The Apocalypse-like scenario painted by “Currency Wars” best-selling author James Rickards about the US facing the prospect of a 25-year Great Depression is certainly depressing for many people. According to Rickards, who calls himself an “economic historian” and is a financial threat adviser to the CIA and the Pentagon, America’s “dangerous level of debt” and the Federal Reserve’s reckless printing of trillions of dollars should serve as bright red signals that a major financial crash is coming.
Known as an investment banker and hedge fund manager who reportedly helped uncover terrorist insider trading after the 9/11 tragedy, Rickards says a key signal is the way the Fed has reportedly been changing Misery Index calculations to hide the true state of the US economy. The Misery Index is an economic indicator wherein figures are arrived at by adding the true unemployment rate with the true inflation rate.
Rickards says the US government does not want the American public to know that the Misery Index has reached more dangerous levels than people have seen prior to the Great Depression – pointing to a complex system that’s about to collapse, a systemic meltdown that no one will see coming. “There will be no digging out from it… $100 trillion is a conservative estimate for the damage. A lot can happen over 25 years as our country struggles to recover from this,” he predicts.
Some economic experts, however, are skeptical about the dire predictions made by Rickards, whose critics paint him as an economic doomsayer and fear monger. For one, unemployment levels in many states have dropped, with less people applying for unemployment aid, according to latest reports. According to US government data, hiring has increased as seen in the 321,000 jobs added by employers spread across 41 states last November, bringing the total to 2.65 million new jobs generated from January to November 2014. In Arkansas, North Carolina, Virginia, Tennessee, Nebraska, Virginia, Ohio, Missouri and North Dakota, the unemployment rate has significantly dropped (to as low as 2.7 percent for some states).
The drop in oil prices to as low as $50 per barrel can also give the US an added edge according to Sen. Judd Gregg and Larry Summers, the former Treasury Secretary during the time of US President Bill Clinton. According to Summers, the US has the chance to become what Saudi Arabia has been for the last two to three decades: the star of the next decade as far as oil and energy is concerned. (In short, strike while the iron is hot since oil prices are known for being very volatile.)
The American economist and Harvard University president emeritus, however, expressed frustration at what he calls the “below potential” economic performance of the US. At the recent conference of the American Economics Association, the downward assessment of the US economic potential could serve as a major hindrance to future growth, Summers said. “That 10 percent potential represents about $20,000 per American family,” he noted, adding that the Federal government ought to spend one percent of GDP on public infrastructure.
One other positive indicator for many analysts and US businessmen is President Barack Obama’s nomination of Allan Landon as a member of the Federal Reserve Board of Governors. This was hailed as an excellent choice by Citigroup chairman Michael O’Neill, who described Landon as a highly ethical, hardworking individual.
Landon is the former CEO of the Bank of Hawaii and during his tenure, the bank was able to weather the financial crisis in 2008 and was named by Forbes as “America’s Best Bank” in 2010. Those familiar with Landon say his nomination is a boost to smaller banks, citing his vast experience as a community banker. Landon has “the proven experience, judgment and deep knowledge of the financial system to serve at the Federal Reserve during this important time of our economy,” Obama stated, his sentiment shared by many who are confident that Landon’s nomination will be approved by the Senate Banking Committee.
Bright prospects for Phl economy in 2015
Meanwhile, the Philippines is facing bright economic prospects for 2015. Manila Rotary, the oldest Rotary club in Asia with a large number of prominent businessmen as members, is looking forward to listening to guest speaker BSP Governor Say Tetangco during the RCM’s regular lunch meeting today.
Say is understandably upbeat about the country’s growth prospects, with a lot of positive indicators such as the higher dollar remittances from overseas Filipino workers estimated at $24 billion – higher than the $23 billion recorded in 2013 – and that does not even include the “informal” remittance channels utilized by OFWs. These dollar remittances have been a key factor in keeping the peso strong.
According to the BSP, the Philippines is increasingly becoming attractive to foreign investors due to the improved economic fundamentals in the last several years, underscored by the economic upgrades from international ratings agencies such as Moody’s, which recently upgraded the country’s credit rating to Baa2 with a stable outlook.
Despite underlying potential global threats that include a volatile market, the prospects are upbeat and the Philippines is expected to weather economic disturbances especially with our $79 billion in reserves as of November 2014 – the highest ever in our history – more than enough to cover the country’s monthly import bills 10 times over. Let’s not forget, spending will be ramped up due to the 2016 May elections which is practically just around the corner. As noted by Governor Tetangco, increased spending would help ensure that the growth target placed between seven and eight percent this year would be achieved. Lucky for us – bright economic prospects, indeed.
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Email: spybits08@yahoo.com.