By: Daryl Montgomery
Why anyone would want to follow European countries on economic matters is a real puzzle. The EU’s handling of the Greek debt crisis will be recorded by history as one of the major episodes of government ineptness of our time (and there is really stiff competition in that category). Instead of dealing with the problem immediately and decisively by instituting dollarization and removing Greece from the currency union, EU leadership let the matter fester ...
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Quantitative easing will encourage large foreign holders to sell U.S. debt and to not make purchases in the future, except for TIPS (treasury inflation protected securities). Even TIPS will ultimately be shunned because they reflect the understated official U.S. government inflation rate.
The price of gold is strongly linked to the loss of value in paper currencies. While many economists refuse to admit it, this is the definition of inflation. Gold has continually ...
Read On →By: Daryl Montgomery
The BLS released its non-farm payroll figures for October today and they stated that 80,000 jobs were created and that the U.S. unemployment rate was 9.0%. There are reasons to believe that this number is actually as high as 12.7%.
Except for February and March of this year, the unemployment rate (the U-3 number) has been 9.0% or higher since May 2009. It hasn’t risen well into the double digits because large numbers of workers have supposedly left ...
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The market lost its rose colored glasses today with Greece announcing a political referendum early in 2012 on the recent EU bailout deal. This could lead to the deal falling apart sooner rather than later. Stocks sold off on the news in Europe and the U.S. while interest rates rose in Greece and other troubled EU countries.
The deal that the EU put together last week to handle its debt ridden members and to help ...
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By: Daryl Montgomery
EU leaders have agreed to seek a 50% reduction in Greek debt from bondholders. This supersedes the 21% reduction decided on in July that was supposed to resolve Greece’s financial problems. Apparently $30 billion will be given to the banks as an inducement for them going along with the plan. The EU and IMF will also give Greece an additional 100 billion euros in bailout aid.
While the announcement was delivered with a ...
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The price of gold is strongly linked to the loss of value in paper currencies. While many economists refuse to admit it, this is the definition of inflation. Gold has continually risen during the last decade (in dollar terms) as the U.S. government has consistently reported low and then ultra-low inflation rates. Either gold or the government is mistaken about inflation. Gold has a 5,000 year record of accuracy. How many governments have been around that long?
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By: Daryl Montgomery
The October Consumer Confidence number fell to 39.8. It is once again approaching the all-time lows that occurred at the bottom of the Great Recession. The number has never reached the 90 level since 2009, which is the cutoff for a healthy economy. The continually poor levels of consumer confidence bring into question whether the last recession ever really ended.
While U.S. consumers are gloomy about almost all aspects of the economy, they are most pessimistic about employment prospects. ...
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By: Daryl Montgomery
European and U.S. stocks were rallying on Friday in what appears to be a liquidity frenzy supplied by the central banks. The market is once again hopeful now that EU leaders are beginning six days of meetings on how to save Greece and the euro. Based on their previous track record, which has led to the current crisis, there is little reason for long-term optimism.
Stock prices have not been the only thing rising lately. Interest rates have ...
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By:Daryl Montgomery
Britain shocked the markets on October 18th when it reported an inflation rate of 5.2% for September. This was up from 4.5% the previous month and well above government projections. Inflation isn’t just rising there, but higher prices are a global phenomenon.
The world seems to be entering a new period of stagflation similar to the 1970s. Stagflation is high inflation and low GDP growth. This is very evident in the UK where GDP ...
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By: Daryl Montgomery
U.S. budget deficit figures released on Friday afternoon indicate that the deficit for fiscal year 2011 (ending on September 30th) came in at $1.3 trillion. This is slightly higher than the 2010 deficit and the third trillion dollar deficit in a row.
Total federal spending (on-budget items) came in at $3.6 trillion. Revenues were $1.3 trillion, over 4% higher than in fiscal year 2010. Revenue rose slightly to $2.3 trillion. As bad as the ...
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