Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

U.S. Economy Stalling as Easy Money Effect Wears Off!

Economics / US Economy Jun 04, 2010 - 07:49 AM GMT

By: Mike_Larson


Best Financial Markets Analysis ArticleThe evidence is coming fast and furious — and it all points in the same direction! Washington’s “bought and paid for” economic recovery is stalling out as the easy money effect wears off.

Just consider what we’ve learned in the past several days …

• Building permits for single and multifamily homes tanked 11.5 percent in April. That left permits at a seasonally adjusted annual rate of 606,000, the lowest since last October.

Builders pull permits before they begin projects. So this leading indicator of construction activity is pointing to a renewed slump in the coming months.

• Initial jobless claims stopped declining in February. After hitting 439,000; they’ve begun a gradual upward climb again.

• Almost 4.7 million Americans are now stuck on the jobless rolls, with little prospect of finding gainful employment. That’s roughly two million above average.

• Durable goods orders outside of the volatile transportation sector fell 1 percent in April. A key indicator of business investment in the report slumped 2.4 percent.

• First-quarter Gross Domestic Product growth fell to 3 percent from 5.6 percent at the end of 2009.

• Personal spending growth? Same story. It dropped from 0.6 percent in March to nil in April.

• To top it all off, a benchmark gauge of manufacturing activity lost steam in May, while purchase mortgage applications just fell to the lowest level in more than 13 years.

Jobless claims are on the rise again.
Jobless claims are on the rise again.

Our REAL Problem? The Economy Can’t Get Off the Dole!

If you’re seeing a pattern here, congratulations! Manufacturing, retail sales, construction activity, and employment are all softening again. As a result, the economic reports we’ll be getting in the coming months will likely look worse than what we’ve been seeing in the past year.

Why is that so troubling?

All the massive borrowing and spending in Congress … and all the easy money spewing forth from the Federal Reserve … had a simple purpose. It was supposed to prime the pump for sustainable, self-feeding growth — to bridge the gap from recession to recovery.

Instead, it looks like the handoff isn’t working.

Policymakers are creating temporary “sugar high” moves in certain sectors. A key example is the home buyer tax credit. It helped push new home sales to the highest level in two years in April, while giving us three consecutive, large gains in pending sales of used homes.

But whenever the government steps back, or the Fed tries to ease off the gas pedal, we end up right back in the soup. That forces policymakers to jump back in again and renege on promises to get spending and emergency life support measures under control.

For example …

  • Those currency swap lines the Fed once had with foreign central banks … the ones it terminated with much fanfare a while back? They’ve been reactivated.
  • The $787 billion economic stimulus package that was supposed to start winding down? Now the Obama administration is pushing a “son of stimulus” package, with up to $200 billion in new spending and aid measures.
  • Those near-zero percent interest rates from the Bernanke Fed? The more than $1 trillion in mortgage assets the Fed bought, then hinted it might try to sell? Not going away anytime soon!

Bottom line: The economy can’t get off the dole!

$13 trillion in easy money hasn't cured the underlying problem.
$13 trillion in easy money hasn’t cured the underlying problem.

Your Portfolio Prescription …

I’ve already told you how banks are still buried under huge bad loans and debts, and how bank failures continue to mount.

I’ve warned you that key technical indicators — ones that presaged the 2007-2009 market crash — are flashing red again.

And I’ve shown how the sovereign debt crisis is spreading from smaller economies like Greece’s to larger ones like Spain’s.

Now, on top of all that, you have a U.S. recovery that’s running out of gas. Policymakers are flailing around in a desperate attempt to head off a renewed slump.

But let me ask you this:

If $13 trillion in bailouts, backstops, and other forms of aid didn’t work over the long term, why should we expect some half-baked batch of additional measures to work?

I’d rather gird myself for the possibility of a renewed market slump. That means dumping vulnerable positions and getting back into inverse ETFs.

I’m sharing my best advice in this month’s Safe Money Report, set for release in just a few hours. If you haven’t already taken advantage of my offer to join up for just 27 cents a day, don’t wait any longer! All you have to do is click here.

Until next time,


This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in