Baltic Dry Index. 1967 +25
LIR Gold Target by 2019: $3,000.
Looking at the components of GDP, it appears as though the economy is set to slow even further and a flattening in Q3 and perhaps even contraction by Q4, barring some positive exogenous shock, cannot be ruled out.
David Rosenberg. Gluskin Sheff.
Friday brought the latest US GDP figures, and with them the reality that all the previous figures released were much worse that previously stated. The gang that couldn’t shoot straight and never saw a recession coming, nor a bubble they didn’t like, still can’t shoot straight and are as helplessly out of touch as ever. Now after the inventory rebuilding phase is coming to an end, and most of the trillion dollar stimulation effect has passed what happens next is likely to be a serious double dip recession early next year. Perhaps even starting in Q4. What happens next at the Fed is likely to be a panicky return to quantitative easing. Stay long gold and silver, now comes the part where the Fed and US Treasury break the US currency as they desperately try to recreate inflation. Don’t worry, they won’t label it as such, and they’ll all keep pretending that they’re in charge and know what they are doing. Trust me, I’m a Princeton economics professor and Time Magazine’s man of the year. Sorry, “person” of the year.
Recession in U.S. Was Even Worse Than Estimated, Revisions Show
July 30 (Bloomberg) -- The worst U.S. recession since the 1930s was even deeper than previously estimated, reflecting bigger slumps in consumer spending and housing, according to revised figures.
The world’s largest economy shrank 4.1 percent from the fourth quarter of 2007 to the second quarter of 2009, compared with the 3.7 percent drop previously on the books, the Commerce Department said today in Washington. Household spending fell 1.2 percent in 2009, twice as much as previously projected and the biggest decline since 1942.
http://noir.bloomberg.com/apps/news?pid=20601087&sid=abbicFFNiHVM&pos=3
Double-dip feared as US economic growth loses pace
Fears that the world's biggest economy could be heading into a double-dip recession took hold on Friday after US growth was shown to have contracted sharply in the second quarter.
By James Quinn, US Business Editor Published: 8:55PM BST 30 Jul 2010
The US Commerce Department also revised downwards GDP figures all the way back to the beginning of 2007.
The second-quarter slowdown led economists to question whether the US might be poised to enter a period of negative growth later in the year, leading to a much-feared double-dip recession. The Dow Jones fell sharply after the release of the GDP data before recovering ground to settle down 40.72 at 10,426.44 in lunchtime trading.
"The post-recession rebound is history," said Bart van Ark, chief economist for the Conference Board, an economic think-tank.
Economists had predicted second-quarter growth of 2.5pc, but their disappointment was compounded by the revised data for the first three months of 2010.
Consumer spending – which accounts for two-thirds of US GDP and is seen as a lead indicator of economic recovery – slowed, rising by 1.6pc in the quarter, compared with 1.9pc in the prior three months. The savings rate rose to 6.2pc as consumers instead put money to one side.
The biggest factor in the slowdown was the US's widening trade deficit, following a 28.8pc surge in imports – the sharpest rise in 26 years – against a 10.3pc rise in exports.
It was the size of the downward revisions to previous years' growth which most concerned economists. In 2009 the economy was previously estimated to have declined by 2.4pc, but the figure was revised to a drop of 2.6pc. In 2008, the revision was from 0.4pc to no growth, while 2007's 2.1pc growth rate was revised to 1.9pc.
-----The disappointing growth numbers were compounded by the International Monetary Fund's (IMF) annual report on the US economy. The IMF said there may be a need for the Obama administration to increase the amount of fiscal stimulus in order to boost the recovery, warning the "outlook remains uncertain".
"Anytime you don't want anything, you get it."
Calvin Coolidge, 30th President of the United States.
Mr. Coolidge was all to correct, while America gets ready to lead Europe into a double dip recession, new boy China is out cruising for respect. As “Daddy Warbucks with ten zillion dollars” to Bernie Madoff like Uncle Sam, Beijing probably thinks it has a pretty good case, but all year long Washington seems to have a different agenda. The latest being last week’s slap at China in last week’s regional security conference in Hanoi. Below the People’s Daily ripostes back. Below that, China becomes the world’s second largest national economy, and ups the ante with news on the yuan the Washington Senators doesn’t want to hear. In a US election year, you can bet on Washington’s finest huffing and puffing and probably in the end blowing down Uncle Sam’s house of cards. A legend in their own minds, in the Senate in Washington DC, the clock is stopped at 1949.
Is US ready to recognize China as world power?
July 29, 2010
The U.S. government has repeatedly made it clear that it would welcome China’s entrance into the world arena as a power. However, a series of issues since the beginning of this year, particularly Washington's stance on the U.S.-South Korean joint military exercises and the South China Sea issue, have made the world think: Is the United States ready to recognize China as a power on the world stage?
It is easier said than done for the United States to adapt itself to China's development. Lip service is far from enough to boost the development of Sino-U.S. relations. If Washington cannot find a way to recognize and accept China's peaceful rise onto the world stage, bilateral ties will be like a roller coaster full of ups and downs. However, no one would like to see the negative effects rocky relations would bring to China, the United States and possibly to the world as a whole.
U.S. Secretary of State Hillary Clinton has urged China to play a greater role in solving the world's economic, environmental and political problems. She said global issues could not be solved by the United States or China alone, but without participation of the two countries, no problems would likely be solved. Washington has realized that the United States’ global interest can be maintained only through changing the way it deals with China.
The Obama administration released positive signals in its relations with China, which have been interpreted as the United States showing its intention to change the traditional strategy of engagement and containment. As a matter of fact, the general direction of Sino-U.S. relations provides a foundation on which the United States can base its foreign policies and is more complicated than an adjustment in real conditions. Issues such as arms sales to Taiwan, Google censorship, RMB exchange rates as well as finger-pointing about economic responsibility show Washington still seems confused and inpatient about relations with China.
The relationship between China and the United States is the most important and complicated bilateral relationship in the world this century. The development of Sino-U.S. relations will affect world peace and stability, especially in the Asia-Pacific region. Ian Bremmer, an American political scientist specializing in U.S. foreign policy, said, "America and China will have more than ever to gain from closer political and commercial ties, and must take steps to avoid a Cold War, or worse."
In that circumstance, the United States needs both wisdom and determination to recognize and accept China, a country that is totally different from its own, as a power on the world stage.
Author: Zhong Sheng People’s Daily, July 29, 2010 Translator: Zhang Xinyi
http://english.peopledaily.com.cn/90001/90780/91343/7085804.html
China Becomes Second Biggest World Economy
Published: Friday, 30 Jul 2010 | 6:03 AM ET
China has overtaken Japan to become the world's second-largest economy, the fruit of three decades of rapid growth that has lifted hundreds of millions of people out of poverty.
Depending on how fast its exchange rate rises, China is on course to overtake the United States and vault into the No.1 spot sometime around 2025, according to projections by the World Bank, Goldman Sachs and others.
China came close to surpassing Japan in 2009 and the disclosure by a senior official that it had now done so comes as no surprise. Indeed, Yi Gang, China's chief currency regulator, mentioned the milestone in passing in remarks published on Friday.
"China, in fact, is now already the world's second-largest economy," he said in an interview with China Reform magazine posted on the website of his agency, the State Administration of Foreign Exchange.
Cruising past Japan might give China bragging rights, but its per-capita income of about $3,800 a year is a fraction of Japan's or America's.
"China is still a developing country, and we should be wise enough to know ourselves," Yi said, when asked whether the time was ripe for the yuan to become an international currency.
Can It Be Sustained?
China's economy expanded 11.1 percent in the first half of 2010, from a year earlier, and is likely to log growth of more than 9 percent for the whole year, according to Yi.
China has averaged more than 9.5 percent growth annually since it embarked on market reforms in 1978. But that pace was bound to slow over time as a matter of arithmetic, Yi said.
-----If China can keep up a clip of 5-6 percent a year in the 2020s, it will have maintained rapid growth for 50 years, which Yi said would be unprecedented in human history.
The uninterrupted economic ascent, which saw China overtake Britain and France in 2005 and then Germany in 2007, is gradually translating into clout on the world stage.
China is a leading member of the Group of 20 rich and emerging nations, which since the 2008 financial crisis has become the world's premier economic policy-setting forum.
-----In the same vein, China was in no rush to turn the yuan into a global currency.
"We must be modest and we still have to keep a low profile. If other people choose the yuan as a reserve currency, we won't stop that as it is the demand of the market. However, we will not push hard to promote it," he added.
No Big Rise in Yuan
China has been encouraging the use of the yuan beyond its borders, allowing more trade to be settled in renminbi and taking a series of measures to establish Hong Kong as an offshore center where the currency can circulate freely.
But Yi said: "Don't think that since people are talking about it, the yuan is close to becoming a reserve currency
http://www.cnbc.com/id/38482538
Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.
Dr. Ben Bernanke.
Have a great weekend everyone.
GI.
