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Fed fiddles as America slides back into recession
The Telegraph ^ | 7/16/2012 | Ambrose Evans-Pritchard

Posted on 07/15/2012 5:42:03 PM PDT by bruinbirdman

The Economic Cycle Research Institute in America has doubled down on its recession call. A fresh US slump is not just a risk any longer. It has already begun.

Output slowed to stall speed over the winter. The US economy tipped into outright contraction in the second quarter, even before facing the "fiscal cliff" later this year – tightening of $600bn or 4pc of GDP unless action is taken to stop it.

Nothing serious is yet being done to head off the downward slide. If ECRI is right, the implications for the global system are ugly.

It is never easy to read the signals at inflexion points. Washington is always caught off guard. As ECRI’s Lakshman Achuthan says, it took the Lehman collapse ten months into recession in September 2008 to "wake people up".

What we know is that retail sales rolled over in February and broader trade sales peaked in December. Industrial output peaked in April. The nationwide ISM index of manufacturing crashed through the break-even line of 50 in June, just as it did at the onset of the Great Recession in late 2007, but this time at a faster pace.

Job growth has slumped to 75,000 a month over the last three months, too low to stop unemployment rising again to 8.2pc, or 14.9pc on the wider U6 measure.

Albert Edwards from Societe Generale expects the US economy to shrink 2pc this year, leading to a 40pc fall in profits. He says the S&P 500 index of stocks will ultimately plumb fresh secular depths, below the 666 bottom of March 2009.

The Federal Reserve has drifted into fatalism, seeming to lose confidence in its own ability to shape events, displaying the same lack of "Rooseveltian resolve" as the Fed in the early 1930s

(Excerpt) Read more at telegraph.co.uk ...


TOPICS: Business/Economy; Government; News/Current Events
KEYWORDS:

1 posted on 07/15/2012 5:42:06 PM PDT by bruinbirdman
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To: bruinbirdman
That photograph shows evidence of a well-run factory (somewhere in the world) mass-producing "I want to work" signs.

I guess that's good news.

2 posted on 07/15/2012 5:46:33 PM PDT by ClearCase_guy (Roger Taney? Not a bad Chief Justice. John Roberts? A really awful Chief Justice.)
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To: ClearCase_guy
your tax dollars at work, they're all US Postal workers...
3 posted on 07/15/2012 6:00:19 PM PDT by Chode (American Hedonist - *DTOM* -ww- NO Pity for the LAZY)
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To: Chode

LOL - look for the union label.....

We should go to 3 day a week delivery MWF and if there’s a holiday in the week on one of those days use TTS instead.

These days anything that needw to move quickly goes on the wire, and for those without internet there’s always FedEx and UPS.

These post office folks are the buggy whip producers of the 21st century. 90% of the mail I get these days is catalogs and junk letters.


4 posted on 07/15/2012 6:08:17 PM PDT by nascarnation
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To: bruinbirdman
Fed fiddles as America slides back into recession

Sounds like a plan to me. As I understand it, the Fed can only do two things:

1. Print money and shove it out into the system.

2. Pull money back from the system and burn it.

I think that's it in a nutshell. Which one should they do now?

5 posted on 07/15/2012 6:09:14 PM PDT by InterceptPoint (TIN)
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To: bruinbirdman
Fed Expands Operation Twist by $267 Billion Through 2012
http://www.bloomberg.com/news/2012-06-20/fed-expands-operation-twist-by-267-billion-through-year-end.html
[Bloomberg title and link only, no content from Bloomberg allowed to be posted to FR.]


6 posted on 07/15/2012 6:18:38 PM PDT by familyop ("Wanna cigarette? You're never too young to start." --Deacon, "Waterworld")
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To: bruinbirdman
AEP is off the reservation with this column. He talks like Krugman and favors massive additional moetary stimulus, i.e. QE:

The Tea Party Congress, like Europe's bourgeousie, would rather wallow in liquidation, Puritan cleansing, and mass default than tolerate the possibility of a solution.

To those who excoriate monetary stimulus as some form of devilry -- most readers it seems -- my question is whether would you rather see bigger deficits and bigger publics debts instead. Because that is exactly what you get if central banks fail to act in a slump, if you don't lose you democracy as well.

Even AEP's loyal readers, as evidenced by the comments, take him to task for his wrong-headedness.

One point of agreement that I have with Bernanke is that the Fed has done all it can and that the President and Congress must right our economic ship by eliminating the federal deficit. The last thing we need, to quote David Stockman, is for the Fed to inject more high-grade monetary heroin into the financial system.

7 posted on 07/15/2012 6:22:05 PM PDT by Praxeologue
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To: All


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8 posted on 07/15/2012 6:24:30 PM PDT by musicman (Until I see the REAL Long Form Vault BC, he's just "PRES__ENT" Obama = Without "ID")
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To: bruinbirdman

“...drive up nominal GDP to a trend line growth rate of 5pc, doing so transparently so that markets know exactly what the objective is and when the stimulus will be unwound.
I have no doubt that this would bring about a full recovery very fast if conducted with enough panache, but is it possible to marshal political consent for such revolutionary action?
The Tea Party Congress, like Europe’s bourgeousie, would rather wallow in liquidation, Puritan cleansing, and mass default than tolerate the possibility of a solution. “

No, ‘faux growth’ from the Fed won’t do it.
Now real 5% growth- say from regulatory and tax cutting- is a cure. But where’s the political support for that except the Tea Party he despises?


9 posted on 07/15/2012 6:27:24 PM PDT by mrsmith (Dumb sluts: Lifeblood of the Media, Backbone of the Democrat Party!)
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To: nascarnation
i heard that...
10 posted on 07/15/2012 7:16:12 PM PDT by Chode (American Hedonist - *DTOM* -ww- NO Pity for the LAZY)
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To: bruinbirdman

Whats missing in this story “IS” Obama wants the economy to slide back into recession which we actually never got out of.. He has done everything in his power to stymie the United States recovery..

Trillions down a black hole.. that literally nobody knows where it went.. He WANTS the US to fail.. or founder on the economic rocks.. He has planned it and performed it and WANTS IT...

Only Rinos and democrats give him the benefit of the doubt and there is NOT any doubt.. He did it ON PURPOSE...


11 posted on 07/15/2012 7:42:02 PM PDT by hosepipe (This propaganda has been edited to include some fully orbed hyperbole..)
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To: mrsmith; Kennard
"One point of agreement that I have with Bernanke is that the Fed has done all it can and that the President and Congress must right our economic ship "

Perhaps the "independent Fed" is fed up with Obamanomics and will hold the status quo (lousy economy) 'til November thus guaranteeing a government that will "right our economic ship"?

yitbos

12 posted on 07/15/2012 8:28:17 PM PDT by bruinbirdman ("Those who control language control minds." -- Ayn Rand)
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To: bruinbirdman
"We're not just winging it, China doesn't own us. All is well. Remain clam, comrades."
13 posted on 07/15/2012 8:34:17 PM PDT by tumblindice (Sic Semper Tyrannis)
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To: tumblindice

I love clams ;-)


14 posted on 07/15/2012 8:47:41 PM PDT by Kudsman (Repeal the 17th, restore the Republic.)
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To: mrsmith; InterceptPoint; Kennard; familyop

Here we go again!

http://www.youtube.com/watch?v=EoS52fVtVQM


15 posted on 07/15/2012 9:14:45 PM PDT by Pining_4_TX ( The state is the great fiction by which everybody seeks to live at the expense of everybody else. ~)
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To: bruinbirdman
guaranteeing a government that will "right our economic ship"

The chances of that are near zero, given the two candidates. What you may have intended to say was that the Fed may be looking for a better Congress. That is possible. That was also the message from John Roberts: if the law needs to change, Congress should do it.

It is telling that the Founder's envisaged three branches of government and we now effectively have four, to include the Fed. Despite being a creature of Congress, the Fed has all the perquisites of a branch of government: independence, vast power, can print money and Vatican-like secrecy, but only two responsibilities: stable prices and full employment. Today the Fed can wash its hands of both responsibilities: they can't encourage stable prices and full employment with the Government running a 10% deficit and 100% debt-to-GDP.

Two appointed officials, Bernanke and Roberts have an enormous influence on our lives.

16 posted on 07/15/2012 9:45:03 PM PDT by Praxeologue
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To: nascarnation

“These post office folks are the buggy whip producers of the 21st century. 90% of the mail I get these days is catalogs and junk letters.”

I’ve never understood why the environmental movement never got on the junk mailers (using paper that 95% of the time is tossed unread into the garbage); maybe it was the insistence of the postal workers (who would otherwise be delivering three letters per street each day) because it keeps them looking useful.

It seems only a few years back postal workers I know were bragging how they didn’t take government subsidies (they “paid their own way”); incredible that now we’re looking at closing of offices, elimination of Saturday delivery and such..


17 posted on 07/15/2012 10:08:11 PM PDT by kearnyirish2
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To: Kennard
"The chances of that are near zero, given the two candidates."

On occasion, elected representatives put principle above reelection. Sarkozy comes to mind, Berlusconi, the entire Tea Party and surprisingly the House commies who voted for socialized medicine knowing half of them would be thrown out.

Little heard, not repeated, but noted by a few, Limbaugh had a one on one with Romney. Rush was told by Mitt that what he was going to do could very well mean one term. No further details were mentioned. The subject has not come up again.

How oftern does the Chief Justice of the Supreme Court tell the nation that they better get rid of the President and his socialist followers?

How oftern does the Chairman of the Federal Reserve tell the country that the fed has done all it can, a regime change is needed?

Take it for what you like.

yitbos

18 posted on 07/15/2012 10:34:34 PM PDT by bruinbirdman ("Those who control language control minds." -- Ayn Rand)
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To: bruinbirdman

Recession the new definition = government isn’t getting enough revenue.

Stimulus = electronic adding, directly into government paychecks and funds (which are in the anti-free market).

Everyone else, there’s no such thing.


19 posted on 07/15/2012 11:11:12 PM PDT by Varsity Flight (Phony-Care is the Government Work-Camp: Arbeitsziehungslager)
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To: All

AEP should know better by now the Fed is powerless at this point. The previous QEs had no impact on the real economy. It only flooded stimulus into commodities and stocks but did nothing to create real jobs/growth. The time has come to have the hangover of all hangovers and stop these phony ‘hair of the dog’ cures that are only making matters worse. Hopefully it happens now rather than next year so Obama gets pink slipped.


20 posted on 07/15/2012 11:21:56 PM PDT by DHerion
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To: bruinbirdman
Little heard, not repeated, but noted by a few, Limbaugh had a one on one with Romney. Rush was told by Mitt that what he was going to do could very well mean one term. No further details were mentioned. The subject has not come up again.

We should assess Romney by his actions, not by his implied promises.

How often does the Chief Justice of the Supreme Court tell the nation that they better get rid of the President and his socialist followers?

Roberts did not ask the Country to "get rid of" Obama. He upheld ObamaCare, Obama's signature legislation and said that it was up to Congress to change it. Judge Justice Roberts by his actions, not by his words.

How often does the Chairman of the Federal Reserve tell the country that the fed has done all it can, a regime change is needed?

Bernanke's board rolled out QE1, QE2, Operation Twist 1 and, a few days ago, Operation Twist 2, all supportive of Obama. He then said that it was up to Congress and the Executive to balance the budget, without advocating either spending cuts or tax increases. Judge Bernanke by his actions, not by his words.

21 posted on 07/16/2012 10:50:13 PM PDT by Praxeologue
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