economy

Q4 2012 GDP Revised to a Barely Breathing 0.1%

Q4 2012 real GDP grew by just 0.1% after the second revision.  While technically not in contraction, 4th quarter gross domestic product results imply the economy was officially D.O.A.   Trade imports plunged, which helped economic growth.  Government spending cliff dove and sucked out -1.38 percentage points from 4th quarter real gross domestic product growth as federal defense spending declined 22.0% from Q3.   Private inventory changes hacked off -1.55 percentage points from Q4 real GDP as businesses shed their inventories.  Even without inventories in the economic growth mix,  the economy is still suffering from weak demand.

Good Economic News... If you're a Turk

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The Turkish people elected a new government in 2002. Recep Tayyip Erdoğan became Prime Minister after his AK Party gained an absolute majority in the nation's unicameral legislature. Erdoğan and AK have governed continuously from 2002 through the present.

The annual change in gross national product (Graph, Turkish Review, January 2011) developed through Turkish management of the economy.

During the critical period that included the global recession, Turkey fared better than most industrial nations. (Trading Economics)

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Negative growth hit Turkey in only three quarters, with a solid rebound starting in 2009. Forth quarter 2010 economic growth was 9.2%. Only China led Turkey during that time with 9.8% growth.

The International Monetary Fund (IMF) announced an end to its formal agreement with Turkey in 2010. In fact, the Turks ended IMF involvement with economic management in 2007 when they rejected IMF's "austerity" requirements for a stand by loan. Since that time, Turkey has paid off 75% of its IMF debt and managed the economy without IMF help.

Highlights - How they did it

Volker: "We cannot rebuild the economy to the tune of 70 percent consumption or housing booms. It will just break down again,"

CNBC has an interesting news bit about something Volker said. First off, let me give kudos to AmericaBlog for first picking this up. In a meeting at the White House, the famed former Fed chairman basically said we need to rebalance the economy.  That to have a GDP where over half (well 70% give or take) is due to consumption is not sustainable long term.

The alternatives to help bolster future economic growth include boosting exports, applying innovative technology to green issues and improving the nation's infrastructure, Volcker said.

The former Federal Reserve chairman, who now heads the White House Economic Recovery Advisory Board, said Obama understands that "We cannot have so much consumption."

Is this the year the US defaults?

James West makes the case the USD collapse and, by extension, a bond default.
Critics argue that it just can't happen .... have they crunched the numbers?

Number one among the indicators favoring this scenario is what is happening in the U.S. Treasuries auction market.

Last Thursday, an $30 billion auction in five-year notes failed to stir the interest of traditional primary dealers. The auction itself was saved by an anonymous “indirect” bid.

Buyers are discouraged by the prospect of what is expected to amount to $2 trillion total issuance for the full year of 2009. The further out the maturities on notes, the more bearish the sentiment towards them. The only way to entice buyers is through the increase in yields.

The Effect on Real People When the Economy Collapses - MotherJones

Mother Jones has a very good piece, Desperate Times and Desperate Measures .

One thing Mother Jones is pointing out...the main stream media rarely tally up the suicides of regular folk, or the increase in extreme violence and this implies hypocrisy in American culture. Millionaire suicides over financial distress hit the headlines....but the thousands who are in quiet desperation never get a mention...unless they take along with them at least 3.

It's Time to Stop Being Stupid

An opinion piece by Bob Herbert in the New York Times kind of says it all. Stop Being Stupid on U.S. economy policy.

Ya got that right! He lists a series of absurd policy positions and the make-believe public relations talking points that followed it as a classic case of denial by policy makers and by the American people. One call out I particularly enjoyed:

We were stupid in so many ways. We shipped American jobs overseas by the millions and came up with the fiction that this was a good deal for just about everybody. We could have and should have taken the time and made the effort to think globalization through, to be smarter about it and craft ways to cushion its more harmful effects and to share its benefits more equitably.

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