Busted: Bankers and The Global Economy

August 29, 2008

GDP Up: Why the Panic?

Bernanke and a much needed visit.

Bernanke and a much needed visit...

The economy performed far better than expected in the Spring (second quarter), reportedly led by exports and increased government spending, notably the stimulus program. Still, many economists like Wachovia’s Mark Vitner are talking up recession. Figures are continually revised up and down as more information comes in. “To many, it still feels like a recession.” Indeed it does!

Because of the weak dollar, nations have been buying more U.S. goods resulting in a foreign trade bonanza for the U.S. despite economic weakness on the home front. Consumer spending was up as well, reportedly sponsored by the $91 billion federal government fiscal stimulus program. Uncle Sam is still sitting on the remaining third of money allocated for the stimulus. What Congress will do with the surplus is anyone’s guess. That stimulus is now part of the burgeoning national debt that is approaching $10 trillion. The presidential candidates report that they are unconcerned with national debt as they propose new fiscal budget-busters.

unemployed.

unemployed.

The reality is still pessimistic as everyone realizes that all isn’t well. In fact, if you read enough news, you might get confused over the sundry viewpoints expressed. Still, nothing has changed except that when quarterly figures are updated, sometimes the nation comes out ahead in the statistics department. In the meantime, a weak dollar will help multinationals to consume more U.S. products or purchase from more U.S. suppliers. The world of business simply isn’t sharing that monetary goodness with their employees as they prepare for the reportedly bleak future ahead, continuing to fulfill the prophecy of recession. The labor market is still in decline, perpetuated in part by the continued offshoring of U.S. jobs to foreign markets. ~ E. Manning

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