New signs of global slowdown darken analyst's economic outlook
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Bill Bonner Guest blogger
Monday was Memorial Day. We said a prayer for all the brave men and women who died in war鈥fter all, we have a heart!
But the brain never quite gets in sync. When it looks at what those soldiers were doing, it wishes they had never left home. America鈥檚 wars were almost all 鈥榳ars of choice,鈥� says a friend. 鈥淭hey were fought to expand the power of the empire. The Mexican-American war was a bald-faced grab for Mexican land. The 鈥楥ivil War鈥� was a battle to bring the South into submission. The US took Puerto Rico and the Philippines in the Spanish American war. President Wilson took the US into WWI simply to throw our weight around in Europe; we had no dog in that fight. He botched up the peace so badly that the Europeans went to war again 20 years later to sort it out. That was a war 鈥� WWII in Europe 鈥� that the US didn鈥檛 have to get involved in either.
鈥淎nd then there was Korea, Vietnam, Iraq, Afghanistan鈥nd hundreds of sleazy assassinations, tawdry meddles and rank ops. They all increased the reach and power of the military-led empire鈥ut the price was paid by the Old Republic, which is now almost extinct.鈥�
Mr. Obama can start a war with whomever he pleases鈥o vote of the people鈥檚 elected representatives needed (as if that would make any difference).
Frankly, we never much cared for the empire. We liked the Old Republic, as it was meant to be. So, we didn鈥檛 festoon our house with red, white and blue, celebrating the success of the US empire, this Memorial Day. Instead, we hung black crepe鈥nd mourned the loss of America.
And what鈥檚 this鈥�? A headline that caught our eye:
100 Million Americans Without Jobs鈥�
Business Insider reports:
The national unemployment rate gets lots of attention, and lately more attention has been paid to the workforce participation rate since more Americans have given up looking for a job, but we can also see that an astounding 100 million Americans don鈥檛 have jobs鈥� According to the April jobs report, the number of jobless American stood at 100.9 million.
Let鈥檚 see鈥hat鈥檚 about one in three Americans actually working. And how many of them have productive jobs? It depends on what you mean.
Do you mean jobs that actually increase the supply of goods and services that make up our real wealth? If so, you have to take out all the people who are doing zombie jobs鈥�
You may be thinking of people working for the government鈥aper pushers whose contribution to national prosperity is marginal, or even negative. What about all the TSA agents who are feeling up nuns and radiating grandmothers? And what about people who work for the zombie industries 鈥� like 鈥淕overnment Motors鈥濃�unded by the feds鈥r Solyndra, which got a $535 million loan, guaranteed by the feds鈥r the Bank of America, kept in business by Fed bailouts鈥r any one of dozens of companies whose revenues come almost entirely from the feds? Do any of them add to the nation鈥檚 wealth? Net? Probably not.
So, out of a population of 311,000,000 how many are carrying the load?
Maybe 50 million. One in 6. The rest are zombies. Or retired. In school. Disabled. Or just goofing off.
Land of the free? RIP.
Darn! Day after day, the Dow is headed down.
Finally, on Thursday of last week, stocks caught a break. The end of a long losing streak. But then鈥n Friday鈥own again, with a 74 point loss for the Dow.
Gold lost money too. Oil closed right on the $90 mark.
What鈥檚 going on? The Wall Street Journal reports:
New signs of a global slowdown are darkening the economic outlook.
On Thursday, the US reported that businesses were slowing their orders of computers, aircraft, machinery and other long-lasting goods. Measures of business sentiment in Europe slipped, and reports from purchasing managers at manufacturers around the globe turned down. Among them, China, the world鈥檚 second-largest economy, registered its seventh straight drop in an important manufacturing index.
A slew of data this week suggests that the global economy is slowing down.
With the latest reports, a new economic threat is emerging: That activity is slowing in sync around the globe and not just in a few markets with their own isolated problems. Europe, struggling with the risk of a Greek pullout from the euro area and broader fiscal problems, is the epicenter of global economic concerns right now. But reports of economic trouble are turning up in China, India, South Africa, Brazil and elsewhere.
When the global economy is performing well, synchronized growth reinforces itself and spreads prosperity wide and far. But slowdowns can become interconnected and self-reinforcing, and the global economy has been plagued by them since the financial crisis of 2008.
A synchronized worldwide slowdown? Bummer!
But hey, dear reader, would you reach out and pat us on the back?
In 1999, we said the tech bubble was going to pop. We made fun of the techies.
And guess what? We were right. Tech blew up鈥nd never came back.
Okay鈥kay鈥e were wrong about some things. We called Amazon the 鈥淩iver of No Returns.鈥� Well鈥mazon has done quite well. But where鈥檚 Global Crossing? And Pets.com? Boo.com? GeoCities? All dead and gone.
We urged dear readers to buy gold, not stocks. If they had done that they would be way ahead. Stocks went nowhere for the next 10 years. Gold went up 5 times.
Dear readers who got all golded up would have dodged the housing bubble, too. Sell your expensive house, we urged dear readers in 2005 and 2006鈥nd rent! That turned out to be good advice, as the bubble blew up in 2007 and has been in tatters ever since.
When the recession of 鈥�09 hit, economists and pundits wondered what shape the recovery would be. V? or W? We said it would be an L. Down鈥hen dragging across the floor for a very long time.
A real recovery was 鈥渋mpossible,鈥� we said, choosing our words recklessly鈥ut correctly. It was impossible for a debt-soaked economy to recover until the debt had been squeezed out, we said.
Well, here we are, 5 years after the crisis hit, and we鈥檙e still at the bottom of the L. Debt is still being wrung out of the private sector鈥hile the feds pour it on the public sector as fast as they can.
Right again! The economy bumps along the bottom鈥ith persistent high unemployment, record low bond yields, and 鈥済rowth鈥� that is more a product of government gas than real, honest GDP building.
So, what are we going to be wrong about?
Here鈥檚 our hunch: that the bottom of this L stretches out for a long, long time. Maybe 10 more years. Maybe 20. Maybe 100.
We鈥檝e got a whole theory to back this up. But since we鈥檙e just back from a long weekend we鈥檒l save it for tomorrow!
Regards,
Bill Bonner,
听蹿辞谤 The Daily Reckoning
