The age of turbulence

Publié le par Jean-Pierre Chevallier

The age of turbulence


The latest figures yesterday published by the Fed are worse than those of the previous week: Americans increased their savings of $ 40 billion compared with the previous week, and especially to $ 127 billion over the last 4 weeks ending February 11.

It's worse than last August at the height of the subprime crisis.

It is worse after the terrorist attacks on September 11, 2001: Americans have increased their savings than $ 50 billion but in the following weeks, they continued to spend their money normally, which maintained growth.

The main concern of Alan Greenspan was returning to the American economy and he intervened strongly in this direction.

Ben Bernanke is not responding and it is a problem ...

- Either he is incompetent and oblivious to the gravity of the situation created by maintaining the rate of the Fed too high for too long (and the Wall Street Journal published an article in this direction by reviewing his possible successor!),

- either Americans voluntarily create a shock as part of their strategy of disorder they finally emerge victorious (a recession in the United States will have a major impact throughout the world).

The behavior of Americans changed completely from the collapse of Jan. 21: before that date, they normally spend their income, which worked for growth, but since they spend less and save more, slowing growth.
If this trend continues in the coming weeks, GDP growth will be negative for this first quarter compared to the previous.


M2-M1 rose by 8.5% year on year, as the worst time of last August. The trend of early January has been completely reversed,

Chart 1:
2008.02.22.US.1.M2M1.gif
(Click here to enlarge the graph)

As GDP growth is inversely proportional to the variation in the free money supply, this growth will be negative if the behavior of Americans will not change radically in the coming weeks,

Chart 2:
2008.02.22.US.2.FRM.gif
(Click here to enlarge the graph)

M2 increased by 6.8% a year-on-year, far too much while the increase was returned to normal at 5% before January 21,

Chart 3:
2008.02.22.US.3.M2.gif
(Click here to enlarge the graph)

Americans must spend more immediately to ensure that growth does not fall,

Chart 4:
2008.02.22.US.4.FRM05.gif
(Click here to see graph)

Alan Greenspan has rightly observed that the future will be different from the past: changes in the behavior of the Americans could create strong turbulence that will be very difficult to manage.

It is a time of turbulence, a book to read!

Commenter cet article

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