John on September 1, 2011 at 11:55 am
First up, here’s a prediction of a two year US “retail recession” from an analyst who predicted the 1,000 day recession in 2007. Watch:
The official recession estimate still seems to be around 33-40% in the US but there are signs that may be creeping upward. Unemployment is expected to climb again tomorrow and national PMI numbers out today show us barely hanging on to expansion at 50.6.
The global PMI number this month is 50.1 which is literally the tipping point between expansion and contraction. Meanwhile Germany’s GDP growth last quarter was o.1%. Germany has been the source of much of the bailout for Greece and Portugal so this news will likely affect the viability of further bailouts. I also came across this prediction of a Swiss recession yesterday.
But the real worry continues to be Italy. It’s one of the largest economies in Europe and if it requires a bailout the amount required would be devastating, possibly enough to spell the end of the Euro. There’s reason to worry here because Silvio Berlusconi, not unlike progressives in this country, continues to be more concerned with staying in power than in dealing seriously with his contry’s debt.
The Paul Krugman’s of the world will continue to blame everything on our failure to stimulate. I suppose he’s right that we could prop this economy up with several trillion more in borrowing, assuming the Chinese are willing. But that will absolutely lead us to another downgrade in the next two years.
Taking money from the future to avoid the present only works for so long. At some point, someone has to pay it all back and with nearly $15 trillion in debt on the books already and $7-8 trillion more scheduled to be added over the next decade, it’s getting hard to see how we’ll ever get around to that.
Category: Energy & Economy |