Every week on Monday morning , the Council and our invited guests weigh in at the Watcher's Forum, short takes on a major issue of the day, the culture, or daily living. This week's question:Where Do You See The Economy Going?
The Noisy Room: Straight off a cliff if we keep heading the way we are going. And frankly, I don't see a way to stop it at this point.
Deutsche Bank in Germany is now calling for negative interest rates or they say they will implode. The Federal Reserve is also calling for negative interest rates here in the US. They want to charge us every time we make a deposit. The banks are broke. In point of fact, they have been charging us negative interest rates for a long time with bank charges and wire fees, but they are increasingly desperate since there is no money left. Deutsche Bank is a cornerstone bank. If it fails, it will start a domino effect in Europe of banks failing that cannot be stopped. First in Europe and then in the US. Many of our banks are intrinsically tied to Deutsche Bank. Consider that Deutsche Bank's derivative exposure is now $60.4 Trillion.
The countries with negative interest rates currently are:
| Japan | -0.1 per cent on new bank reserves |
Eurozone | -0.3 per cent on bank reserves |
Sweden | lends cash to banks at -0.35 per cent |
Denmark | -0.65 per cent on bank reserves |
| Switzerland | -0.75 per cent on bank reserves |
The Bank of England said Friday that it is looking at ways to throw open its cash facilities to Islamic banks, a move that would make it the first of the world’s major central banks to offer such a service. They are looking to close their private accounts division and go expressly corporate with a heavy emphasis on dealing with Islamic banks.
Here in the US the unemployment rate is absolute fiction. Obama says it is at 4.9% when in reality, a third of working adults are unemployed. It's even worse in the black and teenage demographics. Jobs are fleeing the US at an alarming rate and it has to be stopped. We also don't manufacture much of anything anymore here in the US which is a recipe for disaster. Oil will fall further and cause more companies to fail and lay workers off. More retailers will lay more people off as well. As a nation, thanks to Obama we are $19 Trillion in the hole. When he leaves office, we will exceed $20 Trillion. That does not include entitlements. There is no way that I can see that we can ever pay off that debt now.
Unless we elect a Republican candidate willing to put our foot down and force business back into the US along with jobs, we are going to tip over.
Not to be a killjoy, but right now I see a global depression and war heading our way. Everything hinges on this next election for the US. We had better choose wisely this time. My choice in this dog fight is Ted Cruz, but Donald Trump will also help us economically.
The Glittering Eye: I think that the odds are about 5:3 that we'll see a global recession from which the United State is, fortunately, somewhat insulated. The way in which the global recession will have the greatest effect on us is that the U. S. is going to start looking very, very good to a lot of people willing to move for work.
All of this is the long-overdue consequence of trying to integrate China into the global economy. China is just too big and too authoritarian to integrate gracefully. China has extended credit to the hilt and invested all of that borrowing in factories. There is presently enough steelmaking, cement-making, auto production, etc. etc. capacity to satisfy the whole world's prospective demand for decades. There's no really good way to dig ourselves out of this hole.
JoshuaPundit: There are a few elements I see in play. First off, I see devaluation rather than inflation as the coming scenario. Many stocks and other assets are extremely overpriced and the correction we're seeing now reflects that. I also notice that gold and silver prices are rising some after being low for quite some time, another sign. Real Estate prices should also be affected, although rents may not because the demand in most urban and suburban centers in America remains high as people compete for affordable housing.
Obviously some countries will be more affected than others. As always, the Third World will be hit hardest.
I also see a great deal of unemployment unless things change markedly because of robot workers, automation and computerization of many jobs now held by humans. I'd advise anyone mulling over a career to consider that factor.
Laura Rambeau Lee,Right Reason : There are clear indications the U. S. economy is headed in a very bad direction. Regulations coming out of the Consumer Finance Protection Bureau, FDIC, and the Department of Justice such as Operation Choke Point severely restrict legal but deemed “high risk” businesses such as firearms dealers from operating by threatening and intimidating the banks into not accepting their deposits or processing payments. Moody’s reported in December that of the mortgages closed under the new regulations from the CFPB, ninety percent are non-compliant and according to an American Land Title Association report “there may be a larger problem growing with investors on the secondary market refusing to purchase loans because of potential compliance issues.” In addition, the Consumer Finance Protection Bureau fined automobile company Honda twenty four million dollars for purported discriminatory lending practices based on an algorithm, not fact, to determine the racial background of the consumer. We can expect more of the same from the CFPB going forward as they choose their next target to make an example of in the coming months and years.
The federal government is using bullying, intimidation, and pay to play tactics across the spectrum of businesses, banking, and financial industries which will force hundreds of small companies out of business and millions of people out of their jobs, leaving only those favored by the current administration to survive.
Well, there you have it.
Make sure to tune in every Monday for the Watcher’s Forum. And remember, every Wednesday, the Council has its weekly contest with the members nominating two posts each, one written by themselves and one written by someone from outside the group for consideration by the whole Council. The votes are cast by the Council, and the results are posted on Friday morning.
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