Here Comes The Double Dip Pt. 2

[Daniel_Plainview]

On Friday 13th, Euro Zone May Again Slay the U.S. Consumer

Just as U.S. consumers feel better about the economy, Bam! Europe flares up again. Friday was all about mixed signals on the outlook.

U.S. consumer sentiment increased more than expected in early January, a good sign for spending in the first quarter. Then talk about “imminent” ratings downgrades for some European government debt raised the usual fears about the fallout from an imploding Europe.

The gain in sentiment illustrates the disconnect most Americans feel about their own economic situation and what’s happening on the global stage. It’s not that Americans are ignoring the news out of Europe; it’s just what happens in Brussels doesn’t change behavior in Boise.

Even so, the euro-zone crisis is having negative impacts on two important parts of the U.S. economy: trade and financial markets. Both have potential to throttle down 2012 real gross domestic product growth [which is not expected to be that strong to begin with.] Trade weakness will slow industrial output, while the decline in equity prices is eroding wealth and injecting new uncertainty among businesses.

Absent a total meltdown in the financial markets or banking system, the crisis’s most direct effect on GDP growth will come through net exports. ...

[Daniel_Plainview]

22 Signs That We Are On The Verge Of A Devastating Global Recession

The following are 22 signs that we are on the verge of a devastating global recession….

#1 On Thursday it was announced that U.S. jobless claims had soared to a six-week high.

#2 Hostess Brands, the maker of Twinkies and Wonder Bread, has filed for bankruptcy protection.

#3 Sears (NASDAQ:SHLD) recently announced that somewhere between 100 and 120 Sears and Kmart stores will be closing, and Sears stock has fallen nearly 60% in just the past year.

#4 Over the past 12 months, dozens of prominent retailers have closed stores all over America, and one consulting firm is projecting that there will be more than 5,000 more store closings in 2012.

#5 Richard Bove, an analyst at Rochdale Securities, is projecting that the global financial (NYSEARCA:XLF) industry will lose approximately 150,000 jobs over the next 12 to 18 months.

#6 Investors are pulling money out of the stock market at a rapid pace right now. ...

#7 There are signs that the Chinese (NYSEARCA:FXI) economy is seriously slowing down. The following comes from a recent article in the Guardian….

Growth had slowed to an annual rate of 1.5% in the second and third quarters of 2011, below the “stall speed” that historically led to recession.

#8 The Bank of Japan (NYSEARCA:FXY) says that the economic recovery in that country “has paused“.

#9 Manufacturing activity in the euro zone (NYSEARCA:FXE) has fallen for five months in a row.

#10 Germany’s economy actually contracted during the 4th quarter of 2011. At this point many economists believe that Germany (NYSEARCA:EWG) is already experiencing a recession.

#11 According to a recent article by Bloomberg, it is being projected that the French (NSYEARCA:EWQ) economy is heading into a recession….

The French economy will shrink this quarter and next, suggesting the nation is in a recession as investment and consumer spending stagnate, national statistics office Insee said.

#12 There are a multitude of statistics that indicate that the UK (NYSEARCA:EWU) economy is definitely slowing down.

#13 In the UK, the average price of a gallon of gasoline has risen to an astounding $9.67.

#14 It is being reported that the Spanish (NSYEARCA:EWP) economy contracted during the 4th quarter of 2011.

#15 Bad loans in Spain (NYSEARCA:EWP) recently hit a 17-year high and the unemployment rate is at a 15-year high.

#16 According to a recent article in the Telegraph, the Italian government is forecasting that there will be a recession for the Italian economy in 2012…. The Italian government predicts GDP will contract 0.4pc next year, but many economists fear the figure is optimistic. "We can say without mincing words that we have already slipped into recession,” said Intesa Sanpaolo analyst Paolo Mameli. “We expect GDP to keep contracting for the next 3-4 quarters.”

#17 Italy’s (NYSEARCA:EWI) youth unemployment rate has hit the highest level ever.

#18 The unemployment rate in Greece for those under the age of 24 is now at 39 percent.

#19 Greece is already experiencing a full-blown economic depression. About a third of the country is now living in poverty and extreme medicine shortages are being reported. ...

#20 In Greece, large numbers of people are simply giving up on life. Sadly, the number of suicides in Greece has increased by 40 percent in just the past year.

#21 In many European countries, the money supply continues to contract rapidly. ...

#22 The major industrialized nations of the world must roll over trillions upon trillions of dollars in debt during 2012.

[Daniel_Plainview]

Charles Hugh Smith -- Habituating to Contraction
The Savior State has pulled out all the stops to prop up the Status Quo. Its gargantuan borrowing and spending have fixed nothing. Contraction is replacing expansion as the new normal.

For the past 67 years, Americans have been conditioned to expect expansion and more of everything: more income, more stuff, more opportunity, more benefits, more medical care, more government entitlements, and so on.

As a result, Americans have habituated to permanent expansion. The concept that contraction--less of everything--is the new normal simply doesn't register; it is rejected, denied, or decried as a great tragedy. The notion that it is simply reality does not compute with a populace habituated to permanent "growth" that is at worst interrupted by brief recessions.

U.S. politicians have learned that Soaring Rhetoric (TM) about "morning in America," "the New Frontier," "hope" and other ritualistic appeals to permanent expansion win elections, while accurate descriptions of reality lose elections.

The voting public's demand for "permanent good news" promising permanent expansion has spawned a feedback loop of officially sanctioned manipulated statistics and media spin (a.k.a. propaganda) that expands with every administration, even as the real economy visibly weakens. Though the Obama Administration has perfected the techniques of presenting "permanent good news," the divergence of the real economy and the official "story" that "we've returned to permanent expansion" is widening.

The real story is the "expansion" has cost the taxpayers trillions of dollars in new debt and trillions of dollars of backstops, shadow purchases and money-printing by the Federal Reserve. Roughly speaking, $6 trillion in additional Federal borrowing has been blown to simply keep the Status Quo from imploding, and around $13 trillion in guarantees, backstops, asset purchases, and losses made good have been issued to keep the Status Quo's financial sector afloat and in charge.



By any credible, unmanipulated measure, for example, the number of people with fulltime employment or household income, the economy has yet to recover to 2007 levels.

This reality must be denied, both by the power-obsessed politicos who fear the truth like vampires fear garlic-garlanded crosses, and by voters who fear a reduction in their personal share of the swag.

Humans habituate quickly to a wide range of conditions and expectations, but once they've settled into the new habitat, they are resistant to new conditions. Needless to say, humans prefer a future in which there will be more of everything over one with less of everything, as permanent expansion means there will be few if any troublesome cost-benefit analyses, hard choices or painful triage, and little need to adjust to new realities.

Changing conditioning is difficult and often arduous.

Americans have been conditioned for three generations to expect the Savior State to "do something" during downturns to "make it right." The idea that systemic problems are now beyond the reach of the Federal government does not compute; there must be something the government can do to "fix" everything.

This notion that the Central State is effectively omniscient and all-powerful is central to the belief system of Americans now. The concept that the government cannot fix the problem, or that government central-planning has made the problem worse, is anathema to everyone conditioned to believe government intervention will "save the day."

The basic reality is the Federal government has already pulled out all the stops in the past four years to "make the economy recover," and all its unprecedented actions have accomplished is to maintain the Status Quo via unsustainably gargantuan borrowing, spending and backstopping.

If we scrape away the rhetoric and bogus statistics, at heart the current fantasy that the U.S. has "decoupled" from the global economy and will remain an island of "permanent prosperity" in a sea of recession boils down to this belief: the Federal government "won't let us stay in recession." In other words, it's within the power of the Central State to make good every loss, guarantee every debt, maintain the Empire, solve every geopolitical challenge and find technological or military solutions to potential energy shortages. All we need is the "will" to force the government to use its essentially unlimited power to "fix everything."

A people conditioned to this expectation will have great difficulty accepting that their government has already done everything possible, and that these stupendous debt-based expenditures are simply not sustainable going forward. Some problems are not fixable by more government intervention; indeed, government intervention in the marketplace is like insulin: the system begins to lose sensitivity to Central State manipulation and intervention.

2012 is looking like the year that the American public will have to face up to the fact that the Central State's massive efforts to "fix the economy" have failed, and that Central State support of the Status Quo cannot fix what's broken.

We will have to habituate to contraction, and the belief in a god-like Savior State with unlimited powers and money will fade as the economy's systemic illnesses--extreme concentrations of power and wealth, corruption, financial leverage, excessive debt and so on--reassert themselves.

All that has happened for four long years is systemic problems were papered over to benefit the Status Quo. Everything that is broken awaits real repair.

[Daniel_Plainview]

Forbes -- S&P Downgrades France To AA+, Maintains Negative Outlook

The worst-kept secret on Wall Street was officially confirmed after the close Friday, when Standard & Poor’s downgraded its sovereign debt rating on to AA+ from AAA. Widely-anticipated since the ratings agency put 15 of the 17 eurozone countries under review in December, Friday’s downgrade have likely been factored in by most market participants.

France’s rating was chopped one notch to AA+, putting its rating in line with that of the U.S. at S&P, which cut Uncle Sam from AAA in August.

Importantly, S&P said its outlook on France remains negative, which indicates further cuts to the rating can not be ruled out. The impact on the European Financial Stability Facility, the current bailout mechanism that depends on the AAA imprimatur of its sovereign backers, remains to be seen.

Perhaps more worrisome than France losing its AAA was news Friday that the discussions over haircuts for private sector holders of Greek debt were halted. Without some form of deal, and perhaps even with one, a Greek default could throw another wrench into the efforts to salvage the eurozone. ...

[Daniel_Plainview]

Mass S&P downgrade as Greek debt impasse hit euro zone

(Reuters) - Standard & Poor's downgraded the credit ratings of nine euro zone countries, stripping France and Austria of their coveted triple-A status but not EU paymaster Germany, in a Black Friday 13th for the troubled single currency area. "Today's rating actions are primarily driven by our assessment that the policy initiatives that have been taken by European policymakers in recent weeks may be insufficient to fully address ongoing systemic stresses in the eurozone," the U.S.-based ratings agency said in a statement.

In a potentially more ominous setback, negotiations on a debt swap by private creditors seen as crucial to avert a Greek default that would rock Europe and the world economy broke up without agreement in Athens, although officials said more talks are likely next week.

If Greece cannot persuade banks and insurers to accept voluntary losses on their bond holdings, a second international rescue package for the euro zone's most heavily indebted state will unravel, raising the prospect of bankruptcy in late March, when it has to redeem 14.4 billion euros in maturing debt.

S&P cut the ratings of Italy, Spain, Portugal and Cyprus by two notches and the standings of France, Austria, Malta, Slovakia and Slovenia by one notch each. The move puts highly indebted Italy on the same BBB+ level as Kazakhstan and pushes Portugal into junk status.

It put 14 euro zone states on negative outlook for a possible further downgrade, including France, Austria, and still triple-A rated Finland, the Netherlands and Luxembourg.

Germany was the only country to emerge totally unscathed with its triple-A rating and a stable outlook.

Can you say "GLOBAL RECESSION" ???

If not, how about "GLOBAL DOUBLE-DIP RECESSION" ???

If not, how about "GLOBAL DEPRESSION" ???

[TheAntiDoomer]

Sorry DP, NO Double Dip

http://www.pittsburghlive.com/x/pittsbu ... 75252.html

"There will be no double dip, no relapse back into recession."

Nationally, Hoffman predicts the private sector will establish 2 million manufacturing, energy, hospitality and leisure and construction jobs in 2012, accounting for economic growth of about 2.5 percent. In 2011, the economy grew by nearly 2 percent.

He said the national unemployment rate would decrease from 8.6 percent to 8.25 percent by the end of the year. The Bureau of Labor Statistics today will release the jobless figures for December.

Read more: U.S. economy rates '1 thumb up' - Pittsburgh Tribune-Review http://www.pittsburghlive.com/x/pittsbu ... z1jOHdKVNm

[TheAntiDoomer]

Gallup Daily Unemployment Numbers taking the next leg down!!

http://www.gallup.com/poll/125639/gallu ... force.aspx

[Daniel_Plainview]

Sorry DP, NO Double Dip

OK, OK, you win ... you win ...

After all, if PNC Financial's CEO Stuart Hoffman declares as much (in his address to 120 members of Duquesne Club), then it must be true ... It must be true ... It must be true ... It must be true ... keep hope alive ... keep hope alive ...



There's no place like Cornucopia ... There's no place like Cornucopia ...

[Lore]

Sorry DP, NO Double Dip

http://www.pittsburghlive.com/x/pittsbu ... 75252.html

"There will be no double dip, no relapse back into recession."

Nationally, Hoffman predicts the private sector will establish 2 million manufacturing, energy, hospitality and leisure and construction jobs in 2012, accounting for economic growth of about 2.5 percent. In 2011, the economy grew by nearly 2 percent.

He said the national unemployment rate would decrease from 8.6 percent to 8.25 percent by the end of the year. The Bureau of Labor Statistics today will release the jobless figures for December.

Read more: U.S. economy rates '1 thumb up' - Pittsburgh Tribune-Review http://www.pittsburghlive.com/x/pittsbu ... z1jOHdKVNm

After all, how can any economist ever be wrong, especially one from a financial services company, about reading the tea leaves.

[rangerone314]

Housing will not go down, it will continue going up.

The check is in the mail.

Any other good lies?

[OilFinder2]

After all, if PNC Financial's CEO Stuart Hoffman declares as much (in his address to 120 members of Duquesne Club), then it must be true ... It must be true ... It must be true ... It must be true ... keep hope alive ... keep hope alive ...

And ... if Michael Snyder says we're on the verge of a devastating global depression, it must be true ... it must be true ... Especially since Hostess Twinkies are in trouble! BOY IS THAT A SIGN OF IMMINENT ECONOMIC COLLAPSE IF I EVER HEARD OF ONE!!!


When you wish upon a star ...

And if Karl Denniger says the Double Dip is on its way, it's all but arrived at the station!

[Daniel_Plainview]

And ... if Michael Snyder says we're on the verge of a devastating global depression, it must be true ... it must be true ... Especially since Hostess Twinkies are in trouble! BOY IS THAT A SIGN OF IMMINENT ECONOMIC COLLAPSE IF I EVER HEARD OF ONE!!!

Wow, you sure know how to take lameness to new heights. If you bother to READ, Mr. Snyder discusses "global recession", not "imminent collapse."

Hostess -- along with thousands of other companies -- has been experiencing massive, suffocating margin squeezes. Why? Because resources and raw materials are becoming more costly. Why? Because of growing scarcities, and because of Heli-Ben's previous QE1 and QE2. This is a growing problem that will be repeated with increasing frequency.

It's interesting to see how you Cornies squirm and writhe as the obvious signs of economic stress escalate.

[Daniel_Plainview]

Europe's endgame threatens us all

The rapid deterioration of the situation across the Atlantic, after a brief holiday reprieve, threatens to pull the U.S. economy down into recession in 2012 via financial market turbulence and a slowdown in global trade. Asia is already catching cold with Singapore, rest stop between Asia and Europe, suffering a 4.9% annualized drop in its economy in the fourth quarter as manufacturing activity plunged 22%.

Friday's developments, along with Thursday's terrible retail sales report, has Wall Street analysts falling all over themselves to cut their GDP growth projections. JPMorgan (JPM) economist Michael Feroli cut his first quarter estimate to just 2% and expect policy uncertainty near the election to weigh on growth later this year too.

Expect more of this as the two temporary tailwinds that supported the American economy recently -- savings withdrawals and cheaper gas prices -- both reverse.

Now, with Europe's woes pulling down growth and Washington embroiled in bitter divisions, Federal Reserve officials are out in force trying to talk up the potential for another round of money printing, or "quantitative easing."

But ... this is a terrible idea since instead of supporting growth, it is likely to merely encourage Wall Street to push up commodity prices, inflate gas prices, and cause more economic damage just as the $600 billion "QE2" initiative did in late 2010 and early 2011.

... Europe's debt crisis has reached its final stages where the like of Greece have no choice but to consider debt defaults and possible exits from the eurozone, something that will increase the pressure on Europe's banks and the countries that must stand behind them. This, in turn, will increase the pressure on "core" Europe creditors like Germany and France, weakening their ability to save troubled-but-not-yet​-doomed countries like Italy and Spain.

All the while, America faces a stark choice between a new recession that will weaken its own debt problems or having another go at dollar devaluation, commodity price inflation, and having its central bank become a political punching bag. Pick your poison.

[Daniel_Plainview]

Europe debt crisis tied to US economic recovery

WASHINGTON — ... If Europe tanks, it could take the fragile American economy with it. ... Should the Europeans fail, it could hurt trade, consumer confidence and possibly even shatter the euro, gumming up much of the world’s banking system in the process.

... The full brunt of Europe’s debt crisis has not been felt. Up ahead: an expected further tightening of credit and a retrenchment by European banks. Austerity measures along with a bank pullback could prove to be a huge drag on growth in Europe and the United States.

“Time would suggest the crisis is deepening,” said Heather Conley, a Europe expert at the Center for Strategic and International Studies. “The Obama administration is very concerned about, in its view, Europe’s lack of ability to get hold of this problem and handle it decisively.”

“Our economies are so interlinked and intertwined that whatever happens in Europe has a significant impact in the United States, and whatever happens in the United States directly affects Europe,” Conley said. ...

[Daniel_Plainview]

WSJ -- Economists See Europe as Main Threat to U.S. Growth

The euro zone will most likely experience a short recession, but the uncertainty surrounding Europe remains the biggest risk to growth in the U.S., according to economists surveyed by The Wall Street Journal. ... Forty-eight of 50 economists surveyed said that the euro zone is in a recession now or that one is imminent, while just two believe the region will avoid a downturn.

[KingM]

Why don't you start a new thread about the arrival of the next recession? Even if it arrived tomorrow, it would not count as a double dip recession. It has been too long since the last one ended.

[TheAntiDoomer]

^Cause DP has a hard time admitting he was wrong.

[OilFinder2]

And ... if Michael Snyder says we're on the verge of a devastating global depression, it must be true ... it must be true ... Especially since Hostess Twinkies are in trouble! BOY IS THAT A SIGN OF IMMINENT ECONOMIC COLLAPSE IF I EVER HEARD OF ONE!!!

Wow, you sure know how to take lameness to new heights. If you bother to READ, Mr. Snyder discusses "global recession", not "imminent collapse."

Oh wow, as if ... a "devastating" global recession doesn't amount to the same thing.

Hostess -- along with thousands of other companies -- has been experiencing massive, suffocating margin squeezes. Why? Because resources and raw materials are becoming more costly. Why? Because of growing scarcities, and because of Heli-Ben's previous QE1 and QE2. This is a growing problem that will be repeated with increasing frequency.

Dude, I would suggest you educate yourself on the matter by actually, like, reading the news. Hostess' main problem has been a byzantine and inefficient collection of union arrangements brought on by several mergers over the years where they inherited union arrangements of the companies they bought. I am soooo sorry to burst your political fantasy, but it's got absolutely nothing to do with Bernanke and QE2 and little to do with costly resources. In fact, Hostess had previously gone through bankruptcy proceedeings in 2004 - BEFORE Bernanke became Fed chairman and long before QE2 existed.

As usual, you're so utterly, totally and completely obsessed and deluded by politics and ideology you've got to blame even the bankruptcy of Hostess on Bernanke.

It's interesting to see how you Cornies squirm and writhe as the obvious signs of economic stress escalate.

It's hilarious watching doomers grasp at every trivial instance they can find to give themselves hope that another economic collapse is just around the corner. And it's even more hilarious (and pathetic) watching the politically obsessed and deluded try to blame everything on the objects of their political wrath.

[Daniel_Plainview]

Why don't you start a new thread about the arrival of the next recession? Even if it arrived tomorrow, it would not count as a double dip recession. It has been too long since the last one ended.

As of September 2008, the global economy entered completely uncharted economic territory, where traditional definitions of "recession," "recovery," and "depression" do not neatly apply.

In the post-2008 era, the concept of a "double-dip" is a completely semantic exercise ... and to debate the contours of a once-relevant definition will never lead to satisfactory outcomes.

Does this look like a traditional "recovery" to you?



Does a traditional "recovery" require ongoing ZIRP, QE2, "Operation Twist," and hundreds of billions doled out annually for food-stamps, unemployment, etc?



Does a traditional "recovery" require ongoing annual federal deficits in the trillions of dollars?



A better framework is to admit that the US economy is on perma-lifesupport, and that we never left the "depression" that began in September, 2008 ... despite unprecedented and ongoing fiscal and monetary stimulus.

^Cause DP has a hard time admitting he was wrong.

When you're in uncharted territory such that a majority of the economy is government controlled, then historical concepts of "recession" and "recovery" need to be revisited ... There is no "right" or "wrong" when the playing field has been completely re-written. You're trying to fit a round object into a square hole, and that will never lead to a satisfactory outcome.

The cornies are in complete denial as to the new reality, and it's an utter waste of time for anyone to try to debate the Cornies.

[KingM]

I agree that it has been a shaky recovery, with the worst labor market in decades, although that appears to be turning, slowly, around. But it was never a depression. It doesn't come close to the carnage of the 30s, or some of the panics in the late 19th century. People are still rushing the doors at Wal-Mart on Black Friday, for god's sake, not fleeing the Dust Bowl by the thousands with all their possessions in the trunk of their cars, or lined up around the block at soup kitchens.