Economic News Articles in the Great Recession — Archive for the week of 04/22/2012

Splintering sounds ruptured the euro zone as it, again, became the big leader in economic news last week. The prior week emitted a couple of loud cracks when Spanish bonds sailed to unsustainable heights. This past week the austerity pact, which was intended to stabilize those bond prices, became the new threat. Political instability broke out on the weekend and resulted in a rough start for European stock markets on Monday with £122 billion lost in corporate values.

The stalwart Germans saw two of the strongest national supporters of their austerity rules begin to bust apart: France’s president lost his first election round in the French counterpart to the U.S. primaries, and the Dutch prime minister resigned over his own country’s inability to live within the austerity agreement. While Germany intended the austerity pact as a way to restore financial stability, it clearly has caused countervailing political instability.

Even the nations most in favor of the austerity pact have failed to meet its mandates. And, while the European Commission demanded budgetary austerity from all of its member nations, it increased its own budget almost 7% last week. Greece in particular rumbled with more talk of splitting away, as its own economic expderts said Greece will be worse off for decades if it stays in the euro zone than if it drops out of the E.U.

While the euro zone creaked under pressure, three European nations announced they had slipped solidly into the long-feared double-dip of the Great Recession. That means lower tax revenues, and that means the likelihood of meeting austerity-pact goals becomes worse than ever. Even Germany’s economy shrank at the fastest rate it’s declined since 2009 when the economic crisis that originated in the U.S. first washed up on Europe’s shores.

On this side of the sea, two different measures of the U.S. housing market indicated that housing is falling into a second recessionary dip, too. I’ve been saying it would, contrary to the voices of far more popular economic experts. The illusion that had appeared to these soon-to-be-disappointed optimists as a recovery during the first quarter of the year disintegrated last week. Reports revealed that home sales dropped all over the nation. Prices, due to foreclosures, also hit a low they have not seen in a decade.

Orders for durable goods took a big drop, too. Yet, the sweet taste of Apple’s earnings report, lifted the U.S. stock market out of fears that had caused it to stagger backward earlier in the week when it heard the rumblings in Europe.

This past week also reinforced the popular but unwarranted fears that China will have a hard landing in the months ahead. I’m sticking with my recent prediction that China will have a smooth landing, precisely as it has planned … at least for this year.

I have finally found one U.S. official (or former official) who agrees with my statements that the Fed is causing a stock market bubble. A former FDIC chair that the wild ebullience of the stock market in recent months is nothing but a bubble created from fastest free money ever clicked into existence on a computer screen. Obviously, the Fed loves creating bubbles because it has been in the bubble business several times in the past.

Iran did exactly as I predicted it would during negotiations and indicated last week that it may halt nuclear expansion! Whoohooo! (What I said will happen is that Iran will try to make it look as if negotiations have hope of succeeding … to the fullest extent it can while remaining strong in appearance against the U.S.. The Russians gave them that chance last week with a proposal that would halt enrichment. The proposal afforded the opportunity for Iran to appear to be acting in good faith as a gracious and diplomatic act toward their Russian allies without looking weak to the U.S. The press, of course, also did as I said it would and heralded this as a “possible breakthrough.” They should stay with publishing funny papers. All Iran really said of the Russian proposal that would curb their nuclear expansion was, “We need to study this proposal and to establish on what basis it has been made.”

Of course that is what they said: 1) Russia has provided the bulk of Iran’s nuclear technology; so Iran cannot simply dismiss what its nuclear partner says without thinking through a careful response; 2) The obvious ploy that the press missed entirely is that studying the proposal takes time, which is another way of saying that it buys the time Iran needs to continue its development of nuclear weapons. For as long as Iran can cause negotiations to continue, it can continue its clandestine nuclear enrichment. Yet the press, which now seems to drink the same dope as our flamboyant economists, proclaims this ruse a “possible breakthrough!”

That wasn’t the only news that edged in the direction of my earlier warnings: Fifty percent of last year’s college graduates are either unemployed or underemployed. What happens to a trillion dollars in student loans when half of all graduates cannot find a job that is capable of making payments on those loans?

For the past two weeks now, several things have started to track exactly as I’ve said they would every month this year. I’ve maintained all along that I did not expect these things to start going the way I was predicting until spring. As in the past, I’m one of the few people who has been saying that there is no sustainable recovery and that the appearance of one in the beginning of the year was an illusion. Those who speak of “the recovery” live in illusion.

The popular economists who are all over the news have been saying the exact opposite of what I have been saying all year. So, I write contrary all the time to the most influential voices in America. These beleaguered optimists were, again, surprised by the changes that have come in the last two weeks (which reflects yet another failing on their part to do their jobs).

Among the following stories are a few of the surprises that came their way last week:


China syndrome — following the Great Recession to the Great Wall

Economic indicators seen in the news this week

  •  04/23 U.S. Stocks drop 1% on China, Europe fears “Events over the weekend re-ignited concerns that the European community is going to have trouble working out a coordinated plan.” Investors have focused on the Dutch prime minister resignation’s and France’s possible government shakeup.
  • 04/24 Home prices lowest since 2002 The home price index of 20 cities recorded a decline of 3.5% from a year earlier. Home prices have not been this low since November 2002. The main challenge for housing continues to be foreclosures and other distressed property sales.
  • 04/24 New Home Sales Drop After Big Revision The Commerce Department said Tuesday that sales dropped 7.1 percent in March to a seasonally adjusted annual rate of 328,000 units. That followed a 7.3 percent increase in sales in February.
  • 04/24 Strong earnings from AT&T, 3M lift US stocks Solid U.S. corporate earnings and higher spirits in Europe propelled the Dow Jones industrial average to a triple-digit gain Tuesday.
  • 04/25 Apple blowout quarter stokes Wall Street US stocks advanced on Wednesday after a blowout quarter from Apple further lifted optimism in an earnings season that has far outstripped expectations.
  • 04/25 Durables orders drop sharply, cast shadow on U.S. recovery Orders for equipment, appliances, aircraft and other so-called durable goods fell 4.2 percent in March from February — the second decline in the past three months and the biggest monthly dip in three years, indicating the economy has gone soft.

Economic predictions / forecasts that made news headlines

  • 04/24 Gold may touch $7,000 per ounce before end of uptrend While gold’s latest price gyrations may seem excessive to some investors, Bank of America analyst MacNeil Curry said the volatility was nowhere near extreme enough to convince him the precious metal’s long-term uptrend was nearing the end.

Euro crisis updates as the Great Recession goes viral

Federal Reserve actions tracked in the economic headlines

The Iranium Reaction as it makes and shakes the news

Articles of Justice during the Great Recession

  • 04/23 Iceland ex-PM Haarde ‘partly’ guilty over 2008 crisis Mr Haarde is thought to be the first world leader to face criminal charges over the financial crisis. Some Icelanders have seen the trial as scapegoating, while others feel public accountability is essential after the country’s financial collapse.

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

  • 04/25 Goldman Board Hopes Image Overhaul Will Save Blankfein It’s being billed as the biggest salvage job on Wall Street—and it has nothing to do with preventing another meltdown at troubled mega banks Bank of America and Citigroup. Rather, it’s about preserving the job of Goldman Sachs’ CEO, Lloyd Blankfein.
  • 04/25 Small banks in US bailout pool under pressure More than 100 smaller banks were able to tap government programs to pay off bailout money they received during the financial crisis but hundreds of others still owing face a perilous future, a federal watchdog said on Wednesday.

Other economic updates / miscellaneous economic news articles

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