Economic Forecast for US Economy for 2009 and Beyond.

S

SouthAmerica

.
January 1, 2009

SouthAmerica: My crystal ball is very foggy these days, and I would be lying to you if I told you that I understand how the new economic system adopted by the United States in 2008 works.

It is very hard to make any intelligent predictions when today we have a new economic system adopted here in the United States based on stock market manipulations, massive U.S. government intervention and nationalization of major sectors of the US economy, and we have a U.S. government acting as if it’s in complete PANIC because the entire US economic system is spinning completely out of control in a downward spiral and as a result the US government is resorting to print money as fast as they can in a major last effort to avoid the First Great Depression of the 21st Century.

It is scary to see the US government today following the Zimbabwe economic model of last resort before a total economic chaos and collapse - print money as fast as you can….

Anyway there are few trends that you can bet it will continue in 2009 and 2010.

1) Real Estate prices will continue to decline at least another 20 or 30 percent or even more in the next 2 years.

2) The US dollar should be declining at a much faster pace right now, and at one point we should reach the meltdown point for the US dollar – but it’s very hard to predict when people from around the world are going to take a good look at the US dollar using common sense – most central bankers and people in general from around the world still under the illusion that the US dollar is the only sound currency in time of massive global economic and financial crisis.

But today if we were using good common sense then we would realize that we can compare the US dollar with the “Titanic” – this great ship, powerful, impressive, unsinkable, and that a lot of wealthy and influential people wanted to be aboard it.

What is interesting and ironic is that today the new “Titanic” already hit the iceberg and the magnificent ship is sinking fast and the central bankers and money masters still are thinking that this ship is safe and sound and they still investing and are placing their bets on the future of this ship.

The Fed run out of bullets and the Fed funds rate is away below the current rate of inflation in the USA. And the Fed balance sheet has been turned into a massive toxic financial wasteland.

I wonder if many of these central bankers and money masters understand what is happening to the “intrinsic value of the US dollar” and what a policy of printing money as fast you can and running massive deficits year after year can do to the value of the currency. Only one world can describe the end result of this fiasco – MELTDOWN – a massive US dollar meltdown, and the total collapse of the current international monetary system based on the US dollar.


3) Stock Market Averages

I would not be surprised to find out in the future that the US government is trying to manipulate the stock market here in the USA today. (Possibly even with the help of a few major market players.)

The current US stock market averages (Dow, S&P and Nasdaq) reflect manipulated information, and is being kept up by artificial means.

These averages should be down at least another 20 or 30 percent if the Hedge funds start letting people redeem their investments, and if people start trading based on the reality of coming company earnings and a fast declining US economy with fast increasing unemployment, and new levels of financial crisis as many companies file for bankruptcy, and new financial scandals come to the publics' attention.

The averages closed for the year of 2008 at:

Dow = 8,776.39

S&P 500 = 903.25

Nasdaq = 1,577.03


The new Obama administration can’t produce economic miracles overnight, and during the next 2 years at any point the averages should reach a new low along these ranges:

Dow = 7,000 to 6,000

S&P 500 = 750 to 650

Nasdaq = 1,250 to 1,100


In a Nutshell: As the Obama administration replaces the worst government the United States had since 1776 (the Bush administration 2001 to 2008) – this new administration is going find out very fast that they have inherited the Perfect Storm as the U.S. economic and financial system descends step by step into the New First Great Depression of the 21st Century..

New First Great Depression of the 21st Century – Made in the USA.

.
 
The US Government is the problem really. Obama's ideas are certain to exacerbate the real problems. Obama is talking about "expanding the economy" by creating public sector jobs... those only expand the government and they depend on taxes so in reality Obama is planning to shrink the economy. George Bush and most of the states did the same thing during the Bush administration btw. Obama is really planning on buying votes for his socialist party by stealing money from successful people and giving it to losers, but losers with a vote...

The thing about world currencies is that none of them have any intrinsic value that I'm aware of. The US can use it's military to defend the value of it's currency, the rest of the world pretty muchly does not have that option so maybe the US will fare a little better in the upcoming world collapse than the rest of the world.

The dry shipping index does not indicate a world wide slowing of economic activity since mid '08, it makes it very clear that economic activity actually came to a halt due to the credit freeze which has not thawed much at all yet. The bailout money was misapplied, it should have been used to make the toxic paper visible so the worst institutions could fail and the smarter ones could go back to lending. The money was distributed to insider banks probably. I think we saw proof that the Democrats are terrified of the banksters and threw the better part of a trillion dollars to them but they balked at giving a tiny fraction of that to GM. GM is a productive corporate member of society and they were made to grovel. I think that says a lot about the future of the USA.

Here is a link to the shipping index, note that it dropped by about 99.5%.

http://www.dryships.com/pages/report.asp

Good luck everybody!!
 
Well, SA, I agree with 2 out of 3 points you have written, and your conclusion about predictions.

#2 however, I do not agree with. While it may happen, and lord help us if it does, I would not be surprised to see another round of dollar strengthening. The only reason the USD is so low at this time is due to the absolute collapse in the US yield curve.

Hmm. Me and SA agreeing. World must be coming to an end.
 
Quote from drsteph:

Well, SA, I agree with 2 out of 3 points you have written, and your conclusion about predictions.

#2 however, I do not agree with. While it may happen, and lord help us if it does, I would not be surprised to see another round of dollar strengthening. The only reason the USD is so low at this time is due to the absolute collapse in the US yield curve.

Hmm. Me and SA agreeing. World must be coming to an end.
More...

And with the fear of deflation, that will only help to strengthen the dollar.

Also, the world markets are very much correlated with the US market. You don't take the biggest consumer out of the picture and not affect the entire world. The reason that the dollar is considered a safe haven is because:

Number 1:
Many world governments are up to their eyeballs in debt. Much worse than America even.

Number 2:
Many world governments (especially Europe) are heavily invested in emerging markets. The US actually has relatively little exposure to the emerging markets

Number 3:
The US pretty much has a trade deficit with everybody. With purchasing power parity being destroyed for all these countries around the world, and with the US being a net importing country, why would foreign currencies strengthen against the dollar? And especially with the emerging markets. Those markets are so darn dependent on the US consuming, that this pretty much guarantees a tough ride for them. Hence back to point number 2.
 
.
Fractals ‘R Us: The thing about world currencies is that none of them have any intrinsic value that I'm aware of. The US can use it's military to defend the value of it's currency, the rest of the world pretty much does not have that option so maybe the US will fare a little better in the upcoming world collapse than the rest of the world.


*****


January 8, 2009

SouthAmerica: Then they are traded against each other based on what?

About the military you are completely confused about what happens in the actual world. If what you said was possible then the British Empire and the Pound Sterling still would be important today in global affairs. The Soviet Union also could not use its vast military power to keep its economy from imploding and the Ruble meltdown.

Massive military expenditures year after year for a long period of time has put many empires out of business such as the British Empire, the Soviet Empire, and now the United States Empire is crashing down.


*****


Drsteph: Well, SA, I agree with 2 out of 3 points you have written, and your conclusion about predictions.

…#2 however, I do not agree with. While it may happen, and lord help us if it does, I would not be surprised to see another round of dollar strengthening.


*****


SouthAmerica: Happy New Year. The last few days I had a nasty flu, but finally I am getting better – what a way to start the new year.

The US economic system has been imploding by the day for many months; and most people here in the US and abroad don’t understand how it works the new US economic system adopted by the United States in 2008.

The only predictions that we can make are the obvious ones about the declining real estate prices, a declining stock market (after the suckers who are making the stock market to go up catch up with the reality of the economic implosion that is under way), and eventually an US dollar currency meltdown.

I wonder how much money invested in emerging markets the US hedge funds, mutual funds, banks, insurance companies and so on still have for them to sell and bring the money back to the USA to cover redemptions from their investors or margin calls.

After this final wave of selling and repatriation of these US dollars related to these investments the US dollar should continue its downward trend as a result of massive budget deficits in the United States. There is no two ways about it – massive mismanagement of the US economy will finally catch up with reality – and the US dollar has to decline in world markets in a sudden meltdown creating the biggest international monetary crisis the world has ever seen.

The year 2008 is the turning point for the global monetary system – the end of an international monetary system based on the US dollar – and during 2009 and 2010 the new global monetary order has to figure out how the new international monetary system for the 21st century is supposed to work.


*****


The United Nations Monetary and Financial Conference, commonly known as Bretton Woods conference, was a gathering of 730 delegates from all 44 Allied nations at the Mount Washington Hotel, situated in Bretton Woods, New Hampshire to regulate the international monetary and financial order after the conclusion of World War II.

The conference was held from 1 July to 22 July 1944, when the agreements were signed to set up the International Bank for Reconstruction and Development (IBRD), the General Agreement on Tariffs and Trade (GATT), and the International Monetary Fund (IMF).

As a result of the conference, the Bretton Woods system of exchange rate management was set up, which remained in place until the early 1970s.


*****


During 2008 because of the collapse of the international financial system many people started to talk about Bretton Woods II conference to try to come out with some quick fix and place a few band aids in the current system.

But after the world wake up instead of having a Bretton Woods II conference to try to come out with some quick fix for the current system they probably will have the new conference in China: in Beijing, or in Shanghai.

China will play a major role on the design of the new international monetary system for the 21st Century.


*******


Tradestrong: The US pretty much has a trade deficit with everybody. With purchasing power parity being destroyed for all these countries around the world, and with the US being a net importing country, why would foreign currencies strengthen against the dollar? And especially with the emerging markets. Those markets are so darn dependent on the US consuming, that this pretty much guarantees a tough ride for them. Hence back to point number 2


********


SouthAmerica: In 2008 Americans pulled out of Brazil billions of US dollars that they had invested in Brazilian companies – not because these were bad investments but because these US hedge funds, mutual funds, banks, insurance companies they all needed to raise cash as fast as they could for one reason or another.

That is good in a way – that is just another step in the disconnection of the Brazilian economy from the United States.

Today more than ever what happened in the last 7 months shows how vulnerable the Brazilian economy is because of the Real – now it is becoming imperative that Brazil adopts the New Asian currency ASAP – unless the Brazilian people want to continue to be jerked around and look like a bunch of fools.

The future of the Brazilian economy is connected with China and not the United States.
.
 
Quote from southamerica:


SouthAmerica: In 2008 Americans pulled out of Brazil billions of US dollars that they had invested in Brazilian companies – not because these were bad investments but because these US hedge funds, mutual funds, banks, insurance companies they all needed to raise cash as fast as they could for one reason or another.

That is good in a way – that is just another step in the disconnection of the Brazilian economy from the United States.

Today more than ever what happened in the last 7 months shows how vulnerable the Brazilian economy is because of the Real – now it is becoming imperative that Brazil adopts the New Asian currency ASAP – unless the Brazilian people want to continue to be jerked around and look like a bunch of fools.

The future of the Brazilian economy is connected with China and not the United States.
. [/B]
More...

And the Brazilian economy will connect with China's economy and suffer the same unfair trade practices America has exeperienced with China which will hurt Brazil more than help them. When the trade deficit with China starts developing because of all the cheap imports going into Brazil, a protectionism war will develop. And when the protectionism war develops, prices will go through the roof for both countries and the relationship will sour.

What's that old saying? The grass is always greener on the other side of the fence.
 
.

Tradestrong: And the Brazilian economy will connect with China's economy and suffer the same unfair trade practices America has experienced with China which will hurt Brazil more than help them. When the trade deficit with China starts developing because of all the cheap imports going into Brazil, a protectionism war will develop. And when the protectionism war develops, prices will go through the roof for both countries and the relationship will sour.

What's that old saying? The grass is always greener on the other side of the fence.


*****


January 9, 2009

SouthAmerica: If you read some of my articles about Brazil and China then you will understand what I am talking about.

In this very difficult global credit environment I was not surprised when 2 weeks ago the Government of China lent US$ 10 billion dollars to Petrobras even though a barrel of oil has declined from US$ 147 per barrel 6 months ago to the current price around US$ 47 per barrel. (Petrobras is a company controlled by the Brazilian government.)

You can see a list of these articles at:

http://brazzilnews.blogspot.com/

.
 
.

Tradestrong: And the Brazilian economy will connect with China's economy and suffer the same unfair trade practices America has experienced with China which will hurt Brazil more than help them. When the trade deficit with China starts developing because of all the cheap imports going into Brazil, a protectionism war will develop. And when the protectionism war develops, prices will go through the roof for both countries and the relationship will sour.

What's that old saying? The grass is always greener on the other side of the fence.


*****


January 9, 2009

SouthAmerica: If you read some of my articles about Brazil and China then you will understand what I am talking about.

In this very difficult global credit environment I was not surprised when 3 weeks ago the Government of China pledged to lend US$ 10 billion dollars to Petrobras even though a barrel of oil has declined from US$ 147 per barrel about 6 months ago to the current price around US$ 42 per barrel. (Petrobras is a company controlled by the Brazilian government.)

You can see a list of these articles at:

http://brazzilnews.blogspot.com/


*****


Asian Times - Dec 19, 2008
... China has pledged $10 billion in loans to Brazil's oil giant Petrobras to develop the Western hemisphere's largest oil discovery since 1976. ...


*****


Bloomberg News – December 9, 2008
“Petrobras Is in Talks With Chinese Bank on Financing”
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ajcqgHZ2X2t4

.
 
You must log in or register to reply here.
Back
Top