By Jon Markman’s Speculations – MarketWatch
Excerpt:
So that $750 billion borrowed and allocated for stimulus by Congress in the president’s first year, and the $600 billion borrowed and allocated for bond buying by the Federal Reserve, have literally bought us nothing. There has been no payoff. None. Zilch. Nada. That’s why we’ve now got to cut into the kids’ milk money to pay the bills.
Lakshman Achuthan, head of the Economic Cycle Research Institute — the one forecasting organization that I trust — says the hidden reason for all this is that the global industrial machine has entered a profound and pervasive cyclical slowdown that cannot, at this point, be blunted.
Concurrently, he says, employment growth has peaked for this cycle, and will never improve beyond the pace seen in February to April this year. “That was as good as it’s going to get,” he told me in an interview this week.
This is a huge problem because the only way that debts can be paid off — in Greece or the United States — is if borrowed money is used to create valuable assets that spin off cash. Without growth that creates jobs (and in turn generate taxes that can pay off the debt), you have one big smokin’ hole in the middle of your country.
Greece now, maybe the United States later. GDP Two percent or worse GDP growth will not cut it.
The real problem ahead for markets, in short, is that watching the pain in Greece is like holding up a mirror to the future of the United States and seeing it reflect back a world of hurt.
via Keep market exposure — apply caution in late July Jon Markman’s Speculations – MarketWatch.
