Weather Report: The Economy — “Crazy Fed”?, Deep Recession From Deep Job Losses, Food — Going Hungry

THE ECONOMY–“CRAZY FED”?: Money news (moneynews.newsmax.com) on 12/9/08 presented the article, “Roubini: Fed Will Have to Go Crazy”.

The NYU Professor Nouriel Roubini terms our current economic situation one of “stag-deflation”. This is Professor Roubini’s term to describe an economy that is mired in the combination of recession, deflation, and economic stagnation..

These then are “desperate times” that give forth “desperate economic news” and therefore require “desperate policy actions” according to the professor. It is the combination of these “ desperates ” that will push the Fed into more “crazy” policies along with the worse economic news to come.

DEEP RECESSIONFROM DEEP JOB LOSSES: Bloomberg.com of 12/7/08 says in a piece, “U.S. Job Losses Signal Recession Will Be Long, Deep (Update2)” by Rich Miller and Bob Willis, that the U.S. “… may be headed for the longest recession since WW11…” due to increasing job losses.

Employers are cutting jobs at the fastest rate in 34 years in order to survive. Along with jobs, businesses are reducing investments to strengthen their cash positions for what they perceive as more economic difficulties ahead. This “survival mode” according to Mark Zandi, chief economist at Moody’s Economy.com, portends “big job losses” in the future.

FOOD–GOING HUNGRY: Energy Bulletin (energybulletin.net) on 12/8/08, notes in a brief Paul Myers (Sydney Morning Herald) article, entitled “Going Hungry in the 21^st Century,” that the world is currently experiencing, “The most acute food shortage in more than 40 years, according to the World Bank…”.

This food shortage is unique, according to the article, in two very important ways: first, it’s “… not confined to sub-Saharan Africa…” and second, it’s not “temporary”.

Declining food supplies are also in evidence in places like South Asia, Central and South America, and the Caribbean. Here it is important to note that for the past 12 months a number of countries have temporarily prohibited rice exports (China, Thailand, Cambodia, Vietnam, and Egypt) in order to, the article states, “…preserve local supply.”

At the end of this week, PrudentHome hopes to discuss a/some different perspective(s) on what some are calling the “depression”.

Until then, keep your eyes on the horizon.