The View From 1776

It’s Not Just China That Worries About Obama’s Socialist Spending

Weak Treasury Auctions Raise Worries About US Debt Burden.

See also Another Straw In The Inflationary Wind.

Posted by .(JavaScript must be enabled to view this email address) on 07/29 at 09:29 PM
  1. The indirect bidders includes the central banks that had been over 50% of purchases and are now pulling back.

    The seven year are next and it is very important they go well. We are really getting on thin ice as more nations realize the dollar isn't going to get significantly stronger and will get much weaker if the current deficits continue.

    If the dollar drops to 72 again, then we all will suffer with $100 oil again even if there is a supply glut. Not because the price of oil went up as much as because the value of the dollar went down.

    Food, imports, raw materials will all go up even if there is no demand here but there is globally or they just won't sell to us for the same amount of dollars they were willing to accept before.

    There is nothing the government can do but either default or hyper-inflate out of debt. If the cut the spending, it will send us even deeper, faster into a depression.

    The Fed in a meeting recently said, "no new net job growth for 5 years." That is because we will be growing the population faster than we can create jobs.

    They also said over 10% unemployment for at least a couple years. We also have 2 years of ARM and Alt-A resets, commercial real estate in trouble as well as home equity loans (Well Fargo is biggest holder of them) and credit cards, car loans, and other loans that will rise in default as more people have their hours cut or wages cut or lose their jobs.

    This is not an inventory recession like all the rest since WW II. This is a credit recession (depression)like the 30's. We saw a huge rally and the comments I will put in the next comment. All that happened was people got their hopes up and the next wave hit them like a rock and the markets went down for two more years.

    That is not to say that will happen this time as this time, debt is higher, the dollar is weaker and we don't have the industrial base like we did then but, the debt will still drag consumers down for 5 to 10 years if not more.

    The boomers that are 78 million strong and the retirees that are 38 million or so are cutting spending like crazy and saving, paying down debt, ect. just as citizens did in the 30's which caused the 2nd wave down then. Personal and corporate debt, not what the government did or didn't do was the cause of the depression and why it was so deep and so long.

    Credit recessions don't behave the same way as inventory recessions and the "fixes" don't work the same either.
    Posted by JanPBurr  on  07/30  at  01:01 AM
  2. #

    # "For the immediate future, at least, the outlook (stocks) is bright."
    - Irving Fisher, Ph.D. in Economics, in early 1930

    # "...there are indications that the severest phase of the recession is over..."
    - Harvard Economic Society (HES) Jan 18, 1930

    # "There is nothing in the situation to be disturbed about."
    - Secretary of the Treasury Andrew Mellon, Feb 1930

    # "The spring of 1930 marks the end of a period of grave concern...American business is steadily coming back to a normal level of prosperity."
    - Julius Barnes, head of Hoover's National Business Survey Conference, Mar 16, 1930

    "... the outlook continues favorable..."
    - HES Mar 29, 1930

    # "... the outlook is favorable..."
    - HES Apr 19, 1930

    # "While the crash only took place six months ago, I am convinced we have now passed through the worst -- and with continued unity of effort we shall rapidly recover. There has been no significant bank or industrial failure. That danger, too, is safely behind us."
    - Herbert Hoover, President of the United States, May 1, 1930

    " May or June the spring recovery forecast in our letters of last December and November should clearly be apparent..."
    - HES May 17, 1930

    "Gentleman, you have come sixty days too late. The depression is over."
    - Herbert Hoover, responding to a delegation requesting a public works program to help speed the recovery, June 1930

    # "... irregular and conflicting movements of business should soon give way to a sustained recovery..."
    - HES June 28, 1930

    # "... the present depression has about spent its force..."
    - HES, Aug 30, 1930

    # "We are now near the end of the declining phase of the depression."
    - HES Nov 15, 1930

    # "Stabilization at [present] levels is clearly possible."
    - HES Oct 31, 1931

    # "All safe deposit boxes in banks or financial institutions have been sealed... and may only be opened in the presence of an agent of the I.R.S."
    - President F.D. Roosevelt, 1933

    Again, it won't be the same. Bernanke has said that if there isn't success with what they are doing this could be "worse" than the great depression.

    I think he is beginning to see how hard it is to keep the lenders lending (since they don't have enough money to cover or demand for money) and keep the dollar up and interest rates down to keep mortgage rates down.

    He has a house of cards that he is desperately trying to use fraud, manipulation, and happy talk, to keep from being blown down by consumer and corporate and city and state debt.
    Posted by JanPBurr  on  07/30  at  01:06 AM
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