3 Signs of Economic Disaster

Each day, more economists jump onto the Double-Dip bandwagon. Signs abound that the natural economic recovery that would normally follow a deep recession won’t happen. Instead, the economy is now saddled with so much debt, so many regulations, and such onerous new taxes that the Obama Administration tells us to be happy with 9.5 percent unemployment.

great-depression

Barack Obama is an economic disaster of the first order.

So why all the pessimism? 

Well, every week it seems we’re hit with wave after wave of bad news. At the same time, Biden and Obama tour the country telling the unemployed they never had it so good.  Here’s today’s top stories on Drudge:

 drudge25AUG10

Here’s a link to one of the stories—on CNBC—that says we have left recession and entered . . . economic DEPRESSION.

And that brings us to this week’s triple-play of disastrous economic news.

First, existing home sales fell by 27 percent in July to the lowest levels in 15 years. At the same time, inventories climbed and interest rates fell.  That means prices will have drop dramatically before the housing market can recover.

Second, durable goods orders, excluding transportation, fell by 3.8 percent in July. Economists and analysts expected a 12 percent rise.  That means businesses have abandoned hope of recovery.

Third, existing home sales plummeted 12 percent in July to the lowest level on record. 

Why can’t the economy find solid footing?  Because America can no longer afford the government in Washington.  With government workers earning twice as much as people who actually produce value in the economy, wage earners can afford only two things:  subsistence and taxes. Truly, the government has erected a multitude of New Offices and sent hither swarms of Officers to harass our people and eat out their substance.

Either we cut the cost of government or die.  That’s a stark choice.  But it’s the one we’ve been given.

Fed Report Hints At Depression--Markets Tank

The Federal Reserve Board's Open Market Committee released the minutes of its October 28-29 meeting, today, in which some members raise the specter of economic depression extending more than 4 consecutive quarters.  The report calls the present financial mess the worst in more than half a century, carefully avoiding direct references to the Great Depression.

Stocks Tank

Wall Street responded with 427 point (5.16 percent) collapse, with Citigroup leading financial stocks to a 10 percent crash.  Citigroup lost 25 percent of its value today.

Most economists consider a depression more than 1 year of negative GDP growth.  The last depression in the United States was the Great Depression of 1930 through 1942.  Only increased wartime production ended that economic chaos.

Fed Has Been Overly Optimistic

The Wall Street Journal (subscription required) notes that in recent meetings, the Fed has underestimated the economy's weaknesses, which could mean unemployment, bankruptcies, and negative growth could get far worse than today's report suggests:

  • The Fed downgraded its previous expectations for GDP growth for 2008  after significantly over-estimating 2008 growth in its August meeting
  • The Fed downgraded its 2009 growth estimate from greater than 2 percent to -0.2 to 1 percent
  • The Fed raised it unemployment forecast to 6.5 percent, even though unemployment is already above 6.5.  In August, they predicted 5.5 to 5.7 percent unemployment

Blog Reactions

Allahpundit has a poll asking where the market will stand on 1/1/2009.  I picked 6,000-6,999.  I expect the DJIA to reach and hold 6,900 by Demember through mid-2010, trading in a range of +400 to -200 points. 

Gateway Pundit notes that this is the largest post-election sell-off in history.