Bear Country - by Stephen Lendman
Financial markets provide early signals of future economic conditions, good or bad. Currently, they're flashing red.
On August 19, economist David Rosenberg reported the bad news about major world stock markets in bear territory, including Germany, France, Italy, Spain, Netherlands, Switzerland, Russia, Belgium, Portugal, India, and others heading there, including Japan, China and America.
They signal hard times getting worse, what Main Street Americans knew since 2008, mired in Depression. Tipping points for others now are evident. Low bond yields when financial stocks crashed are "classic sign(s) of (further) credit contraction."
Mortgage rates also hit a record 4.17% low. Even so, "existing home sales collapsed at a 17% annual rate so far in 2011," providing more proof of America's greatest ever housing Depression, or as Rosenberg put it:
"The housing market is completely broken....in a full-fledged depression and will likely take at least another two years before" bottoming. Even then, recovery will be slow.
In fact, credit demand, tougher lending rules, homeownership, and cyclical spending "are undergoing a profound shift." Household frugality and force-fed government austerity created "a potent deflationary (Depression) brew."
It explains "why Treasury yields are....melting like an ice cube on a Houston sidewalk" in summer. Counterintuitively, however, it's happening at the same time inflation is hammering food, medical costs, college tuitions, transportation, and until oil prices recently fell, gasoline and other forms of energy.