McAlvany Weekly Commentary | Weekly monetary, economic, geo-political news and events

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McAlvany Weekly Commentary | Weekly monetary, economic, geo-political news and events: About This Week’s Show:
-Gold is money and therefore increases it’s buying power during a deflation (contrary to popular belief)
-Question: How can the economy ever recover if the Fed stops injecting it with new stimulus? Answer: If left to the natural business cycle, the PRICE of all things adjusts to a lower equilibrium which prompts spending once again
-Why does the Fed want us to fear inflation and to “fight it at all costs” when some of the most productive era’s in history have been during deflationary periods?

3rd UPDATE: Geithner: World Economy In 2nd Slowdown Of Recovery - WSJ.com

3rd UPDATE: Geithner: World Economy In 2nd Slowdown Of Recovery - WSJ.com: WASHINGTON (Dow Jones)--The world economy is in the "second slowdown of this recovery" and more needs to be done about the European debt crisis before it becomes more severe, Treasury Secretary Timothy Geithner said Saturday.

Bernanke Gets Hammered, Tells Truth About US Economy

August 3, 2011
Yes, this is from the Onion. But in this surreal, centrally planned by none other than Ben Bernanke reality, the mirror in mirror effect is extremely disturbing.
Drunken Ben Bernanke Tells Everyone At Neighborhood Bar How Screwed U.S. Economy Really Is
SEWARD, NE—Claiming he wasn’t afraid to let everyone in attendance know about “the real mess we’re in,” Federal Reserve chairman Ben Bernanke reportedly got drunk Tuesday and told everyone at Elwood’s Corner Tavern about how absolutely fucked the U.S. economy actually is.
Bernanke, who sources confirmed was “totally sloshed,” arrived at the drinking establishment at approximately 5:30 p.m., ensconced himself upon a bar stool, and consumed several bottles of Miller High Life and a half-dozen shots of whiskey while loudly proclaiming to any patron who would listen that the economic outlook was “pretty goddamned awful if you want the God’s honest truth.”
“Look, they don’t want anyone except for the Washington, D.C. bigwigs to know how bad shit really is,” said Bernanke, slurring his words as he spoke. “Mounting debt exacerbated—and not relieved—by unchecked consumption, spiraling interest rates, and the grim realities of an inevitable worldwide energy crisis are projected to leave our entire economy in the shitter for, like, a generation, man, I’m telling you.”
“And hell, as long as we’re being honest, I might as well tell you that a truer estimate of the U.S. unemployment rate is actually up around 16 percent, with a 0.7 percent annual rate of economic growth if we’re lucky—if we’re lucky,” continued Bernanke, nearly knocking a full beer over while gesturing with his hands. “Of course, if everybody knew that, it would likely cripple financial markets across the entire fucking globe, even in various emerging economies with self- sustaining growth.”
After launching into an extended 45-minute diatribe about shortsighted moves by “those bastards in Congress” that could potentially exacerbate the nation’s already deeply troublesome budget imbalance, the Federal Reserve chairman reportedly bought a round of tequila shots for two customers he had just met who were seated on either side of him, announcing, “I love these guys.”
Numerous bar patrons slowly nodded in agreement as Bernanke went on to suggest the United States could pass three or four more stimulus packages and “it wouldn’t even matter.”
“You think that’s going to create long-term economic growth, let alone promote job creation?” Bernanke said. “We’re way beyond that, my friend. There are no jobs, okay? There’s nothing. I think that calls for another drink, don’t you?”
While using beer bottles and pretzel sticks in an attempt to explain to the bartender the importance of infusing $650 billion into the bond market, the inebriated Fed chairman nearly fell off his stool and had to be held up by the patron sitting next to him.
Another bargoer confirmed Bernanke stood about 2 inches from her face and sprayed her with saliva, claiming inflation was going to “totally screw” consumer confidence and then asking if he could bum a smoke.
Read full article

U.S. outlook casts shadow over world economy: Reuters poll

By Ross Finley

BANGALORE | Tue Aug 9, 2011 3:02pm EDT

(Reuters) - The chances of another U.S. recession are rising and Europe's recovery is also at risk, according to the latest Reuters poll, taken during the worst stock market selloff since the nadir of the financial crisis.
The latest survey of more than 200 economists, published four years to the day that credit markets first started to dry up, showed analysts cutting forecasts for U.S. growth, a reflection of widespread concern the global economy is slowing rapidly.
Punishing losses in world financial markets, culminating in widespread carnage in risky assets this week following Standard & Poor's downgrade of U.S. sovereign debt, suggest sentiment has soured -- and decisively.
"The world doesn't look particularly rosy at the moment. There's no question about that," said Mark Miller, senior international economist at Lloyds Banking Group.
"The equity market reaction over the last few days is a particular concern. It doesn't point toward a strong pickup in investment activity, which is needed in many countries."
World stocks, as measured by the MSCI, crashed into a bear market on Tuesday, falling 20 percent since May after days of punishing losses that have wiped away trillions of dollars in company equity around the globe.
While economists are still clinging to hopes for better days, the consensus for 2.3 annualized U.S. growth in the current quarter -- slashed from 3.1 percent -- will not be enough to turn around the moribund labor market.
The forecasts come just hours before the Federal Reserve -- now expected to hold rates near zero through this year and next -- meets to set policy.
But investors and market speculators hoping for a third round of bond purchases, or quantitative easing (QE3), after $2.3 trillion already doled out, may be disappointed.
The poll found there is only a 30 percent chance that will happen, even though the probability that the world's largest economy sinks into a second recession has risen to one-in-four, from one-in-five just a month ago.
Seven of 40 economists now see at least a 50 percent chance of more QE, compared with just one of 46 in a poll taken two months ago.
Earlier on Tuesday, China reported industrial output growth, the engine of the world's second-largest economy, slowed in July while inflation unexpectedly shot up, a reminder that all is not well in Asia either.
Prospects for Europe are darkening too, even though Germany, the continent's largest economy, has remained a bulwark of economic and fiscal strength through the recovery.
But economists seem even more reluctant to acknowledge that a sovereign debt crisis that started in Athens, spread to Dublin and Lisbon and is now circling Madrid and threatening Rome, will do much more than delay a broader euro zone recovery.
While the latest euro zone purchasing managers' indexes suggest the recovery, led by France and Germany, is grinding to a halt, the Reuters consensus merely slipped to 0.3 percent growth from 0.4 percent for the current quarter.
And while a majority of euro zone money market traders polled by Reuters on Monday said it was a bad idea for the European Central Bank to begin raising interest rates in April, economists still see one more hike, to 1.75 percent, this year.
For Britain, where the capital's police cells are full and other cities across the country are reeling from the worst riots in decades, the economic outlook is also turning down, particularly for 2012, when London hosts the Olympic games.
That is also when the government's planned dramatic spending cuts, to plug a huge hole in the budget thanks to British bank bailouts and the deepest recession since World War Two, will be in full swing.
Economists still see 0.5 percent growth in the current quarter, following a nine-month period of essentially no growth. But economists have pushed back the timing of the first rate hike by one quarter for the fourth straight month.
The first move up in the Bank Rate, which the Bank of England has held at a more than 300-year low of 0.5 percent since early 2009, is not expected until the second quarter of next year.
The chances of a second round of QE in Britain rose to 30 percent this month, from 25 percent a few weeks ago and 20 percent about a month ago. The BoE completed the first 200 billion pounds of purchases early last year.
"It is looking ever more likely that a further round of QE will take place," said Rob Harbron at CEBR, an independent forecasting company.
Japan, still reeling from its worst natural disaster since World War Two and a persisting nuclear crisis, is set to emerge from recession in the current quarter.
Economists have generally been more optimistic on Japan's prospects because of an expected reconstruction boost.
But a strong yen -- which due to its safe-haven status is now trading close to a post-war high against the dollar set in March, despite intervention by the Japanese authorities -- is likely to hamper its export-reliant economy.
(Polling and analysis by the Bangalore Polling Unit, Jason Lange in Washington, Kaori Kaneko in Tokyo, Andy Bruce and Jonathan Cable in London; Writing by Ross Finley; Editing by Susan Fenton)

Dow Bloodbath Could Herald “Great Depression”

NY Times admits: It’s a ‘double dip’ as markets plunge.
Paul Joseph Watson
Prison Planet.com
Friday, August 5, 2011

Seven months after President Barack Obama gave a State of the Union speech in which he said the economy was in “recovery mode” and that “the stock market has come roaring back,” the New York Times today all but admits that America has entered a double dip recession following yesterday’s 512 point Dow plunge, while others go further, warning of a new Great Depression as markets continue to plummet today.
Why it takes a dramatic fall in the stock market for the establishment media to admit something that’s been painfully obvious in almost every other sector of the economy for the last 2 years goes right to the heart of the split between Wall Street and Main Street.
Rising unemployment, crumbling house prices, record food stamp usage, and the soaring price of gold as a barometer of dollar depreciation are three key reasons why contrarians have been warning all along that the economy was in fact getting worse and that talk of a “recovery” was deluded at best and crazy at worst.
For refusing to go along with the happy clappers by putting the blinkers on when it comes to the real measurements of economic health and not the phony, casino-style stock market, people like Gerald Celente and Max Keiser were accused of engaging in “pessimism porn” even as their forecasts played out.
Americans who believed the propaganda about the non-existent “recovery” and failed to move their assets into safe havens will feel stabbed in the back now that the Old Gray Lady finally admits the 2008 recession never really ended. But it really serves them right for placing trust in an establishment that has lost all credibility.
Under the headline, Time to Say It: Double Dip Recession May Be Happening, Floyd Norris highlights how the recession was significantly deeper than we were first told, and the so-called “recovery” was notably overestimated.

• “Last week the government announced its annual revision to the numbers for the last several years. New government surveys indicated Americans had spent less than previously estimated in 2009 and 2010 on a wide range of things, including food, clothing and computers. Tax returns showed Americans even cut back on gambling. The recession now appears to have been deeper — a top-to-bottom fall of 5.1 percent — and the recovery even less impressive. The economy is still smaller than it was in 2007,” writes Norris.

Thursday’s market bloodbath also prompted John Lonski, chief economist at Moody’s Investors Service in New York, to predict a return to recession. “I now think the odds are uncomfortably high for a double dip,” he said.
But Peter Morici, a professor at the University of Maryland business school and former chief economist for the U.S. International Trade Commission, went further, warning of a crisis to rival the fallout of 1929.
“If we go down a second time, it will be the Great Depression,” he said. “Last time (during the long recession) you didn’t see armies of men roaming the country looking for work. Next time the (extended) unemployment benefits will be tapped out, public employees will be laid off; we will see some really bad things.”
Yesterday’s stock market plunge, which is being repeated in Asian and European markets so far today, will precipitate what the Federal Reserve and Ben Bernanke were planning all along – QE3 – which could represent a terminal blow for the already stricken U.S. dollar. Helicopter Ben will flood the money supply with more fake greenbacks, the artificially inflated stock market will briefly rally once more, and all the suckers will plough all their money back in only to get burned again later down the line.
Smart and sober realists who doggedly stuck to the unspectacular but reliable safe havens of gold, silver and other stores of wealth, will once again preserve the value of their assets.
As Marc Faber told Bloomberg yesterday, ” “Stocks will be dropping 30%, then rallying 20%, and dropping another 30% – that’s going to be the pattern. And whoever can’t live with that shouldn’t be buying equities at all.”
Faber warns “there is a case to be ultrabearish about everything, and markets are going to go lower,” adding that next week will give us a clearer picture of exactly how much enthusiasm Bernanke has for hammering the final nail in the dollar’s coffin with the launch of QE3.
*********************
Paul Joseph Watson is the editor and writer for Prison Planet.com. He is the author of Order Out Of Chaos. Watson is also a regular fill-in host for The Alex Jones Show.

Are You Ready For How Bad It Will Get?

However, I would strongly contend that the recovery was in fact non-existent for the following reasons:

1. The Government data used to validate the recovery (GPD, unemployment, etc) is clearly massaged if not bordering on outright propaganda
2. We are in fact in a depression and the “recovery” was simply a bounce in economic activity taking place within the context of a larger economy contraction

Are You Ready For How Bad It Will Get?

“Surprisingly” Bad Economic News | Personal Liberty Digest

Celente, who in 2007 predicted the 2008 crash and is one of those who is not constantly surprised, is predicting another crash—and another war—before the end of 2010, saying it’s not going to be a double-dip recession but a continuation of the current one… the new Great Depression. Last week’s news out of the Fed that it’s buying debt with more debt is an indication the death spiral has begun.
Even the mainstream media is beginning to recognize what’s going on and some stories are starting to talk about a second Great Depression.
The flow of money out of the Fed will stave off the crash for a time, but the regime is gasping. Celente says it’s too late to stave off the ultimate crash.

Surprisingly” Bad Economic News | Personal Liberty Digest