http://www.marketoracle.co.uk/Article13370.html
Since March of this year, we have seen growing consensus and excitement from the mainstream media and government about an economic recovery underway. Scattered economic indicators are released and spun in a positive light when they are proportionally minuscule improvements compared to the declines already experienced for each given indicator. They typically use this sugarcoated data and ignore reality to say “the worst is behind us, yet perhaps we’ll still see a 10-15% correction in the markets, and growth might be slow for quite awhile”. In under six months from the low, the markets have rallied over 45%. Yet this type of market move up hasn’t been seen since the lead-up to the crash of October, 1987.
It is extremely difficult to find a true bright spot in the economy that indicates improvement enough to warrant such optimism. To begin, here is a brief update about the 4 key underlying economic problems outlined within Arbitrary Vote’s original warning article:
Unprecedented, massive amounts of existing and coming national debt – U.S. national debt has continued to increase and there is no sign of future debt letting up.
Foreign reluctance to fund U.S. debt – China, Russia, Brazil, etc continue to back away from U.S. Treasurys, diversify into other investments, and make moves toward trade in non-U.S. currency.
Declining productivity and indicators of poor future productivity – GDP has continued to fall and unemployment has continued to rise. Recent political action, reform currently on the table, and mounting taxation all point to future productivity damage.
Unprecedented, massive levels of money printing – The printing presses have been running non-stop and there’s no real sign of them letting up. Much of the recovery hype has stemmed from economic illusions caused by this temporary “fix”.
All of these factors have continued and mostly worsened since June. Each plays as significant a role as ever in the near- and long-term direction of the economy.
The situation is worse than described by most mainstream sources, and because of developments thus far this year and events unfolding in the near future, there are particular reasons to beware of the months ahead.A few communication sources are predicting stock market crashes and corrections for the autumn of 2009, but rarely outline specifically what could be so dangerous about this timing and potential big-picture implications.
A large segment of this analysis is devoted to outlining the near-term factors that could cause serious economic and societal problems in the coming months. The outline of factors is broken down as follows:
Current activities and conditions - Those activities and economic conditions that continue to be underway and could lead to additional economic problems in the near-term.
Scheduled near-term activities - Those activities that are scheduled to take place within this autumn or winter and could lead to economic harm.
Uncertain near-term activities - Those activities that could happen within this autumn or winter and could lead to economic harm.
After walking through the statistics and information under each of these three sections, everything will be tied together to depict the overall impact on the economy.
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