Economic crash: Dig into recession again as umemployment rate already hit 20%!
By Daniel at 19 August, 2009, 9:23 am
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There is a growing sense that the current recession is over. Too bad there are already worries about the next one. And this one could be disastrous! DJIA could fall to March’s low or deeper if things got “worse than expected”!
“There are similar issues with the way the unemployment rate is measured. The headline rate only jumped from 9.4% to 9.5% because of a drop in the number of people in the workforce. The more inclusive “U-6″ measure of unemployment, which includes discouraged workers, jumped from 16.4% to 16.5%. But even this doesn’t adequately capture the situation on the ground: Back in the Clinton Administration, the definition of discouraged worker was changed to only include those that had given up looking for work because there were no jobs to be had within the last year.
By adding these folks back in, William’s SGS-Alternate Unemployment Measure rose to a jaw-dropping 20.6%. Separately, the Center for Labor Market Studies in Boston puts U.S. unemployment at 18.2%. Any way you cut the numbers, the situation is very bad. According to David Rosenberg, one-in-three among the unemployed have been looking for a job for more than six months and still can’t find one. ”
http://investment-blog.net/panic-unemployment-rate-already-at-20/
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“A double-dip recession is a downturn that technically ends, but is followed by a fleeting period of growth and another period of economic declines.
This last happened nearly three decades ago, with the economy coming out of a minor recession in early 1980 only to be followed by a far more pronounced downturn that lasted from the middle of 1981 throughout the end of 1982.
Of course, things are a bit different from the early 1980s. This recession can hardly be considered minor. So if growth resumes later this year, it’s tough to imagine how the dip would be worse than the initial plunge.
That said, the cause of another double dip could be similar. Inflation.”
“”Inflation could skyrocket by the end of the year. That could force the Fed to raise interest rates and send the economy into a double dip recession in 2010,” Pento said.
Unemployment may be bigger worry than inflation”
http://finance.yahoo.com/news/Doubledip-recession-fears-are-cnnm-2487366613.html?x=0&.v=2
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“China holds more US government debt than any other country and cut its holdings of US securities by more that 3% in June, said the BBC’s Chris Hogg.
Japan and the UK - second and third largest holders of US debt - increased their holdings over the same period.
China’s holding of US debt is about 7% higher than at the turn of the year. ”
http://news.bbc.co.uk/2/hi/business/8207174.stm
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China market went bust. China market drop as much 5.8% Monday and 4.3% at Wednesday is a clear signal investors/traders withdraw from China’s equity market.
China couldn’t save U.S, China has it’s own to deal with. China needs to export to grow. That’s why it’s an export economy. With reduced exports, the rate of growth will be limited.
China’s $1 trillion bubble burst!!!
“It’s easier to finger point than to self-analyze, China now is in trouble.
Most of $1 trillion lend out by Chinese state banks was diverted into stocks and real estate. This is not helping the economy. It will drive investors cash out from the market as the price hit their expectation TOO FAST. Tears for those $1 trillion borrowers who entered the market hoping to make some money back.
China is attempting to forestall economic collapse by pulling a Japan: it’s ordering banks to loan money to industry and trying to ramp up exports despite failing demand overseas. China’s economic growth is largely coming from (1) virtual economy (the proceeds from a variety of speculative enterprises from skyscrapers that have no tenants to the vast commodity stockpiles which have overflowed warehousing and are now anchored offshore as well) and (2) pushing out other exporters. Neither strategy is sustainable or adding to global growth. The first is just leading to inflation–hence rumors of a coming, dramatic tightening order–and the other is depressing the economies of other exporting countries, yielding no net improvement in global economic conditions.”
http://investment-blog.net/its-a-very-serious-threat-chinas-1-trillion-bubble-burst/
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Breaking info: Germany braces for second wave of credit crunch
“Germany’s economics ministry is drawing up a raft of special measures with the Bundesbank to head off a fresh financial crisis, fearing that a loan squeeze by struggling banks will set off a serious credit crunch early next year.
“The most difficult phase for financing is going to be in the first and second quarter of 2010,” said Hartmut Schauerte, the economic state secretary.
“We are working as a government to create instruments that can offset a feared credit crunch or any credit squeeze in sectors of the economy,” he said.
…Unemployment is expected to rise by another million to 4.5m by late next year.
Hans Redeker, currency chief at BNP Paribas, said the credit contraction was eclipsing recovery in Europe’s bond market. “At the end of the day, there is not going to be any durable recovery until we see a revival in credit,” he said. ”
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