If you think this is a bad economy, you haven’t seen anything yet

Tuesday, October 4, 2011
By Paul Martin

By Renisha Chainani
CommodityOnline.com

On 30 September, the ECRI (Economic Cycle Research Institute) came out with a statement that the U.S. economy is headed for a new recession that the U.S. federal government cannot prevent. Data are starting to show signs that a new recession is not only possible, but quite likely in the near future. They further said it’s not just a bad economy that will cause problems for us; it’s an economy that will keep on worsening having locked itself into the vicious cycle.
The ECRI, a widely respected forecasting firm, has used some indicators to show that the U.S. economy is already or is on the verge of falling back into another recession. What’s worse is that it made clear that the economic conditions are so bad that we should stop tying our expectations to policymakers to pull us out.

Before this outlook was released by ECRI on last day of September, Global markets suffered serious setbacks during September as investors’ nerves were tested on numerous occasions. Hardest hit has been the Silver and Base metals sector with the London Metals Index (LMEX) down 21 percent year to date with Copper and Nickel particularly suffering heavy losses.

The near six percent rise in the value of the dollar during September also hurt the sector, given its inverse relation to commodity prices. Silver dropped by 34 percent in a matter of days, its sharpest drop in 30 years. Gold meanwhile corrected by 20 percent from its peak, which has only happened twice before during the last decade. Copper entered into a bear market having corrected by one third from the February high as hedge funds reversed their positions into shorts for the first time in more than two years.

The Rest…HERE

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