Where is the US economy headed?

@Thomas,

European stock markets got slammed on Monday - down some 4% - with banks leading the retreat. The culprits were the usual fears about whether the euro zone can survive; the bad U.S. jobs numbers that came out Friday; a challenge in Germany to whether the German aid to the weak governments is legal; and what impact there may be on European banks named in the U.S. lawsuit filed against a dozen or two big banks.
Oil dropped some 3%.

2 Replies

@realjohnboy,

Quote:

European stock markets got slammed on Monday - down some 4%

WOW, is this your attempt at positive spin??

The CAC 40 was down 4.73%, the DAX 5.28%

1 Reply

@hawkeye10,

Reuters reported that European stock markets fell 4%. That was about 2 hours ago. Thanks for the update.

1 Reply

@realjohnboy,

Somebody wrote something about Europe bleeding from a thousand wounds in the early 19th century and it was nothing compared to what had gone on before then.

And we haven't done so bad. Have you seen our trains. I think we might muddle through. We are not the sort of people who get by by thinking that everything we say is true on the evidence of us having said it. It gives us an edge I think. We know we are wankers. We laugh when somebody starts talking about "change". Unless the barmaid has given change for a tenner when it was a twenty.

Is your weather as bad as our TV makes it out to be. It looks from here that the US is either underwater, on fire, being shaken up and whirled around, whited over six feet deep and being blown away. There are govenors screaming "disaster area" all over the map. Which looks like a disaster for those which are not disaster areas.

When they get the rainforests shifted out of the way and the land all ploughed up they are going to murder agricultural prices.

2 Replies

@spendius,

The comments about the markets falling are coming from those who ignored the comments about the market rising in what might come to be called The Years of Golden Sunshine.

Did you see that bit of newsreel showing the newly prosperous Indian women buying the gold personal ornamentation. One of them came in with a couple of pounds of the stuff already in place. Looking for a tiara.

I read the other day that the female passion for personal ornamentation was a prime cause of the civilisation of mankind. Which is not only an interesting idea on an economics thread but quite a worrying one.

0 Replies

@realjohnboy,

realjohnboy wrote:

Reuters reported that European stock markets fell 4%. That was about 2 hours ago. Thanks for the update.

Here is the nut of it

Quote:

Deutsche Bank's outgoing chief executive, Josef Ackermann, said on Monday that some European banks would go bust if they were forced to recognise in their accounts the existing losses on government debts they own, based on current market prices for government bonds.

Banks also face the prospect of being sued by US government mortgage agencies for mis-selling home loans during the housing boom, while the Financial Times reported on Monday that Deutsche Bank headed a list of banks being investigated in the Serious Fraud Office for similar mis-selling in the UK.

Meanwhile, evidence emerged that some analysts suggest shows European banks have been transferring large amounts of cash across the Atlantic in a bid to escape an emerging European banking crisis.

Data released by the US Federal Reserve on Friday indicated that unnamed foreign banks transferred cash into the country's banking system over the summer, while separate data from the ECB that shows that European banks have been withdrawing their cash from the European banking system.

http://www.bbc.co.uk/news/business-14785694

Very bad stuff......

1 Reply

@spendius,

It has been a bad year, Spendius. I am reminded of conditions in Australia a couple of years ago.
The storm named Lee that is dumping rain on us now reminds me of Hurricane Camille back in 1969. It came ashore in Mississippi as a Cat 3 and wreaked havoc along the coast. Then it moved north through the mid-south and disappeared from the news for awhile. It suddenly made a 90% right turn and came towards Virginia from the west. She got stuck in the 4,000 foot mountains one county south of me and dumped a huge amount of rain in the span of one night. Small valleys - called hollows - got flushed downstream, carrying away livestock, houses and people and in fact all of the dirt that lay on the bedrock. Over 100 people died. They don't really know as there were not accurate counts of how many people lived in the very rural and insular places.

0 Replies

@hawkeye10,

That's the reason why the full impact of the financial problems in Europe takes time. When the **** hits the fan, most of us already know what's going to happen to the Euro and those banks with Greek bonds.

Also, from marketwatch.com.

Quote:

U.S. stock-index futures decline sharply

NEW YORK (MarketWatch) -- U.S. stock-index futures on Monday fell along with European shares, hit by a report late last week showing flat hiring by U.S. companies in August and on renewed worries about Europe's debt crisis. With the U.S. stock market closed for the Labor Day holiday, the September futures contract for the Dow Jones Industrial Average declined 225 points at 10,983. Futures for the Standard & Poor's 500 declined 25.5 points to 1,143.80. Futures for the Nasdaq 100 fell 46.50 points to 2,118.25. Benchmark oil for October delivery fell $2.14 to $84.31 a barrel on the New York Mercantile exchange. Gold futures rose $20.90 to $1,897.80 an ounce.

I have a sinking feeling...

2 Replies

@cicerone imposter,

No wonder. Economics is about the cause of these things and not a list of what they are accompanied with some wailings calculated to go down well with the disgruntled and disillusioned.

In ye olden times when it was tough to even eat regularly and keep warm economics was easy. Now those problems are well solved it is in the realm of psychology and politics. Which complicates things somewhat.

What happened was unstoppable in all the circumstances and failing to face up to the psychological aspects is offering no advice on how to stop it happening again.

0 Replies

@cicerone imposter,

The way I am reading todays news is that a European banker has confirmed as many watchers have been saying that European Banks have weak balance sheets, plus we have the European banks placing the bet that the future of the Euro is in grave doubt.

Do you concur CI?

1 Reply

I digress.
I wrote - perhaps on Friday - about what might be in Obama's job speech on Thursday. Most of the ideas seem to me to be small potatoes with the exception of what amounts to a public works program. I am skeptical as to whether Congress would ever approve of it, anyway.
I mentioned the Georgia Work$ project that does enjoy some degree of support from Republicans and Democrats and job seekers and businesses. I offered to summarize it.
It was started in 2003, well before the recession hit. People collecting unemployment could choose to participate in an 8-week unpaid stint at a business. Some call it "training;" others say "tryout."
Repeat: participants can choose to do this and they will continue to receive unemployment benefits.
Near the end of last year, 5000 people enrolled per month and some 25% ended up being hired by the business they interned with. Almost 60% got a job somewhere within 90 days of completion.
Georgia tinkered with the structure of the program. cutting the length from 8-weeks to 6 and then back to 8. They left the maximum hours per week at 24. They also instituted a "stipend" program where participants would receive a lump sum payment in addition to their unemployment insurance to cover things like child care and transportation. The amount was changed several times, hovering between $240 and $600 total (I think) for the 6 or 8 weeks.
That ended up costing a lot of money which came out of the fund the state had collected from uninsurance tax premiums collected from employers.
By mid-2011, the program has withered away dramatically. Really dramatically.
There are questions as to who should pay for workman's comp insurance and there are lawsuits about whether or not businesses who participate are evading minimum wage rules. There are evidently issues about whether these workers are "employees," "trainees" or "interns."

1 Reply

@realjohnboy,

That sounds like a wave of spaghetti sliding down the road John.

1 Reply

@hawkeye10,

Yes. It's impossible for Germany and France to prop up the Euro when so many are in financial straits.

1 Reply

@cicerone imposter,

cicerone imposter wrote:

Yes. It's impossible for Germany and France to prop up the Euro when so many are in financial straits.

Yes, so this idea that the problem gets solved by Germany agreeing to back stop everyone's debts..the current hail Mary plan, does not solve the problem. Besides, it will not happen, as this new piece
http://www.washingtonpost.com/world/europe/in-europe-a-struggle-for-economic-unity/2011/09/02/gIQAmxdg2J_story_2.html
points out the Germans 15 years ago started to economize, started to cut worker pay, when no one else did. These same good Germans who have been working harder than anyone else in the EU after taking more pay cuts than anyone else in the EU are now being asked (EXPECTED really) to pay the debts of all of the spendthrifts so that the EU does not fall apart.....the $1000 Euro question is do Germans read that as neccessary self interest or rather as being treated as the chumps of the EU and thus refuse their leaders demands??

1 Reply

@hawkeye10,

I read your link and it seems to end with the idea that it will happen because Germany needs its exports to other EU countries to support its own economy. Where do you get from that that it wont happen?

1 Reply

@JPB,

Quote:

Where do you get from that that it wont happen?

That it will not happen is my belief, based on some of the facts that this WP article talked about. I started asking the question "What will the Germans do?" over six months ago here at A2K, and finally the popular press has figured out that since the Germans are the only ones left in the EU with any money that it this is a very important question, though most observers take the position that the Germans will at the end of the day pony up their savings yet again for the EU dream. I simply disagree with the majority (unusual as it may be for me to have the minority position). Thing is the German have been paying in for a long time, and working hard, and they are now being expected to go all in with every bit of savings that remains for the good of the EU...will they do it? I think not, in no small part because the Germans can do pretty well going it alone, exporting to Asia and what remains of American economy after the crash.... the rest of Europe will be fucked of course, but I am not sure that this is a deal breaker.

0 Replies

@spendius,

Thanks for the image, Spendius.
The stipend is well intentioned, perhaps, but quickly gets very expensive and is prone to abuse.
It could also be that a company might dismiss a floor sweeper and instead use a series of unpaid "interns" to do the job for 8 weeks at a time.
My experience with anything remotely related to this involves my chain of stores and work with agencies placing people with physical/mental issues. The truth is that probably turns out to be an expense for us because of the level of supervision needed. It takes a lot of time for an employee to break tasks down into small bites.
The unemployment rate in the U.S. is 25% in the age group 18-25. The rate, if you include kids not even looking is probably double that. The U.K. perhaps has similar numbers.
What scares me, Spendius, is the number of people who, quite simply, don't know how to work. Things like getting to work on time.
I was told by a granddad that the best investment of 15 minutes is to get to work ahead of time and never put your hands in your pockets.

1 Reply

@realjohnboy,

What do grandads know about this situation? A $ was a $ when their brains were formed. Now a $ is an abstract concept. A bit like a quark in nuclear physics.

0 Replies

The Nikkei is currently down over 2%.....

No good news around at the moment on the economic front it would seem..

0 Replies

Gold hits $1920.

That is all.

1 Reply

Where is the US economy headed?

Related Topics

Quick Links

My Account

able2know