Tag Archives: Recession

All that glitters is not gold: storm clouds on the economic horizon

“There is perhaps no single person or entity that has done more to sell the economy under President Trump than Fox News.” When Trump faces a negative story, Fox News pivots to the economy:

Fox routinely finds ways to spin bad, unrelated news about the economy into good, related news about the economy, often blaming the media for its focus on Trump’s scandals and ethics probes.

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Indeed, Fox has been so anxious to praise Trump for the economy, it has even admitted to deliberately giving the president positive economic coverage.

The economy is not as good as the three dolts on the divan (Fox and Friends) who provide Trump his presidential daily briefing (PDB) of Fox propaganda each morning would have you believe.

Earlier this month, the New York Times editorialized Clouds Darken Trump’s Sunny Economic View:

[T]he American economy has a lot more power than it can handle right now, and it’s making a lot of noise. So is President Trump, who takes singular credit for a robust second-quarter rise in the gross domestic product of 4.1 percent, something that hasn’t happened under any other president since … Barack Obama. While Mr. Trump praised himself effusively — he’s good at that, isn’t he? — the stock market seemed unimpressed. Friday’sannouncement that 157,000 new jobs were added in July, a modest gain or perhaps a seasonal glitch, elicited an even more subdued reaction. That’s because if you look down the line, there are few clear reasons to be so enthusiastic.

“Over all, we see this report as supportive of our views that the economy is currently firing on all cylinders,” wrote Bricklin Dwyer, a senior economist with BNP Paribas, after the new G.D.P. numbers were announced. But there was a caveat: Mr. Dwyer said that “growth is likely peaking. Indeed, in our forecasts, [the second quarter] marks a high-water mark for growth.”

For one thing, the initial jolt of the Republicans’ $1.5 trillion tax cuts, mostly for corporations and the wealthy, is wearing off. Corporations have bought back $437 billion of their own shares, which leaves them that much less to invest in new production, or wages. In fact, spending on business equipment slowed.

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Trump takes credit for the Obama economic recovery, but will not take the blame for the next market correction and recession when it comes

Over the weekend, Clad in pink and vowing to vote, activists around the globe flooded streets for another women’s march.

The serial sexual predator and misogynist Twitter-troll-in-chief couldn’t resist trolling the women marchers.

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Donald Trump, once again, is taking credit for the economic recovery that his predecessor, President Barack Obama, handed off to him.  Former Treasury Secretary Lawrence Summers explains at the Washington Post, Trump doesn’t deserve credit for all the economic good news:

President Trump will be attending the World Economic Forum in Davos, Switzerland, this week. Inevitably, attention will focus on whether the president projects a commitment to internationalist values or reiterates his truculent nationalism in the name of making America “great again.” Attention will also focus on the durability of the current economic and market upswing that has buoyed the spirits of businesses and investors around the world.

While Trump will probably try to take credit for all the economic good news, it is unlikely that he deserves it. He is president of the United States, not the world. And the economic surprises in the rest of the world have been more favorable than those in America. The scale of upward revisions of growth forecasts for 2017 and 2018 has been higher in Europe, Japan, China and emerging markets broadly than for the United States. Many other stock markets have outperformed those here. If Trump’s pro-business policies were driving the global economy, one would expect an increase in net capital flows into the United States, and so a stronger dollar. In fact, the dollar has weakened significantly in the past year, despite more Federal Reserve tightening than was anticipated at the beginning of 2017.

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Brexit makes a global recession more likely

I have been warning you for months now about the economic slowdown in China, China economic news: Asian indicators likely to confirm slowdown continues, and uncertainty over the pending Brexit vote in Britain.

heston-beachAs I was streaming the BBC News election coverage last night, I was reminded of George Taylor (Charlton Heston) in this famous scene from Planet of the Apes (1968): “We finally really did it. You Maniacs! You blew it up! Ah, damn you! God damn you all to hell!”

As I was watching returns, “the British pound fell more than 10 percent Thursday night, reaching $1.34 per pound, after midnight Eastern time, a stunning decline for a rich country’s currency in a single day.” The stunning collapse of the British pound, in charts.

When it became clear that “Leave” the EU was going to win, the next dominoes to fall were Prime Minister David Cameron announcing that he would resign in October, and the global markets responding with steep declines. Britain’s shock vote brings swift consequences as leader to resign, markets plunge:

A day after British voters defied widespread warnings of economic and political peril should they cut ties with the European Union, the country reckoned with the consequences as markets tanked across the globe, the prime minister said he would resign and the United Kingdom felt the renewed pressure of a breakup.

Brexit resultsThe cascading developments, all within hours of the result of a deeply polarizing referendum, reflected a country shocked by its own decision.

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[I]n the short term, the pessimistic view appeared to be winning out Friday as the country endured layer upon layer of self-inflicted turmoil — and a sudden question over who would lead Britain at a crucial moment.

With Britain still absorbing the dawn news that the country had voted by a margin of 52 percent to 48 percent to withdraw from the E.U., an emotional Prime Minister David Cameron appeared in front of 10 Downing Street on Friday and said he would step down after championing a failed campaign.

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Larry Summers warns of the next recession

Economics_circular_flow_cartoonI have never been a fan of Lawrence “Larry” Summers, Bill Clinton’s last Secretary of the Treasury. It was Larry Summers and his mentor and predecessor, Treasury Secretary Robert Rubin, and Fed Chairman Alan Greenspan who convinced Bill Clinton and congressional Democrats to go along with the financial deregulations proposed by Senator Phil Gramm (R-TX), e.g., the Gramm–Leach–Bliley Act (GLBA) aka the Financial Services Modernization Act of 1999 (which partially repealed the firewalls in the Glass-Steagall Act of 1933), and the Commodities Futures Modernization Act of 2000 (which prevented the Commodity Futures Trading Commission from regulating most over-the-counter derivative contracts, including credit default swaps).

Deregulation directly encouraged the casino capitalism of the banksters of Wall Street which nearly destroyed the financial markets and the world’s economy by September 2008.

Larry Summers tried to redeem himself by serving as the Director of the White House United States National Economic Council for President Barack Obama from January 2009 until November 2010, where he was a key economic policy adviser in the Obama administration’s response to the Bush Great Recession.

Larry Summers is now a columnist for the Washington Post‘s Wonkblog, and he has been warning against the Fed raising interest rates, No time for an interest rate hike and Larry Summers: Here’s yet another reason the Fed shouldn’t raise rates, and warning about the next recession on the horizon. Maybe Larry Summers has been chastened by his experiences and now sees the error of his ways, and maybe, just maybe, we should be listening to his warnings.

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