Obama: Leading to world depression — 9/27/2011

…not to say great minds think alike, because of the two of us, only roubini’s qualifies, but rather to point out a) that the indicia of crisis are REAL, and b) analysis does not depend on policy orientation, here’s my illinois review post from 9-22:

Obama: Leading to world depression
by Chris Robling

from Drudge this afternoon —

Dow plunges 391 points…
Global markets tumble 4%…
ZOELLICK: ‘World in danger zone’…
SOROS: US already in double-dip…

We made the point a month ago about the Philly Fed manufacturing report indicating to Fox business that we were already in a second dip.

Indicators have worsened considerably since then.

Euro sovereign debt, Obama’s latest tax hike plan, Obama’s failure to address spending and debt, uncertainty over Obamacare and slowing activity in China are opening vast possibilities of depression — not just recession.

My sense is the European banks will seize up, as ours did in 2008. They have vast amounts of cotton candy on their balance sheets, and their non-performing assets to total assets ratios are about to skyrocket.

There is not enough money in Europe to save them.

If Europe goes, demand for many of our goods — and services — will go. China is also widely exposed to Europe, so its decline in manufacturing will accelerate. If these three steps take place, then we will be in — at best — a 0.0 percent to 1.0 percent growth economy for years.

But it could get worse — deflation. In deflation we see successive periods of reduced production. It is actual contraction, and it accompanies depressions.

Net net, we are looking at a reduction of global incomes unseen since the Great Depression. That will cause a reduction in demand. That causes producers to cut prices, and then consumers await still lower prices… It can become a spiral, just as hyper inflation (Germany in the 1920s and Zimbabwe in the 1990s) becomes a spiral of upward prices.

Dramatic changes are needed now, when we can control them — or they will come on their own, and control us. I have never seen anything from President Obama that indicates he will do anything but the expedient. Here, that will send us into a decade of disaster.


and by the way — if china fails to produce 2m new jobs per month for any lengthy period, chances for civil unrest will increase. check turmoil already reported in the hinterlands — scores and scores of millions there are between agrarian poverty and industrialized poverty. some provincial governments have begun land accumulation — dispossessing peasants of their plots. peasants are already gingerly demonstrating about that. should manufacturing in fact go south, and folks have to return home from the labor encampments, and find their family’s plot gone . . . not good.


POSTED TUESDAY SEP 27, 2011 08:25 #
Explore posts in the same categories: Current Events, Politics

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