From The Global Futurist (http://theglobalfuturist.blogspot.com/)
THE OTHER SHOE DROPS...HEAVILY.
Dear Fellow Futurists and Friends:
I am not known for my tact or easygoing nature. It is partially a function of my having lived more than half a century and having observed many different types of economic cycles, and partially a sign of the current times. Part of my work as a Futurist is to gather as much data as I am able to, from as many reliable sources as I can find (both within and far outside of mainstream media), and find 1) areas of commonality [agreement between parties who generally tend to disagree] and 2) evidence, over a period of time, of trends in various areas that I am studying. At the moment, I am studying the Global Economy from the US (the nucleus) on outward.
The outlook is extraordinarily bleak. The key economic variables upon which I gauge the success of any recovery do not include political proclamations, market rallies, Wall Street or Washingtonian economic perspectives or the usual pablum. I look at the very foundation of any economy -- I view the root causes instead of the day-to-day effects and spurious "victories" generated by sporatic jumps in conventional economic indicators. These "jumps" mean very little to me unless they are logically supported and sustainable.
Here's my short list of key economic variables:
1) Real unemployment and real private sector jobs creation;
2) Real availability of consumer and commercial/industrial credit;
3) Real rates (percentages) of savings;
4) Real rates of net home sales and foreclosures;
5) Real financial position of the largest private sector companies (profitability, equity, leverage, debt-service ratio);
6) Real small business and emerging enterprise sales and profitability;
7) Real strength of the central banking system and the institutions which support it;
8) Real activity (in the form of rapid-fire, stimulus-response enactments, executive orders or emergency legislation) in government "quick fix" policies and pronouncements (very telling, indeed);
9) Real "value" of total government bailouts, benefits extensions, subsidies and other non-productive expenditure;
10) Real incidence (i.e., the number and frequency in a given quarter) of investigations of financial institutions and ratings agencies.
Bottom line: We are not in a recovery -- we are in the eye of the hurricane. I anticipate financial disaster of unprecedented post-Depression Era proportions internationally, presenting in early June. Next Month. By my indices, we are in for a wallop that cannot be wisked away.
Yes, Ladies and Gentlemen -- I expect the other shoe to drop next month....heavily, and for a period of no less than a year. I had originally forecast (in late 2008) that the global economy would not stabilize until the first or second calendar quarter of 2012, with the United States to lag two to three quarters behind, without a recovery to its prominence as the world's strongest economic, political and military leader. I stand by what I had said.
Faithfully,
Douglas Castle
p.s. Following is an excerpt from an article in today's New York Times. Its uncharacteristically sincere and ominous tone expresses my feelings about what is to come. An important hint -- ignore all the commentary about the stock slide, the Dow and the "flight to the quality and safety of U.S. Treasury issues," and look to the reasons that economic and capital market analysts are concerned.
####
Breaking News Alert
The New York Times
Thu, May 20, 2010 -- 10:36 AM ET
-----
Stocks Extend a Steep Slide
The stock market extended its sharp slide Thursday after
disappointing employment news added to investors' already
bleak view of the world economy.
The Dow Jones industrial average fell 200 points in morning
trading. Interest rates fell sharply in the Treasury market
as investors once again sought the safety of United States
government debt.
The euro, which has become a key indicator for confidence in
Europe's economy, is falling again and continues to hover
near a four-year low.
The Labor Department said new claims for unemployment
benefits rose by 25,000 to 471,000, their largest amount in
three months. That came as an unpleasant surprise to
investors who were expecting a slight drop to 440,000.
####
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