Researchers at both JP Morgan and Citigroup agree that the probability that the U.S. economy will soon plunge into recession is rising.

The Economic Collapse

Are You Prepared For The Coming Economic Collapse And The Next Great Depression?

JP Morgan And Citigroup Agree That The U.S. Economy Is Steamrolling Toward A Recession

By Michael Snyder, on December 6th, 2015

 

 

As we approach the end of 2015, researchers at both JP Morgan and Citigroup agree that the probability that the U.S. economy will soon plunge into recession is rising.  Just last week, a member of the U.S. House of Representatives asked Janet Yellen about Citigroup’s assessment that there is a 65 percent chance that the United States will experience an economic recession in 2016.  You can read her answer below.  And just a few days ago, JP Morgan economists Michael Feroli, Daniel Silver, Jesse Edgerton, and Robert Mellman released a report in which they declared that “the probability of recession within three years” has risen to “an eye-catching 76%”…

“Our longer-run indicators, however, continue to suggest an elevated risk that the expansion is nearing its end, and our preferred model now puts the probability of recession within three years at an eye-catching 76%.”

The good news is that the economists at JP Morgan believe that a recession will probably not hit us within the next six months.  But due to steadily weakening economic conditions, they are convinced that one is almost certain to strike within the next few years…

“When we first wrote, only manufacturing sentiment was signaling an above-average probability of imminent recession,” they said. “But recent weakening in the Richmond Fed services survey and the ISM nonmanufacturing index have now pushed the nonmanufacturing sentiment probability up somewhat as well.”
In the short term, the note says that the 6-month likelihood is only 5%, but within a year it stands at 23%, in two years 48%, and in three years the “eye-popping” 76%.

To be honest, I believe that this assessment is far too optimistic, and it appears that researchers at Citigroup agree with me.  According to them, there is a 65 percent chance that the U.S. economy will plunge into recession by the end of next year.  Last week, Janet Yellen was asked about this during testimony before Congress…

In testimony before Congress’ Joint Economic Committee, Yellen was asked by Rep. Pat Tiberi about a piece of research released by Citigroup’s rates strategy team Monday.
Specifically, Tiberi, an Ohio Republican, wanted to know what Yellen made of Citi’s conclusion that there is a 65 percent chance of a U.S. recession in 2016.
“The economists said that they would assign about a 65 percent likelihood of a recession in the United States in 2016. Now, 65 percent sounds high to me, but I’m not an economist and I’m not the Fed chair. But zero risk might be too low as well. So what would you assign a risk level of a recession next year?” Tiberi asked.

So how did Yellen respond?

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Sen. Joe Manchin,urges federal regulators to ban Bitcoin. Janet Yellen, says , "Hands Off".

• NBC News

Senator Calls For Total Ban of 'Dangerous' Bitcoin

By Devin Coldewey

Drew Angerer / Getty Images file

Sen. Joe Manchin, D-W.Va, talks to reporters in September of 2013.

Sen. Joe Manchin, D-W.Va, has written to federal regulators urging them to totally ban Bitcoin, the "cryptocurrency" that has so excited the financial and tech world over the last year. Manchin calls Bitcoin "dangerous," "disruptive" and "highly unstable."

Addressed to Treasury Secretary Jack Lew and several other regulators, the letter paints Bitcoin as volatile and unregulated, a criminal currency already denounced by other major governments.

"The clear ends of Bitcoin for either transacting in illegal goods and services or speculative gambling make me weary of its use," Manchin, who sits on the Senate Banking Committee, concludes. "I urge the regulators to work together, act quickly, and prohibit this dangerous currency from harming hard-working Americans."

Sen. Manchin's objection certainly comes at a time of major turmoil in the virtual currency's history: The largest Bitcoin exchange (at which coins can be bought, sold, and traded), Mt. Gox, collapsed earlier this week after months of problems. Federal prosecutors are already looking into it and have reportedly issued subpoenas to Mt. Gox and others.

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The Wire

Janet Yellen Is Bitcoin Users' New Hero

Allie Jones

 

Associated Press

Diehard bitcoin believers can rest easy (for now). According to its new chair, Janet Yellen, the Federal Reserve will not regulate bitcoin. During her Senate Banking Committee hearing on Thursday, Yellen clarified the Fed's position on digital currencies for Sen. Joe Manchin. Manchin has asked federal regulators to ban the digital currency to "prohibit this dangerous currency from harming hard-working Americans." Yellen says the Fed can't do that. 

"Bitcoin is a payment innovation that's taking place outside the banking industry," she explained. "To the best of my knowledge there's no intersection at all, in any way, between Bitcoin and banks that the Federal Reserve has the ability to supervise and regulate. So the fed doesn't have authority to supervise or regulate Bitcoin in anyway." This makes bitcoin users very happy. 

In response to Yellen's statement, one bitcoin user posted on Reddit, "Well Manchin must feel like an idiot." According to users, Manchin doesn't get that the best thing about bitcoin is that it's unregulated. As another Reddit poster explained Thursday on the r/bitcoin forum:

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Here’s why the unemployment rate doesn’t matter anymore

• The Washington Post

• By Ylan Q. Mui

• February 11 at 12:20 pm

(Photo by Jacquelyn Martin/AP)

The unemployment rate used to be a pretty straightforward economic indicator. It showed the percentage of people who want a job but don't have one -- one of the most basic measures of labor market health.
But the number has been acting in funny ways since the recession, and it just keeps getting weirder. The unemployment rate skyrocketed as millions of people lost their jobs during the darkest days of the financial crisis. That part makes sense. 
What is harder to understand is why the jobless rate has dropped substantially even though many workers do not have jobs. Solving that puzzle requires looking at more esoteric labor market data. Even newly minted Fed chief Janet Yellen said on Capitol Hill today that "we shouldn't focus only on the unemployment rate."


Read More Here

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Former Harvard Economics Professor - Why am I getting in line to take my money out of Bank of America? Because of Ben Bernanke and Janet Yellen, who officially begins her term as chairwoman on Feb. 1.

PBS

Is your money safe at the bank? An economist says ‘no’ and withdraws his

BY Terry Burnham  January 30, 2014 at 12:45 PM EST

The Fed policies of Ben Bernanke and Janet Yellen, who begins her term Feb. 1, are making former Harvard economist Terry Burnham withdraw his money from Bank of America. Photo by Davis Turner/Getty Images.


Terry Burnham, former Harvard economics professor, author of “Mean Genes” and “Mean Markets and Lizard Brains,” provocative poster on this page and long-time critic of the Federal Reserve, argues that the Fed’s efforts to strengthen America’s banks have perversely weakened them. (See our 2005 segment with Burnham below about how “lizard brains” influence our economic decisions.)
Last week I had over $1,000,000 in a checking account at Bank of America. Next week, I will have $10,000.
Why am I getting in line to take my money out of Bank of America? Because of Ben Bernanke and Janet Yellen, who officially begins her term as chairwoman on Feb. 1.
Before I explain, let me disclose that I have been a stopped clock of criticism of the Federal Reserve for half a decade. That’s because I believe that when the Fed intervenes in markets, it has two effects — both negative. First, it decreases overall wealth by distorting markets and causing bad investment decisions. Second, the members of the Fed become reverse Robin Hoods as they take from the poor (and unsophisticated) investors and give to the rich (and politically connected). These effects have been noticed; a Gallup poll taken in the last few days reports that only the richest Americans support the Fed. (See the table.)

Why do I risk starting a run on Bank of America by withdrawing my money and presuming that many fellow depositors will read this and rush to withdraw too? Because they pay me zero interest. Thus, even an infinitesimal chance Bank of America will not repay me in full, whenever I ask, switches the cost-benefit conclusion from stay to flee.
Let me explain: Currently, I receive zero dollars in interest on my $1,000,000. The reason I had the money in Bank of America was to keep it safe. However, the potential cost to keeping my money in Bank of America is that the bank may be unwilling or unable to return my money.
They will not be able to return my money if:

Customers wait in line at the IndyMac Bank branch headquarters in Pasadena, Calif., in July 2008. Joshua Lott/Bloomberg News

• Many other depositors like you get in line before me. Banks today promise everyone that they can have their money back instantaneously, but the bank does not actually have enough money to pay everyone at once because they have lent most of it out to other people — 90 percent or more. Thus, banks are always at risk for runs where the depositors at the front of the line get their money back, but the depositors at the back of the line do not. Consider this image from a fully insured U.S. bank, IndyMac in California, just five years ago.
• Some of the investments of Bank of America go bust. Because Bank of America has loaned out the vast majority of depositors’ money, if even a small percentage of its loans go bust, the firm is at risk for bankruptcy. Leverage, combined with some bad investments, caused the failure of Lehman Brothers in 2008 and would have caused the failure of Bank of America, AIG, Goldman Sachs, Morgan Stanley, Merrill Lynch, Bear Stearns, and many more institutions in 2008 had the government not bailed them out.

In recent days, the chances for trouble at Bank of America have become more salient because of woes in the emerging markets, particularly Argentina, Turkey, Russia and China. The emerging market fears caused the Dow Jones Industrial Average to lose more than 500 points over the last week.
Returning to my money now entrusted to Bank of America, market turmoil reminded me that this particular trustee is simply not safe. Or not safe enough, given the fact that safety is the reason I put the money there at all. The market turmoil could threaten “BofA” with bankruptcy today as it did in 2008, and as banks have experienced again and again over time.
If the chance that Bank of America will not return my money is, say, a mere 1 percent, then the expected cost to me is 1 percent of my million, or $10,000. That far exceeds the interest I receive, which, I hardly need remind depositors out there, is a cool $0. Even a 0.1 percent chance of loss has an expected cost to me of $1,000. Bank of America pays me the zero interest rate because the Federal Reserve has set interest rates to zero. Thus my incentive to leave at the first whiff of instability.



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Harvard Economist Expects Bank Runs, Withdraws $1 Million from BofA

AMTV


 



Published on Feb 4, 2014
In today's video, Christopher Greene of AMTV reports on a Harvard economist who expects a Bank Run at Bank of America.
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[LINKS]
Is your money safe at the bank? An economist says 'no' and withdraws his
http://www.pbs.org/newshour/making-se...
Why Are Bitcoiners Going to Jail for Money Laundering While Big Banks Walk?
http://motherboard.vice.com/blog/why-...
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• Now You Can Panic: Economist Withdraws All of His Money from Bank of America

Ron Paul: Yellen is ‘worse than average’

  

Alexis Levinson

Political ReporterRon Paul is not a fan of Janet Yellen, the newly confirmed Chair of the Federal Reserve, but he told The Daily Caller Monday she is nowhere near as flawed as the system she is about to take over.
“She’s worse than average,” the former Texas congressman told The Daily Caller in a phone interview shortly after the Senate voted 56-26 to confirm Yellen’s nomination, “but I don’t dwell on that at all.”
“It was never the chairman himself, herself that’s the problem,” Paul said. “It’s the whole system.”
Paul has been criticizing the central bank for years, calling both for an audit of the Fed and for its total abolition. Paul a long-serving Republican member of Congress and 1988 presidential candidate on the Libertarian Party ticket, is a proponent of Austrian Economics, which focuses on the relativity of value and the impossibility of centrally planning a complex and dynamic economy.
“I put a lot of blame on the problems that we have, the booms and the busts and the unemployment and this recession that we can’t get out of –– it’s all due to the monetary system,” Paul said, saying they were “living in this dream world” to assume that one body could set interest rates. “And the head of the Federal Reserve just is the symbolic head of a deeply flawed system that should’ve never been created.”
“I think they’re living a pipe dream and it’s going to soon be very apparent what terrible shape our economy is in,” he said.
Yellen will hasten that revelation, Paul said, explaining that the reason he sees her as “a little bit worse than average” is “because she is probably going to be more excessive in creating money.”
“But what can she do?” Paul said. “They’ve taken the interest rates down to zero, the only tool they have is printing money, creating money out of thin air, so there’s nothing left. And she believes in even doing more of it.”

Read More Here

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