Recession probabilities – For the 50 million Americans in poverty the probability of a recession is 100 percent. Growing economic divide for working class.

MyBudget360
November 14, 2012

The probabilities of the US slipping into another official recession are growing.  Don’t tell this to the 50 million people that are reportedly at the poverty level according to a new US Census report.  This trend isn’t something new and it certainly is not going to be resolved overnight.  We have nearly 47 million Americans receiving food stamps so the probability of slipping into another recession should not come as a shock.  The fiscal cliff is not a surprise.  We’ve known that unsustainable debt growth would ultimately lead to a day of reckoning.  There are now rumors that a patch work for one year is going to be applied to kick the can down deeper into the future.  Look at how well this approach is working in Europe.  The core problem of this debt crisis has yet to be resolved.  Let us examine the recession probability further.

Recession probabilities grow

An interesting chart looking at four key economic metrics is put out examining the probability of a future recession:

What does this chart examine?

-1.  Non-farm payroll employment

-2.  Industrial Production

-3.  Real personal income excluding transfer payments

-4.  Real manufacturing and trade sales

The recent spike is largely coming from weak income growth and also the tepid manufacturing data.  If you broke down the above you would find that this is a fairly solid measure.  We are looking at jobs but also how well are households doing in terms of income.  There is a growing number of working poor and also a large portion of our society now works in temporary limbo.  Many young Americans find that they are being trapped by deep college debt and career paths that are not leading them into any long-term employment.

The number of Americans not participating in the labor force is rather large:

This figure will grow with population growth however it has spiked because of the recent deep recession.  We’ve added roughly 10,000,000 people into the “not in labor force” category since 2008.  What is interesting is that this figure has accelerated even after the recession ended.  Part of this also has to do with many older Americans opting out of the employment segment of the economy.  You also have many staying or going back to school during tough economic times so this figure grows.

Bank lending?

Banks are also holding onto a large amount of excess reserves:

With banks at the front lines you realize that many are not lending because the economy is still weak.  Banks are using this bailout to shore up their own weak balance sheets instead of lending to cash strapped Americans.  With interest rates so low, you would expect banks to lend out to consumers to turn a profit.  Yet without steady income, it will be hard to repay any sort of loan.  The Census figures released this week shed a deeper light on the problems of our economy:

“(WaPo) Based on the revised formula, the number of poor people exceeded the 49 million, or 16 percent of the population, who were living below the poverty line in 2010. That came as more people in the slowly improving economy picked up low-wage jobs last year but still struggled to pay living expenses. The revised poverty rate of 16.1 percent also is higher than the record 46.2 million, or 15 percent, that the government’s official estimate reported in September.”

The recession probability chart is telling and demonstrates that we are still not out of the woods.  The sad reality is that 50 million Americans are at or near the poverty level.  How can we claim this is a true recovery?  Who is really recovering here?  This is larger than one political party.  The working and middle class largely do not have a voice on the mainstream press.  There is some heavy lifting that needs to be done.  We have half of our young college graduates in jobs that don’t require college degrees or many are in a worse position, unemployed.  The recession probability is 100 percent for tens of millions of Americans.

Governments Everywhere Having Deep Money Problems

Bob ChapmanInternational Forecaster
Thursday, April 12, 2012

It was 13 months ago we disclosed that the administration passed a stimulus bill known as the $17.5 billion “Hiring Incentives Act” to restore employment. It required that foreign banks not only withhold 30% of all outgoing capital flows, and disclosure of the full details of transactions of non-exempt holders to the Internal Revenue Service. They want the structure of how money ended up at that bank. In addition banks, particularly in Switzerland are required to close the account. That is equivalent to capital controls, so in future it will be easy to put currency controls of all funds entering or leaving the    US.

Now we have a new gem on our hands, Senate Bill 1813, which was presented by California Senator Barbara Boxer. The bill has been passed in the Senate 74-23 under the “Moving ahead for progress legislation in the 21^st Century Act.”

Section 4034 of the legislation states that any individual who owes more than $50,000 to the IRS will have their passport confiscated, revoked, or put on special terms and they will be denied exit or entry, out or into the US. The bill is loosely written, so as usual the interpretation is left up to bureaucrats in Washington. Hopefully this inclusion will be struck down in the House. Inasmuch almost all our Congress is bought and paid for – you will have to lobby very hard to eliminate it from the bill. This is not about tax evasion; it is about people control and their assets. E-mail, fax, write and call all House members to stop another nail being put in our coffin.

As we pointed out in past issues, Operation Twist, was just another surreptitious attempt to mask a QE 3 operation the Fed sold the short end of the bond market and bought the long end in order to keep mortgage rate down, which we find was unsuccessful. Thus, the regular QE 3 is ready to be launched.

ADP and BLS employment figures are totally bogus, so we’ll stick with John Williams’ 22.4%.

The Fed is not going to lower interest rates, they can’t. If they increase them the bond market would collapse and all confidence in the system would be gone.

We continue to believe if any military action is going to happen regarding Iran, it won’t happen until next year. This day by day will be negative for the US petrol dollar.

Read the entire article

“Surprisingly” Bad Economic News

August 16, 2010
 by Bob Livingston


Have you noticed how often the elitist “economists” in government, academia and the media are surprised by bad economic news?

They are constantly “surprised” by high unemployment numbers. They say the low manufacturing numbers were “unexpected.” They claim they didn’t “foresee” such a great trade imbalance.

When the Fed Open Market Committee met in June it said the economic recovery was “proceeding” and was likely to advance at a moderate pace. At the time they were talking of “tightening” monetary policy to fend off inflation.

Vice President Joe Biden has said we are in the “Summer of Recovery.” President Barack Obama has been saying his policies have “pulled us back from the brink of another Great Depression.” As recently as Aug. 2, Treasury Secretary Timothy Geithner, in an op-ed piece for The New York Times, wrote an uplifting column entitled “Welcome to the Recovery.” And he wasn’t being facetious.

Read the entire article

Inflationary Depression Forecast Revisited...We are Halfway there

Howestreet.com

By Paul Mladjenovic, CFP



Going back a few years ago, I made a forecast that America would be heading toward an inflationary depression. I made that forecast during 2007 and early 2008 when the federal government’s policies were very bad.

Today in 2010, the federal government has replaced the bad policies of a few years ago with much, much worse policies today. It is mind-boggling how bad these policies are and it is astonishing that most politicians and many economists don’t see the obvious dangers.

A forecast of an inflationary depression is actually two forecasts since a “depression” and “inflation” are technically two separate events. Therefore, I have to make clear that we are talking about two separate forecasts.

It is an old saying that the “road to hell is paved with good intentions”. Well, in recent years, that road has been changed to a super-highway! America was put on that super-highway a few years ago and right now we are traveling at break-neck speed toward the financial abyss.



PART 1 OF MY TWO-PART FORECAST: DEPRESSION

I believe that my forecast of a “depression” is accomplished. If you think that our experience of 2008-2009 was a garden-variety recession, I would ask you to re-consider that. The trillion-dollar spending policies enacted during the late Bush yeas and now the Obama years are extraordinarily dangerous. The federal government (and the state & local governments, too) are spending beyond our means as well as theirs. Bankruptcies, foreclosures, business contraction and unemployment are certainly at depression-level. Talk of a recovery is wishful thinking since the effects of still more bad policies are on the horizon. Look at what we have right now:

1. Unemployment is at 17%. I am not talking about the much reported yet highly inaccurate “official unemployment rate” which is a sham; I am talking about what is called the “U-6” employment rate that the Bureau of Labor Statistics compiles. It is a much less reported yet more accurate measure of unemployment. This statistic includes those counted in the “official unemployment rate” and adds in those that dropped out of the job search; the so-called “discouraged” unemployed. U-6 also includes those that are “under-employed” which means those that want full employment but have had to settle for part-time employment.

2. Foreclosures are at all-time highs.

3. Bankruptcies are at all-time highs.

4. Personal debt is still at record levels.

5. Government debt is at a mind-boggling all-time high and still soaring.



Then couple the above list with what is coming:

1. The tax-cuts enacted in the past decade are set to expire by January 2011. If this goes as planned, the effect is a tax increase that would deliver a body-blow to an already weak economy. A tax increase is nothing more than money taken by force by the government from the private economy. Basically that would mean less income and less invest-able capital for the private sector as the government forcibly siphons these resources and redirects it to a bureaucracy that is already the biggest in American history.

2. Congress and the president’s economic team have made noise about a “Value-Added-Tax” which is dumb during good economic times and quite stupid during bad economic times. Even the name is idiotic since taxes don’t add “value”…it merely increases the price or cost of that particular product or service.

3. The same folks are still considering pushing through what is called “Cap-and-Trade” legislation that would raise energy costs greatly since the legislation is nothing more than a huge hidden tax on energy usage. This legislation would do little (nothing?) for the environment but it would do much harm to our economy.

Therefore, consider the depression here and now. If taxes, regulations and other burdens and risks are not decreased immediately and substantially, then this depression will continue.



PART TWO OF MY FORECAST: INFLATION

Some readers have asked about the prospects for inflation. I am on record that I think that inflation is not an “if” but a “when”. As the federal reserve keeps creating trillions of dollars out of thin air, there will be consequences. Technically, they are indulging in “monetary inflation” but of course most people think of inflation by its symptom which is “price inflation”. Since many observers don’t see price inflation, they assume that deflation is winning the day and will be here for the foreseeable future. This is wrong.

If you have read my prior essays on inflation, I point out that inflation will become evident when two conditions occur:

1. The excessive creation of money (again, this is “monetary inflation”)

2. …When this money circulates through the economy (also referred to as “velocity”)

If the government creates trillions of dollars and these dollars do not circulate, then velocity will not occur. But just keep in mind that “velocity” occurs where there is DEMAND. This is a key reason why I am a long-term bull on commodities in general and “human need” commodities in particular. I believe that this is such an important consideration for investors that I even did a national seminar on commodities investing.

There are many areas where there is simply no substantial demand (such as housing and autos). Money will not flow there in this economic environment. However, money does flow to areas of “human need”.

For example, a recent report has shown that the price of wheat has gone up 71% during the past 12 months. I think that similar price movements (or higher!) are in store for many essentials. Commodities tied to “human need” will definitely see their prices continue to zig-zag upward.

I also believe that gold and other precious metals such as silver will continue their bull market. Why?

I consider gold and silver to be “human need” essentials in today’s economic environment. As inflation unfolds among essential commodities, people will need a “store of value” as the world’s major currencies keep on being over-produced. When people start to see that the dollars they hold (or other currency) start to lose value as the government over-produces it, they will then see that having cash is not a “safe harbor”; inflation will erode its value.

They will then seek to replace currencies that are “depreciating” or losing value and shifting their resources to that which holds value…gold and silver.

In fact, as people world-wide see the problems with fiat currencies (dollar, euro, etc.) and with paper assets (stocks, bonds, etc.), they will migrate into those things that will hold value or appreciate over time. The flight will be from “paper” to “stuff”. “Stuff” like precious metals, food, water and other essentials.


THERE WILL BE LITTLE OR NO INFLATION IN THOSE THINGS THAT PEOPLE DO NOT NEED.

The corollary to that (and this goes back to my forecast) is this…

THERE WILL BE SEVERE INFLATION (EVEN HYPERINFLATION) IN THOSE THINGS THAT PEOPLE DO NEED.

We have a huge world population and their needs will be addressed. When you couple this demand with expanding money supplies across the globe, rising prices will be the result.

The stage is being set for historic price inflation…in those commodities that are “essential”. Investors need to prepare.

Investors can learn about investing in human need from Paul Mladjenovic’s audio seminar “Cash in on the Commodities Super Bull Market”. He is the author of Stock Investing for Dummies and you can get his free financial newsletter, the Prosperity Alert at http://www.ravingcapitalist.com./

Total collapse by 2012!

SIC SEMPER TYRANNIS!!!
Mark Matheny


There are many forecasters these days making predictions as to the fate of America's Economy.Gerald Celente is one of the most renowned and consulted Trends forecasters being interviewed on numerous news channels in the media, as well as syndicated talk shows and Internet radio programs.

It seems we all have our opinions as to what the fate of America may be, but will economic forecasters, and Wall Street Gurus be able to save us from this delimna?It seems that the Wall Street Crime Syndicate has all but destroyed our economy,with the help of our fine government "Politburo" to legalize the Banking Cartel's conspiratorial activities. And all the average American citizen seems to do is shrug their shoulders and say,"That's the way it goes-What can I do about it?

Meanwhile, on Capital Hill, (or should I say,Captive Hill) our elected?Representatives seem to only be worried about shredding what little bit of the Constitution is left.There are some exceptions since Congressman Paul, Senator DeMint, and a few others are battling to put out the fires being set by Barack Hussein Obama and his Socialist Drones, however will they succeed if the public(we the People),fail to carry the buckets in line to back what few loyal Public Servants we have in the fight against a coming all-out tyranny?

I see mobs in the streets fighting when their favorite football team loses, but when their rights are being taken right out from under their noses,they don't seem to care!They cry when their favorite Pop-Icon dies, but tell me- who will weep for Lady Liberty? She is on her deathbed and all of her vital signs are weak!!! Is there no Balm in Gilead?

Economic collapse is the least of our worries my friends, What I fear most is that America, with all her wealth and resources, has become a nation destitute of true patriotism, and morally bankrupt!!

Please prove me wrong.
Mark Matheny