Three BIG Words: Revision, Recession, and Intervention

Financial Sense Online ^ | July 31, 2002 | Jim Puplava

[henderson field]

The housing market is not driven by low interest rates. It is driven by immigration population growth.

[Ken H]

Overnight action in the Dow, Nasdaq, S&P, gold, currencies can be followed here-- http://www.mrci.com/qpnight.asp

[Digger]

This site IMO is excellent. Been a lurker there for quit some time.

[glorgau]

I like the line I heard on with Kudlow and Kramer on MSNBC -

"today, USA, Inc. was forced to restate growth for the past 4 quarters..."

[arete]

The markets and the public are going to need something to distract them and perhaps a war will do just that.

Listen to the drumbeats of war. That tells be the economy is weak and there is no real recovery in sight.

Richard W.

[arete]

Gold is falling like a rock again today. Just like last week when there was major interventions in the markets. Humm.

Richard W.

[TightSqueeze]

Once these excesses have been taken out, and gold has been transferred from weak to stronger hands, the stage is set for the next advance of what I believe will be a decade-long bull market.

IMHO this is pure speculation, the trend for gold is still down and this action looks like a typical bear market rally. The real economic enemy is not inflation, but deflation and gold is acting as it should in deflationary times. Gold should not be purchased for investment purposes but as a store of wealth in times of crisis.

[grania]

It appears from the above reports that the economy is likely heading back toward a recession. This is worrisome for most analysts and economists who have been consistently wrong in forecasting a second half recovery

This would be the "double dip recession" some analysts had feared earlier, wouldn't it? I would think the timing would be awful, with people delaying retirement or taking part time jobs to supplement retirements. And it's a lot of people in that category: the "baby boomers" are in their mid-50s now. One would think this has to cause an unemployment situation, unless there is something like increased defense spending.

[LS]

Richard, come on. Who is "doing the drumbeats of war?" THE DAMN NEW YORK TIMES. Yah, those liberals want to strengthen the economy to re-elect Bush? Not logical. Moreover, sorry to tell you, but economic history shows that war is NOT good for business. There has been no war where major industries outside of munitions have really prospered. Robert Higgs has a WELL-RESPECTED study showing that the U.S. really didn't come "out" of the Great Depression until 1946, when the pent up savings of Americans finally came back to consumer goods. Military spending did little to "get us out" of the Depression.

[Wyatt's Torch]

Since Q3 last year gold had been trending up (from $260 to $325), seemingly reversing the deflationary downward trend that started in 1997. However, since last Tuesday, gold has fallen 8% (from $325 down to $300). Barring major manipulation of the market (which I now believe), it is a bad sign that the Fed is not supplying enough liquidity and deflation will be reignited. Not good.

[arete]

Yah, those liberals want to strengthen the economy to re-elect Bush? Not logical. Moreover, sorry to tell you, but economic history shows that war is NOT good for business.

No liberals don't want to strengthen the economy not that there is anyway they could. Unless you know of some secret fix, I'd say that the libs are simply making hay out of pointing out the obvious.

I also suspect that the ruling class elite (all politicians) see themselves in jeopardy of being thrown out of office if things get really bad. If the best they can do is give us recession and economic uncertainty, then maybe all of them need to go.

War, unless you are building tanks, probably does little to stimulate economic activity overall. It does provide the public with a big distraction and at least in the short run, provides a form of single mindedness and societal "glue." The politicians want us focused on Saddam and not Senator Dipshit. It is terribly unfashionable and UNPATRIOTIC to criticise our government when we are at war.

Richard W.

[arete]

There is more bad news on the way tomorrow judging from the gold market.

Jobless Claims Rise in Latest Week

Richard W.

[arete]

July ISM sinks to 50.5%, showing slow growth By Rex Nutting

The nation's manufacturing sector was growing for the sixth straight month in July, but at a much slower pace than in June, according to the Institute for Supply Management. The ISM index fell to 50.5% from 56.2% in June. New orders dropped to 50.4% from 60.8%. Production sank to 55.7% from 61.4%. Employment eased to 45.0% from 49.7. ISM said the drop in new orders could be a pause in inventory replenishment.

Richard W.

[arete]

Like I said, the bad news just keeps rolling in:

Construction spending fell 2.2 percent in June, instead of the 0.2 percent rise economists expected. The May figure was revised to a 2 percent drop from the originally reported 0.7 percent dip.

Complete text of article here:

Weak and weaker

All that pro-duct-iv-ity just doesn't seem to be helping all that much.

Richard W.

[razorback-bert]

Companies must pour billions into retiree plans after betting on stocks
 
Amid the wreckage of the worst bear market in at least three decades, hemorrhaging corporate pension plans are rapidly becoming Wall Street's biggest new worry. They have lost hundreds of billions of dollars, and now companies face the end of their long-running holiday from writing checks to the plans. Over the next 18 months or so, companies ranging from General Motors to United Technologies face having to pump billions into their plans to comply with federal laws to protect pensioners.
 
Even if plan investments somehow manage to eke out 5% returns this year, companies in Standard & Poor's 500-stock index will be $40 billion short of their projected pension obligations, according to Morgan Stanley estimates. If plans lose 5%, they'll be $150 billion in the hole. Either way, it is a world away from 1999 when the plans had a $292 billion surplus and a 30% cushion over their commitments. "The squeeze on U.S. pension funds has the potential to be the defining U.S. financial crisis of the 2000s, like the savings and loan squeeze of the 1980s," says Bob Prince, director of research and trading at money manager Bridgewater Associates.

[razorback-bert]

I think we are suffering from an inflated deflation, now pass me my Nobel Prize.

[junta]

As far as financial disasters go my bet is still on the GSEs and what they have done. I read somewhere that one of the smaller government boondoggles (not FNM or FRE) has a 10% non-performing rate and all this while the economy is still growing and credit card apps are still being sent out to anyone with a pulse. Wait till a contraction of both happens in ernest and all those 50% gross income mortgages become junk.

[sinkspur]

Anyone who's read Puplava for any length of time knows that he is, at bottom, a gold bug. Talking down the economy, painting the worst possible picture, and getting in a plug for gold is his stock in trade.

The language may slightly vary, the numbers vary, but the message never does.

[Tauzero]

You slacker you.