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October 2011 US Stock Market Forecast $99
October 2011 Global Economic Analysis $99
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November 2011 Emerging Markets ETF Forecast $99
November 2011 US Stock Market Forecast $199
November 2011 Global Economic Analysis $99
UK Economic Analysis: Risks to the Housing and Banking Sectors $50
December 2011 U.S. Stock Market Forecast $99 |
| January 2012 Global Economic Summary |
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Originally Published on January 9, 2012
After nearly four years of harsh economic consequences, we have seen little if any progress by the criminal puppets in Washington. Despite the continuous lies from a variety of partisan sources, there has been no real job creation. We have only heard delusions, excuses and lame duck proposals.
Without surprise, not one single individual from the economic, academic or media circle has called for the criminal prosecution of countless Wall Street executives for their role in securities fraud that wrecked the global economy.
Despite claims from the Obama Administration and its supporting institutions, there has been no Wall Street reform, no healthcare reform and no trade policy reform. Yet, Americans continue to be distracted and fooled by the media establishment, which continues provide an amble supply of talking head puppets supportive of the fascist establishment known as “democracy and free markets.”
Establishment economists and Wall Street shysters have played a prominent role in the propaganda campaign as well. While the denials and distractions continue, no one has addressed the real problems.
Needless to say, President Obama has been a complete disaster much in the same way as his predecessor. Without any doubt, the next U.S. president will serve merely as a puppet to the Wall Street and corporate-controlled establishment similar to those in the past. Consequently, Americans will not be provided with real economic solutions because this would not bode well for the objectives of the establishment.
While Washington cronies continue to feed the military-industrial complex, the national debt has now swelled past the annual GDP. Instead of ending these useless wars, the criminals in Washington are hell-bent on cutting Medicare and Social Security, without any protest by the American people. It is clear that the vast majority of the American people are under complete mind control by the Washington-corporate America media monopoly.
Despite all that has happened in recent years, it is indeed shocking that the vast majority of Americans fail to understand virtually every major economic issue affecting their livelihood, from healthcare and government regulation to housing and jobs. Rather than seeking out unbiased resources, they have relied on the two-party theme song which ultimately produces the same end results.
The appetite for U.S. capital markets continues to grow amidst the continued problems in the U.S., as investors are more worried about the debt crisis in the E.U. As a result, many investors have been deceived to think we have seen a decoupling of the world’s two largest economies.
While earnings from U.S. corporations remain strong (but fading a bit as expected), we expect to see a larger downturn in many sectors by 2012, as the effects of the recession in the E.U. spillover to the world.
In October we stated…
“Although the possibility of a recession in the EU is close to certain at this point, the European Central Bank must act immediately to lower interest rates by 100 basis points over the next few months in order to contain the spillover effects.
It is also remotely possible that a recession might be avoided in Germany and France if the right elements come together at the right time, such as adequate rate cuts, continued support for EU banks and sovereign bonds by the ECB and so forth. This more optimistic outcome is predicated on the replacement of current leadership at the ECB, EUC and IMF with competent leaders.”
As it turned out, we do not feel the ECB acted quickly enough, as it continues to stall in cutting rates sufficiently. The ECB did not begin cutting rates until November, from 150bp to 125bp, followed by another 25bp cut in December 2011. Currently, the rate in the E.U. stands at 100bp as of January 9, 2012.
While the ECB also lowered bank reserve requirements, we feel that it must slash rates immediately by another 50bp, followed by another 25 by the end of January if it expects to have any chance of avoiding a recession. Otherwise, further delays in monetary loosening by the ECB will be too little, too late. This would add yet another stroke of consistent failure to the leadership in Europe.
We would have preferred to see rates at 50bp by the end of 2011. While inflation continues to rise in the E.U., lowering rates will create additional inflationary pressures that have already been boosted by the recent reduction in banking reserve requirements. However, inflation remains a minor worry relative to the other problems in the E.U.
In short, abysmal leadership and horrendous execution from the EU and ECB make it certain that the situation in Europe to get much worse.
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