Many are cheering the "recovery". Unfortunately, the recovery is nothing more than unsustainable government spending, not just in the US but globally.
David Rosenberg talks about the GDP in Tuesday's Breakfast With Dave.
The reason why we remain skeptical over the sustainability — the operative word for investors — is because the U.S. economy (or the global economy for that matter) has yet to show any ability that it can stand on its own two feet without the constant use of government steroids. At a time when the U.S. government is running a 13% fiscal deficit-to-GDP ratio, it somehow has enough in the coffers to try and perpetuate a cycle of spending by inducing a populace in which 20% are already three-car families, to go out and buy a new car to support a shrinking industry at future taxpayer (or bondholder) expense.
Look at what happened in that first quarter GDP number — total GDP contracted around $30 billion at an annual rate, but when you strip out all the government activity, ranging from spending, to tax reductions, to benefit payouts, the decline exceeded $300 billion. In other words, without all the government intervention, the decline in GDP in 1Q would have been closer to an 8% annual rate, not 1%.
Motor vehicle sales surged to a 10-month high in July — an annualized 11.2 million units compared with 9.7 million in June. The results largely reflect the “Cash for Clunkers” $1 billion program that ran out of money in barely more than a week.
Link
They are printing another two billion for the program. Massive waste, fraud. Car dealers are smiling though.
ReplyDeleteThe government needs to raise TWO TRILLION by September 30th to fullfill all their plans.
ReplyDeleteTheir nefarious plans.
Raise = print. Print print print print print!
ReplyDeleteGet ready for massive inflation like this country has never seen before. When you hear the liars saying that high inflation will never return YOU KNOW they are lying.
1980 20% inflation? Nope. Much, much worse.