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DOW JONES     The Double-Dip Recession, Four Reasons Why Its Not Going to Happen (Christina)

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Christina     posted : 24/07/10   12:01 pm

Do You Believe in Double-Dip Recessions and Unicorns?

The first reason not to worry about a double-dip recession is simple. They’re rare. Extremely rare.

In fact, the National Bureau of Economic Research says that over the past 80 years, we’ve only endured one of them – from 1980 to 1982.

And over the past 150 years, we’ve only encountered… (wait for it)… three.

Translation: We have a better chance of seeing a unicorn before another double-dip recession. Well, almost.

If you’re looking for a little more meat on the bone, look no further than my second reason…

Double-Dip Defiance From Corporate America

If America were heading into a double-dip recession, we’d see the downturn reflected on corporate balance sheets across the country.

But that’s not happening. Quite the opposite, actually…

Corporate profits are rising – up 52% during the first quarter, with analysts forecasting a 34% increase once the second-quarter results are tallied.

And that’s not the only positive trend. Consumer spending, capacity utilization, industrial production, retail sales and the average number of hours worked are all rebounding, too.

In fact, of the 40 economic indicators that I track, the overwhelming majority have steadily improved over the past year.

I’m not the only one who believes the current economic data flies in the face of the double-dip recession talk, either. Credentialed economist and Lord Abbett’s market strategist Milton Ezrati offers seven reasons why you shouldn’t fear a double-dip in a recent Wall Street Journal blog post.

Now I’ll readily concede that the momentum of the economic recovery might have slowed over the past couple of months. But that’s not fazing these guys…

These Two Heavyweights Are on the Same Page

Former Federal Reserve Chairman Alan Greenspan notes that the current environment seems to resemble the typical pause patterns witnessed during previous recoveries. In other words, the recovery is still intact.

Don’t trust Greenspan’s assessment? No worries. Consider Warren Buffett’s…

In his 2008 “Letter to Shareholders,” he wrote of “life-threatening problems,” “non-functional” credit markets, “tumbling home prices” and “a freefall in economic activity… that I have never before witnessed.”

Financial Armageddon, you might say.

But nowadays he’s preaching a different story, saying: “There’s no doubt in my mind, we’re coming back.” And he offers irrefutable proof: Most of the 70 companies in which Berkshire Hathaway owns a stake are improving their margins and hiring workers again.

And then there’s the Federal Reserve…

This Indicator Says There’s Zero Chance of a Double-Dip Recession, Too…

What’s one of the best indicators that the Fed uses to determine the probability of a recession?

It’s the Treasury spread – i.e. the difference in yields between 90-day Treasury bills and 10-year Treasury bonds.

The calculation allows the Fed to construct a yield curve.

As the New York Fed reveals: “Research beginning in the late 1980s documents the empirical regularity that the slope of the yield curve is a reliable predictor of future real economic activity.”

So how do you read the yield curve? Simple…

* Steep Yield Curve: Points to economic growth.
* Flat or Inverted Curve: Signals an economic slowdown or recession.

And as the latest Treasury Spread Model shows, there’s a 0.19% probability of a recession in the next year. Take a look… and relax.
I\'m happy to receive any constructive criticism about my trades. I\'m always ready to learn more.
Christina     posted : 06/08/10   07:30 pm


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I\'m happy to receive any constructive criticism about my trades. I\'m always ready to learn more.
Christina     posted : 08/08/10   10:49 am

from casey research

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I\'m happy to receive any constructive criticism about my trades. I\'m always ready to learn more.
mart.j     posted : 09/08/10   07:40 pm

Costco to Begin Accepting Food Stamps

By Ann Zimmerman

Costco Wholesale Corp., one of the country's largest warehouse-club chains, said it will start accepting food stamps at its 420 stores nationwide, as the number of Americans receiving government assistance continues to soar.

Under pressure from politicians, Costco began accepting food stamps at six New York City stores earlier this year and was surprised to discover that this led to a rise in memberships and sales. Other warehouse-club chains began accepting food stamps within the last year.

"Given the economy and layoffs, this was a positive for our members and the right thing to do," said Richard Galanti, chief financial officer of Costco, which is based in Issaquah, Wash.

More than 35 million people received food stamps in June
, the most recent month for which data is available, a 22% increase over the previous June, according the U.S. Department of Agriculture. It was the seventh consecutive month that participation in the Supplemental Nutrition and Assistance Program increased.

Costco joins a growing number of competitors that have embraced the program during the recession, including BJ's Wholesale Club, Target Corp. and Sam's Club, the membership club unit of Wal-Mart Stores Inc., which began accepting food stamps late last year and rolled it out to all of its 600 stores by March.

Costco was concerned that accepting food stamps, which can be used only for certain purchases, would slow down check-out lines. But that proved not to be a problem, in part because food stamps are now delivered via plastic cards similar to debit cards, the company said.

Dollar stores began implementing the technology to accept the cards several years ago and attribute their strong sales gains during the recession, in part, to food stamps. Family Dollar Stores Inc., which posted record profits last year, accepts the cards at about 80% of its 6,500 stores.

Costco also thought that its relatively well-to-do members wouldn't utilize the food stamp program.

"I think that was probably a little bit arrogant on our part." Mr. Galanti told Wall Street analysts during a conference call in early October.

number of food stamp:

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Luck i m your father     posted : 09/08/10   08:09 pm


The economy is already in a depression.

The problem is that no one wants to admit it. Certainly not in Washington. Not on Wall Street either. And, unfortunately, not even on Main Street.

But the fact of the matter is that in real terms, the U.S. economy has already contracted more than it did during the Great Depression.

I’ll prove it to you in a minute. But before I do, here are a few simple facts that also show you that the economy is either rivaling the depths of the 1930s, or is already in worse shape …

First, the true unemployment rate in this country is at least 22%. Not the 9.5% mythical figure Washington is reporting.

You see, Washington plays with the unemployment number. The figure they report every month is what they call the “official” unemployment rate. But it includes only those ages 16 or older who are not currently employed, but are able and available to work, and “actively seeking work.”

The problem: Washington conveniently leaves out people who are working part-time, people whose hours have been dramatically cut, and “discouraged” workers — those who are ready, willing and able to work — but have essentially given up looking for a job because they can’t find one.

Add these workers into the mix and you have an unemployment rate of 22.7% — more than double the so-called official number and almost as bad as the Great Depression of the 1930s.

And that’s just a nationwide average. In places like Detroit, Los Angeles, Allentown, Pa. and other urban areas, the real unemployment rate is as high as 40%, far worse than during the Great Depression.

econd, from its 1925 peak, the median home price in the U.S. fell 12.57% into a bottom in 1932. Compare that to the 31% decline since the property peak in 2007.

Third, in 1929, total U.S. debt as a percent of GDP stood at roughly 290%. Today, it’s approaching 380%, and growing.

Put another way, it now takes $3.80 to produce $1 of GDP, compared to $2.90 during the Great Depression. I don’t know about you, but to me, that’s not real economic growth. It’s debt-riddled growth.

Moreover, when debt is growing so rapidly, there is simply no way the economy can produce the same amount of unencumbered goods and services than it did just a decade ago.

Fourth, U.S. high-yield corporate bond default rates last year hit their highest level since the Great Depression. And although they’ve come down a bit since then, there’s no doubt in my mind that corporate bond default rates are going to surge dramatically higher in the months ahead.

Fifth, total corporate and personal bankruptcy filings each year in the U.S. are now more than double the number of filings that occurred during the entire decade of the Great Depression.

Sure, bankruptcy laws have changed dramatically, making it far easier for individual and corporations to stave off creditors, with far less stigma. But is that a good thing? Or does it merely make things look better on the surface?

Either way, I repeat, we’re talking bankruptcy filings in a single year that are now more than double the filings that occurred in the entire Great Depression.

Now, for the real proof the economy is already in a Depression.

Back in the 1930s — and all the way through 1971 — the U.S. monetary system was on a gold standard. In 1933, for instance, $1 of GDP was equal to 1/35 of an ounce of gold.

In 1971, it was equal to about 1/42 of an ounce of gold. Then, Richard Nixon severed the link between the dollar and gold once and for all.

Don’t get me wrong. I do not advocate a gold standard. Never have, never will. But you simply must understand that just because the world is no longer functioning on a gold standard — doesn’t mean you cannot — or should not measure values in terms of gold.

As a matter of fact, you should. Measuring values in terms of an asset that represents the real value of money is the only real way to measure anything today. That’s even truer these days than ever before because paper currencies are so fickle and volatile in nature.

So now, let’s take a look at our country’s GDP in terms of the amount of gold it can buy.

And let’s do a simple comparison of 1932, the depths of the Great Depression … with 1971, just before the gold standard was abolished … the year 2000, the peak of the tech bubble … the year 2007, the real estate peak … and the latest GDP data.

Let’s see what’s really happening — in terms of how much gold the country’s GDP can purchase at those different points in time.

Here’s the summary, and a chart to go along with it …

arrow black Why All the Double Dip Talk Is Pure B.S. ... In 1932, our country’s GDP was worth 2.8 billion ounces of gold.

arrow black Why All the Double Dip Talk Is Pure B.S. ... In 1971, it was worth 27.74 billion ounces of gold. Put another way, our country’s GDP was almost ten times what it was in 1932.

arrow black Why All the Double Dip Talk Is Pure B.S. ... In 2000, our country’s GDP would purchase 34.54 billion ounces of gold.

arrow black Why All the Double Dip Talk Is Pure B.S. ... At year-end 2007, it was worth only 16.87 billion ounces of gold.

arrow black Why All the Double Dip Talk Is Pure B.S. ... As of March 31, 2010, our country’s GDP would purchase a mere 13.08 billion ounces of gold.

That’s a 22.47% decline in three years, since the peak of the housing bubble … and a whopping 62.13% decline since the end of the year 2000.

If that’s not a contraction, if that’s not a depression in real terms, I don’t know what is.

Of course, almost everyone will argue with me about the above analysis, their main objection being: I’m just viewing the economy in terms of gold, and that the contraction I speak of is merely because the price of gold has gone through the roof.

But I ask you the following questions, and I’ll let you answer them …

If gold isn’t real money, then what is? Paper money?

If so, then why does paper money — in almost all cases — buy you less than it did a couple of years ago … five years ago … ten years ago … fifty years ago?

Why does a barrel of oil cost nearly eight times more than it did just ten years ago, when in gold terms, the price of oil is the same?

For the economy’s current GDP to equal the same gold purchasing power it had in the year 2000 — 34.54 billion ounces of gold — the price of gold would have to plummet by more than 64.5%.

What are the chances that’s going to happen, when the Federal Reserve recently stated it would print as much as $5 trillion more in funny money to try and turn the economy around, by papering over the mess?

Folks, the U.S. economy is already in a depression. Deep in a depression. And as I said at the outset, almost no one realizes it.

Hopefully, you do. And hopefully, you’re taking the steps necessary to protect your wealth, so that it does not suffer the same devastating losses in real terms.

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Christina     posted : 11/08/10   02:02 am

our new currency in New york

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I\'m happy to receive any constructive criticism about my trades. I\'m always ready to learn more.
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