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Wednesday, October 3, 2012

Economic Outlook from CEOs, Bernanke, and Beyond

Thanks for Mish for his post US CEOs Sharply Reduce Expectations for Economic Outlook, Hiring; Third Largest Plunge in 6-Month Expectations in History; Reflections On "Uncertainty".

The survey hasn't seen this outlook level since 2009, inferring a slowdown is upon us.

Ben Bernanke must have read my post on Monday.  Mish reports Bernanke Begs Congress to Address "Fiscal Cliff", Pledges to Hold Interest Rates Near Zero Through Mid-2015 Even If Economy Picks Up
Which is exactly what I posted on Monday, that the fiscal cliff is going to be a political showdown at the expense of US citizens and the world.  Mr. Bernanke not only promised to purchase 40 Billion per month indefinitely  but keep low interest rates through 2015.  Once again, I ask you, what else can the fed do to prop up inflated asset prices?  There is always more, but only if there is a situation that justifies taking more extreme measures.

Looks like Austerity is the fad in Europe, and France has joined Greece, Spain, Italy, Portugal and others in cutting back spending.  As governments around the world grow more conservative in spending, is that a economic boom or would deflation likely follow.....
Mish reports Austerity Programs Hit France; Marchers Demand Vote on Treaty; Hollande Reneges on Campaign Promise

To add fuel to the Europe fire, Mish reports Concerns Mount that ECB Bond-Buying Program Is Illegal; Concerns? What Concerns?.   If the ECB was forced to stop bond buying, even for a few months, it would be devastating to prices.

The US Federal Debt is now at over 16 Trillion dollars.   The US GDP is about 16 Trillion dollars.  Congratulations USA, we now owe as much as the entire US Generates in 1 year!.  At this point the debt should never be paid back, not that anyone believes it will.  The real issue is not actually paying back, but the interest alone today every citizen owes the US is 12K and counting.  The interest will strangle the US budget and economy in the years ahead.

What we may be facing in the years ahead is not an Arab Spring, but a World Spring, as the central banks perversion of risk pricing, asset inflation, and capitalism distortions create more acute pain.  2013 is looking to be a real fun year, and at some point I'll do gold and gold miners again.

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