US Economic outlook update - a mixed picture

Mixed signals from US economic reports are out this week. Here this week's report from Steve Peasley, president of KPP Financial. Steve believes that the economy is still very strong even without worrying about inflation. Well, at least for the moment.

Good economic numbers came out from the housing sector. New constructions were down but if you take out  the apartments part, it's definitely up... Single family homes construction was up. We just need to always keep in mind that these are backward looking economic trends.

What's more important is the growing numbers of new construction permits. Permits are always the leading economic indicator.

But what's concerning is that not all of the Federal Reserve governors agreed about the QE3. QE 3 is an 80-Billion per month pay off to banks (i.e. securities a month). Quantitative easing was supposed to be applied until the unemployment reaches a certain level and this move created a surprise for the marets and markets don't like surprises...

As always, thanks Steve for your expert analysis and reporting.

Global Economic Collapse?

Yesterday I talked about a worst case possibility that I called global economic meltdown.

I don’t like to use alarmist language – I feel that it always carries the message that somehow, you are a bit of a crank or fanatic. You know, like the folk with the placards saying ‘Repent Now - The End is Nigh’.

However, as I have watched politicians around the world of every political persuasion, fail to  come up with a credible solution to the world’s economic crisis, it has become clear that no-one is willing or able to come up with or implement a solution that can reverse this downwards slide.

This short film explains why a collapse is almost certain now.

I am of the view that all  politicians are being very  economical with the truth. Politicians want to gain or retain power. So their horizons are governed by the electoral terms in their nation. And we all know that they will say or do whatever they think will help them achieve that goal. That’s it.

Jim Rogers is convinced that this is going to happen unless there is a complete writing off of global debts and we start again. Here’s his view on the matter:

I think the US Federal Reserve will continue printing money and continue diluting the strength of the dollar. The Bank of England will continue with quantitative easing. And the Central European Bank will continue will bailouts and austerity measures for the failing Eurozone nations. All the while just trying to buy more time for a miracle to happen while building up a bigger problem for the future.

In my view, the very best we can hope for now is that the credit lines and quantitative easing available to the western governments can stretch out long enough without breaking, while we simultaneously (somehow) get growth back into our economies. Oh yes and we have to do that without spending any more money... 

What do you think?