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Saturday, January 28, 2012

The beginning of detoriation in slow US economy: Recession ahead

Baltic Dry Index During Recession
So far main stream media has been presenting even bad news as a good news showing how great is US economy compare to world economy and US stock market is rallying because of the good news. There are more bad news which never shows up in the media. So far media were happily promoting that it was great holiday sale which leaded which to huge pile of inventory and that save US GDP to be above 2%. This was the weakest GDP  report in last 3 year for January.  If we compare year over year

Jan 29 2010, GDP was 5.7% expected 4.5%, Dec 2009 : 2.2%
Jan 28, 2011, GDP was 3.2% expected 3.6%, Dec 2010 2.6%
Jan 27th, 2012 GDP was 2.8% expected 3.0%, Dec 2011, 1.8%

Yet media is promoting strong growth in US economy after 15 month. The consumer sentiment came at 75, but its the survey conducted in 500 household. Will you consider this sentiment as true picture for rest of the population.

Government has spending money with QE1, QE2, Operation Twist, Stimulus and so on. They have been putting tax payer money but it doesn't show up in economy. The only thing that is growing is Wall street bonuses and US stock market.

Since Nov 25th, Dow has added 1600 point, S&P500 about 170 point and infact Dow and S&P500 is sitting at 2011 highs. 

Baltic Dry Index value is at 726 which suggest that global economy is shrinking.

Yesterday Spain unemployment rate  hit 22.8% leaving 5.3 million out of work. Spain has a population of about 46 million. Spanish unemployment rate between age 16-24 is 51.4%, Greece 46.6%, and Portugal 30.7%. A country cannot do well without its youth talent. With billions of Euro in debt, Greece, Portugal and Spain.

This stock market is rallying on rumor and hope and it doesn't like reality. It won't be too long before US market will take a big U turn and we should see biggest decline in very short time because of this automatic trading. 

1 comment:

Water Park in Delhi NCR said...

What you're saying is completely true. I know that everybody must say the same thing, but I just think that you put it in a way that everyone can understand. I'm sure you'll reach so many people with what you've got to say.

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