ragerunner

I think holders of our debt, companies, individuals, etc. absolutely hope and expect us to make good on our debt 'promises'. I think China is showing their concern as they have been reducing their exposure to US debt. This is one reason why the FED has become a major buyer of our 'debt'. Supporting data for both of these items have been posted in the forum this year.

Per my comments above. Treasury yields hit new low on Spain worries Yields on 10-year, 5-year notes touch record low "NEW YORK (MarketWatch) — Treasury prices rose on Wednesday, pushing yields to a record low, as increasing worries about Spain’s fiscal health and its banks weighed on the euro and equities, increasing the appeal of the relative safe haven of U.S. bonds and the dollar." http://www.marketwatch.com/story/treasury-yields-hit-record-low-on-spain-worries-2012-05-30?dist=countdown

I think most people if they were being honest don't believe we will actually ever make good on all our debt. Europe is in the eye of the storm at this time and its problems are actually helping us sell our debt on the world markets (lesser of two evils at this time). This helps us keep interest rates low for the time being (of course we are needing to buy more and more of our own debt since the world's appetite is dropping for our debt as well). Sooner or later the world's attention will turn to us. I believe our only real long term hope is to inflate as much of our debt away as possible and since we control our own currency that may very well happen one day. Two other options that have been seem to come and go over time is a world currency through the IMF and the Amero. I believe as long as Europe stays in the eye of the storm we will continue to plug along. Low/no growth and in and out of technical recessions.

The level of desperation is clearing reaching a feverish pitch. Of course you have a plan that just adds more debt to the system. Short term relief that will create even bigger issues long term. I think Alessandro di Carpegna Brivio has hit on what is behind QE, bailouts, etc. its to fill (or refill) the world's banks vaults. Once you view it this way things that have been done for housing, QE, wall street, Europe etc. actually make more sense. Most of these things are not about saving nations, main street or sovereignty its about saving banks. Not saying there is not value in saving a Country's banking system but there comes a point when the cost seems to be to high. Europe’s debtors must pawn their gold for Eurobond Redemption "Southern Europe’s debtor states must pledge their gold reserves and national treasure as collateral under a €2.3 trillion stabilisation plan gaining momentum in Germany." "The plan is drafted by the German Council of Economic Experts and inspired by Alexander Hamilton’s Sinking Fund in the United States -- created in 1790 to clean up the morass of debts left by the Revolutionary War. Flourishing Virginia was comparable to Germany today. Chancellor Angela Merkel shot down the proposals last November as "completely impossible", but Europe’s crisis has since festered, and her Christian Democrat party has since suffered crushing defeats in regional elections. The Social Democrat opposition supports the idea. The Greens say they will block ratification of the EU Fiscal Compact in the German Bundesrat -- or upper house -- unless Mrs Merkel relents." "Alessandro di Carpegna Brivio, a gold expert at Camperio Sim in Milan, said Italy should treat such proposals with care. "Everything being done at a European level is in the interests of Germany and France, to save their banks. It is not in the interest of Italy," he said." http://www.telegraph.co.uk/finance/financialcrisis/9298180/Europes-debtors-must-pawn-their-gold-for-Eurobond-Redemption.html

Leading up to this there was a lot of happy talk in the MSM about how consumer confidence should start rising as gas prices fall. I guess the consumer has more on their minds than just gas prices. Consumer confidence falls in May "WASHINGTON (MarketWatch) — A gauge of U.S. consumer confidence declined for a third month, with gloomier views in May on present and future conditions, the Conference Board reported Tuesday. The consumer-confidence index fell to 64.9 in May — the lowest level since January — from a revised 68.7 in April. A prior estimate for April pegged the level at 69.2, according to Conference Board, a membership and research group. Economists polled by MarketWatch had expected a reading of 70 for May." http://www.marketwatch.com/story/consumer-confidence-falls-in-may-2012-05-29 Home prices flat in March: Case-Shiller Index remains at post-recession low "WASHINGTON (MarketWatch) — U.S. home prices were unchanged in March but remained at a post-recession low, according to the S&P/Case-Shiller 20-city composite index." http://www.marketwatch.com/story/home-prices-flat-in-march-case-shiller-2012-05-29 Dallas Fed May Business Activity Index Drops To -5.1 From -3.4 In Apr http://www.4-traders.com/news/Dallas-Fed-May-Business-Activity-Index-Drops-To-5-1-From-3-4-In-Apr--14347568/

I agree with your point. If you really start looking at what is causing these issues the will power/desire to address them and the ability to come to an agreement on how to address them is/will be very difficult to do. That is why I believe we will see very little economic growth any time soon and more official recessions. These big items will just get worse because we can't agree on a solution. If we continue down this path we will have a solution one day because the world economic system will force a solution (even if we don't like it). Some of the European countries are starting to learn this lesson now.

Well, part of the problem is that there isn't much agreement on that the "underlining [sic] economic issues are" to be "actually dealt with." -National debt that is nearing a 100% of GDP and not slowing -quality employment -cost of living that is in balance with incomes -underfunded items like social security -personal debt (cc, student loans, etc) -infrastructure deficiencies -financially unsustainable sprawl Just for starters. Some of these create short term weaknesses and all of them create long term economic issues. Example: One of the reasons so many US municipalities, counties and states are having huge financial challenges are because of underfunded pensions, aging and deteriorating infrastructure and financially unsustainable sprawl.

If this keeps going we will clearly see cheaper oil and other commodities. This would give the FED another window of opportunity to do a QE3 in the face of deflation in many economic areas. Which they will need to do in one form or another if Europe doesn't stabilize soon. On your comment about being stuck in an 'economic twilight zone' I think you are right. We will have limited to no true recovery until the underlining economic issues are actually dealt with. Right now we just print to mask the underlining mess. That can't create long term economic stability and robust growth. Matter of fact it just makes the day of reckoning more painful when it finally comes.

China's economy suffers 'sharp slowdown' 'Clearly the economy is much, much weaker than most people thought until recently ... They have a real mess on their hands' "XI’AN, China — A nationwide real estate downturn, stalling exports and declining consumer confidence have produced what a Chinese cabinet adviser, quoted on the official government Web site on Thursday, characterized as a “sharp slowdown in the economy.” "The most striking feature of the slowdown is that it extends beyond the coastal provinces, which depend on exports and are closely linked to the global economy, to the country’s far more insular interior, including cities like Xi’an here in northwestern China. China’s unexpected economic difficulties are starting to unnerve investors in world markets, especially commodity markets, as China is the world’s largest consumer of most raw materials and the second-largest consumer of oil. A deepening slowdown would ripple across the world economy. Until now, China’s economy barreled ahead mostly unhindered as the main engine of global growth, even as Europe struggled with its government debt crisis and the United States limped along with a crippled housing market." "The World Bank also warned on Wednesday of a slowdown. “Clearly the economy is much, much weaker than most people thought until recently,” Ms. Choyleva said. “They have a real mess on their hands.” http://www.msnbc.msn.com/id/47561828/ns/business-us_business/ European markets fall as Catalonia asks government for bailout "Spain's wealthiest autonomous region, Catalonia, needs a bailout from the central government because it is running out of options for refinancing debt, warns Catalan President Artur Mas." http://www.telegraph.co.uk/finance/financialcrisis/9290206/Catalonia-demands-a-bailout-from-central-government.html

Speaking of Germany. If politics don't bring Merkel down the German economy may. Debt crisis now taking toll on German economy Ifo tumbles; Greek exit ‘unleashing a second uncertainty shock’ "National data showed private-sector activity in Germany returned to contraction in May, with the country’s composite index falling to 49.6 in May from 50.5. Meanwhile, the Ifo Institute’s gauge of German business confidence tumbled more than expected to a six-month low at 106.6." http://www.marketwatch.com/story/debt-crisis-now-taking-toll-on-german-economy-2012-05-24?dist=countdown

Recently there was a discussion about workforce participation levels and the amount of boomers that are suppose to be leaving the workforce on a monthly bases. It looks like they might not be leaving or planning on leaving at that rate anytime soon. If this is the case it will suck for incoming workers of the next generation(s) if the economy can't start producing a lot more job opportunities. Why Boomers Aren't Saving for Retirement "Here’s a scary statistic: About 49% of Americans say they aren't contributing to any retirement fund. A new survey conducted by LIMRA, a trade association for the financial services industry, shows less than a third of Americans over age 50 worked with a financial professional to plan for retirement. So what gives? If boomers aren’t saving for retirement because they don’t have enough funds leftover after covering daily expenses like food, housing, gas and putting kids through college, how do they feel like they will have enough savings for retirement? Well, many don’t plan to ever retire fully or will delay leaving the workforce." Read more: http://www.foxbusiness.com/personal-finance/2012/05/24/late-to-retirement-saving-game/#ixzz1volK0pat

Obama 'took over' for Bush in late January 2009. The recession began in December 2007 and "really got going" in the Fall of 2008. Just some points of clarification. And I really don't have a problem with a newly elected administration refusing to take the blame for economic condition caused by the policies of the previous administration and/or congress. Nothing magical happens during the swearing in ceremony which changes things in an instant (no matter what the candidate says they will do "on the first day in office"). It takes at least 6 months to a year for any real impact. What I do have a problem with is the talking heads, the fringe websites and such, trying to place that blame. If in January, February, and March 2013 the economy is losing 400,000 jobs a month, it certainly won't be Mitt's fault...... but the carousel has been set in motion and you better believe that is the spin which will be used (for retribution if nothing else) Hts121: I guess I will never convince you that I have no interest in slanting towards republicans or democrats with my comments. I think both parties have a lot of issues and in the end do what Wall Street and the Fed want. (That is my slant on political economic issues) The democrats were still pointing to the republicans and Bush for the economic mess 2 years into Obama's administration. I also believe if Mitt get elected and things are still in the dumps 2 years later republicans will point at Obama and democrats for the problem. I was just saying that finger pointing is a major tool of both parties.

Durable-goods orders edge up 0.2% in April Core capital-goods orders fall; signs of export weakness "WASHINGTON (MarketWatch) — Orders for long-lasting goods edged up 0.2% in April, the second rise in three months after demand for cars and car parts picked up." http://www.marketwatch.com/story/durable-goods-orders-edge-up-02-in-april-2012-05-24 Acutally we added 2,000 for this and last weeks number. I have grown to love this data point, it maybe one of the most manipulated stats for a headline you can find. Having this number stay this elevated through the late spring summer higher season is not a good sign. Requests for jobless benefits fall slightly Applications for jobless benefits stuck around 370,000 mark "Jobless claims dipped by 2,000 to a seasonally adjusted 370,000 in the week ended May 19, the U.S. Labor Department said Thursday. Claims from two weeks ago were revised up to 372,000 from an original reading of 370,000, based on more complete data collected at the state level." http://www.marketwatch.com/story/requests-for-jobless-benefits-fall-slightly-2012-05-24

If true, Romney better hope his poll numbers don't continue to climb. I do not think he would want to carry the blame if the economy goes down the toilet in 2013 right after he is sworn in. They will just rinse and repeat the cycle already used. When Obama took over for Bush and the recession really got going they blamed Bush and the republicans for as long as possible. If Romney wins and the economy goes back into an official recession they will blame Obama and the democrats for as long as possible. One thing I give our two party system is that its pretty predictable on a lot of things. With finger pointing near the top of the list.

Eurozone nations told to prepare for Greek euro exit "EU leaders arrive in Brussels for growth summit as the Bundesbank says a Greek exit from the euro would be "manageable" and Athens denies that eurozone leaders were told to prepare for the eventuality." http://www.telegraph.co.uk/ Visitors to Greece warned over possible euro exit "Holidaymakers warned over possible food and fuel shortages, but Greek tourism official says "there's never been a better time” to visit." http://www.telegraph.co.uk/travel/travelnews/9284971/Visitors-to-Greece-warned-over-possible-euro-exit.html

If Merkel gives in on this issue she will not survive politically in Germany. Of course many politcial leaders in Europe have been 'sacrificed' over the last year or so in an effort to keep money flowing to the banks. ‘Astonished’ Merkel says no to Eurobonds High yield spreads undercut reforms, says Spain’s Rajoy "FRANKFURT (MarketWatch) — Chancellor Angela Merkel gave no hint that Germany will soften its opposition to Eurobonds at a Wednesday summit meeting with fellow European leaders, rejecting growing international pressure to pool euro-zone borrowing efforts." http://www.marketwatch.com/story/astonished-merkel-says-no-to-eurobonds-2012-05-23 I guess it all depends on your definition of 'survive'. Euro collapse needn’t torpedo global economy Commentary: U.K., U.S., China would survive a European depression "LONDON (MarketWatch) — It isn’t hard to understand why the financial markets are going into the summer looking shaky. Fresh Greek elections are set for next month, and may trigger a disorderly exit from the single currency. There is a slow-motion run on the Spanish banking system underway. Contagion from the euro crisis threatens to spill out into the rest of the world." http://www.marketwatch.com/story/euro-collapse-neednt-torpedo-global-economy-2012-05-23

Thanks for the links (Jeffery and Hts121). I think some of these tax breaks will be extended or new one will be created to replace them. I personally believe we never left a recessionary economy (we have just printed a positive GDP), but I agree that an 'official' recession is coming in the first half of 2013. One thing I have learned over the last 5/6 years is don't underestimate the 'power that be' ability to pretend and extend as long as possible. With that said there so many issues coming to a head over the next 6-9 months that I would be amazed if they can put that many fingers in the dam at once. China is falling into a nasty economic 'slowdown' already, India is having some real issues, Europe is just a complete mess (they should only hope that Greece's final default is all they go through over the next year) and the US is clearly slowing down (it takes about 6 months before the slow down shows its face on Main Street). Add in that workforce participation is in the tank and U6 unemployment is still around 14% to 15% and you can see that a giant economic storm is brewing for the world and US economy. Side note: Just had a meeting with some housing/RE people yesterday that do foreclosure sales for major banks. They stated that BOA, JPM and others have a ten year supply of 'shadow inventory' that they plan on starting to release into the system beginning in July. The RE people believe that by early next year we will see new pressure on home prices and inventory. Add in all the junk above with this an things have a very good chance of not looking so good by early next year and the elections will be over as well.

This type of information along with the data that was report about China's electrical usage being 50% less than last year and its becoming very apparent that China is seeing a significant economic slowdown. Despite 'official' government data. UPDATE 3-Chinese buyers default on coal, iron ore shipments-trade "SHANGHAI/SINGAPORE, May 21 (Reuters) - Chinese buyers are deferring or have defaulted on coal and iron ore deliveries following a drop in prices, traders said, providing more evidence that a slowdown in the world's second-largest economy is hitting its appetite for commodities. China is the world's biggest consumer of iron ore, coal and other base metals, but recent data has shown the economy cooling more quickly than expected, with industrial output growth slowing sharply in April and fixed asset investment, a key driver of the economy, hitting its lowest in nearly a decade." http://www.reuters.com/article/2012/05/21/china-coal-defaults-idUSL4E8GL1BS20120521

Someone better be bluffing or this will cause a lot of damage in the economic world. Of course Iceland seems to be recovering nicely, not exactly the same situation but it has many similarities.

If Spain or Italy end up taking the Greece route and 'default' on a large percentage of their debt, it will make Lehman Brothers look like baby talk. Moody's cuts ratings of 16 Spanish banks "SAN FRANCISCO (MarketWatch) -- Moody's Investors Service on Thursday lowered ratings of 16 Spanish banks and Banco Santander's U.K.-based subsidiary by one to three notches. Moody's cited unfavorable operating conditions on renewed recession, reduced creditworthiness of the Spanish sovereign, and rapid deterioration in asset quality for the downgrades. The outlooks on ten of the banks are negative while ratings of seven other banks remain on review for further downgrade." http://www.marketwatch.com/story/moodys-cuts-ratings-of-16-spanish-banks-2012-05-17-1647570

H-P gains on layoff reports; techs slip LinkedIn, Yelp fall ahead of Facebook IPO; Apple loses more ground "SAN FRANCISCO (MarketWatch) — Hewlett-Packard Co. was able to defy a selloff across the rest of the technology sector Thursday, as word emerged that the troubled industry titan was planning to cut as many as 30,000 jobs." http://www.marketwatch.com/story/apple-h-p-cisco-lead-tech-retreat-2012-05-17?dist=afterbell

Philly Fed factory index turns negative Manufacturing activity shrinks in May for first time since September "WASHINGTON (MarketWatch) — Business conditions at manufacturing firms in the Philadelphia region worsened in May, as orders for new products fell and executives scaled back hiring plans, a survey showed Thursday. The Philadelphia Federal Reserve said its manufacturing index sank to -5.8 in May from 8.5 in April, marking the first negative reading since September. Economists polled by MarketWatch were expecting the index to increase to 10.0. Readings below zero suggest that more companies are contracting instead of expanding." http://www.marketwatch.com/story/philly-fed-factory-index-turns-negative-in-may-2012-05-17 Leading economic indicators dip in April "WASHINGTON (MarketWatch) — The economy is “still struggling to gain momentum,” though long-term trends remain expansionary, the Conference Board said Thursday, as it reported that its index of leading economic indicators dipped in April for the first decline since September." http://www.marketwatch.com/story/leading-economic-indicators-dip-in-april-2012-05-17

Europe, US and the world brace for messy impact from Greece "As Greece teeters on the edge of financial collapse, European officials have a new task before them: preventing the financial turmoil from spreading across the continent, across the Atlantic and around the rest of the world. The fear is that Greece’s financial turmoil could spread beyond its borders despite European efforts to create a “financial firewall” to contain it. “The spillover effects, the chain of consequences are very difficult to assess,” said International Monetary Fund President Christine Lagarde on Wednesday. “We can certainly assume that it would be quite messy.” http://economywatch.msnbc.msn.com/_news/2012/05/16/11733028-europe-us-and-the-world-brace-for-messy-impact-from-greece?lite Greeks withdraw $894 million in a day: Is this beginning of a run on banks? "Political leaders in Athens were due to discuss an emergency government Wednesday to deal with a possible run on banks as it emerged Greeks withdrew almost $900 million in a single day, fearing their country could crash out of the euro currency by the end of the week." http://worldnews.msnbc.msn.com/_news/2012/05/16/11729795-greeks-withdraw-894-million-in-a-day-is-this-beginning-of-a-run-on-banks?lite

Spring is eternal. I know the area I work in, here in Colorado, is seeing a nice uptick in building permits. This summer should be one of the better summers for construction in years. The real question is how will things be next summer with the increase build up, by then, of foreclosures and the Presidential elections over? But this spring and summer is pretty well set in stone for the building community. Of course from a sustainability stand point just adding more suburban housing product has long term issues and a lot of this growth is in that category. Building of new U.S. homes rises in April Housing market posts best stretch of growth in nearly four years "WASHINGTON (MarketWatch) — U.S. builders started construction of new homes in April at a slightly faster pace, extending their best stretch of business in almost four years, according to data released on Wednesday." http://www.marketwatch.com/story/building-of-new-us-homes-rises-in-april-2012-05-16 Hopefully inventories will have a noticable slowdown or production will have to be cut. Industrial output rebounds strongly in April "Overall production at the nation’s factories, mines and utilities rose 1.1% in April, the strongest gain since December 2010 and well above expectations, the Federal Reserve said Wednesday." “Factory output had been rising faster than sales, so the slowing should not come as a surprise. Inventories were accumulated at a $70 billion annual rate last quarter, an unusually rapid pace that is expected to slow this quarter.” http://www.marketwatch.com/story/industrial-output-rebounds-strongly-in-april-2012-05-16

One thing this all showing is it sucks when you can't print your own money. Greece on brink of collapse "Europe’s financial crisis lurched into a perilous new phase as dire predictions emerged of a collapse in Greece’s economy, with a run on its banks bringing an inevitable end to its membership of the euro." "As leaders in Athens accepted the need for a new general election to end a national stalemate, the International Monetary Fund said Europe’s leaders should prepare for the possibility of a Greek departure from the single currency." "Raising tensions still further, Germany warned Greek voters that the wrong result in next month’s election will force their country out of the single currency." "Greece’s president warned, perhaps most alarmingly, that its banks risk running out of money, posing a “threat to our national existence”. http://www.telegraph.co.uk/news/worldnews/europe/greece/9268507/Greece-on-brink-of-collapse.html Italy's banks shaken as economic slump deepens "As Greece erupts, Italy is moving into the eye of the storm. Its economy is contracting at speeds not seen since the depths of the slump in 2009 as draconian austerity bites, greatly increasing the risk of social revolt and a banking crisis." "With the world's third largest debt after the US and Japan at €1.9 trillion (£1.18 trillion), it is big enough to bring the global financial system to its knees. It is also in the front line of contagion as the Greek crisis metastasizes. Yields on 10-year Italian debt jumped 16 points to 5.86pc on Tuesday after Italy's data agency said the country is sliding even into deeper recession, with GDP shrinking 0.8pc in the first quarter. Output is now 6pc below its peak in 2008. Italy has been trapped in perma-slump for a decade, the only major state to suffer a fall in real per capita income since 2000. Rising anger has led to a spate of violent attacks by terrorist groups over recent weeks, all too like the traumatic 'years of lead' in the late 1970s. The government is mulling use of troops to protect targets after anarchists shot the head of Ansaldo Nucleare last week and hurled petrol bombs at tax offices." http://www.telegraph.co.uk/finance/financialcrisis/9268330/Italys-banks-shaken-as-economic-slump-deepens.html