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Bad News For You Economic Doomsayers.

Discussion in 'Uncategorized Threads' started by JBrooks, Aug 8, 2008.

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  1. JBrooks

    JBrooks TS Member

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    Well, for all you who have been beating the drums of America is finished as an econmic power, here is some bad news. This is from the London Telegraph and you woll note that oue economy is well outperforming Europe and Asia and money is flowing back into the dollar as, once again and as always, it represents the most stable and secure safe haven for wealth. Note also that folks don't want those shaky eurobonds. Looks like good old US Treasuries are still the one.

    "US dollar rallies as extent of worldwide recession becomes clearer
    By Ambrose Evans-Pritchard, International Business Editor
    Last Updated: 10:13pm BST 08/08/2008

    The psychology of global markets has shifted hugely over recent days as it becomes clear that Europe, Australasia and parts of Asia are sliding into recession.

    The US dollar has launched its best rally in half a decade, reflecting a recognition that half the world is in even worse shape than the US. In fact, America is the only G7 country to eke out modest growth this summer.

    The US dollar index - currencies watched closely by traders - smashed through resistance yesterday in the biggest one-day move since the long dollar slide began seven years ago.

    advertisement"This was highly significant. Perceptions have changed," said Ian Stannard, currency strategist at BNP Paribas.

    The greenback gained three cents to $1.5050 against the euro, with big moves against other currencies.

    Pound at lowest in 21 months
    ECB hawks take a pounding
    More by Ambrose Evans-Pritchard
    Commodities tumbled as hedge funds and financial investors struggled to untangle themselves from crowded positions on the futures markets. Brent crude fell $4 to under $114 a barrel, down over 20pc since peaking in early July. The Baltic Dry Index has now fallen every day for over three weeks, dropping 30pc on fears that ship demand is fizzling out.

    Copper fell to a six-month low on reports of rising inventories in China and Europe. Lead, nickel and tin all dived in frantic trading on the London Metal Exchange.

    "We see a deep global recession," said Albert Edwards, chief strategist at Société Générale.

    "Growth prospects in the Eurozone, Japan and the UK have deteriorated. Most now accept that recession has already begun in all three," he said. Mr Edwards predicted a "collapse" in emerging markets next. "You ain't seen nothing yet," he said.

    The commodity slide boosts the dollar as petro-payments are recycled into euros, not the greenback.

    A Bundesbank study found that for every $1 sent to the Middle East or Russia for oil, the eurozone gets 40 cents back. Europe is the chief supplier of cars and industrial good to the petro-economies. The US receives just 10 cents.

    This bias is now going into reverse. Moreover, Danske Bank says there has been a $70bn net outflow of investment from the eurozone over the last year. It appears that foreign governments are sated on European bonds.

    The drip-drip of bad news in America is now being trumped daily by the icy douche splashing over Europe. The markets were stunned by leaks from Berlin last week that Germany's economy had shrunk by 1pc in the second quarter. Yesterday Italy revealed a 0.3pc contraction.

    The last straw was an admission this week by European Central Bank president Jean-Claude Trichet that "downside risks had materialised" and there was no clear end in sight.

    The comments were followed by the ECB's lending survey yesterday, confirming that banks have cut back sharply on mortgages and household credit.

    BNP Paribas said it was now clear that the ECB had misjudged the severity of downturn. The monetary squeeze of the last year has raised mortgage costs by 150 basis points in Spain, Italy, Ireland and other states that rely heavily on floating-rate contracts. House prices are dropping in several regions at rates that match the US slide.

    Bernard Connolly, global strategist at AIG, said the falling euro would come too late to prevent a severe economic crunch across southern Europe. "We think the EMU credit bubble is about to burst," he said.

    Current account deficits have already reached 10pc of GDP in Spain and Portugal, and 14pc in Greece. The region depends on foreign capital flows to keep its economies afloat. This is now under threat as investors become alert to the solvency risks of debt deflation, causing a blizzard of warnings from rating agencies on the health of the banks in these countries.

    Over the last few months the US dollar appears to have hit the bottom of its cycle, suggesting its relentless slide since 2001 may finally be over.

    Arguably, the US is now super-competitive. Airbus and Volkswagen are shifting production plant across the Atlantic. US furniture and textile companies have stopped outsourcing to China, and are coming home.

    The International Monetary Fund says the dollar has fallen 25pc to 30pc on a global basis, just as it did in the late 1980s. There was no shortage of dollar doomsters at that time, warning that America was finished - left behind by Japan and Germany. Events played out otherwise. America was on the cusp of a recovery.

    Will this be repeated? The US current account deficit has fallen from 7pc of GDP to under 5pc early this year, or nearer 4pc after adjusting for the oil spike.

    As the Habsburgs used to say, "the situation is desperate, but not serious"."
     
  2. Haskins Bill

    Haskins Bill TS Member

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    Hmmm, lets look back to when Bush the elder was running against slick Willie. They said the economy was in the toilet, well after the election the tune changed and the refrain was 'oh the economy was better than we thought it was'! Bill
     
  3. nipper

    nipper TS Member

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    i guess you will believe anything you read then

    bill
     
  4. JBrooks

    JBrooks TS Member

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    I would say a business that makes in earnings the multiple of its debt that the US economy does is in very good shape. I would say that a business that can support 300 million people to the highest standard of living in history is in good shape. I would say a business that provides billions of dollars in charity all over the world is in good shape. I would say a business than can create 50 million new voters in countries that were previously ruled by oppressive dictators is in good shape. I would say that a business that has people standing in line to give it billions of dollars in exchange for its bonds is in good shape. I would say that a business that dwarfs its nearest competitors grouped together is in good shape. I would say a business that has people wanting to come from all over the world to work for it is in good shape. I would say a business where the vast majority of it employees would not even consider leaving is in good shape. AND, I would say a business where 100,000s of its best young people are willing to sacrifice their lives to preserve what it stands for is the best business that ever was.
     
  5. pendennis

    pendennis Well-Known Member

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    2str8 - The U.S. debt is only a part of the total national balance sheet. Don't forget about the total assets of the country. The economic output of the U.S. is still 25% of the world total, far in excess of the next three or four nations.

    For those sooth- and naysayers who believed that oil would top $200/bbl, the price closing price of oil today was $115/bbl, based mainly on a STRENGTHENING U.S. dollar. Markets always correct themselves, and many economists forecast that the price of oil in June was far ahead of its value, and would have to start retracting. And it's doing just that.

    Closer to trapshooting, lead is now below $1.00/lb, down from highs earlier of $2.00/lb.

    So, before you move to the wilds of Montana, or leap from your penthouse apartment in Manhattan, take a deep breath and use a discriminating eye.

    Dennis
     
  6. Shooting Coach

    Shooting Coach Well-Known Member

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    Dear Dennis

    Thank you for a breath of reason. The Republic WILL survive.
     
  7. halfmile

    halfmile Well-Known Member

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    I would love to agree with this whistling in the dark, but I find it impossible.

    You the taxpayer are going to bail out Fannie Mae and Freddie Mac. Thsi will not benefit the hundreds of thousands who are (or have already) being foreclosed. No, Nancy, the Bankers will benefit.

    And the money is coming from YOU.

    Have a nice day. Stay tuned for the credit card meltdown.

    HM
     
  8. phirel

    phirel TS Member

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    JBrooks- I found your first post both enjoyable and interesting. I don't know why, I did not understand the ramifications of the information you gave us. I have long had a suspicion, with no supporting evidence, that economic forecasters and weather forecasters attend the same school, and the weather forecasters were at the top of the class.

    I can report that my personal business is doing well and I plan to do whatever is required of me to keep it sound.

    Pat Ireland
     
  9. blizzard

    blizzard Active Member

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    JBrooks,


    I for one would like to send you a big " Thank You " for the time and research that you do in your effort to battle the libbies and trolls that have infested this once great site.


    I appreciate your posts, and the info that they include.
     
  10. BIGDON

    BIGDON Well-Known Member

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    2str8; Back to your corner and sucking your thumb.

    Don
     
  11. shannon391

    shannon391 Active Member

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    Global recession should lower the demand for oil.
     
  12. JBrooks

    JBrooks TS Member

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    flincher,

    Why don't you go start your own thread about Iraq and not threadjack this one. We all know you're not the brightest bulb here, but if you can't do it on your own, get some other anti-America troll halfwit and put your heads together and come up with a thread of your own.
     
  13. grnberetcj

    grnberetcj Active Member

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    hmmmm...flincher listens to NPR radio......now that'll tell us all something about his mentality and possible prediliction for elementary school playgrounds....

    Curt
     
  14. pendennis

    pendennis Well-Known Member

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    Pat, I was a finance and economics major in college. The dirty little secret among economic forecasters, is that their reputations are built on one or two successful hits, and not much more. Economic science forecasting is based on historical actions, and then trending those actions in an attempt to create models which will predict future trends. The operative words here are trends. Mostly, no one is able to accurately forecast events, because the events are too dependent on non-historical actions. There are too many intervening actions which affect economic events.

    I worked in accounting for one of the Big Three automakers for over twenty-five years. Our job was to accurately state the books of account based on all the financial transactions happening in a given period (material usage, purchases, etc.). The books were closed each month, and we would publish income and other statements. Our worst critics were from the financial analysts because our results didn't match their forecasts. A running joke among us, was that the company could go Chapter 13 bankruptcy, as long as the analysts forecast it.

    Best,
    Dennis
     
  15. over the hill

    over the hill Active Member

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    Regardless of what the experts say we will make it.

    When we hurt the world hurts. However, people still wait in line for a shot at the American experience.

    The middle class has and will take the worst hit.

    Supply and demand still rules


    Regards....Gerald
     
  16. BDodd

    BDodd TS Member

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    pendennis, Your quote - "So, before you move to the wilds of Montana, or leap from your penthouse apartment in Manhattan, take a deep breath and use a discriminating eye."

    What the heck is wrong with "them" leaping from their penthouse windows? We don't need them and could do without some overpopulation;-).....breakemall....Bob Dodd
     
  17. W.P.T.

    W.P.T. TS Member

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    You are not supposed to pick and choose the news that you want to believe and or comment on ... The United States is in a ressession and Yes we will make it out alive but beat to a pulp once we cover all of the dead beats ass's who have homes that could not afford an apartment because of the first and last months rent and the security deposit ... The shit has not hit the fan yet but it will in the near future and we will all be paying dearly before its all over ... There are only a few business's that will not be effected by the economy in the future but someday even that will come to an end once things are all caught up ... WPT ... (YAC) ...
     
  18. Ahab

    Ahab Well-Known Member

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    Why do Economists use decimal points?
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    Just to prove that they have a sense of humor!
     
  19. JBrooks

    JBrooks TS Member

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    We are not in a recession by the generally accepted definition of the term. To say so is ignorant or misleading.

    Now I know what all the long lines are at the airports. It's people leaving America to go to countries with higher standards of living.
     
  20. shannon391

    shannon391 Active Member

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    What country has a higher standard of living for unskilled labor?
     
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