In addition, the Dallas Fed released its regional manufacturing index for August this morning. It declined substantially from July and is close to going negative. And it was well below the consensus Einsteinian group of highly paid Wall Street economic clan, who can't seem to hit the broad side of Adam Smith's barn with their forecasting. Here's the report: LINK As you can see, almost every single input variable was negative, indicating the likelihood of serious economic contraction in the region. This report is consistent with those from Chicago, Philly and Richmond. Collectively I would expect, short of some incredible David Copperfield-esque perception manipulation from the Government, that we will see a negative GDP print for Q3. I also think we could see a negative print for Q2 when the Government reports its final revision on September 29th.
To address the above situation, I expect at some point that the Fed will roll out some sort of massive money printing program in conjunction with a massive "stimulus" program to be unveiled by the Teleprompter early September. Expect that we are going too see a MASSIVE transfer of wealth from Taxpayers to the housing sector. As an example, take a look at this article from Bloomberg detailing how the Government is now largest home seller. Here's the kind of policy response we'll get from the Teleprompter and his Big Government solution:
The government’s housing inventory is just one challenge facing President Barack Obama as he prepares to run for re- election next year. The administration also is exploring ways to help hard-hit neighborhoods, unemployed homeowners and underwater borrowers whose houses are worth less than what they owe -- many of them concentrated in battleground states including Florida, Ohio and NevadaHere's the link and try not to weep while you read it: LINK
In order to justify his Big Government policies, the Teleprompter has announced the appointment of Bernanke's academic colleague, Alan Krueger, to be his chief economic advisor. I couldn't find a lot about Krueger's economic views other than he's some kind of expert on education and minimum wages. Given that he's a Princeton economist, I would also suspect that he heavily buys into Keynesian policies, which have demonstrated utter failure in practice. Krueger has never had to work in the real world and thus has no grounding in reality. Expect a very heavy dose of Government programs designed to spend Taxpayer money putting people to work building a lot more useless infrastructure projects and bridges to nowhere. Also expect a heavy dose of education subsidies and bigger student loan programs. All of this, mind you, paid for using printed money and much higher Government borrowing. Here's summary from Bloomberg on Krueger, which is consistent with the information I found using google: LINK
It's getting nice and cozy in the Oval Office now, with the Teleprompter doing a great job reading the scripts prepared for him by his chief of staff, ex-JPM director William Daley, and now his new chief economic advisor whispering sweet nothings into his ear about spending a lot of borrowed money for infrastructure projects and student loans. Based on his academic background I expect Krueger - in a move right out of Atlas Shrugged - to lobby hard for a big increase in the minimum wage as well. I'm shrugging right now because Big Government always fails and it transfers a lot of wealth to the elitists in the process.
It's getting really ugly out there on Main Street and in DC. With all this coming money printing and Government "stimulus," I expect to see - on balance - a big rally in the price of gold and silver, especially as we now entering the prime Indian buying season and the Chinese demand for gold is accelerating. This won't come without a lot of volatility, which will include some aggressive by attempts by the Fed and its bishops - the bullion banks - to force some big down days. Buy these as best you can.