Economic End Times - by Stephen Lendman
Despite a deepening global depression, establishment economists are in denial. On June 9, the Wall Street Journal said those surveyed expected slow, steady growth through 2011, despite high US unemployment, a housing depression, European sovereign debt in crisis, and the unreported insolvency of major French and other banks.
On June 8, testifying before the House Budget Committee, Fed chairman Bernanke fantasized about 3.5% US growth through 2011, stopping just short of ruling out the possibility of recession he called "unlikely."
And in 2007, when equity and housing bubbles peaked, neither he or Greenspan expressed alarm, destroying their credibility in the process.
Based on an early August survey, establishment (in bed with Wall Street) economists now put the chance of "another" downturn at 30%, compared to 15% in May, expecting 2.5% growth over the next year.
Some, in fact were sanguine, calling America's economy strong, attributing negative views to a crisis of confidence, not hard reality, signaled by the August 4 shot across the bow market rout.
Despite a predictable rebound, it signified much worse to come because conditions are dire getting worse. Even manipulated data show enough to sound alarms, highlighted by economists like David Rosenberg.
On August 15, he expressed surprise about so "little reaction to the shocking US consumer sentiment data that were released on Friday - the worst since the tail end of the Jimmy Carter recession era in 1980."
Moreover, consumer spending is weak even with suspect upward revisions. In addition, "(n)ew mortgage and refinancing loan volumes fell 19% in Q2 to" a three-year low. Further, auto buying plans declined to a decade low, likely headed much lower as economic conditions deteriorate. Other big ticket buying plans also dropped to 2008-09 depths when the economy falling off a cliff seemed possible.
In fact, growth indicators overall are rapidly heading south at a time they're already woefully weak. There's no end to decline in sight. Remarkably, negative household assessments of government policy hit record lows, surpassing the depths of the early 1980s recession and Watergate.
As a result, Rosenberg called the US economy "recession-bound, expecting" even manipulated data to show negative Q 3 growth, followed by greater contraction in Q 4 and 2012 Q 1.
"(P)ractically every major variable is" negative. "We are past the point of no return....I can understand the innate need to be hopeful," he said, but it's impossible to dispute reality.
Weakness and imbalances are extreme. American and European sovereign debt are overextended and troubled. "Anyone who thinks this gets contained (especially in Europe) slept through the last financial crisis after Lehman failed."
And when weak economies beg for stimulus, austerity is force-fed, assuring far greater economic pain. It's coming, will deepen and persist because policy measures are opposite of what's needed.
Commenting on the August 4 market rout, Rosenberg said nearly always it signals downturns. Western economies are fundamentally weak. Unlike earlier times when the Fed could cut interest rates, it now relies on "untested methods to underpin investor confidence and the economy."
And if America's economy plunges, so do others even deeper. Hunker down believes Rosenberg and independent economists believing the worst is yet to come.