Breaking from NewsMax & MoneyNews.com
Economist Magazine Warns 'Danger Time' for U.S.
This week's edition of The Economist magazine offers an ominous warning for the U.S economy."Danger Time for America" -
the respected global weekly magazine states, depicting a cover
drawing of Federal Reserve Chairman Alan Greenspan passing a stick of
dynamite labeled the "The Economy."
The Economist is not given to alarmist warnings.
this year, and challenges economic optimists' recent sunny predictions
regarding the U.S. financial picture. The Economist report mirrors the
analysis that has been offered by the Financial Intelligence Report, a publication of NewsMax and MoneyNews. The FIR has been warning investors for some time of the potential economic chaos that Federal Reserve Chairman Greenspan is about to drop on the American economy. For more info Go Here Now.
has been warning investors for some time of the potential economic
chaos that Federal Reserve Chairman Greenspan is about to drop on the
American economy. For more info Go Here Now
The magazine targets Greenspan, who will soon retire from the Federal Reserve with most people bombarding him with glowing praise and congratulations for a job well done.
Not so fast, says The Economist.
The publication says: "The economy that
Alan Greenspan is about to hand over is in a much less healthy state
than is popularly assumed."
While respectfully bowing to the
retiring Fed chairman, with a sly wink to "Greenspan's 'exuberant'
send-off," The Economist's outlook soon turns dour, both on Greenspan
and on the U.S. economy.
"During much of his 181/2 years
in office America enjoyed rapid growth with low inflation, and he
successfully steered the economy around a series of financial hazards,"
says the article.
"In his final days of glory, it may
therefore seem churlish to question his record. However, Mr.
Greenspan's departure could well mark a high point for America's
economy, with a period of sluggish growth ahead. This is not so much
because he is leaving, but because of what he is leaving behind: t
While the magazine acknowledges that
Greenspan "can't control huge economic uncertainties" and "is
constrained by limits of what monetary policy can do," it points out
that one cannot exaggerate Greenspan's influence over the economy and
financial markets.
It is in the setting of monetary policy that Greenspan falls particularly short, The Economist concludes.
"The main reason why America's growth
has remained strong in recent years has been a massive monetary
stimulus," it says. "The Fed held real interest rates negative for
several years, and even today real rates remain low."
The magazine notes that Greenspan
triggered two of the greatest bubbles in history, the
dotcom bubble of the 1990s and the real estate one the magazine
warns is about to pop.
Greenspan's actions have created a
domino effect through which American consumers could borrow against the
rising, potentially artificial value of their homes to buy plush hot
tubs and $5,000 barbecue pits. In this way, Americans have been able to
literally consume more than they earn.
And that is leading to a consumer
financial environment in which Americans have negative savings rates, a
growing burden of household debt and a sizable current-account deficit.
[See: Sir John Templeton warns of housing bust - Go Here Now.]
Says The Economist: "Part of America's
current prosperity is based not on genuine gains in income, nor on high
productivity growth, but on borrowing from the future.
For the present, that means slower growth, weaker job creation and low wage growth.
Citing Morgan Stanley, The Economist
points out that over the past four years total private-sector labor
compensation has risen by only 12 percent in real terms, compared
with an average gain of 20 percent over the previous five
expansions.
The U.S. economy during the past several
years has been fueled by real estate and related spending - not from an
increase in labor compensation which has fueled previous economio
"Given that consumer spending and
residential construction have accounted for 90 percent of GDP
growth in recent years, it is hard to see how this can occur without a
sharp slowdown in the economy."
Investors who agree that the United States may be facing economic trouble ahead can prepare by reading the following reports:
Investors who agree that the United States may be facing economic trouble ahead can prepare by reading the following reports:
- Prepare for the coming Greenspan recession: Discover the 7 steps to take now to protect your wealth and survive this coming storm. Go Here Now.
- Sir John Templeton first warned housing prices could crash 50%. Find out what he said and learn how to protect yourself and even profit from the coming storm - Go Here Now.
- With a net worth of $43 billion, Warren Buffett is America's greatest stock investor. He is also warning of a possible economic crisis. Find out Buffett's 8 Great Investment Plays. Just Go Here Now.
- Find out why gold will soar in the year ahead Go Here Now.
- 10 Dividend Stocks will weather a bear market -- See Them Here.
Claudia D. Dikinis
http://starcats.com >^..^<
Political & Personal Astrology for a New Millennium
*****************************************************************"If a nation is unable to perceive reality correctly, and persists in operating on the basis of faith-based delusions, its ability to hold its own in the world is pretty much foreclosed." -- "Dark Ages America: The Final Phase of Empire," by Morris Berman"A Nation of Sheep breeds a Government of Wolves." -- Edward R. Murrow"When fascism comes to America, it will be wrapped in a flag, carrying a cross." --Sinclair Lewis (1935)"By words the mind is winged." - Aristophanes"Maybe this world is another planet's Hell." - Aldous Huxley
