Economic Lens

What Will Next Thanksgiving Be Like?

So much for the polyanna scenario. Yes, the inventory is indeed coming down because the banks are sitting on a shadow inventory of foreclosed homes which are being kept off the market. More jobs just around the corner....been hearing that one for six months. Next Thanksgiving will be far worse than now as the secondary shocks to the economy will define 2010. Those businesses, governments etc. that have been holding on hoping for a turnaround. Their resources are about depleted and now they too will have to bite the bullet. Dubai is just the tip of the iceberg.

The Death of the U.S. Consumer

Taxes are slowly rising and will continue to get much worse. Health insurance premiums are rising, some as much as 20% in a single year. Prices of food are rising though everyone acts like it is not happening. Consumer credit is being tightened. Each of these things reduce the consumer spending power. Then we will get word that spending is up for the holidays. Don't believe it. If we have less stores now, a slight increase in per sales stores will still be way less overall sales. The people reporting will take the most optimistic number which will be per store sales. Overall spending will be down this year no matter what is reported. The retail sector is in a death spiral.

Examining the Debt Data

Why does everyone say, the US is not like Japan. The US is not like Argentina. The time it is not like (fill in the blank). We are just like all of the above. We may be delaying the effect with massive government stimulus but folks, the time is coming when things begin to unravel quickly or wind down slowly. There is no middle ground. Our course is crash hard or deflate to the bottom slowly. Either way we will end up in the same place. Higher unemployment, reduced GDP, possibly major war, etc etc. All the directions are bad. America is in for a shock over the next 10 years and be honest with yourself. None of us know exactly what it will be other than bad.

U.S. Recession: More Unemployment, Sinking Dollar

Why does anyone think America will go down a different road than any other society in the past with similar economic conditions. Wheter inflation or deflation, high unemployment is here to stay for many years, creating a large poor and lower middle class within the country similar to a multitude of other countries around the world. The effects of globalization have finally come home. The wealth of our manufacturing base has been sent overseas, raising the lives of multitudes. Unfortunately at a cost of severely lowering the standards of living for multitudes in this country. This is but the beginning of a generational change and probably the worst is yet to come.

Will 'Self-Preservation' Work After Decades of Fiscal Suicide?

For America to recover the dollar has to collapse. We have to be unable to import anything and rely on manufacturing within America again. Only when we rebuild our manufacturing base will America pull out of this problem. Of course we could always go to war and put a few million men to work. I am afraid that is the easy solution for our government.

Will 'Self-Preservation' Work After Decades of Fiscal Suicide?

Let us revisit this problem in 2011 and remember 2009 as the good times. The worst is yet to come.

The Dollar's Continued Decline: Unintended Consequences

Investors need to get out of the mindset of trying to increase their capital. This is the time to perserve capital. Commodities have been lagging the market but this is not the time to abandon them for a transitory equity run unless you want to live in the moment. When the tides change, it will be all at once and no one will have time to get into a lifeboat. The dollar decline is inevitable which will result in a steady rise in commodities. A dollar collapse will wipe out just about everyone not in hard assets and the Fed will be in no position at that time to bail anyone else out.

How Will Agriculture Investments Be Affected by New Deadly Wheat Fungus?

Everyone has to eat. Expect food prices to continue to spiral upward as the government tells us that inflation is in check since they don't consider the price of a chicken (up from $3 a year or two ago to $8 now) when they reassure us.

The other really scary statistic is the number of farmers leaving their farms as the price of fertilizer etc. is outpacing the cost of food and further reducing our agricultural capacity.

Irrational Exuberance of the Green Shoots

This cannot continue for more than another year or two before it comes apart. However, don't underestimate the Fed and Goldman Sachs working together to hold this balloon up far longer than anyone thinks possible.

Bond Action Back in the Spotlight

Governments printing money worldwide will eventually lead to inflation because they will be unable to show restraint once liquidity returns. People know this and the moves are anticipatory of what everyone knows is going to eventually happen even if a few years off.

How $30/Barrel Oil Could Save the World

Betting oil to go lower is a dangerous proposition. The economies or the world are crashing, currencies are under pressure, the world is destabilizing. Any crisis will spike oil, any serious crisis will send it soaring. If the price of oil drops, it will be only a pause. The Iranian nuclear situation will soon be resolved over the next year or so. Either way oil will rise with either the event of an Israeli strike or a nuclear Iranian test. Better to ride oil down and buy as it drops than short it and hope for a polyanna world. Or if you don't have the stomach, get out of oil investments alltogether.

My Thoughts on Bernanke, Boeing and Citibank

All elected officials are in trouble in 2010 and 2012. If they are incumbent, look for them to get voted out. They are flushing America down the tubes, rank amateurs can do no worse.

California default CERTAIN – Martin Weiss

Excellent comments and predictions. You left out the next step though. City governments defaulting within the state, laying off city employees, it is rolling downhill and no one has the guts to make the hard decisions to live within our means. Probably too late anyway. This is just the beginning of the depression that will hit America. BTW it is just a recession now, in a year or two no one will argue when we use the word depression.

Are There Any Solutions for the Grim Budget Outlook?

The cycle must close the loop. As the dollar falls and inflation takes hold, goods will become more expensive making us all seem poorer. Then over the next generation America will return to a manufacturing base and grow our exports with the weak dollar. The speed of this transition will be directly tied to the the speed with which the dollar deflates. Let us hope it does not crash during the ride down. Either way, the change will occur.

Commercial Real Estate Is Plunging

Commercial real estate is in a slow motion death spiral. As the recession grinds on, more and more businesses will begin to fail with subsequent empty strip malls etc. A friend of mine tried to get their funds out of three of the largest commercial REITS in America. Guess what. They were told that the one company was not redeeming any investments at all, one other not until next year and the last not until the first of the year. That does not sound like three companies that have alot of cash to spare right now. GGP will not be the first major REIT to go into bankruptcy in the next couple of years. BTW, all 3 have drastically slashed their dividends. Who would have guessed.