G.O.O.D

Source: money.cnn.com

A key measure of consumer confidence fell to an all-time low in December amid a dismal job market and uncertain outlook for the new year.

The Conference Board, a New York-based business research group, said Tuesday that its Consumer Confidence Index fell to 38 in December, down from 44.7 in November.

Economists were expecting the index to increase to 45.5, according to a Briefing.com consensus survey of economists.

The gloomy news came at the end of a full year of recession. The credit crunch has strained the financial system as central banks struggle to raise capital.

At the same time, housing prices have plunged and S&P 500 has plummeted more than 40%. The dollar has been weak against major currencies. This year’s holiday retail season is predicted to have been the worst in decades.

Perhaps most unsettling for Americans is the deteriorating job market. Layoffs and income cuts were widespread this year. The number of Americans filing for first-time unemployment benefits rose to a 26-year high for the week ended Dec. 20.

Nearly 2 million jobs were lost in 2008, and the slumped stock market means some nest eggs have shrunk considerably.

The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households.

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Source: breitbart.com

The governor of the Bank of Spain on Sunday issued a bleak assessment of the economic crisis, warning that the world faced a “total” financial meltdown unseen since the Great Depression.

“The lack of confidence is total,” Miguel Angel Fernandez Ordonez said in an interview with Spain’s El Pais daily.

“The inter-bank (lending) market is not functioning and this is generating vicious cycles: consumers are not consuming, businessmen are not taking on workers, investors are not investing and the banks are not lending.

“There is an almost total paralysis from which no-one is escaping,” he said, adding that any recovery — pencilled in by optimists for the end of 2009 and the start of 2010 — could be delayed if confidence is not restored.

Ordonez recognised that falling oil prices and lower taxes could kick-start a faster-than-anticipated recovery, but warned that a deepening cycle of falling consumer demand, rising unemployment and an ongoing lending squeeze could not be ruled out.

“This is the worst financial crisis since the Great Depression” of 1929, he added.

Ordonez said the European Central Bank, of which he is a governing council member, would cut interest rates in January if inflation expectations went much below two percent.

“If, among other variables, we observe that inflation expectations go much below two percent, it’s logical that we will lower rates.”

Regarding the dire situation in the United States, Ordonez said he backed the decision by the US Federal Reserve to cut interest rates almost to zero in the face of profound deflation fears.

Central banks are seeking to jumpstart movements on crucial interbank money markets that froze after the US market for high-risk, or subprime mortgages collapsed in mid 2007, and locked tighter after the US investment bank Lehman Brothers declared bankruptcy in mid September.

Interbank markets are a key link in the chain which provides credit to businesses and households.

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Jean-Claude Trichet

Source: Bloomberg.com: Germany

European Central Bank President Jean- Claude Trichet said the euro region’s economy will shrink next year for the first time since 2003 after the bank delivered the biggest interest rate cut in its 10-year history.

“Global and euro-area demand are likely to be dampened for a protracted period of time,” Trichet said at a press conference in Brussels today. The ECB lowered its benchmark by three quarters of a percentage point to 2.5 percent.

The ECB’s decision came after the Bank of England today cut its key rate by one percentage point to 2 percent and Sweden’s central bank lowered borrowing costs by the most since 1992. The Federal Reserve’s benchmark rate now matches a five-decade low as central banks rush to respond to the global recession.

“The level of uncertainty remains exceptionally high,” Trichet said. The euro was little changed after his comments and traded at $1.2634 at 3:16 p.m. in Brussels.

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Source: Telegraph

Gold is poised for a dramatic surge and could blast through $2,000 an ounce by the end of next year as central banks flood the world’s monetary system with liquidity, according to an internal client note from the US bank Citigroup.

The bank said the damage caused by the financial excesses of the last quarter century was forcing the world’s authorities to take steps that had never been tried before.

This gamble was likely to end in one of two extreme ways: with either a resurgence of inflation; or a downward spiral into depression, civil disorder, and possibly wars. Both outcomes will cause a rush for gold.

…

Citigroup said the blast-off was likely to occur within two years, and possibly as soon as 2009. Gold was trading yesterday at $812 an ounce. It is well off its all-time peak of $1,030 in February but has held up much better than other commodities over the last few months – reverting to is historical role as a safe-haven store of value and a de facto currency.

Gold has tripled in value over the last seven years, vastly outperforming Wall Street and European bourses.

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