Thursday, July 8, 2010
Dark clouds on the horizon?
The following are 24 pieces of evidence that do seem to indicate that very difficult economic times are imminent....
-U.S. Treasury yields have dropped to stunning new lows. So why are they so low? Well, it is because so many investors are anticipating that we are headed into a deflationary period. In fact, many economists are warning that the fact that Treasury yields are so low is one of the clearest signs that economic trouble is ahead.
-The Conference Board's Consumer Confidence Index declined sharply to 52.9 in June. Most economists had expected that the figure for June would be somewhere around 62. If consumers aren't confident they won't be spending money. If American consumers don't start spending money soon a lot of American retailers are going to go belly up.
-The M3 money supply plunged at a 9.6 percent annual rate during the first quarter of 2010. If the M3 keeps declining at that kind of a rate it is going to put extreme deflationary pressure on the U.S. economy.
-Many economists are now warning that the "China investment bubble" is about to burst. In fact, Kenneth Rogoff, Harvard University professor and former chief economist of the International Monetary Fund, claims that China’s property market is beginning a "collapse" that will send a shockwave across the globe. One prominent economist that specializes in China is even forecasting that property prices in major Chinese cities are likely to soon experience a drop of up to 30 percent.
-Nouriel Roubini is warning that Europe's economy could stop growing as soon as this year. Back in 2007 and 2008, the U.S. was the epicenter of the financial crisis, but many analysts believe that it will be Europe this time around.
-Vacancies and lease rates at U.S. shopping centers continued to get worse during the second quarter of 2010. If things don't pick up soon will we see half empty shopping malls by the time Christmas rolls around?
-CBS News is reporting that the oil spill in the Gulf of Mexico is hurting businesses "from coast to coast". The longer this oil spill goes on the bigger of an impact it is going to have. The cost to the American economy from this disaster could ultimately be in the trillions.
-Some analysts are warning that if BP goes under as a result of the Gulf of Mexico oil spill that it could cause the total collapse of the worldwide derivatives market and unleash a liquidity crisis unlike anything the world financial system has ever seen.
-The state of Illinois has stopped paying most of its bills and yet the flood of red ink continues to get even worse. Illinois now ranks eighth in the world in possible bond-holder default. That is even worse than California.
-Speaking of California, the Schwarzenegger administration has won an appellate court ruling saying it has the authority to impose the federal minimum wage of $7.25 an hour on more than 200,000 state workers as California wrestles with its latest budget crisis.
Link: Read them all...