90 seconds at 9 am: US retail sales weak, worse than expected; IMF downgrades global economy and warns; China worried; NZ$1=79.8 US cents

Here's my summary on on the key news overnight in 90 seconds at 9 am, including news the US economy is spluttering along.

Overnight we had American retail sales results and they weren't good. They fell 0.5 percent in June, the first time they have fallen for three consecutive months since 2008, and another report found rising business inventories. This was worse than expectations, will raise fears that the US economy is failing to grow, and will fuel expectations of another round of quantitative easing by the Fed.

The IMF has downgraded its world economic outlook and called on policy makers for stronger action to combat risks to the weak recovery. It's downgrade wasn't major, but it warned that the outlook could dim further if policymakers in Europe do not effectively address their debt crisis and cited rising concern about the "fiscal cliff" battle in Washington.

In Spain, their 10 year government bonds reached an entirely unsustainable yield of 6.81%. In contrast, bond yields in the US are at record lows.

China’s Premier Wen Jiabao warned that his nation’s recovery is yet to build any momentum, and this warning is fueling speculation that extra economic support measures may be announced after a cabinet meeting this week.

Oil is up to US$88 / barrel, the Dow is unchanged in late trade, and the NZ$ starts the day at 79.8 US cents, up slightly, 78 AU cents, unchanged, and the TWI is also unchanged at 72.4. Later this morning, Q2 inflation rate will be released. We are not expecting any surprises. 

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The IMF are suggesting a global growth rate of circa 4%, yes?
Doubling everything we do on the planet, in 17-18 years?
Tui Ad.  Good idea not to be holding the negative pigs.

Growth-its happening everywhere

Census 2011: population surges by 3.7 million in a decade

The population of England and Wales has undergone its biggest surge since records began after a decade of mass immigration and a baby boom, according to the 2011 census.
The top employs the bottom to supply the top with everything wholesale...the top then marks up everything and sells it to the bottom retail.

The difference between the wholesale cost and the retail price is the yield or "I want to be rich tax" the top lives off of.

The problem with the USA is that it produces less than it consumes....

Increasing the demand or tax for more from the producers...is not going to solve the problem.

I'm sorry but rich people or net consumers of yield don't work for a living...They just think they do...

It's the net producers of yield or the poor which supply all that the rich consume in order to sustain their glory.

Increasing the amount that net consumers or the rich demand from the net producers or poor is not going to solve the problem with the USA.

In 2008 when the producers of yield reached their maximum potential to supply the demand of the consumers of yield...the USA began to collapse.

The rich are the riders of the horse which is poor.

They whip the horse and tax it in order to get the horse to gallop as fast as possible to the bright glorious future.

but eventually the poor or producers become exhausted...slow then stop.

the rich then whip...or tax the poor to death.

the supply of the taxes...The productive people of the USA and the world have been taxed to death by the consumers in order to sustain the delusional lifestyles of the wannbe rich and famous.

Raise the taxes all you want...I'll just whip the slaves some more.

The poor are the power plant and the rich are the light bulb.

Tax the light bulb and the power plant has to work harder to keep the hypocrisy shining bright.


World economy heads for another perfect storm

The International Monetary Fund’s latest “World Economic Outlook” makes for chilling reading. A perfect storm in which all parts of the world economy go down together seems fast to be gestating somewhere out in the mid-Atlantic.
Still, the message was quite bad enough, coming the very day the Government chose to relaunch its growth strategy with a welcome but, in the scale of things, insignificant programme of rail electrification. The way things are going, the UK economy may soon need rather more urgent defibrillation than that.

Today 09:01 PM


Probably the greatest challenge of our time is for the politico-economic Establishment to understand that we’ve now almost certainly reached the end of economic growth as we’ve come to know and love it this past 150 – 200 years, ie throughout the industrial/post-industrial age.
This is such a shocking proposition for most people that it is generally unthinkable.  That we might have reached the end of industrial age rates of economic growth is either never suggested, still less explained in the mainstream media; or, if somebody like me raises the subject then we’re immediately classified as naive crackpots who should just keep taking the tablets.  Economic growth is a God-given right, of course.  It’s just economics, innit?  People like Tim Worstall at the Adam Smith Institute, for example, tell us that “infinite growth on a finite planet [is] easy peasy!”
Incidentally, without sustained industrial age rates of economic growth it’s fair to say that, given our current economic circumstances (we’re mired in unprecedented levels of debt, in case you hadn’t noticed), we’re stuffed.  Servicing the world’s debts, let alone repaying them becomes difficult nay impossible without the sort of economic growth we’ve experienced for the past 40 – 50 years.  Consequently, re-establishing trend economic growth at rates of, say, 3% - 5% per annum has become the sina qua non – the essential condition of global economic policy makers.  Right now, politicians and their collaborators in the debt markets are making an enormous collective bet that the future economy will be exponentially larger than the present.  In other words, economic growth to debt-ridden developed economies is as heroin to the addict. Small wonder then that there is often an air of panic in politicians’ calls (screams) for a return to economic growth.  After all, it’s politicians who have as good as bankrupted the developed world with their addiction to debt-fuelled state spending and the votes that such spending buys. Politicians simply don’t do economic contraction: there are no votes in it.
So, how on earth could we possibly have reached the end of economic growth? After all, we see countless news reports either demanding that economic growth be restored (usually demanded by politicians and journalists), or telling us to hang on a little longer and economic growth will be restored presently
(usually according to economists), or – if you’re Ambrose Evans-Pritchard – you advocate the ‘nuclear force’ of printing more money than you can add noughts on the end with the express intention of restoring growth to an explicitly declared 5% per annum, and Bob’s your uncle.  Printing money = the surefire route to restoring economic growth.
On the other hand, some people would say that economic growth if/when it comes at all, comes not from human beings printing money, but from human beings doing productive work and exchanging goods and services for profit. Furthermore, energy is a precondition for doing work.  And let’s get down to brass tacks here: cheap oil is the source of energy that allowed us to spend the past 40 – 50 years on an unprecedented, unsustainable, debt-fuelled, globalised consumer boom that has brought us to the verge of bankruptcy and global financial collapse.
It is absolutely no coincidence that in 2000 Colin Campbell (a petroleum geologist) forecast that around the year 2010, stagnant or declining supplies of oil would lead to soaring and more volatile oil prices which would precipitate a global economic crash.  This rapid contraction would in turn lead to sharply curtailed energy demand, so oil prices would then fall; but as soon as the economy regained strength, demand for oil would recover, prices would again soar, and consequently the economy would relapse.  This cycle would continue, with each recovery phase being shorter and weaker, and each crash deeper and harder, until the economy was in ruins. Financial systems based on the assumption of continued growth would implode, causing more social havoc than the oil prices themselves directly generate.
Sound familiar?



Stockman: We're Heading Toward Recession, Paralysis