Very Beloved Friends and Relatives,
It is becoming clearer with the rising of each day’s sun that the change we are all going through, environmentally, politically, economically, culturally, socially and spiritually is deepening, sometimes dramatically and sometimes slowly.
This article on the economic situation we face is very challenging in and by itself, but the reality that there is zero political unity to address these challenges is not a good combination. It is clear now that this was a solvency problem right from the beginning. All of the efforts to boost liquidity just ended up infuriating the public.
At the heart of the 4th Way is the understanding and awareness of the prior unity and oneness of the Human Family. Without this realization and awareness, our beloved Human Family will continue to increasingly suffer. This is all part of the birthing process leading to our promised emergence as spiritually mature Human Beings. “The 500 Year Sun Dance”, as it has been called.
We will continue to pray together and build the 4th Way.
With Warm Love and Greetings,
Brother Phil
No defence left against double-dip recession, says Nouriel Roubini
The United States, Japan and large parts of Europe have exhausted their policy arsenal, leaving them defenceless against a double-dip recession as recovery slows to ‘stall speed’
By Ambrose Evans-Pritchard, International Business Editor in Cernobbio, Italy
Published: 9:49AM BST 05 Sep 2010
Nouriel Roubini said the US growth rate was likely to fall below 1pc in the second half of the year.
“The US has run out of bullets,” said Nouriel Roubini, professor at New York University, and one of a caste of luminaries with grim forecasts at the annual Ambrosetti conference on Lake
Como.
“More quantitative easing (bond purchases) by the Federal Reserve is not going to make any difference. Treasury yields are already down to 2.5pc yet credit spreads are widening again. Monetary policy can boost liquidity but it can’t deal with solvency problems,” he told Europe’s policy elite.
Dr Roubini said the US growth rate was likely to fall below 1pc in the second half of the year, despite the biggest stimulus in history: a cut in interest rates from 5pc to zero, a budget deficit of 10pc of GDP, and $3 trillion to shore up the financial system.
The anaemic pace compares with rates of 4pc-6pc at this stage of recovery in normal post-war recoveries.
“We have reached stall speed. Any shock at this point can tip you back into recession. With interbank spreads rising, you can get a vicious circle like 2008-2009,” he said, describing a self-feeding process as the real economy and the credit system hurt each other.
“There is a 40pc chance of double-dip recession in the US, and worse in Japan. Even if it is not technically a recession it will feel like it,” he added.
Hans-Werner Sinn, head of Germany’s IFO Institute, said the US would have to purge its debt excesses the hard way.
“The bitter truth is that there is no way out of this with monetary and fiscal policy. They will just have to see their living standards go down. I see a decade of difficulties for the US,” he said.
Dr Sinn said the US the market for mortgage securities (CDOs) had collapsed from $1.9 trillion in 2006 to just $50bn last year, leaving the US property market reliant on federal agencies.
“The world is simply not willing to buy these dubious financial products again. Germany is leaving, China is no longer there, and Japan is pulling away. The US system of mortgage finance is on government life support and that cannot drive a sustainable upswing,” he said.
Harvard Professor Niall Ferguson said the US has exhausted fiscal stimulus given warnings from the Congressional Budget Office that interest payments as a share of tax revenues will reach 20pc by 2020 and 36pc by 2030 without drastic retrenchment.
“The fiscal crisis seems to be out of control. The ‘big crossover’ is approaching when the US spends more on debt service costs than on security, and historically that is the tipping point for any global power,” he said.
Mr Ferguson said the “Chimerical” marriage of recent years is on the rocks. China is no longer willing to fund the US Treasury bond market, cutting its share of holdings from 13pc to 10pc of the total debt stock.
While China must find ways to recycle its trade surplus and hold down the Yuan, it is doing this by stockpiling commodities, buying hard assets around the world, or rotating into Asian bonds.
Dr Roubini said US companies have plenty of cash but are boosting profits by a policy of “slash and burn” on labour costs. “We’ve lost 8.4m jobs and if you include the loss of hours worked it is equivalent to another 3m. We need to generate an extra 450,000 jobs every month for three years to get it back,” he said.
The US non-farm payrolls data released on Friday was better than expected but still showed a net loss of 54,000 jobs.
Dr Roubini said average public debt in the rich countries would rise to 120pc of GDP by 2015 in the rich countries, leaving no scope for a further fiscal stimulus. If they push their luck, they too risk the sort of bond crises seen in Southern Europe this year.
In the US, the fiscal boost has faded, switching to tightening over coming months, the lift from the inventory cycle is finished. Capex spending by companies has held up well, but this slowed sharply in July. Housing is already in a double dip. The last support for the US economy is consumption, barely growing at 1pc.
“All we did was kick the can down the road and stole demand from the future,” he said.
This is a key understanding of what we must avoid individually and collectively, “All we did was kick the can down the road and stole demand from the future!”
With Warm and Loving Greetings,
Brother Phil
Chief Phil Lane Jr.
Chairman
Four Worlds International Institute
Four Directions International
www.fwii.net
1-604-542-8991
Skype: planejr1234