Chicken Smith View:
The events that have unfolded over the recent past are evidence that our current U.S. economy is faltering and is headed for a major depression.
The reports in the mainstream media of a weakening economy which were hard to find around this time last year, are ever more visible as of late than ever before. The general public is finally waking up to the debt and the financial crisis that is about to shake this country.
Signs of a Recession:
Bank Failures – Metropolitan Savings, with total assets of approximately $15.8 million at the end of the third quarter 2006, was closed by the Pennsylvania Department of Banking. “Worries about financial stability start to creep in” according to Prechter’s Market Perspective. The Mortgage Lender Implode-O-Meter reports 39 lenders (and counting) have now gone kaput
Foreclosures Rise – Late mortgage payments rose to a 31/2-year high in the final quarter of last year, and new foreclosures surged to a record as borrowers with tarnished credit histories had trouble keeping up with their monthly payments, the Mortgage Bankers Association reported on 3/13/07. Hold on to your assets. The deepest housing decline in 16 years is about to get worse. Reported Bloomberg.com on 3/12/07.
Inflation Up – The government said before trading started in New York that the February PPI rose 1.3%, more than double expectations. One reason was rising food costs, which showed the highest increase in three years. – Forbes.com, 3/15/07
Cost of Labor Up – The Labor Department reported that the cost of the labor needed to produce each unit of output soared by 6.6 percent, far higher than the 1.7 percent initial estimate and well above the 3.2 percent increase Wall Street was expecting. Reports the AP in a Boston Globe article on 3/7/07.
Manufacturing Orders Down – New orders for manufactured goods in January decreased $22.9 billion or 5.6 percent to $383.1 billion, the U.S. Census Bureau reported on 3/6/07.
Dollar Down – In recent years, the U.S. Dollar has dropped to record lows against the Euro. In addition, it has reached record lows against several other currencies as well. There’s doubts about how strong the U.S. economy is. Reports Bloomberg.com on 3/16/07
Overall Debt Up – The greatest economic threat today isn’t deflation in the housing market. A bigger worry is that a meltdown in the debt markets could force the global economy into a credit squeeze and recession. MSN Money 2/23/07. This is because there is compelling evidence that a recession is dead ahead. MSN Money 9/25/06.
Greenspan is Sounding the Alarm – If home prices keep falling, there could be more of an impact on the broader economy’s momentum, he indicated. Consumer spending fuels two-thirds of national economic activity. CNN Money.com 3/15/07.