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Economic News Articles in the Great Recession — Archive for the week of 04/01/2012

If you’ve been following The Great Recession Blog, others are surprised by the jobs report at the end of last week, but you are not. You saw it coming. The year is already looking like a repeat of 2011 where all the experts were excited that the “economic recovery” was gaining steam in the first quarter due to some good initial statistics. Then it all fell apart. You know there is no economic “recovery.” There is only life support for the old economy and lots of it to buoy it along during its dying days.

In other words, the foundation of the economy has not been rebuilt, nor is anyone trying to lay a better foundation. We have done nothing that actually builds a new economy on better principles. Followers of this blog, for example, are keenly aware that the number of foreclosures yet to work their way through the pipeline is larger than the number that have already come through. They know this is due to a backlog created by the massive foreclosure fraud case that was finally settled, and they are wise enough to be open to reality when the truth is not pretty so they recognize you cannot have an influx of foreclosures the size of a tsunami without another drop in the value of homes on the market and additional bank troubles as a result.

Readers of the blog also know that banks are continuing to entice people with adjustable rate mortgages. It’s a great deal for the banks because mortgage rates are far more likely to go up than down. Regular readers here, however, know those are only time bombs for future foreclosures because equity in the home will not be there when the time comes where today’s buyer hopes to refinance for better rates in order to avoid the big hike of an ARM.

Regular readers of The Great Recession Blog also know there is an intense likelihood that Europe’s problems do not end with Greece and that Europe’s growing recession virtually guarantees the Euro crisis will return with a 2012 vengence that may surpass what happened in the summer of 2011. How can the sovereign debts of nations not become as worse problem when deepening recession means more unemployment and, therefore, fewer taxes collected?

Readers here know the U.S. government has pumped more baseless cash into the economy than at any time in history and that all of that cash has elevated the stock market in another speculative bubble that is completely out of touch with economic reality. We are even seeing another dot-com bubble, having learned nothing from the last one. In spite of this vacuous stock market, readers here can see the obvious — that this mountain of cash, which would have created a boom economy in the past, has barely created any lift at all in real terms that matter — no lift in home ownership (more renters now than ever), no lift in jobs, etc.. When that much power is applied with that little lift it is surely a sign of a hugely overweighted plane. This bird doesn’t want to fly.

They also know that the U.S. is now financing almost all of its own longterm debt because our major foreign financiers have already fled for the hills. Readers here knew that before it was ever once said on the news. Moreover, they are beginning to recognize that there is no end-game to this once interest rates on U.S. debt start rising because U.S. credit ratings will get worse as agencies realize the U.S. has more debt than it can sell. Great Recession Blog readers see that we have made no political headway so that more credit downgrades by the big three agencies will happen sometime this summer … maybe even sooner … because nothing politically has improved since last summer. Both parties are still more concerned about winning the 2012 election than about saving the nation.

We are about to enter the no-fly zone where the economy stalls just as its leaving the runway … again. That means you’ll be hearing more and more talk of QE3, just like this time last year. Only now it will be a third and final round of quantitative easing because no one is going to believe in that trick after one more round fails worse than the previous rounds. (Law of diminishing returns for those who still believe in real economics.)

So, anticipate seeing an article here on The Great Recession Blog in the near future that describes what quantitative easing is all about. That article is mostly written … just waiting for the time when such talk becomes mainstream again … as it soon will. The government and all the bankers of this world and all the realtors are addicted to saving the old economy that made them rich, not to laying the foundation for a more sustainable economy.

With those focal points in view, here was the news last week:

 

China syndrome — following the Great Recession to the Great Wall

  •  04/02 China Sees U.S. as Competitor and Declining Power, Insider Says The senior leadership of the Chinese government increasingly views the competition between the United States and China as a zero-sum game, with China the likely long-range winner. The U.S. is no longer viewed as awesome or economically trustworthy. [In short, U.S. bonds have NO appeal to the Chinese at all. The U.S. is seen as a lame duck. Everyone wants out from under the shadow of the falling bird.]

Economic indicators seen in the news this week

Economic predictions / forecasts that made news headlines

  • 04/04 Americans brace for next US foreclosure wave Sales are picking up across the country, and the plunge in prices is slowing, but a painful part two of the slump is coming: “We are right back where we were two years ago. I would put money on 2012 being a bigger year for foreclosures than 2010.”

Euro crisis updates as the Great Recession goes viral

  • 04/03 Euro unemployment spikes to record 10.8 percent Unemployment in the 17 countries that use the euro hit its highest level since the currency was introduced back in 1999. Unemployment is nearly 1.5 million higher than the same month a year ago, adding to fears that the region is in recession.
  • 04/04 Markets down globally over US and Europe economy fears In Europe, shares fell after a disappointing Spanish bond sale. German and French shares fell almost 3%. Wall Street fell 1.1% after the Federal Reserve signalled that it might not provide more stimulus.
  • 04/04 Spain Not Greece Is the Real Test for the European Union The decisive test of the euro area’s plans for economic recovery was never Greece but Spain, but the Spanish government’s new austerity plan hasn’t won investors’ confidence, which threatens the whole EU.
  • 04/05 Greece extends debt swap deadlineGreece has extended its long-planned debt swap plan for a second time. Hedge funds have been resisting the swap, which forces them to take losses of up to 74% on their bonds. The extended deadline applies to the “vulture” funds that are holding out.

The Iranium Reaction as it makes and shakes the news

  • 04/03 Iran vows to stick to nuclear ‘path’ One week ahead of talks with world powers that are increasingly seen as a last chance for diplomacy in its showdown with the West, Iran declared it will not be swayed from its nuclear “path” by sanctions.

U.S. banking / financial crisis as it shapes the economic news of our times

  • 04/02 The Wreckage Of The Foreclosure Crisis is Far From Over  To understand how long the Great Recession will last, we need to size up the “shadow inventory” of homes that are still working their way through the clogged foreclosure pipeline. How long of a shadow does it cast over our economic future?

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