On Tuesday, Federal Reserve Chairman Ben Bernanke delivered his semiannual monetary policy testimony to the Senate Banking Committee. Wall Street and Washington had high hopes for a new round of quantitative easing, but Bernanke did not oblige.
After the testimony, Senator Chuck Schumer urged Bernanke to “get to work.” Like many of his colleagues, Schumer seems to believe that Bernanke holds the power to significantly boost the economy. Those times, however, appear to be behind us.
“I wonder if he [Bernanke] is hesitating to initiate another program quickly because the Fed might doubt its effectiveness. Or perhaps they’re seeing data that leads them to think, ‘It’s not as dire as it seems,’?” remarked Jim Paulsen, chief market strategist at Wells Capital Management in Minneapolis, after Bernanke’s testimony. “It could be a bit of both. But do we really need more excess reserves in banks?”
Paulsen’s final question emphasizes the excessive availability of credit to banks. The real dilemma lies in the fact that banks lack avenues to effectively deploy this credit. Continue reading
Incredibly, the budget deficit for the 2012 fiscal year is projected to exceed $1 trillion for the fourth consecutive year.
According to the Treasury Department, “in the first nine months of the budget year, the federal deficit amounted to $904.2 billion.” By the close of the fiscal year, which wraps up on September 30, the Congressional Budget Office anticipates the deficit could reach approximately $1.17 trillion. This is unprecedented.
It’s worth noting that prior to 2009, the federal government never reported a deficit exceeding $500 billion, and in many years, this figure was significantly lower. In fact, just 12 years ago, the government achieved a surplus, although the surplus was not used to reduce the national debt.
Since 2009, however, $1 trillion deficits have become the norm. This seems to be the necessary cost of maintaining government operations and fulfilling promises made to the public. Any attempt to cut spending or increase taxes is often met with warnings of dire economic consequences… Continue reading
If you’re worried that the economy might be heading for another recession, it may already be too late—we may already be in one.
That’s the perspective shared by Lakshman Achuthan, Co-Founder and Chief Operations Officer of the Economic Cycle Research Institute (ECRI), during an interview on Bloomberg TV last Tuesday.
“In our December forecast, we suggested that Q1 would likely mark the recession’s onset, or, at the very least, by mid-2012. I’m here to confirm that our prediction stands,” Achuthan stated. “I firmly believe we are in a recession right now. It’s uncommon to have such clarity as we head into a recession.”
The ECRI is renowned for its expertise in business cycles. According to The Economist magazine in 2005, “ECRI is likely the only institution that provided advance warnings of each of the last three recessions, and impressively, it has never issued a false alert.” Over the years, especially leading up to and through the Great Recession, ECRI has maintained its reputation for accurate predictions. Continue reading
Despite extensive monetary and fiscal stimulus measures, the global economy continues to limp along like an exhausted mule. Many European nations are experiencing recessions, the U.S. economy is expanding at a meager 1.9 percent, and China’s monumental two-decade growth seems to be faltering. What lies ahead?
Today, we turn to Dr. Copper for an insightful perspective.
Dr. Copper, the metal known for its economic intelligence, usually provides a reliable forecast of future economic trends. Its widespread use in various industries—ranging from infrastructure to housing and consumer electronics—makes it an essential early indicator of economic activity.
When copper prices surge, economic activity often follows suit, while a decline in copper prices usually signals an economic slowdown. Over the past year, copper prices have plummeted by 20 percent.
Clearly, copper is in a downward trend, and it appears that the global economy is following suit. Continue reading
