The U.S. economy is poised to slide into a recession thanks to anemic job growth, weak industrial production figures and consumers who spend more than they’re taking home, says international investor Wilbur Ross, CEO of WL Ross & Co.

A slew of dismal economic indicators points to a fresh economic downturn in the world’s largest economy, especially the Bureau of Labor Statistics May jobs report.

“In the most recent jobs report, only 69,000 net jobs were created. We need to create over 100,000 just to keep the unemployment rate constant,” Ross tells Reuters.

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“In today’s world, there are many who want government to regulate and control everything. The most bizarre instance, though — more bizarre even than banning the sale of large-sized sugary drinks — is surely central banking.

Why? Well, central banking was created to replace something that was already working well. Banking panics and bank runs happen, and they have always happened as long as there has been banking.

But the old system that the Fed displaced wasn’t really malfunctioning — unlike what the defenders of central banking today would have us believe. Following the Panic of 1907, a group of private bankers led by J.P. Morgan successfully bailed out the system by acting as lender of last resort. The amount of new liquidity disbursed into the system was set not by academics like Ben Bernanke, but by experienced market participants. And because the money was directed from private purses, rather than being created out of thin air, only assets and companies with value were bought up.

The rationale of the supporters of the Federal Reserve Act was that a central banking liquidity mechanism would act as a safeguard against such events, to act as a permanent lender-of-last-resort backed by government fiat. They wanted something bigger and better than a private response.”

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“China surprised economists today with a surprise cut in interest rates by a quarter point, the first cut in rates since 2008.

Just a couple of months ago, few analysts had forecast that Beijing would cut rates, believing that China was on track for a “soft landing”. But after growth slowed to 8.1 per cent in the first quarter, recent data showed the economy was on track for a sharp deceleration.”
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“Federal Reserve Chairman Bernanke traveled to Capitol Hill this morning for his periodic appearance before the Joint Economic Committee of Congress.

Getty Images Federal Reserve Board Chairman Ben Bernanke testifies before the Joint Economic Committee on Capitol Hill June 7, 2012 in Washington, DC.

He delivered a careful and balanced view of the economy (a gradual healing in the context of a still-muted outlook growth and jobs), re-iterated the improved banking and financial conditions at home (stressing the major additions to bank capital), and referred to the strains in Europe (acknowledging that they act as a drag on the US economy).”

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“An International Monetary Fund report on Spanish banks will show the country’s troubled lenders need a cash injection of at least 40 billion euros ($50 billion), sources in the financial sector said Thursday.”

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Cites the need to tighten budgets as well.

“Headlines from the Bernanke speech:

• BERNANKE SAYS FED READY TO ACT, REFRAINS FROM DETAILING STEPS
• BERNANKE: `FISCAL CLIFF’ IN 2013 POSES A `SIGNIFICANT THREAT’
• BERNANKE SAYS U.S. BUDGET TREND `IS CLEARLY UNSUSTAINABLE’
• BERNANKE: EUROPE CRISIS IMPAIRING EXPORTS, CONSUMER CONFIDENCE
• BERNANKE SAYS EUROPE CRISIS POSES `SIGNIFICANT RISKS’ TO U.S.

But the kicker, as we explained a few days ago, is the Chairman’s hint that more QE would come in the form of additional Twist, not LSAP:”

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Security breaches are a big problem and LinkedIn needs to discover and quell the breach.

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Politicians are messing with the worlds paper wealth. Larry Fink says investors must be careful as markets have become tough to navigate.

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All eyes on the CLAM. Testimony begins at 10am.

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In Play ,

On the Wires 

Marc Faber is saying gold has bottomed and you can figure out the rest given everyone’s anticipation of what central banks will do.

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The Saudi’ should target $10 imo….

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An insider revealed after a meeting yesterday that both Bernanke and Geithner were very worried about Europe’s debt problems. Among the topics discussed the most important was:

“One of the issues which we talked most was how to deal with the banking sector in Spain or in some other European countries because we should avoid a new banking crisis,” Katainen said. “This is an issue which we are considering right now.”

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We have quite vehemently reminded readers of the dismal drop in US (and global) macro data over the past few months. These disappointing economic surprises and the ensuing global growth weakness will, Morgan Stanley believes, lead to a global policy response (rate cuts where rates can be cut and QE where they can’t) and while they expect this monetary policy to work in many important emerging economies, they are doubtful as to whether it will make a material difference to growth in developed economies.

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“Now that stocks are back to reflecting nothing more than expectations of how many times the Chairsatan dilutes the existing monetary base in a carbon copy replica of not only 2011 but also 2010… and 2009 (because contrary to what purists may believe, the only way to inflate away unsustainable debt in a growth-free economy is by destroying the currency), and manic pattern chasers have crawled out of their holes proclaiming the death of the bear market after a two day bounce, what is happening in the actual economy, no longer reflected by the market, has once again been pulled back to the backburner.”

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Art Cashin is not hot for this rally and does not really expect it to last. but the possibility remains that we could see three weeks of upside.

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Gold is up a $100 since last Friday and it makes perfect sense as the world expects more QE and stimulus to boost growth world wide.

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Hope he’s not on the bath salts….

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The U.S. economy is healing but not growing fast enough to achieve escape velocity and break free from the pull of a fresh slowdown, says Mohamed El-Erian, CEO of Pimco, manager of the world’s largest bond fund.

Despite gloomy headlines such as those pointing to dismal jobs reports, there are some winds of recovery blowing in U.S. sails.

Corporate earnings are healthy and wealthy households remain poised to spend and invest to boost the economy. Housing appears to bottoming out and despite May’s jobs report, which showed the economy added a scant 69,000 net jobs, jobs are still being created.

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