US Recession is Guaranteed: Analyst

US Recession is Guaranteed: Analyst

As the debate rages on about whether the U.S. economy is headed for a douple-dip, one analyst says another recession is all but guaranteed, and there's nothing that can be done to prevent it.

Paul Gambles, Managing Director of financial advisory and asset management firm MBMG Group said the bond market, which is the most reliable indicator, has been pointing to a slowdown since at least April or May. According to Gambles, the deleveraging process facing the U.S. is so severe that a recession is inevitable.

"If you've got a $14.5 trillion debt burden, it's going to be a pretty severe recession," he said. "Recession is usually linked to the size of the debt (a country) has to clear up."

In fact, Gambles believes the U.S. economy has been in trouble far longer than most people appreciate and has been merely using debt to prop up growth.

Gambles said he's been taking advantage of the rally in the Treasury market over the past few months, but he thinks that party might end soon because a recession would hurt the government's ability to raise revenues.

"Once we get into that environment, at that point, you probably don't want to be holding Treasurys any more, because there's a huge amount of pressure coming down on the credit rating, not just from the growth slowdown or the move into recession (but the) move into deflation," Gambles said.

Saying it how it is folks, though many of us here already know. Though, it is clear the US is in more of a depressionary state than a double dip situation. Further to this statement, and to divert a bit from the article, I cite the GPS program on CNN I watched last night, an interview and analysis with Paul Krugman and Ken Rogoff.

Now regardless of whether we agree with the likes of Paul Krugman and Ken Rogoff (Former IMF Chief Economist) and their positions on a pathway to resolving the US economy, both of these guys share a very poignant view of the situation the US is in now. Both agree and assert that the US is in fact in a depression like that of the 1930s (see video link above). Very interesting for anyone who hasn't seen the program.

Typical cyclical recessions show a strong and robust recovery within months following the recession, unlike the 2008 financial crisis. It is anemic growth at best, but the big indicators such as long-term unemployment, housing and credit contraction and a number of other problems both Krugman and Rogoff cite, in my opinion, shows the reality of where the US is currently and where it is heading. And together with slowing and contracting economies around the world of which a number likewise host a sovereign debt crisis, indicates the dire and ominous situation the global economy is in, going forward.

Oh so it's just now going to be a recession?? Perhaps they'd like to tell that to all the businesses that have closed and all the people that don't have jobs or are under employed. Or maybe they'd like to inform the housing market.

Because we are currently doing A OK!

reply to post by surrealist

In fact, Gambles believes the U.S. economy has been in trouble far longer than most people appreciate and has been merely using debt to prop up growth.

This. Wasn't it Bill Clinton who supposedly used SS funds to balance the budget? Then we had that bailout that Bush pretty much ordered for the banks and businesses back 07 or 09.... that's two occasions I can think of right off hand. I dread trying to find others but there are probably more.

Yeah, Clinton's "surpluses" were generated by raiding the trust funds so that it looked like he was reducing the national debt, when in fact it was still increasing. There was never a real surplus under Clinton, despite what most economists/analysts will say.

The same trick has been used now by Geithner while the debt ceiling debate was going on, hence why as soon as the ceiling was raised the debt increased by a few hundred billion as he repaid the trust funds.

The debate about a double dip is moot, there hasnt been a recovery.

I'm not so interested in the fact we are moving into a double dip (new recession or continuation of the previous one) but what the plans the elite have to deal with the situation..

I started a thread 18 months ago drawing many comparisons with the Swing riots of the 1830s (no 1 source of the rage was the under employment drowning in debt) stating the UK would face a similar "rage" in the summer of this year. (it takes time for the rage to build and explode)

I feel that should we (in the West) continue down the route we appear to be on that rage will only increase and eventually explode in a process that will literally put the necks of the elite at risk.. if I (and many other commentators on here and across the net) can see this brewing then I feel safe to assume the establishment does as well and will be planning accordingly.

Since they are not doing anything to directly change the path we are on to neutralise or minimise the rage building I can only conclude they plan to use that pent up rage and redirect it elsewhere..

So my concern is what the establishment will do once the markets show we have stepped off the cliffs edge again.

Hong Kong Recession Risk Is Global Warning, Most Accurate Forecaster Says

Hong Kong’s export-led economy, a barometer of global growth, is sinking into a recession that is likely to last for at least a year, said Daiwa Capital Markets economist Kevin Lai.

Of nine economists in a Bloomberg News survey, Lai came closest to predicting a 0.5 percent contraction in the city’s economy in the second quarter. Only two of the analysts expected gross domestic product to decline from the previous three months. The government released the data Aug. 12.

“Global demand is really weak and we expect the U.S. and Europe will see a sharp slowdown, or near-zero growth, next year,” Lai said in a phone interview in the city today. “A recession is a reality for Hong Kong.”

See this is the sort of data people need to look at when assessing the health of the global economy. It is not just about what happens in the United States. If other major exporting countries are seeing a slow-down in exports, that may be indicative of a slow-down in consumption in the US, and / or vice versa. As this article points out, Hong Kong is now contracting and heading into recession and that too will have adverse impacts on the global economy, together with other economies also slowing and contracting simultaneously.

ETA also note there that only two of the nine economists predicted a contraction. Similar problem, most seeing the world through rose colored glasses instead of what reality is clearly showing.