43 Replies to “11 Month American Recovery Watch Remains On High Alert”

  2. Obviously Obama needs to tax and regulate American industry more. Perhaps some law making it impossible to lay people off, or a special tax on excess profits. Letting “laissez faire”, dog-eat-dog economics run rampant over America just lets greedy industrialists grab all the money, and nothing good ever came from greed.
    I really think I better cut down on The Huffington Post.

  4. The glory and wisdom of Obamanomics.
    Mr. Smart President knows better than the peons.
    Yes we can. Well maybe not.

  5. Exactly, DaninVan! It was unexpected by the happy talk folks who elected O-bomb-a president. The rest us are still girding for the worst.

  6. No ‘recovery’ from the fiat bail out debt trap. Currency collapse eminent, economic depression unavoidable, fragile/bogus greenback confidence is all that is forestalling the economic tsunami for the US. This bogus confidence will evaporate after the Chinese dump their greenbacks. The smart money is calling a collapse within the Obama admin.
    Obama will ‘bail out’ the failed Fed currency programs by adopting IMF currency trading within US.
    Take that to the bank

  7. unexpectedly expanded at the slowest rate in 5 months,
    That’s how journalists write when they’re twisted like a pretzel trying to cover more than one agenda at a time.

  8. The fact is that the US has not yet come out of recession. The only reason the GDP growth was positive was the govt spending borrowed money. The *actual* economy shrunk by .5% in that same report.
    Obama is pushing a string here.

  9. I said all along that it is obvious to any informed observer that this administrations economic policies are destined to fail. The only political strategy that I can think of is: sometime in late 2011 thru 2012 the economy will see a large positive bump as a result of the trillion dollars the government would by then have spent under the guise of “stimulus”. Going forward into 2013, the economic chaos that many elude to will hit and hit hard, relegating millions of Americans to waiting for hand-outs, and forever stuck in the Democrat voting welfare trap.
    Will this happen? I don’t know, but as I said early in 2009, deductive reasoning points to this as the only reasonable plan from President Obama’s perspective.

  10. In my opinion, the obamination is trying to ruin the united states of america and he and his minions are doing a fine job of it.
    o isn’t that stupid, he knows exactly what he is trying to accomplish…that being the destrucion of the u.s.a.
    i’m not sure the u.s can recover from just one year in office of this pos.
    One thing for sure…give him and his minions 3 more years …and it won’t.
    anyone know the difference between the white house and a zoo?
    one contains an african lion
    the other a lying african!

  11. Uncle Sam, Obama has shot you through the heart you and you are bleeding to death The good news is that the you are bleeding slower than before, so you will die in slow motion. Once dead my gold investment will go though the roof and I will cash out and buy a new Japanese SUV.
    What could save you?
    Death to the health care bill,
    Death to the cap and trade bill,
    Death to the furthering of bail-outs
    Death to any new plans to tax anyone for anything.
    Death to the Obama administration in 2010 and 2012
    Other than that, what kind of flowers do you like?

  12. Uncle Sam, Obama has shot you through the heart you and you are bleeding to death The good news is that the you are bleeding slower than before, so you will die in slow motion. Once dead my gold investment will go though the roof and I will cash out and buy a new Japanese SUV.
    What could save you?
    Death to the health care bill,
    Death to the cap and trade bill,
    Death to the furthering of bail-outs
    Death to any new plans to tax anyone for anything.
    Death to the Obama administration in 2010 and 2012
    Other than that, what kind of flowers do you like?

  14. I love your blog Kate. I rarely post here, but I read here daily. It’s nice to get some REAL news.
    I’ve been listening to Peter Schiff on youtube for about 6 months now. And he seems to know what he is talking about when it comes to the economy. He predicted the housing collapse, and now he is predicting the currency collapse of the U.S. dollar will be far worse than the housing crisis.
    http://www.youtube.com/watch?v=gPdpP9Uu5Lc

  16. Jake, You may not have enough money for the Japanese SUV as, gold hasn’t gained at all against currencies like the Yen.

  18. When GW Bush was in power it was the snide “Recession Watch”; now that the Bush-created meltdown happened, it’s “Recovery Watch” as McMillan snidely waits for Obama to clean up the mess her ideology created.
    What an impressive display of intellect and effort this blog is!

  19. If KevinB or Captain Capitalism are lurking, your comments regarding this topic would be most appreciated.

  22. bleet… you should watch some of Peter Schiff’s videos and learn something for a change. When Bush, being a big spending liberal like yourself, became president there was the dotcom market crash, he did not want to start his presidency with a recession, so he stimulated the economy, and Greenspan lowered interest rates to historic lows. How did that work for them? Not well, it led to the housing bubble. There were other factors that led to that as well, the Pelosi inspired ninja loans.
    http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/HowGreenspansPoliciesHurtYou.aspx?page=1
    So bleet, Bush didn’t get it right with stimulus and low interest rates, so what does you’re all time hero, obama do? He brings in an enormous stimulus package, much, much larger than Bush’s, almost a trillion dollars, and bernake cuts interests rates to almost zero. Well, I guess Obama is trying to cause the next GREAT DEPRESSION and a currency collapse of the U.S. dollar.

  24. “…..Unexpectedly expanded at the slowest pace….”
    Proving what?
    That the writers at Bloomberg are as stupid as the rest of the MSM?
    It is an effin miracle that any part of the economy is expanding at all and in spite of the best efforts of the Democretins to drive a stake through it’s heart.

  25. Talk about spin. How many months did this web site deny there was a recession?
    Jiminy Croquet at December 15, 2009 5:56 PM
    About 72 months, from 2001 until 2008. Of course there wasn’t one, but your “journalist” friends opined differently in those days. Short memory?

  26. the greenies want to “Stop the Tar Sands”
    talk about killin the golden goose.
    whadda ya eat after………

  27. Kate, your lead reminds me of one of my favorite all-time Onion headlines, over a photo of a shrouded body being put into a morgue truck:
    “23-hour suicide watch a failure”

  28. Brian:
    I wasn’t lurking, I was working, but here’s my take –
    First, I do think it kind of funny that a blog that ran “Recession Alert Remains on High” posts for months in 2007-08 while I was warning about it now posts the opposite, but this time, I do agree with Kate. It’s not going to happen quickly, and I agree with David Rosenberg of Gluskin-Shiff that the current stock rally “is to be rented, not owned”. Bear markets usually follow an “A-B-C” pattern – A is the first fall, B is a recovery, and C is the final leg down. We haven’t seen C yet.
    Tim in Vermont’s “pushing on a string” is quite right. Consumer credit in the US has contracted faster than any other period in history. People are paying off debt, especially credit cards, and not taking on new debt. As individual households repair their own balance sheets (which are bad, but not disgustingly horrible), consumer spending necessarily falls.
    A brief digression – in economic terms, the rate at which money turns over is called “the velocity of money” (Vm). When I was in university, I asked my economics prof if there was any value in the concept of “money momentum” (the money supply times Vm), in the same way that engineers studied physical momentum (the mass times velocity). He patted me on the head (figuratively), and said “No – the velocity of money never changes”. Oh, really? Wish I knew where he was now..
    And, if the consumer’s Vm has slowed, the US banking sector’s has stagnated. Huge sums have been pumped backed into the banks, but because of their reluctance to mark their residential and commercial portfolios to market, the banks are holding on to the cash to help rebuild their cash ratios. It’s instructive, and not mentioned here before I believe, that over 140 banks have failed in the US this year alone. There are literally thousands of bankers who fear their institution might be next, and the FDIC is broke. If one bank fails and the FDIC can’t make good, I fear we’ll see a bank run that will the Depression’s look like “It’s a Wonderful Life”.
    US 10-year interest rates have crept back over 3.5%, and when the next round of ARM resets in the US hits, there will doubtless be another wave of defaults, foreclosures, and “jingle mail”. But many pundits think the residential mortgage mess is the tip of the iceberg – the commercial real estate (CRE) sector is in even more precarious shape. The US’s largest mall operator filed for bankruptcy earlier this year; many small malls and strip malls financed by regional banks are in awful shape – occupancy rates are down (another bit of fall-out from the drop in Vm – consumers aren’t spending, so lots of small shops, restaurants, etc. are shutting their doors), and landlords are so desperate for tenants that rates have dropped and inducements such as “four months free rent” are being offered. This slaughters the landlords’ cash flow, and naturally, the market value of the mall. No banker wants to admit publicly that the $10-15 million mall he bankrolled five years ago is worth half that today, but he knows it, and knows he’d better build up on the reserves on his balance sheet if he wants to survive.
    That’s the domestic US picture. The Fed’s massive increases to the money supply have not affected my quaint concept of “money momentum” because Vm is in serious retreat. Until the rebirth of “animal spirits”, Vm is not going to recover, nor is the US economy. I’m not holding my breath.
    Now, let’s turn an eye to the international view. The world over continues to buy enormous amounts of US government paper, despite increasing concerns about the wisdom of doing so. Last week, we saw one petro-state’s sovereign wealth fund (SWF) teeter precariously. At the same time, sovereign debt for Greece was downgraded to less than investment grade (meaning pension funds can’t buy it), and there are fears that Italy, Ireland, and Spain may soon follow suit. But the 800-lb gorilla is, as it has been for almost 7 years, the US dollar. The US dollar index, which is a trade-weighted basket of 7 major currencies against the US $, hit a peak of 120 in 2002; a few months ago, it bottomed around 71, and while it’s recovered to 76, that still means it’s lost a little less than half its value against its trading partners who allow their currencies to adjust (the Chinese, while a huge trading partner, have pegged their currency to the buck, so they don’t count). I remember reading stories in 2006 that rich people from Manchester, England, found it less expensive to fly to NYC, take in a couple of shows on Broadway, stay at a nice hotel, enjoy some great dinners, and fly home again for less than the 90-minute train trip to London and similar jaunts there would cost. One US financial commentator, as the Euro fell to $0.75 US after 9/11, mockingly referred to it as the “zeuro”. He’s since changed his tune, as the Euro is now worth $1.50 US, or twice as much.
    Increasingly, we hear noises from petro-states, SWF’s, China, Russia, and others that they are considering pricing oil in other than dollars, adding other currencies to reserves, and especially, moving away from fiat currencies altogether into.. um.. gold. China, India, and tiny little Mauritius have all announced major gold purchases for their reserves. Now, why would they do that?
    What was that old joke – “I’m from the government, and I’m here to help you”? Whenever I hear a US official from the Treasury or the Fed start talking, I usually need to dash to the toilet. “Helicopter Ben” Bernanke and Tim “The Safecracker” Geithner both talk repeatedly about the US’s commitment to a “strong dollar”. In fact, Geithner, during a trip to China earlier this summer, made such statements to a large group of Chinese university students, who responded by erupting into gales of laughter. Don’t worry, Timmy, they’re not saying “Boo”, they’re saying.. oh wait.. they are saying “Boo”. In actual fact, I think Bernanke knows in his heart of hearts that the US only has two options: slow currency devaluation, which means paying back your debts with cheaper dollars but also means a gradual and relative decline in US living standards, or default, which could be catastrophic to the point where global depression, anger, and ambition could conceivably lead to a WWIII no one wants to see. So the Ben, Tim, and Bambam show will talk “strong dollar” while secretly wishing it falls slowly.
    But a falling US dollar scares the bejesus out of China and Japan. Not only do both countries hold hundreds of billions of US debt, which is becoming worth less daily in Japan and which, as Bambam lectures China on the need to let its currency rise, gives us that wonderful SNL “Doing sex to me!” skit, but they are depending on exports to the US to boost their own economies. If their currencies were allowed to rise against the dollar, this would mean fewer exports, fewer jobs, and in China’s case, possible unrest. Richard Russell of the “Dow Theory Letters” calls this a “competitive devaluation” and a “race to the bottom”.
    I apologize for the length of this post, but I feel I owe my one or two fans the debt of depth, unlike the MSM, who want to gloss over everything in a paragraph. In summary: no real recovery in the US for some time, the US dollar will continue to fall, US non-military influence will wane, and gold is good (so are guns and ammo, but that’s another post).
    Oh, and to sg: You should visit kitco.com. Gold unchanged against the yen? Guess again, kiddo – 10 yr change in gold in the USD is 250-1100, and 10 yr change in gold vs the yen is 30k-100k. Yeah, gold only tripled against the yen, while it quadrupled against the buck. What a punk investment.

  29. Actually Dave-
    Your beef is with McMillan, the webmistress – she’s the one with the crush on “the big spending liberal” Bush, as evidenced by her many ‘I Miss W’ posts.
    You guys should confer with each other! You’re one of the majority of conservatives who want to flush Bush down the memory hole, she wants him to come back & be President. First there is no recession (if a Republican’s in power), then there is one (the minute a Democrat’s in power).
    Gosh, it’s almost like you guys have no coherent philosophy or something!

  31. I think it’s totally unacceptable for Ignatieff and the Liberals to put up a fake photo of Jack Layton (pretending to be Jack Ruby) assassinating Prime Minister Harper.
    Anybody knows that Jack Layton would have gotten his radical friends in Hamas, the Tamil Tigers, or the “Toronto 18” to do the job!

  32. OK, I am, for once, dead serious. After posting about the velocity of money earlier (I’m sure most eyes glazed over reading it..), I opened up my daily email from Dave Rosenberg at Gluskin-Sheff, a Toronto private investment firm. For those who don’t know, Dave was formerly the chief economist for Merrill Lynch, and has made many excellent calls over the last few years. Dave got fed up with New York, and moved back to Toronto, where his “Breakfast with Dave” emails are available for free (albeit with a cumbersome registration). Here’s what he wrote today:
    Chart 1 maps out the S&P 500 with money velocity (GDP/M1 ratio). There is a 90% correlation between the two. It is one thing to have the Fed pump liquidity into the system but it is quite another for the liquidity to be re-leveraged into credit and recycled into the economy.
    The Fed’s easing program is over two years old and the rampant Fed balance sheet expansion 15 months old, and still to this day, what the commercial banks have done (to Obama’s wrath) with all that liquidity is to keep it as cash on their balance sheet to the tune of $1.2 trillion. We’re not sure why Obama is as rankled as he is because the banks are in fact lending out a good chunk of that Fed-induced liquidity — right back to Uncle Sam (the banks now own a record $1.3 trillion of government securities).
    Back to the chart — there is obviously a close connection between money turnover and the stock market. But we can get periodic divergences as we did in the first leg of the rally in 2003. But the carry-through from 2004 to 2007 hinged critically on that multi-year acceleration in money velocity. If we don’t see the banks begin to extend credit in 2010, it is hard to see the 2009 bounce from oversold lows as being sustained in the coming year.
    I’m sorry I can’t post the chart but you can see it for yourself if you register. Eerie that we would post roughly the same thoughts on the same day…

  33. Actually bleet, you missed the point of my post. I think some people miss Bush, not because he was a great president, but because Obama is a horrible, extreme socialist president who’s policies are driving the country into ruin. My point was that you left wingers always come on to these conservative blogs talking about how Obama is “cleaning up” Bush’s mess. I’m pretty sure Obama is doing quite the opposite. If he keeps up with his policies he will probably lead them into a great depression. Now Obama is trying to tell the banks that since they were bailed out they should be giving out more loans to help the economy. Why is that bleet? Don’t you think that if the banks were pretty sure they would make money on a loan they would make it without being forced into it? Wasn’t that one of the main problems of the housing crisis?

  34. For years and years our beloved media was a hopin’ and a prayin’ and a spinin’ that the economy would collapse.
    It did collapse when it looked like Obama would beat Clinton. (markets are forward looking by months, if not years)
    But now, with their construct in the WH, our beloved media spins that the recession is over even though it is clear that it is not.
    Bias does not get any clearer than that. And THAT is the reason for the recession/recovery watch posts.

  36. Mmmmm, just when one thinks his figuring is fool proof …
    Dec 15 09
    Euro hits 2-1/2-mth low vs dollar on bank, fiscal
    Dec 16 09
    LONDON: Gold fell one percent in Europe on Tuesday, pressured by a rise in the dollar versus the euro, as the single currency hit a 2-1/2-month low after lacklustre German economic data and on concerns about eurozone banks.
    NEW YORK, Dec 11 (Reuters) – New York gold futures hit a
    four-week low Friday, reversing initial gains as a resurgent
    dollar following upbeat U.S. economic data sent jittery bullion
    investors racing to cut positions.

  37. Ron:
    Mmmmm, just when one thinks his figuring is fool proof …
    Buddy, if you think markets move in straight lines, you’re either a Liberal or illiterate. I urge you – visit “kitco.com”, scroll down on the right hand side until you see the 10 year chart of gold. Open it up, and have a look. From 99 to 01, gold went nowhere. But, during that period, the NASDAQ went from 3000 to 5000 to 2000. Gold looks pretty good compared to losing 50% in tech.
    Keep looking – from late 01 to late 02, gold climbed from $300 to $400 – 33% gain in one year. Not bad. In early 03, gold went from $400 to $350 – giving back half the gain in just a few months.
    Keep looking – by the end of 03, gold was back at $400, but basically went sideways for 18 months, and then exploded, going from $400 to $750 – nearly doubling – in less than a year.
    Keep looking – gold almost immediately gave back half those gains, and then went into a “pennant” consolidation pattern for over a year (i.e. jumping back and forth but ultimately going nowhere).
    Keep looking – in late 07, gold exploded again, going from $650 to $1000 in a matter of months. Another immediate correction followed, followed by a bounce back to $1000, and then went sideways for another year before finally busting out to new highs this year.
    Bottom line – don’t pay attention to the daily, or even weekly swings. It’s what we engineers call “noise” around the basic signal. The basic signal is fiat currencies are being debased around the globe, and gold is the protection.
    The investment classic Reminiscences of a Stock Operator by Edwin Lefevbre – highly recommended for anyone who doesn’t have formal training in the area – makes the point that in a bull market, the gains are made from the sitting. That is, see the market, understand why you’re taking a position, and then, when you’ve taken it, sit with it until the reasons why you’ve taken it change.
    I can tell you right now if I’d tried to trade in and out with gold over the last ten years, I’d have made nothing. I’m too emotional, too knee-jerk, too easily swayed to be a great trader. I would have bought and sold too often, at wrong prices, and paid so much in transaction fees, I’d be sitting here today going “Wha’ happen?”. But I took out positions in 99, and I’ve sat on them, and I’ve not quite quadrupled my money – not bad when the S&P500 is flat over the same period. Don’t confuse noise with information.

  38. OMG !!! That is exactly my point. No one ! but NO ONE ! can figure out the market.
    If you think you can and go the timing route you will be cleaned out – eventually.
    Invest in good companies.
    Whether gold, canola, Euo, oil Procter&Gamble – the price at any given moment is what it is because of the balance between bears and bulls. Only time will tell who is right. Why would little ole’ me, looking at a screen, think he knows more than average ?

  39. I know people who watched the BN pundits and bought the Dow 4500 line. Lost their shirt 🙁

  41. Bleet! Ha ha ha
    Being AFK for a few months, seriously do you people really still respond to Bleet?

  42. Thanks KevinB. Very well presented and along the same lines that I was thinking. It seems to me that everyone has been reluctantly dragged into this market as opposed to jumping in gleefully. I still do not feel any confidence from any of the pros who manage funds for us.

  43. KevinB, good food for thought in your posts. Bloomberg has many guests on saying much the same things, albeit much more reservedly. Makes me wonder how much blarney they are spreading on to keep retail investors like myself from charging the exits. I’ve been calling this a sucker’s rally right along, but I’ve been wrong for a good six months now and I’m still wrong today.
    Lots of guys are raging on about $2000 gold by the end of 2010. I vacillate from thinking they are wacky to praying they are wrong. Others are saying the precious metals/commodity metals are oversold and headed for a sharp correction.
    What do you think?

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