David Rosenberg Part 1: "Why The Depression Is Ongoing"

Tyler Durden's picture

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Mako's picture

You haven't seen a depression yet, the entertainment is just starting.  Wake me up in 40 years and I will take a peak as to how far along all you guys are in the liquidation process.

Won't be a 18-25 year process like last time.  Figure a generation or two this time.

http://www.marketoracle.co.uk/images/2009/Mar/Total_Credit_Market_Debt_v...

The chart is a few years old, you are just starting the roll over portion.

RSDallas's picture

Mako,

One would think that the debt default rate could begin to increase when it becomes obvious (which I think we are close to) that the fed and feds around the world have botched this one.  The debt doesn't have to go to zero before we see some blue skies, does it?  

From what I've read the 1921 depression was as bad or worse than the 29 crash and it cleared itself incredibly fast because the government took the stance of "no one is to big to fail" and excessive debt and malinvestments were wiped out at an astonishing pace which allowed the economy to actually begin it's healing process within a years time. 

Maybe it's wishful thinking, but I can't wait 40 years.  Maybe Gov. Christie will run and win the next presidential election.

dnarby's picture

Quite to the contrary, due to lightning speed communications and global interconnectedness, this will happen with comparitively lightning speed.

I give it 18 months on the outside.

uno's picture

Print Baby Print, or is it Print Print Print.  When that slows then the meltdown begins.

react1200's picture


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CPL's picture

Better yet, sign a petition! That way 1000's of people are duly ignored all at once.  Saves time in the matter.  Not like phoning them has helped in any unique way in the past regarding due process, legal or not.

 

Seriously don't bother wasting your time unless approaching how you can use hand puppets to explain basic economic principles.  So far letters, interviews, phillybuster sessions, hand outs, spreadsheets, power point decks and bribery have done nothing.

So what do you honestly think a phone call is going to achieve?  Let me tell you.

 

Nothing.

Sudden Debt's picture

If you ignore the thing (you know what I mean) it will just go away by itself.

I bet it returned because SOMEBODY said it out loud again!

Never call it by it's name! If everybody doesn't say it anymore, it will go away!

 

Wyndtunnel's picture

DEPRESSION.  There I said it. And I feel less depressed for it.

chistletoe's picture

From a distance, its quite simple:

Capitalism depends on an expectation of growth in order to work.

You don't borrow money unless you expect that

you will have more money coming in in the future to pay it off than you do now

(unless you are planning to file bankruptcy ... but that's a special case.)

You don't loan money unless you expect your client to have more money coming in

in the future than he does now to pay it off.

 

However, today,

we have this anti-immigration racist madness going on,

and we have peak oil, and peak water, and peak food.

So rational people everywhere expect no more growth.

So they have stopped lending and stopped borrowing.

No amount of printing paper by the govenrments is going to change that,

in fact, it just makes matters worse.

 

We have a change coming.  Big change.

The rich are the last to catch on.  They have it coming ...

no cnbc cretin's picture

Good points.

I would add, growth is not substainable - as many seem to think it is.

Sudden Debt's picture

WTF! WE HAVE PEAK FOOD!!!!

I WAS GOING TO HAVE A BBQ THIS WEEKEND AND NOW YOU TELL ME?!

 

looks like I'll have to cut down on the vegetables... the misses really thought it would have been good for me... she'll be so dissappointed...

O hell, I'll survive :)

swamp's picture

The race card is has become the joker.

You are a complete idiot if you think our Constitution is a cartoon and that as a soverign nation we Americans are not permitted to have say about who comes here and how many. 

You are part of the problem, a useful idiot. Useful to the New World Order and the brain dead racists who call everyone else racists. Joker.

The real racism is the genocide against white people who are being squeezed out of their own country and who have been told for 30 years to have only 2 kids or 1.5 kids hence a dwindling population and the Mexicans have 14+ each.

Augustus's picture

Be careful with the various Peak predictions.  You will become know for posting nonsense.

You should be watchful that you are not overcome with the AlGore delusions that led to the suicide deaths of that whole family in Argentina.  It was not much different from the people at Jonestown.  Quite a dreadful outcome when they were overcome by their odd religious beliefs.

no cnbc cretin's picture

Yes, we're in the beginning of a very long Depression. The only reason this phony economy is afloat, is because of the printing press - which at some point will stop.

Sudden Debt's picture

I heard they just delivered a whole crate of WD40 at the FED's headquarters... I don't know... I think the presses seem to be maintained pretty well...

CPL's picture

Yeah,

It's a big red button now.

Apostate's picture

Growth, GDP, all these metrics are just Cold War dick-measuring tricks. The government needs to show "growth" to indicate that it can stay in power and retain control over the banking system.

Real economies don't give a shit about "growth" as long as they are still meeting the demands of customers. You care about solvency, profit and loss, nothing else.

Whizbang's picture

As long as the government is mucking about, there will be no recovery. Systemic correction is needed to clear the books.

AccreditedEYE's picture

"Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people." -Treasury Secretary Andrew Mellon

poydras's picture

On an inflation adjusted basis, economically earned income is back to late 2005 levels.  The per capita basis is worse of course.

rich_maverick's picture

This is why I'm finished my accumulation of physical PMs and am now am moving towards guns and ammo.  Personally, I'm saddened that by the situation as I'm honestly more of a pacifist.  But, having physical PMs and not having armed guns is kinda pointless.  Those with the guns will have control over those without.  Seen it time after time in my military days.  It sad watching America fall into a 3rd world nation.

Rich

 

tony bonn's picture

well mr rosenberg, industrial activity may well be v-shaped but it is only 19% of gdp and as you note gdi isn't looking too good...

industrial output will only sustain as long as exports grow at the torrid pace you cite....if that slows, industrial activity will curtail sharply....but the good news is that it is only 19% of gdp....

sgt_doom's picture

Thanks Tony, for stating the obvious (obvious to everyone else except rosenberg, of course!).

Seriously, as anyone with two neurons to rub together who follows this site is aware, there is no economy (nor any media, for that matter).

But then, you just explained that, didn't you???

 

Roy Bush's picture

Waste of time.  Stop looking to the government to change anything that helps the average person.  It won't happen.  The only thing that will help the average person is the stock market going to zero and a complete collapse of fiat money.  And yes, it will happen on its own.

swamp's picture

There's one besides me left. Maybe a few more :)

The protracted assault on personal responsibility has left a nation crippled.

sethstorm's picture

Make it impossible to get around creating work in the US - and not temp work a la Europe.  Not the proverbial ditch dig/fill, but something that actually has some productivity to it.  

There are too many for whom are using jobs(existence and placement) as a political weapon - and not for any good means. 

three chord sloth's picture

I don't think this is a depression. I think this is de-industrialization.

We have been using bubble economics to hide the decline over the past 3 decades, but now all of the bubbles have popped, and we're finally seeing what they've been hiding all these years. The mergers-and-acquisitions bubble of the eighties, the high-tech and dot-com bubbles of the nineties, and the exploding debt bubble of the aughts are all played out now, and we're settling into the new normal.

We shipped out millions of high-paying, wealth-creating blue collar jobs, and this has left us hollow. We have a warped, incomplete economy, an economy that has no real use for 30% - 40% of the population. The prediction that it will take 5 years to soak up the current unemployed is a joke -- there will be more unemployed then than there is right now, as the off-shoring of back-office labor accelerates.

It's funny -- pretty much everybody can see the flaws in North Korea, the Hermit Kingdom. A completely closed economy with completely sealed borders is obviously flawed. But so few can see that its exact mirror image, completely free trade with wide-open borders, is just as flawed. If one position is too extreme, how can its polar opposite be less so?

So anyway... don't call this a depression. It is systematic, purposeful de-industrialization.

sethstorm's picture

Thus my reply above. 

In finding work:

The "qualifications" word gets overused a bit much.  Given the extended unemployment, too many entities are able to sweep said unemployed away if it's not voting season. 

 

overmedicatedundersexed's picture

with you there.."It is systematic, purposeful de-industrialization."

great insight into the mirror image of N Korea..

the do gooders (aka as long as we benefit crowd) elites killed the golden goose..

thank you think tanks and endowment funds'

taken over by leftist (ford foundation comes to mind),

for the death of the middle class and the perpetual poverty placed on the poor..

they may rejoice in victory as America has been

chained to marx.

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spritch's picture

Christletoe I have to agree with you. Capitalism depend on infinite growth. Works good in minecraft but not so good in our world of limited resources. Very good post.

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