Markets say USA is going into - in RECESSION
You cannot take the steroids away (QE2) and expect the athlete to improve their performance in the short-term. Isn't that obvious to everyone?? Why anyone is bullish for the second half of 2011 or think anything good will happen in the first half of 2012 is ignoring the bond market, stock market, economics and the political situation in the USA.
First, the markets are a leading indicator. The market is discounting the next 12 months and when QE2 ended in June and Congress and the Obama Administration had their tantrums in July, the markets are in the process of changing its expectations for the next 12 months. Sure, the Fed could do something and its impact on future economic events would have to be discounted. Same with Congress and the Obama Administration. Say President Obama did something smart and gave every Governor three infrastructure projects to choose and exempted them from the excessive Federal regulations that obstruct the development of infrastructure.
The markets may fall off the cliff, but the economy will continue to muddle along at a maintenance level pace. Surprise, China and much of the emerging markets are still growing (more demand tomorrow than today) just at a slower pace. That is quite different that Europe of the USA where we are contracting (less demand tomorrow than today) Together, global growth will be flat to contracting in the near term until Europe and USA put their financial houses in order. BTW, that does not mean borrow and spend more.
First, the markets are a leading indicator. The market is discounting the next 12 months and when QE2 ended in June and Congress and the Obama Administration had their tantrums in July, the markets are in the process of changing its expectations for the next 12 months. Sure, the Fed could do something and its impact on future economic events would have to be discounted. Same with Congress and the Obama Administration. Say President Obama did something smart and gave every Governor three infrastructure projects to choose and exempted them from the excessive Federal regulations that obstruct the development of infrastructure.
The markets may fall off the cliff, but the economy will continue to muddle along at a maintenance level pace. Surprise, China and much of the emerging markets are still growing (more demand tomorrow than today) just at a slower pace. That is quite different that Europe of the USA where we are contracting (less demand tomorrow than today) Together, global growth will be flat to contracting in the near term until Europe and USA put their financial houses in order. BTW, that does not mean borrow and spend more.
Posted by Bradley Fluetsch at 8/18/2011 5:16 AM 
Categories: Economics
Tags: stock bond equity Obama Congress China QE2 recession
Categories: Economics
Tags: stock bond equity Obama Congress China QE2 recession
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