So last July I had the pleasure of visiting this case study home in New Mexico–100% sustainable, built completely off the grid, 10,000 square feet, 10 bathrooms w/ complete running water–although only using a well and harnessing rain water. Anyway, my point…it was constructed and envisioned by this man Robert Plarr who seemed light years ahead in his thinking and knowledge of human beings and the direction of our world and the economy. The Case study home hosted many influential people from artists to stars to CEOs mesmerized by his vison. Many evenings we would stay up late talking about these issues–He told us that the CEOs from Ford and GM had visited–they were floored by what they saw. They told Robert that a major recession was coming in 2006–that they would be laying off tens of thousands of people and closing plants. If I’d had any doubt about the validity of Roberts stories, it was cured last week when the news broke about the layoffs and the plants shutting down.
The US auto industry has its own problems so I don’t think that’s a good yard stick. Caterpillar for instance just announced strong profits so not all companies or industries are doing poorly.
If a recession were to happen, I think one possibility is the selling of US treasuries by foreign governments. Foreign governments like China and Japan own so much treasuries, if they do decide to dump them (or buy less), it could trigger a jump in long term rates. And of course there’s the declining USD and if this trend resumes in 2006, Ben may have no choice but to raise short term rates. Then the whole yield curve could shift up, killing off business activities and cause a recession.
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