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Housing remains in Depression. In the week ending June 15, mortgage purchase applications plunged 8.5%. Companies keep cutting planned capex expenditures. According to the latest Architectural Billings Index, commercial construction keeps contracting.
Down 22% from their highs, commodity prices entered bear market territory. Oil prices hit an 18-month low. It signals weak demand. Brent fell 8% in one week. It's down 30% from its earlier high.
US factory output reached an 11-month low. Eurozone business activity dropped for the fifth straight month. At a 48.5 read in June, Germany's PMI shows contraction. The Fed's June Philadelphia manufacturing index contracted sharply to -16.6 after dropping 5.8 points in May.
The Jolts (Job Opening/Labor Turnover) survey showed job openings plunged 325,000 in May. It was the steepest drop since Lehman's September 2008 collapse. Only twice before in the past decade did it decline that much. All major categories were affected.
New hires decreased for the second straight month. They're lowest since July 2011. Again all categories showed weakness. Layoffs keep increasing. Cuts rose in three of the past four months. Data revisions are mostly negative. Peak levels were reached months ago. The full impact of how weak things are has yet to hit home. So-called recovery is an illusion, not reality.
Europe's economic condition is grim. Bailing out Spain gets harder. Economist Jack Rasmus estimates its banks need at least $300 billion, not the publicly announced $78.75 billion. He added that hundreds of billions more are needed to rescue Spain's regional and central governments. At issue is who'll supply it. Sick economies can't solve their own problems.
Eurozone ones look to Germany for help. It bears the greatest burden when it's economy is weakening. Italy's troubled economy combined with its 12-month 29% of GDP sovereign financing burden means it can't contribute much.
Europe's PIIGS (Portugal, Ireland, Italy, Greece and Spain) combined with troubled France have a combined public debt of 200% of Germany's GDP. Its own debt to GDP ratio is 80%. Simple math says it can't backstop the Eurozone. Bailouts can't continue forever. Debt burdened economies head for collapse. Adding more hastens the timeframe.
Troubled Eurozone economies are so weak that cross-border bank-to-bank lending dried up. ECB chairman Mario Draghi calls inter-bank lending "dysfunctional." It's "not working," he said. As it goes, so does business lending altogether.
Rasmus said these developments show deepening crisis conditions. He blames wrongheaded policy measures. Austerity when stimulus is needed hit hard. Government revenues are down. So is consumption. Business spending keeps falling. Debt keeps rising. A looming train wreck approaches.
Why should households and economies bear the burden of bailing out crooked banks? Why are too big to fail ones allowed to exist? Why do ordinary people put up with politicians scamming them for personal gain? Why do they elect new bums in place of old ones?
When conditions exceed threshold levels too painful to bear, maybe they'll react the way they should have years ago.
A Final Comment
On June 19, the Global Europe Anticipation Bulletin (GEAB) issued a "red alert.
<blockquote>" Global conditions are "negative, even catastrophic," it said. The second half of 2012 may "mark a major inflection point of the global system crisis...." Day of reckoning time approaches. Putting off "the inevitable comes at a high price...." "The shock of the autumn (of) 2008 will seen like a small summer storm compared to what('s)" coming. The "world system" will be "shake(n)."<blockquote>/
GEAB predicts a conversion of geopolitical and economic shocks. They include more Middle East wars, GEAB predicts a conversion of geopolitical and economic shocks. They include more Middle East wars, Afghanistan-Pakistan chaos, "Gulf countries swept away in the turmoil," America's economy in free fall, major bank insolvencies, and money printing madness ended because it no longer works.
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