It's looking as though America (and the rest of us) is now poised on the
edge of the double-dip. If that happens, we'll truly be into a 1930s-type
Depression. Keynesian methods might have worked then because there was
insufficient money but plenty of new consumer goods that half the
population hadn't yet bought. Today, in contrast, most people have most of
the goods in their house and there are no uniquely new consumer goods that
people are yearning to buy -- that is, with sufficient motivation to save
hard for them instead of too easily buying on credit. Also, there is plenty
of money today, particularly after all the quantitative easing. It's either
being hoarded by viable firms which don't know what to invest in next or
it's still going into the off-balance sheet vehicles of banks.
Daily Telegraph 20 August 2010:
Gloomy US industrial data rattle worldwide markets
Global markets were rattled by a series of unnerving US economic data,
heightening fears of a marked slowdown in the second half of this year.
By James Quinn
US Business Editor
Bad news from the US manufacturing and labour markets worried investors,
pushing down the Dow Jones Industrial Average by as much as 200 points at
one stage, trading down 177.25 -- or 1.7pc - at 10,238.29 in early
afternoon trade.
The Dow recovered slightly to close at 10,271.21, down 144.33 points. The
Nasdaq and S&P500 indices were down 1.66pc and 1.69pc respectively.
The flurry of data turned trading screens red, with shares in transport
companies singled out with the Dow Jones 20 Transportation average falling
by 2.9pc, while investors fretted about the state of the global personal
computer market with Hewlett-Packard and Dell because of quarterly profits
reports due after the bell in New York last night.
On the commodities front, gold touched its highest level since July as
investors sought out safe havens.
In London, the FTSE 100 was dragged lower by the US data, with the
benchmark index closing down 91.58 or 1.73pc at 5,211.29 on Thursday.
Germany's DAX and the CAC-40 in France losing 1.8pc and 2pc respectively.
Asian markets followed the US and European markets lower on Friday. Japan's
Nikkei 225 fell 1.4pc, Australia's S&P/ASX 200 dropped 1.1pc and China's
Shanghai Composite slid 1.3pc.
The main cause of the prevailing gloom was the Philadelphia Federal
Reserve's monthly report on the state of the manufacturing industry in
Pennsylvania, New Jersey and Delaware part of the US's industrial heartland.
The Philly Fed said its index of current activity in which a reading above
zero is positive showed contraction for the first time since July 2009,
with a reading of 7.7, from +5.1 in July.
The data came at the same time as the number of people claiming
unemployment benefit for the first time last week rose to the half-million
mark for the first time since November 2009.
Economists had expected the number of jobless claims to fall rather than
rise as it did by 12,000. Jeremy Cook, at currency broker World First,
said: "This will further heighten fears that the US economy is careering
into the dreaded double-dip recession."
Investors were also given pause for thought by the Conference Board's index
of leading indicators, which showed a rise of 0.1pc in July. Nevertheless,
Ataman Ozyildirim, economist at The Conference Board, admitted the index is
"growing at its slowest pace since mid-2009 and it has been essentially
flat since March."
Keith Hudson, Saltford, England
_______________________________________________
Futurework mailing list
[email protected]
https://lists.uwaterloo.ca/mailman/listinfo/futurework
