The Weekly Standard summarized an interview President Obama did with Bloomberg. He said that the US is “poised to take off.” He didn’t mention taking off over the cliff.
“We’re seeing pretty strong consumer confidence, despite weaknesses in Europe and even in Asia. I think America is poised to take off. And the question is, let’s make sure that we don’t have a self-inflicted wound, because there are a lot of silly games played up on Capitol Hill,” Obama told Goldman.
The interview focused mainly on the economy. Obama pushed for tax hikes. (Read More)
Good grief, he’s the master of those silly games. And where does he get his economics news? Just today I’ve read the following articles at Zero Hedge which lead me to conclude that the economy is poised to take off right down into a big hole.
Forget the Fiscal Cliff: it is merely a much needed economic distraction for the next 3-4 months (distracting from what? Why Europe of course). Yes, it will be resolved, and yes taxes will go up, and yes, debates over it will most likely be carried over into 2013 and nothing will be compromised until the ultimate debt ceiling deadline (because it is really a Fiscal Cliff-Debt Ceiling package deal) is hit some time in March 2013, but eventually one or both parties will cave, right after the market plunges to put it all into the proper perspective as it did around the time of TARP and the August 2011 debt ceiling debate, and a resolution will materialize. The bigger issue has nothing to do with the Fiscal Cliff, which is indeed a sideshow. The bigger issue, as Art Cashin explains, has everything to do with a secular decline in the US economy, where a 1% growth rate will soon be the “New Killing It”, where millions more (in part-time workers) will soon be let go, and where businesses no longer generate the cash flows needed to stay open. (Read More)
And while political campaigns were just that, the truth is that nobody has the trump card to a perfect quadrangle of problems which will mire the US economy for years to come, among which i) debt/deleveraging; ii) globalization, iii) technology, and iv) demographics. Gross’ outlook is thus hardly as optimistic as all those sellside reports we have been drowned by in the past 2 weeks, hoping to stir the animal spirits one more time: ‘We may need at least a decade for the healing.… it is getting harder to maintain the economic growth that investors have become accustomed to. The New Normal, like Strawberry Fields will “take you down” and lower your expectation of future asset returns. It may not last “forever” but it will be with us for a long, long time.” Sad: looks like it won’t be different this time after all…(Read More)
With the foundation of our economy now one of gluttony and excess (at all costs), the significance of the slowdown in consumer spending in the latest GDP data cannot be underestimated. As Bloomberg Briefs notes, real consumer spending fell 0.3% in October, and is only 1.3% above year-ago levels – the US economy has a propensity to slip into recession any time the 12-month pace of real consumer spending falls below 2.0%. Their so-called ‘Fab Five’ indicators of discretionary spending took a notable turn for the worse in October. (Read More)
Yeah, poised to take off. Right.
As for needing a decade to recover – I’d say that’s how long we would need with sane fiscal policies. We know we won’t be getting that for at least the next four years, so maybe we should tack on a few years to that prediction.
Update: Linked by Big Pulpit – thanks!