I doubt many of them would be aware of that as generally speaking USA is a very introspective country.

The financial experiment of the past 4 decades with the $US hegemony has been good to most Americans. The country has had virtually unlimited credit and Chinas rise as a cheap exporter of manufactured goods has fed into the equation. But somewhere down the line the credit that has powered the US economy for 4 decades will run out. Thats not going to be a bad thing for USA in general as more expensive imports will mean a resurgence in US manufacturing and more jobs. Although it would take a few years to get the manufacturing infrastructure back on line.

The bottom line is that while most people (and even most so called economists) seem to think the recent experiment of the past 40 years in the $US hegemony is some kind of a permanent thing rather than just a fleeting aberration in historical terms, --- the world of international trade will eventually move on and find a more sustainable means of exchanging goods and services.

Originally Posted by MrG

There is no sense of fair play in American politics. With the Patriot Act, no sense of security under the law. Considering the relentles nature of the Republican Right and the fecklessness of the Democratic opposition, we will soon be The United Oligarchy of America. IMO.

I feel for you MrG. An American with a sense of social justice and an insight into where your country is heading.

Unfortunately, I dont believe the majority of your countrymen share your views, or even have the intellectual capacity to think about such things so long as they remain mesmerized by the corporate media.

I do see some parallels between Thailand and USA in political terms.
Once a country gets so far to the right that those with power control the media and the justice system, its hard to get the system back in balance where democracy can function normally.