This Unprecedented Economic Storm Is Just Getting Started
By Michael Pento of Pento Portfolio StrategiesJanuary 23 – (King World News) – Unprecedented Economic Storm
Economic activity dropped significantly in the first quarters of both 2014 and 2015. During that time the economy, as measured by Gross Domestic Product, grew at a paltry -.9% and .6% respectively. And as you would expect, the con artists on Wall Street tried to come up with a myriad of excuses for these poor performances
Instead of questioning the unsuccessful strategies of deficit spending and free money, the unanimous consensus arrived on Wall Street was to blame the weather.For the past two years we have been spoon fed the narrative that unusually cold weather is the reason for poor economic growth.
Given this tale, it should come as no surprise that the coldest weather in twenty years and the well-above average snowfall in New England brought the economy to a near halt in the first quarter of 2015. According to the National Climatic Data Center’s Northeast Snowfall Impact Scale,–yes that is real data center–the first quarter of 2015, “was only the fourth in 60 years on record with three or more snowstorms sufficiently severe to be rated.”
But the Wall Street cheerleaders weren’t the only ones playing the “blame the weather game”. The severely cold weather in the first half of 2014 led to 119 separate mentions of the word “weather” in the Fed’s Beige Book. According to the Fed, “in sector after sector and region after region, the weather played havoc on conditions”.
It appears we have re-entered a new form of the “Goldilocks economy”: instead of the temperature of the economy being perfect, the new paradigm is that it cannot be either too hot or too cold for economic growth to be better than 0.7%. In other words, it appears the economy can no longer function properly unless winter temperatures are cold enough to make snow, but yet also warm enough to prevent snow?
But this just subterfuge from government and Wall Street. The truth behind the global growth malaise has nothing to do with weather. Rather, it is that the world has become debt-disabled and global asset bubbles have become addicted to continuous money printing from central banks. Investors need to be in cash and short this market in preparation for the unprecedented economic storm that is just getting started.