Bad News on the Economic Front, Steve Forbest Predicts Return to Gold Standard Again, Volcker Claims Big Banks Can't Be Broken Up, and Tom Woods Takes on Salon

Wow, where to start on the dismal economic news.  Let's start with the obvious, Morgan Stanley is now adjusting its initial expectation of a growth in GDP of 1.9% to 1.5% for the first three months of this year.  From Bloomberg:

Morgan Stanley lowered its tracking estimate for gross domestic product in the first three months of the year to a 1.5 percent annual pace from a 1.9 percent forecast prior to the data. Barclays Capital in New York lowered it to a range of 1.5 percent to 2 percent, down a half point. GDP climbed at a 3.1 percent pace in the last three months of 2010.

This has of course lead to a narrowing of the U.S. trade deficit:

The gap shrank 2.6 percent to $45.8 billion from a larger- than-previously-estimated $47 billion in January, according to figures from the Commerce Department today in Washington. Another report showed the cost of imported goods jumped in March by the most in almost two years.

So how much did the cost in imports rise? From the Bureau of Labor and Statistics:

U.S. import prices rose 2.7 percent in March, the U.S. Bureau of Labor Statistics 

reported today, following a 1.4 percent advance in February.

The March increase was driven by both higher fuel and nonfuel prices.

Theprice index for U.S. exports increased 1.5 percent in March after 

rising 1.4 percent the previous month.

So how is consumer confidence doing?

At a nine month low, awesome.  Now that China has stopped their wanna be

"cash for clunkers," GM has taken a hit:

General Motors Co. (GM), China’s biggest overseas automaker, posted slower sales growth in the nation for the second month in March as the government reinstated a 10 percent sales tax and phased out subsidies for vehicle trade-ins in rural areas. Last year, overall auto sales surged 32 percent to a record 18.1 million, helping the nation stay the world’s largest vehicle market for the second year.

Nothing like some stimulus induced prosperity to make way for a hangover.  So with all this less-than-great
great economic news, Mish says what everyone should be thinking:

Expect to Hear the "R" Word Soon

• The ECB is hiking and that will not do Europe much good.
• Japan is obviously hurting.
• In the US, state budgets are a wreck and little or no help is coming from Congress.
• In the US, mall vacancies are high and rising
• Residential housing in the US remains an absolute disaster
• China is hiking to stave off property bubbles and inflation
• The Australian housing bubble has popped.
• The UK is a fiscal disaster.

The overall global economy is much weaker than most think and the global macro picture is awful.

And as EPJ reports, Nouriel Roubini tweets:

Portugal may end up as a worse mess than Greece/Ireland. Plan A (bailout) may fail even before you can design Plan B (debt restructuring)

While Portugal is sinking rather quickly, China may be stepping in to save Spain.  From Reuters:

MADRID/BEIJING, April 12 (Reuters) - China said it will carry on buying Spanish sovereign bonds and help fund a savings bank restructuring, giving the euro zone state fresh ammunition to allay lingering market concerns it might need a bailout.

Hmm, not sure of China's strategy here.  The Euro isn't exactly a safe haven right now and all this is doing is prolonging the inevitable bailout/collapse of Spain.

So you know Bretton Woods II going on in Connecticut right now?  You know, the George Soros planned shindig where global financiers are looking to adopt a new global monetary system?  Yeah, I am not too happy about it, but according to at least one source, the thing is a bust.  So here is the latest from Mr. Rate Hike himself former-Fed Chairman Volcker speaking at the conference:

"I don't like these banks being as big as they are," Mr Volcker told a conference at Bretton Woods in New Hampshire on Sunday night. But "to break them up to the point where the remaining units would be small enough so you wouldn't worry about their failure seems almost impossible," he said.

Robert Wenzel, once again, hits the nail on the head:

Bottom line: Without the implicit backing of the Federal Reserve, these banks would never survive in their current shape and size.

As I pointed out a few weeks ago, Steve Forbes mentioned in an editorial that he the U.S. would return
to a gold standard.  Well, he confirmed it again at a speech at Lakeland College:

"It's highly unusual what we're experiencing today," Forbes said of our nation's current economic woes. "The norm for this country is for people to move ahead. When that doesn't happen, you have to look at what's standing in the way."
Forbes likened the economy to a stalled automobile — too little fuel and the engine stalls; too much and it floods — and said that the Federal Reserve's current monetary policy plays a fundamental role in the situation.
"The Fed has been on a bender since the early part of the last decade, printing too much money," Forbes said. "They're doing it again. … Some people may benefit, short-term, but overall you don't get productive investment, (which) means more inflation at home, speculation in commodities, currencies."

In one of several predictions he made during the lecture, Forbes said that within the "next five years, for the first time since the 1970s, the dollar will be re-linked to gold."

Time will tell if he is right, though I doubt he is.  I would give it a little more than five years.

Speaking of gold standard, Tom Woods has a new video out refuting a Salon article which took a shot at
Ron Paul and the gold standard:

I love Tom Woods, but he spends an awful amount of time knocking down straw men in this video.  Though I agree with all of his points, I think perhaps the video should have been done in a different manner where he
explained why Ron Paul's beliefs are right rather than attacking an argument that wasn't really made by
Mr. Pareene.

Since he mentioned the military complex issue, I should point out this bit of interesting news from NYT:

Pakistan has demanded that the United States steeply reduce the number of Central Intelligence Agency operatives and Special Operations forces working in Pakistan, and that it halt C.I.A. drone strikes aimed at militants in northwest Pakistan. The request was a sign of the near collapse of cooperation between the two testy allies.

So that's now 4 war fronts in MENA countries we are now fighting in, great.

I will end a Ron Paul interview on Neil Cavuto.  No, he doesn't answer what you are thinking (I wish he would!)