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Bear Country

By       Message Stephen Lendman     Permalink
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Bear Country - by Stephen Lendman

Financial markets provide early signals of future economic conditions, good or bad. Currently, they're flashing red.

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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.

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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.

At the same time, consumer and business sentiment are plummeting, the latter falling five of the last six months from 113.4 in February to 24.2 currently, its lowest level since February 2009. In addition, new Gallop poll figures show only 26% of Americans approve of the way Obama is handling the economy at a time growing numbers of Americans disapprove of him overall.

Given his public trust betrayal during deepening hard times, it's surprising why any support remains, except among those he enriched at the expense of all others.

Rosenberg also noted how the Philadelphia Fed Index (a reading of general business conditions covering the Philadelphia, New Jersey and Delaware region) crashed to - 30.7. In fact, all its components were negative, what he called "a one-in-10 event," signaling worse to come nationwide. 

"I can hear the fat lady singing," he said, adding: "Isn't it incredible how so many folks are still in denial?"

Despite his responsibility for deepening worker pain, Obama's three-day bus tour feigned concern for lack of jobs and economic conditions when his policies harmed, not helped.

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Yet in boilerplate stump speeches, he said, "I'll be putting forward, when they come back in September, a very specific plan to boost the economy, to create jobs, and to control the deficit," incomprehensively conflating budget cutting austerity with stimulus. 

It shows what contempt he and Congress have for workers when they most need help. On his watch, real unemployment reached almost 23%. Over 25 million have no jobs. Most others have low-pay, poor (if any) benefit temporary or part-time ones. 

An entire generation of young people, including college grads, has little hope of decent jobs and careers. Bipartisan complicity threw them overboard to wage wars and dole favors on corporate crooks who line politicians' pockets generously in return. 

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I was born in 1934, am a retired, progressive small businessman concerned about all the major national and world issues, committed to speak out and write about them.

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