Friday, July 09, 2010

The New Economic Name

We have a new name for this economic crisis.
It is now known as the Great Recession.

The height and breadth of insanity in the world is just breathtaking. Many continue to insist that the only way out of a hole is to dig deeper. That people, corporations, or nations can borrow and spend their way out of debt.

Some small signs of recovery are evident, as private payrolls continue to climb, though very slowly. Manufacturing payrolls are off this month, although this is on a world wide scale, and that is likely to keep the price of oil (and other energy) down. Lower energy prices are good for US manufacturing, and the US economy in general.

A long talked about commercial real estate slump may be at our door step, but whether it will usher in a "double dip" recession is still in question. I don't think so, but I have been wrong before.

Recently the 2 year treasury bond rate plunged to less than 3/4 of a percent. While some of the above mentioned insane people think this is a good thing (though it does beat the Greek T-Bill rate), what it tells me is that the economy will remain in the crapper for at least another 2 years. The extremely slow gains in private payrolls are not yet enough to offset the increases in population, let alone the increases in government corruption we have seen since the Democrats returned to power in 2007 and 2009. (We need to have an increase of 400,000 jobs a month in the private sector, or an increase of 40,000 jobs in manufacturing per month, something we haven't seen since the mid 80's.)

I still foresee a round of high inflation, some time in our future. But, as always, I don't know when it will be. I can say it will be before we see any real recovery. But at this time, I can't even say if we will seen any real recovery. I thought in 2008 that it would be a couple years after the collapse, but now it still seems a couple years away. More, now it looks like 4 to 6 years away.

Gold is still too high to invest in.
(Needs to be down around $1100 an once.)
I still recommend investing in tools
and other things to help survive
this "Great Recession."

1 comment:

Pilgrim said...

I like your advice to invest in tools, and I'll pass it along to my wife :-)