Last month was eventful. Puerto Rico defaulted on debt payments for the first time while US wage growth and earnings reports relented more disappointment. Canada reported that for the past four months, economic growth continued to shrink and the Federal Open Market Committee once again issues a statement hinting at interest hikes coming soon. Feds continued to try and reassure investors that they would never fall down and no skinned knees would be involved but the current events prove differently. To break it up simply:
- “America’s Greece,” Puerto Rico, defaulted for the first time on debt payments, missing payment on $58 million of their $72 billion dollars of debt. Residents continue to flee, making things even worse as the tax base shrinks and President Obama has said that there will be no bailout from the Executive Branch. Even if some havoc results in the markets, it is time for us to start standing on our own two feet, taking the skinned knees that come with the uncertainty of life, markets and economies. China, Brazil, Canada, and Greece also are suffering.
- Wage growth and earnings reports continued to disappoint. The United States is on the edge of a recession and it may even be the inside edge.
- The Federal Open Market Committee issued a nearly unchanged statement that hints at interest rate hikes in the near future.
Early in the summer, Garcia Padilla, the governor of Puerto Rico, compared the territory’s debt situation to Greece, starting it was a “vicious death spiral” – the debt was simply unpayable. He continued, “This is not politics, this is simply math.”
Despite persistent and pervasive central bank manipulation of economies, the news from the world is so consistently disappointing that we all need to own up that it’s time to stop adjusting the markets and let them find their own free-market price discovery levels. The job growth in the headline numbers is a surge in low-paying jobs, while high-paying manufacturing jobs are being crushed.
Dawn J Bennett, founder and CEO of Bennett Group Financial Services and host of the radio show Financial Myth Busting with Dawn Bennett discusses in further depth the financial crises, using euphemisms like “death spirals” and “skinned knees.” Read the full article here.