The situation there is grim, and the financial and social systems there are buckling:
The worst nightmares of [...] Euroskeptics have been exceeded. The United States carried the luxury-goods industries of France and Italy and the engineered-products industries of Germany on its back for decades, but it will not and cannot do it anymore. Decline is reversible; more complicated is a death wish as thoroughly installed in the attitudes and practices of whole peoples as that of most of Europe.
If Europe cannot spark a demographic renewal, with a work force comprising fully half the people, flexible labor markets, tax rates that encourage savings and investment, an end to stealthily galloping inflation, and a reactivation of the economic and military muscle that alone confer credibility, it will quietly perish.
These are the results of cradle-to-grave statism, and Euro-socialist economic policies. There is no reason why this cannot happen here in the United States, in fact it probably already is happening. The laws of economics and common sense apply in our country as well as in Europe.
In total agreement with Jennifer Rubin here:
The chasm between the president’s agenda (and leadership skills) and the problems we face seems to widen with each passing day. The problem is not the Martha’s Vineyard vacation but the two and a half years that preceded it. The policy initiatives and the president himself seem too small for the challenges we face. He resorts to political stunts to fill the time and directs blame to Congress, the Republicans or whatever else he can think of.
People who complain about the vacation are missing the point. I hear a lot of conservatives complaining about this vacation, as the economy seems to deteriorate with each passing day, and world markets continue to melt, and that the President should be….um, well…I’m not exactly sure what they think he should be doing. Sure the optics look bad, and I honestly don’t think the President really cares. And, as the last four years have shown us, anything the Democrats propose to “help” the economy, is bound to be a disaster.
But more importantly, as Rubin notes, when he does come back from vacation, then what? Democrats, as always, appears to be out of bullets and have nothing to contribute.
[Hat Tip: Instapundit]
Goldman Sachs Group Inc., the bank with the highest equities-trading revenue, said its rivals are too enthusiastic about second-quarter earnings prospects for Standard & Poor’s 500 Index companies.
Operating profit will total $23.75 a share for the period, or 2.3 percent less than the average Wall Street estimate, said David Kostin, an equity strategist at New York-based Goldman Sachs. He said 2011 and 2012 earnings-per-share forecasts will be reduced by 2 percent and 8 percent, respectively.
U.S. corporations are set to report the slowest earnings gain since the recession ended as companies from Ford Motor Co. to McDonald’s Corp. struggled with rising oil and commodity prices and a slowdown in consumer confidence that may continue to hamper spending this year.
There was nothing good in June’s job report released this morning. The unemployment rate inched up to 9.2% and the economy added about 18,000 jobs for the month. And what’s that odor in the air?
It’s the foul stench of recession:
The U.S. economy generated just 43,000 jobs in the last two months, perhaps taking the world’s largest economy skating closer to recession territory.
It was difficult to find a bright spot in the U.S. Labor Department report. Many key labor market signals deteriorated, and the jobless rate rose unexpectedly to 9.2 percent even though the work force actually shrank.
Shaun Osborne, senior currency strategist at TD Securities, summed it up: “The number stinks.” Watch for forecast revisions to second half U.S. gross domestic product.
The Obama administration has run out of silver bullets, as the Democrats perverse experiment with Keynesian economics has failed miserably.
So what to do? The experts are leaving the door open for the Fed to fire up the printing presses again:
[The Labor Department's report] could raise questions about whether the Fed should take additional actions to support growth.
Yes. Because it’s worked so well with QE1 and QE2.
Politically, the Obama
campaign administration has got to be in full panic mode now. Time is of the essence, but even over a year away from the election, the economy will have to show some strong monthly employment gains to bring that rate down. Some broad tax cutting would be in order to accomplish that, along with some bold moves to cut spending. But I wouldn’t bet on that coming from this White House.
Speaking of panic, the President is holding a press conference to speak about this morning’s employment report at 10:30 this morning.
Moody’s Investors Service on Tuesday became the first rating agency to cut Portugal below investment grade, causing the 10-year Portuguese government bond yield to leap more than 1 percentage point to euro-era highs.
The agency cited worries that administrative problems and slow economic growth might prevent the Portuguese government from hitting ambitious targets to shrink its budget deficit over the next three years under a 78 billion euro international bailout.
But Moody’s also said efforts by the European Union to have private investors bear part of the burden of supporting Greece, through a “voluntary” rollover of maturing Greek debt, threatened investor confidence in Portugal as well.
If investors believe the EU may follow the Greek model and pressure them into bearing part of the cost of future aid to Portugal, they may become less willing to lend to Lisbon, reducing the chance that it can resume borrowing from markets in 2013 as planned, Moody’s said.
Saner heads in Europe are sounding the alarm:
Government bureaucrats in centralized Euro-capitals, picking winners and losers in a so-called free market never works.
No end in sight for the decline in the housing market:
The S&P/Case-Shiller index of property values in 20 cities fell 4 percent from April 2010, the biggest drop since November 2009, the group said today in New York. From March to April, prices fell 0.1 percent on a seasonally adjusted basis, the smallest decline since July 2010.
A backlog of foreclosures and falling sales raise the risk that prices will decline further, discouraging builders from taking on new projects. The drop in property values and a jobless rate hovering around 9 percent are holding back consumer sentiment and spending, which accounts for 70 percent of the economy.
“There’s no sign of any real recovery in housing yet,” Jim O’Sullivan, chief economist at MF Global Inc. in New York, said before the report. “There won’t be a significant turn until the labor market shows sustained improvement. The level of foreclosures is still high and a lot of people are delinquent on their mortgages.”
Anyone needing to sell their home right now is in a world of hurt.
The Federal Reserve hoped that its three-year-old economic rescue campaign would reach a climax at the end of June. It hoped that consumers and businesses by now would be spending more and more, and the central bank could start doing less and less.
That peak now looks like a long plateau. The Fed still is expected to announce Wednesday that it will halt the expansion of its aid programs at the end of June, as scheduled, when it completes the purchase of $600 billion in Treasury securities. But growth is sputtering, and economists now expect that the Fed will leave its $2 trillion of bandages, props and crutches untouched until next year.
The pace of economic expansion has repeatedly fallen short of the Fed’s predictions, and the central bank is expected to lower its eyes once again when its releases a new forecast after a two-day meeting of its policy board, the Federal Open Market Committee.
[A] number of studies have concluded that the Fed’s efforts have had only a modest impact on the economy. Stock prices have climbed. Corporations have rarely been able to borrow money more cheaply. Mortgage loans have seldom been available at such low interest rates. But companies are hiring few new workers, and people are buying few new homes. Almost 25 million Americans cannot find full-time work, a number that is rising again after declining modestly over the last year.
Thanks to the geniuses at the Federal Reserve, the US dollar has the utility value of toilet paper, and our economy is just as bad, maybe even worse, than it was when it first started creating dollars out of thin air. QE1 and QE2 are failures and the Fed wants to double down on some more.