The Peanut Gallery

Statements, comments and forecasts that have no substance, but just might turn out to be relevant.

1. Latest US economic indicators are reflecting a slowdown in that economy. The peanut gallery predicts helicopter aviator, Bill Bernanke will announce QE3 under a different name. Bottom line, the printing machines will continue to be employed. Whats the alternative? A double dip recession approaching an election year?

2.China has far more problems than it is letting on. The Chinese economy needs to sustain 8% growth annually to absorb 16 million new jobs a year. Add to that, rising wages and an aging population, food inflation and a sprinkling of corrupt practises. Not all is well with the half awake giant....expect both religious, political and economic discord.

3.Looking for an Obama replacement? The peanut gallery is watching with interest the fortunes of former ambassador to China, Jon Huntsman and governor Rick Perry of Texas.

4.Historically gold has risen in price as the US dollar devalues. A slight but distinct metamorphosis is taking place. Gold has taken on a life of its own and is reacting to instability in all currencies, be it the USD, Euro or emerging markets currencies. It is also reacting to mismanagement of economies by mediocre government officials (by definition) and greedy interest groups.

5.The fog is starting to clear. The results of QE1 and QE2 are becoming apparent. The creation of two trillion dollars of debt in a period of two years has resulted in meagre growth in the US economy. Real unemployment is around 16%. Real estate is doing a double dip. The falling dollar has created a spike in commodity and food prices. So US and foreign manufacturers, both large and small are hesitating. They see demand disappearing while costs continue to rise.

6.The banks are making are making a fortune, borrowing from the federal reserve (an organization that has infinite power) at low rates and lending to the treasury at higher rates. Bank loans to business has fallen 13% this year. Why should they give loans when profits are gifted to them by professors Bernanke and Obama?

7. As for the man in the street, the peanut gallery vaguely remembers the title "Main Street". Anybody remember? It was a key expression used by the president in most of his pre-election speeches. Well main street is still struggling to find or hold onto a job. Wages are stagnant while prices of gas, food and manufactured goods rise. And the hero of main street? He is still making speeches and saving main street....In the Middle East....

8.Wall Street? Profits continue and so do the bonuses....

9.To sum it up. The economists call it stagflation. The peanut gallery mirror on the wall calls it "stagnating economic growth" plus "inflation".

10.The peanut gallery continues to warn. Not all Americans are naive. Float like a butterfly and sting like a bee. They are a great nation of brilliant innovators. This will be the source of their revival.

Can't usually means won't. We can.... if we will - Don Ward