Don’t Lose Sight of Today’s Economic Reality

BECKLEY —  I thought the following article was interesting.  Especially, given all the positive economic propaganda in the media prior to the start of our “holy” shopping season.  The title caught my attention – China, Russia Quit Dollar.   Putin says the following:

“About trade settlement, we have decided to use our own currencies.” 

While the title of the article is quite catching the content is a little lacking.  For one, there is no quote from China saying they are “quitting the dollar”.  In fact, it is only Putin who shares such statements.  However, where there is smoke often times there is fire.  I have no doubt that China has plans to reduce it’s hold in dollar denominated treasuries and currency in order to reduce inflation in it’s country.  It is inevitable as the U.S. monetize it’s debt China cannot sustain nor should it sustain a bailout of the U.S. consumer at the cost of the purchasing power of it’s own citizens.

Originally, when Ben Bernake had promised to congress and the American people to provide an adequate exit strategy with his original Quantitative Easing back in 2009 many people called him on his bluff.  Even Stephen Van Nuys and myself pointed out at the time the precarious economic situation in which Bernake was placing us.   What was Bernake’s real exit strategy for Quantitative Easing?  It was Quantitative Easing 2 (QE2) this time he was smarter then to lay out an exit strategy because now it’s just about printing money as we will most likely begin to see QE3, QE4, etc.

Meanwhile, unemployment is still sky high with only another 400,000+ losing jobs last month with continuing orders for durable goods (3.3% U.S. Made Durable Goods Decline) falling in conjunction with unemployment the economic news headed into the holiday’s is very dire indeed.  Even when one takes the governments “numbers” at face value.   However, this really isn’t much of a change from the past but these are numbers I continue to keep my eye on.  And so should you! Especially, in light of all the media propaganda out there today.

With CNBC, MSNBC, and Fox News respectively running articles, stories and news about “Flush with Profits Wall Street Starts to Spend Again“, “Holiday Cheer: Economy Shows Positive Signs“, and “Wall Street Cheers Bullish Economic Indicators” I encourage you not to buy into the propaganda. Wall Street reads the fall in NEW jobless claims as a positive indicator as it declined by around 10% and came in below  July 2008 as the best month in nearly 2 years.  However, I was also reading my subscription to CFO magazine and only .7% of CFO plan to hire in the next 12 months.  So, those that are still losing their jobs will probably continue to have a hard time FINDING jobs.  Don’t buy into the bullish news on TV and in the Mass Media.  They are the same goons that call the GM IPO a success.

As America heads to the stores on Friday I hope they’ve put into place plans for the deteriorating economic conditions of this country before spending the resources they will need to survive future economic turmoil.  If you have planned for the coming economic turmoil in this country enjoy your Thanksgiving and be thankful God granted you the foresight to prepare.  If you haven’t planned then enjoy your Thanksgiving in moderation saving your resources to plan for the lean years and be thankful for Gods grace in that the economic detioriation has been moderate thus far granting you opportunity for adjustment.

About The Freedom Thinker
I'm a Christian. I'm married and have four children. I'm a West Virginia mountaineer. I'm a leader in strategic thought in the local business community. I'm the Chief Financial Officer for a health care organization. I've worked in the service industry, financial industry, telecommunications industry, and as an international strategic consultant. I'm an avid reader, martial artist, and hardcore snowboarder.

2 Responses to Don’t Lose Sight of Today’s Economic Reality

  1. Pretty gloomy picture, FT. I’m losing my sense for where I think this economy is headed. So far, it is doing better than I would have thought about a year ago. So I’m somewhat optimistic that 2011 could show modest improvement. But the decline in Europe may be the next phase of a global financial freeze-up.

    As to the Russia/China article above, the title truly was more alarming than the content. However, if they settle transactions amongst themselves in their own currencies versus the dollar, that does mean lower demand for the dollar long-term, which will aide in the dollar’s overall decline….

  2. Yes, China tends to be much more veiled then does Russia. My thought is they probably did discuss what Putin claims, it is probably only a partial method for imbalance settlement, but surely it is part of China’s long-term. This coupled with the bad economic news, issues in Europe, and monitizing of debt make for a pretty interesting situation. Really, the dollar is only weakening marginally because of Europe’s issues. That will change before long.

    As for the economy it’s actually doing worse then I thought I had suspected that unemployement would have begun declining by now with inflation really setting in and American’s re-increasing their debt loads yet again. Also, the fall in durable goods is bothersome as well. With the government heating up economy with some pretty hardcore inflation taxes and wealth destruction they sure are getting pretty bad results. I had expected better short term response leading to massive long-term dollar, wealth, and economic vitality issues.

    As for losing my sense where things are headed I did that back in 2006 and 2007. From 2000 to about 2004 I was pretty pessimistic about the economy post-internet bubble burst I had kept my eye on U.S. debt expansion, consumer over extention, etc. but once I left the financial service sector I stopped looking at things on my own and started listening more to the media reports on CNBC, CNN, Fox, etc. and began taking them at their word. Bad mistake.

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