Wednesday, November 21, 2012

The Other Economic Cliff: Why Business Investment Is Really Nosediving

The Other Economic Cliff: Why Business Investment Is Really Nosediving
By Derek Thompson, Nov 19 2012

The Home Economy is strong. It's the Away Economy that's got issues.
The American consumer is the most optimistic s/he's been since before the Obama presidency. Meanwhile, large U.S. companies are cutting spending at the fastest pace since the Great Recession.   Who's right about where we're heading, the pessimists or the optimists? Both.

For the moment, imagine two American economies. The Home Economy and the Away Economy. In the Home Economy, there is mostly good news to report, so long as Washington doesn't screw it up. GDP growth and job growth have been steady, if slow, for more than three years. Consumer spending is healthy. Housing indicators are turning up all over the place, like home prices, home starts, home sales, and construction employment. It adds up to the possibility of accelerating job growth and a recovery worthy of its name in 2013. Small businesses sentiment, which relies less on world markets and more on the animal spirits of the neighborhood, is still higher than it was for most of 2011.  Meanwhile, in the Away Economy, …..To Read More…..

My Take – Baloney! The government is printing money like a drunken sailor spends his pay on shore leave.  We are heading into a massive worldwide default because the world’s governments owe far more than they can pay and they refuse to stop spending and worse yet, continue to impose central planning on their economies.  That alone is sufficient reason to be pessimistic.  That means at some point there has to be a reckoning and that will mean economic collapse on an order the world has never before known.    At least that is the way I see it. 

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