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Gary Shilling: This Is Not just A Temporary, Bear-Recession Dip. But A “Deeper Depression-Style Slow-Growth Likely Till The Election Of 2020


from Paul B. Farrell:

The global economic crisis will not end till 2016 or later, warns IMF Chief Economist Olivier Blanchard: It will take “at least a decade from the beginning of the crisis for the world economy to get back to decent shape,” according to a recent Reuters’ report on a Blanchard interview in Europe.

“It’s not yet a lost decade,” Blanchard said, “ but it will surely take at least a decade from the beginning of the crisis for the world economy to get back to decent shape.” No matter what you can forget about a 2013 quick fix for America’s fiscal-cliff disaster. Won’t happen.

And, like Blanchard, he has been warning us that “much of the excesses and financial leverage built up in past decades, especially in the financial sector globally and among U.S consumers, remain to be worked off.”

Why? The Fed and Treasury’s failed “attempts to bail out the nearly collapsing U.S. private sector” just made matters worse by focusing on bank bailouts rather than jobs. What’s ahead? “Slow global growth in future years.” Not just a temporary, bear-recession dip. But a “deeper depression-style slow-growth likely till the election of 2020.”

Shilling sees beyond today’s lingering hangover of the 2008 banking meltdown, the election wake-up call to corporate CEOs and conservative politicians still demanding deep austerity cuts to solve the debt crisis, and the looming fiscal cliff. Looking years ahead, he warns of ongoing troubles through 2020 as the recovery inches slowly ahead.  

Shilling’s “9 Causes of Slow Global Growth” to memory, plus the 10th one we added:

  • More and more consumers are shifting from a 25-year borrowing-and-spending binge to a saving spree. This trend will spread across the globe. Why? Because American consumers will import less from developed and emerging nations that are dependent on exports for economic growth.
  • Financial deleveraging is already reversing economic trends that financed much of the world’s new growth in recent years.
  • Developed countries in Europe and others are moving toward fiscal restraint and spending less.
  • Throughout the world, increased government regulations and involvement in major economies will reduce innovation and increase economic inefficiencies.
  • Nationalism and protectionism will also slow, possibly eliminate, economic growth throughout the world.
  • Declining commodity prices will further limit consumer spending by commodity-producing nations across the world.
  • Excessive inventories and reduced interest from investors will continue to suppress an already weak housing market.
  • Deflation will cut spending as buyers wait for lower prices and negotiate harder.
  • State and local governments across America are losing revenues, cutting services.
  • But perhaps most of all, certainly impacting everything, the extreme, accelerating irrationality driving our angry political wars will undermine an already stagnant economy … until a 1930s-style crash takes down the American economy.

   

The Worst Economic Numbers In More Than A Year

 

Top Congressional Tax Writer: Major Tax Reform Is Coming Next Year

From Newsmax:

The House of Representatives’ top Republican tax writer on Thursday pledged to tackle a full-scale overhaul of the tax code in 2013, but offered few specifics on how to get it done.

Republican Dave Camp said in the text of a dinner speech that the House Ways and Means Committee, which he chairs, “will write, act on, and pass comprehensive tax reform legislation in 2013.”

He added, “Let me repeat that: we intend to move a comprehensive tax reform bill in 2013 – no matter what.”

The U.S. tax code has not been thoroughly overhauled since 1986. Since then, it has become riddled with loopholes even as the federal budget has slid deeply into deficit.

Bipartisan political support for tax reform has been building in response to the deficit and growing criticism that the tax code is not only inadequate, but to some, unfair.

“One thing that is virtually undisputed though is that tax reform always takes leadership from the Oval Office,” Camp said.

 

Stock Market Has Peaked!! There’s A Lot More To The Stock Market Sell-Off Than The Fiscal Cliff

from comstockfunds:

In fact, while expenditures climbed $83.9 billion in the three-month period, savings decreased $130 billion, clearly an unsustainable situation.  While Hurricane Sandy will muddy the statistical waters for the next month or two, the strength in consumer spending is almost sure to diminish beyond that point.

In addition, the outlook for capital expenditures is lackluster as well.  New orders for durable goods ex-transportation and defense, a leading indicator of future capital spending, have declined 9.1% since year-end and 7.7% since May.  This is likely to lead to softness in industrial production too.  With consumer spending and capital spending accounting for the vast majority of the economy, overall growth is likely to falter in the period ahead.

With the economy likely to soften at a time when fiscal policy is about to tighten, corporate earnings estimates coming down and Fed policy increasingly ineffectual, the factors that have sparked the stock market in the last few years have come to an end.  In our view, this is readily apparent in the change in trend since the peak on September 14th.  We think that will turn out to be the top for some time to come.

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What Really Happened When Lehman Failed… and Why a Spanish Default Will Be Exponentially Worse

Michael A. Gayed: Very suddenly, it feels like we are in the midst of a perfect storm. Our ATAC models keeping the portfolios we manage completely out of the stock market.


‘We are living in a world of complete economic fantasy, using numbers that are unfathomable, unconscionable, and un-repayable.’

from Activist Post:

If you are waiting for the economic collapse, you’re too late – it’s already happened. And it’s TWCTM (Those Who Control the Money) who did it. They pulled the rug right out from under themselves. We are living in a world of complete economic fantasy, using numbers that are unfathomable, unconscionable, and un-repayable.

Those of you who already know this, bear with me for the sake of those who don’t; but here’s a quick primer on big-picture economics in the United States: Congress tells the Treasury that it needs some amount of money. The treasury asks the Federal Reserve Bank (“the Fed” – a privately held company, not a U.S. Government agency) to print/issue an amount of money. The Treasury issues Treasury Notes (a.k.a. T-Bills) to cover that amount of money and these Notes are sold to other countries who are, in effect, loaning us that money until the maturity date of the note. (Lately, though, other countries are less than enthusiastically buying up our T-bills. The biggest purchaser is now the Fed, themselves.)

 

Bankers Rule the World: Bankers, financiers, and bondholders, who take a 35% to 40% cut of our gross domestic product

In the 2012 edition of Occupy Money released this month, Professor Margrit Kennedy writes that a stunning 35% to 40% of everything we buy goes to interest. This interest goes to bankers, financiers, and bondholders, who take a 35% to 40% cut of our gross domestic product.

That helps explain how wealth is systematically transferred from Main Street to Wall Street. The rich get progressively richer at the expense of the poor, not just because of “Wall Street greed” but because of the inexorable mathematics of our private banking system.

 

Ron Paul on Washington Journal: The Real Solutions Aren’t Even Discussed!

from RonPaul2008dotcom:

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