The End Of The End Of The Recession
Zero Hedge, in collaboration with David Rosenberg, Chief Economist & Strategist, Gluskin Sheff + Associates, Inc., is pleased to release the attached analysis "The End Of The End Of The Recession." It is our hope that this piece will provide some badly-needed perspective on "the recession is over" debate, a topic that has become as one-sided as it is wrong-headed. Our purposes is to promote rational, informed discourse on the subject and to this end we enthusiastically solicit reader feedback. Our presentation is licensed "creative commons: attribution" and we hope that our readers will feel free to forward it on or excerpt from it freely, provided attribution is preserved.
The End of the End of the Recession
| Attachment | Size |
|---|---|
| The End Of The End Of The Recession.pdf | 1.03 MB |
(42 votes)
on Sun, 07/26/2009 - 21:45
#15683
It's the start of a journey
To a much better place
And this wasn't bad(?)
So a much better place
would have to be special
No need to be sad
on Sun, 07/26/2009 - 22:42
#15723
so drink this fine cocktail
and rest on your bed
a journey awaits
once we're all dead
good night children
on Sun, 07/26/2009 - 21:46
#15685
Simply outstanding work. Give the rest of the world 60 days to latch on to the substance of the attached, and fasten your "cash for clunker" seatbelt.
This resource is without equals. I am becoming optimistic again.
on Sun, 07/26/2009 - 21:48
#15686
As a regular reader of David's musings (and yours), I only skimmed, as I have read all that stuff before (and I agree with almost everything).
I must say one thing though: I find it comical that people blame that recession on the failure of Lehman Brothers. Lehman is a product (and a spectacular catalyst of this collapse), but in no way a cause. Underwriting standards, reckless monetary policy (hello, anyone from Greenspan Associates listening), you name it.
I think the same would have happened in 2 or 3 years, instread of 1, but Lehman proved to be a spectacular catalyst. If the same amount of credit was not available to the real estate market and it was ALREADY deflating---and RE was the root of all evil in the system---how is this a LEH-driven problem? Yes, a catalyst (a big one), but not a cause...
on Mon, 07/27/2009 - 09:58
#15903
I don't think its being referred to as a cause, more of any easy point of reference. When the history of this crisis is written, I think the LEH collapse will occupy a similar point in history as the 1929 crash does for the Great Depression/WWII crisis.
on Mon, 07/27/2009 - 11:33
#15959
You would be surprised from how many people I have heard this crap. My favorite Lehman story was a couple of months before the failure from a CFA Level II candidate in midtown: "It's a good company; it's just that it has a balance sheet problem."I asked what about the balance sheet leverage, but got a blank look.
If the CFA Institute ever grants that CFA, so much for that institution...
on Sun, 07/26/2009 - 21:48
#15687
As always, great work ZH and staff.
"Talent cant be denied"
on Sun, 07/26/2009 - 21:49
#15688
You could could also add a chart of current oil inventories. Where are they going to keep putting all of that oil if no one is using it?
on Sun, 07/26/2009 - 21:51
#15689
Not so much good news. But DOW can still hit new highs given the fed. gov. liquidity pump up. Fundamentals are a fools game with this kind of liquidity, all worldwide markets are rocket shots until liquidity doled out to mega banks is withdrawn. Reminds me of techs in 1998! Play it for now!!
on Sun, 07/26/2009 - 21:51
#15690
That is amazing work... the brains and insight behind this are impressive... it reinforces what many feel in their 'gut' but have difficulty separating out from the deafening noise of the MSM.
on Sun, 07/26/2009 - 21:59
#15692
Players are traders in this market and all making money on the upside. Stop being caught up in the long term issues and day trade. Wait for morning lows and then go long and sell at with 15 min. left in market and repeat.
on Sun, 07/26/2009 - 21:59
#15693
great report. i just scanned it but will definitely restudy and forward.
a couple of thoughts:
in regards to capacity utilization and ism/manufacturing slack. the price of natural gas will likely turn higher before capacity util bottoms (or we get the data that it has bottomed) and the ism index is highly correlated with nominal gdp which is in turn highly correlated with the 10YR yield, if the 10YR yield takes out 4.00% you can assume nominal gdp is rising and therefore manufacturing. watch natural gas and the 10YR note yield for leading indicators.
also you left out the pending commercial real estate maturity default crisis. all 2005-2007 loans made at historically low cap rates, high ltvs with inflated collateral is coming due. more equity down the drain....
on Sun, 07/26/2009 - 22:01
#15695
CRE is a whole different (yet related) topic. The next big report will focus on the $3 trillion conundrum.
on Sun, 07/26/2009 - 22:15
#15706
lol, conundrum is putting it lightly - bloodbath sounds about right.. regional banks will be dropping like flies
looking forward to it
on Mon, 07/27/2009 - 10:29
#15919
Tyler:
This was a fantastic piece of reporting the "actual" facts versus what we hear on MSM everyday. Thank you for doing what you do. Please be careful, there are powerful people who, I'm sure, would like to see ZH stopped. Ever see "enemy of the State"?. Watch it and learn.
on Sun, 07/26/2009 - 22:01
#15696
Folks, I think you're wrong. Consumers will probably just walk from their debt and thanks to Obama, we're just gonna have one big Jubilee!
http://www.businessinsider.com/henry-blodget-the-new-consumer-debt-strat...
on Mon, 07/27/2009 - 09:42
#15891
And who'll be forgiving whose debts, and in return for what? If the Chinese/world yank your scrotum hard enough, do you think it might change your world view? No oil, no food, no currency. Thats the life
on Sun, 07/26/2009 - 22:04
#15698
Read reports and waste your time. Trade with the flow then party and make dough like a pro.
Tyler your a wuss and you can't take the truth!!
on Sun, 07/26/2009 - 22:14
#15705
I think that "trade with the flow, then party, and make dough like a pro" got us into trouble in the first place. Perhaps we should try a new strategy this next time around.
on Mon, 07/27/2009 - 08:38
#15856
That's a rephrasing of "keep dancing 'til the music stops" Ask Chuck Prince about that approach.
on Mon, 07/27/2009 - 13:55
#16039
I think it worked about pretty well for him, roughly 100mm golden parachute. He also continues to use all of Citi's perks including a manhattan office and a 24/7 black car and driver. Plus he no longer has the headache of the job, his only worry is finding an extra spot in his tee time for stan o'neal
on Sun, 07/26/2009 - 22:17
#15707
The emperor has no clothes.
on Mon, 07/27/2009 - 01:56
#15777
trade with the flow - fine but remember you are skating on the edge of cliff that will give way sometime in the next 12 months with no warning - this is not "normal" growth in value
on Mon, 07/27/2009 - 04:42
#15799
And when the shit hits the fan , try to outsell colocated HF computers.
on Sun, 07/26/2009 - 22:07
#15700
Like what I read so far. Job well done Tyler Durden & Co.
"MARK IT ZERO, DUDE"
on Sun, 07/26/2009 - 22:13
#15704
An astue piece. But co-authored with an employee of an investment manager?
http://www.gluskinsheff.com/us-intl/ourteam/david-rosenberg.html
Is this supposed to be considered unbiased? What a let down, even ZH chooses the path of conflicts of interest.
"At Gluskin Sheff, we believe that superior long-term investment performance is grounded in disciplined security-specific selection."
Oh dear, at least it's good that we know of these affiliations sooner than later.
on Sun, 07/26/2009 - 22:27
#15711
By definition for ZH to have a conflict of interest, ZH would have to have an interest that would compromise their actions. ZH has disclosed many times that they follow Rosie, as do many of us... that in itself is not a conflict. For there to be a true conflict they would need to be invested with Gluskin Sheff, and to do that they would need $5 million, and I am not sensing that this is the case.
on Sun, 07/26/2009 - 22:30
#15713
Yeah, I read the report. The discussion of prices of frozen chicken commodities and soup futures was pretty fucking blatant. It smacks of influence peddling from an investment firm running a chicken soup hedge fund.
In full disclosure, I hold a sizable position in beef jerky and have done battle with the chicken soup traders for years. Especially the Canadians. They have the market cornered on ketchup chips. Look at the 0.96 correlation between SPY and the spot price of ketchup chips (rebased to gold from the Loonie) and you'll see what I mean.
Conflicts GALORE. Thank you for pointing this out. When a Canadian talks about "long term performance" that's just them pimping the frozen chickens.
on Sun, 07/26/2009 - 22:54
#15733
We know the numbers, and even with green-shoot propaganda, most people still have a guts that speaks the truth.
Nice work Tyler and Co., except for that outrageous reference to chicken, OMG TYLER how could you! (hahahah, just kidding)
I am sure the folks at GS and MS are wringing their hands as we speak and soon they will try to one-up you somehow, as not to be left behind.
on Mon, 07/27/2009 - 08:58
#15864
ROFL!!
I needed that laugh on this stinking hot, humid depressing monday.
on Sun, 07/26/2009 - 22:35
#15717
It doesn't look like "co-authored" is the right word for this. I believe ZH is using some Rosenberg material with his permission (or one would hope).
If you want to know more about Rosenberg's opinions, Bloomberg Surveillance has a podcast interview as recent as July 23rd.
on Sun, 07/26/2009 - 22:38
#15720
Get a clue Alexander Supertramp -- like anyone here needs you to link to a bio of David Rosenberg. Rosie is obviously not the co-author of this piece. TD basically summarized hundreds of pages of Rosie's commentary over the last couple of months and had to credit him for it. 'With special thanks to' is not part of the by-line.
on Tue, 07/28/2009 - 19:32
#17613
Oh but with special thanks to you, Black. The late Bon Scott so beautifully sang of the apparently much more important "Rosie" for you. I'd love to survey ZH viewers to see how many really know of this one's fine upstanding work on "providing a top-down perspective to the Firm's investment process" as noted in that bio. (Just come out with it and say, "I exist to sell peddle my firm's wares"). This may not matter to Canadian investors (or to ZH per their "policy on conflicts"), it does to those American. Karabell (no funds to pitch there) did an awesome piece in the WSJ about a year ago called There is no 'The Economy':
"In truth, what used to be "the economy" is just one part of a global chess board, and the data we have is incomplete, misleading and simultaneously right and wrong. It is right given what it measures, and wrong given what most people comclude on the basis of it."
Ya'll should check it out in full and get on the bigger and better things. Betting against the hard-wired, self-interested economic ingenuity of humanity (especially the one Winthrop helped birth aboard the Arbella in 1630) is always a bad idea. Long-term, the Wisdom of Crowds is going to kick the asses of both you and Rosie... again.
on Sun, 07/26/2009 - 23:06
#15740
Perhaps it would help if you read our conflicts policy.
on Mon, 07/27/2009 - 16:34
#16193
"So how do we plan to handle conflicts?
We don't."
Bravo. Boo Koo clarification on what should be trusted on ZH (say, heroic efforts at transparency in HFT) and that which should not (say, snappy economic speculation reports with Canadian money managers). My bad for not scrolling down and digging it out to lower my expectations sooner.
on Mon, 07/27/2009 - 16:44
#16201
Full disclosure (and always a glutton for more punishment), the above is from me before logged in on a bud's computer.
on Mon, 07/27/2009 - 16:53
#16211
1. as to what should be "trusted" on ZH, I don't recall TD or Marla ever asking or suggesting to anyone that they should be trusted. To the contrary, they have consistently expressed the mantra that one should decide for oneself.
2. as to the conflict policy, they have said that people should always assume they are talking their book. seems pretty basic to me.
3. your attempt to tie your perception of ZH's conflict policy with the HFT matter seems to avoid the path of logic.
on Mon, 07/27/2009 - 19:29
#16323
1. Yea, you're right, trust is bullshit anyway (and exactly how "one should decide for oneself" without it is laughable, surely you're not married are you?)
2. Except that there are much more reliable data and opionions on future probabilities for economies and the purchasing of risk (investing) other than from people "talking their book" (again, my bad for not realizing sooner that's all ZH is often doing).
3. Earth to deadhead, I'm not, that's the point. On matter's of HFT and other needed areas of financial industry simple intelligence and sunlight (some of which they're not even aware of but I'll hope for them to be soon), ZH is King and I see no conflicts at all.
Press on, Dude.
on Sun, 07/26/2009 - 22:20
#15709
BRAVO! BRAVO!!!
and many thanks
on Sun, 07/26/2009 - 22:28
#15712
I'll repeat what has been said before. Even at depressed consumption rates, they ain't burying dinosaurs anymore. The Middle East reserves are entirely unaudited and they have zero incentive to inform the world if they have less than is presumed. If they were running out next year, they would not dare say a word about it because a crash program to convert global society to less consumption would deprive them of top dollar for the last drop they might have underground -- so if you were them and you were running out, you, too, would say not a word about it. Just remember, when demand exceeds supply, conventional wisdom from economists (who are the only ones who declared supply and demand a "law" and they have been proven to be buffoons the last 2-3 yrs) is that price rises. Well, suppose it doesn't. Suppose demand exceeds supply and it means only that someone doesn't get an order filled. That someone's people starve from lack of food transport. They go to war not too long after that chasing their neighbor's food.
on Sun, 07/26/2009 - 22:44
#15726
Wrong. They have every incentive to tell people if their reserves are running out. Their oil would hit $10000/barrel overnight if they had 1 year's worth of oil left, and we would be living in Mad Max world.
I guess you forgot how the Saudis tried to abate the price of oil, because they knew that too high oil prices would cause people to move quickly away from oil to alternative fuels. By keeping the prices high, but low enough so that people don't get too upset, they can keep us idiots suckling at their teats for generations to come.
on Sun, 07/26/2009 - 23:58
#15757
Your generations last five years? Educate yourself independently, f.i. here. phd dissertation at the University of Uppsala [not so high stakes in the manipulation game to either side] Fulltext available here: http://uu.diva-portal.org/smash/record.jsf?pid=diva2:169774
on Mon, 07/27/2009 - 09:52
#15898
Look what happened with the spike to $147 bbl. Bam, demand collapses.
No, they'd be keeping quiet about any running out.
on Mon, 07/27/2009 - 11:53
#15971
"By keeping the prices high, but low enough so that people don't get too upset, they can keep us idiots suckling at their teats for generations to come."
That's exactly why they have to convince us they have generations of oil left to pump and don't want us to know if their reserves are "running out."
BTW, reserves don't ever really run out. Production just keeps declining. The production curves have very long tails.
on Sun, 07/26/2009 - 22:36
#15718
Seriously, love you people!
This is simply wonderful.
TD, many thanks.
on Sun, 07/26/2009 - 22:37
#15719
@TD,
None of this is news to me, but thanks for putting everything into one hefty powerpoint presentation that I can point my less-initiated friends to.
@Alexander Supertramp
Rosie used to be at Merril Lynch, and he was one of few sobering voices out there. The guy has credibility and integrity that, in my eyes, is unimpeachable. Look into his history, and you will see what I mean. He is brutally honest, which probably was a factor in why he is no longer with Bank of America Merril Lynch.
on Sun, 07/26/2009 - 22:51
#15732
You are correct on your speculation with respect to Dave parting company with BAC/MER.
He stated as much in the Financial Post magazine (Canadian).
He also noted how some clients walked out on him when he was talking about the upcoming crash in residential real estate (this was clearly before the crash) but it did not deter him from continuing to express this view.
on Sun, 07/26/2009 - 22:38
#15721
Boomers are near retirement and have quit spending. Gen-Y can't get loans. Get ready to short market and go long on ammunition.
on Mon, 07/27/2009 - 14:21
#16079
Remember, being right early in investing is just like being wrong. So watch that, you never know how much more wool they're going to manage to pull down.
on Sun, 07/26/2009 - 22:40
#15722
Great Job ZH!
Way to incinerate the green shoots with napalm!
Is anyone willing to guess an over/under for the
number of major "news" institutions that quote from
this piece?
I'm guessing 1.
P. Prophet
on Sun, 07/26/2009 - 22:50
#15731
I think you are missing the point on inflation. If our dollar is worth less because of the over printing of money or issuance of debt it has the same effect as inflation. Some would claim that is inflation. Regardless the more that is printed or the more debt issued will reduce the dollars value and cause prices to increase, without wage inflation either.
In fact, the greatest threat we have is the devaluation of our currency. Overall nice job, I want to place this on my site if you don't mind.
on Sun, 07/26/2009 - 22:59
#15735
right but it is the net supply of dollars that is inflationary.. if you have $15t dollars vaporized and the gov't prints $10t to replace then net/net you still have fewer in the system. as much as money as the gov't is printing it is less than what has been destroyed by de-leveraging and balance sheet contraction - at least thus far
de-leveraging is disinflationary as long as the totals trump the fed's printing press
on Mon, 07/27/2009 - 00:53
#15770
I look at it this way. Even if the net dollars trump the printing press it does not matter. If other countries view your currency as less valuable then they trade it lower. If it is worth less then it will take more to buy things which means the velocity of money will increase and the printing press will win. I guess I am saying the slid of the dollar will eventually lead to much higher velocity. In my opinion it is an indicator of higher inflation. Devalued dollar drives oil higher which will drive all prices higher. Just my observation.
I foresee a prolonged depression like market with higher prices. Time will tell! Thanks for the thoughtful response I do appreciate it, sincerely.
on Mon, 07/27/2009 - 08:36
#15854
Inflation/Deflation..As long as morons buy US treasuries it means DEFLATION and TD has that right. You will not have the velocity needed for INFLATION.
But Inflationary pressures will eventually arise when we reveal that the printing presses will never stop so figure around the time of announcing Stimulus II.
on Sun, 07/26/2009 - 22:56
#15734
Great stuff TD. As always, you do top notch work.
But what if the markets don't care?
Look at 1982, starting from August the markets roared up, disregarding all economic indicators, and this was the start of the 20+year bull market until the dotcom bust. Unemployment rose through December, more than 4 months after the markets started to skyrocket, and they did skyrocket.
If I remember correctly, though, the difference between then and now is that Reagan dropped interest rates, which gunned the markets. I don't think we have that option this time, and we are laden with debt. And I think consumer credit increased in March, pointing to more consumer spending. Those may be the two reasons why it could be a different situation. Oh yeah, this market has been manipulated like nobody's business by the PPT team, but besides that...
on Mon, 07/27/2009 - 07:26
#15826
great point and I wouldn't be surprised if the MSM pied pipers attempt to suggest that we are beginning a new generational bull market ala 1982. Problem is for 30 plus years folks were sitting on huge savings when suddenly $TNX peaked and rates began a 25 year slide to almost zero which spurred a huge stock rally over that period. Now we are on the opposite side of that situation with no savings, low rates about to ramp higher over time because of supply not demand.. expect the total opposite outcome in the stock market although in roughly one third the time.
on Sun, 07/26/2009 - 23:00
#15736
As a children's party clown, I am incredibly insulted at your suggestion that my profession is interchangeable with "tax advisor" and "broker-dealer"!
STFU MARLA AREN'T YOU LATE FOR A SUPPORT GROUP SOMEWHERE
on Sun, 07/26/2009 - 23:02
#15738
I await the awakening and the collaspe of the Bubble. Then we can begin to rebuild and do it all over again.
on Sun, 07/26/2009 - 23:08
#15742
Tyler, thanks, great work.
I would however encourage that you have an editor for the several typos and other errors. I know they do not change the message content, but the MSM and others will use absolutely anything against you to distract from the core message.
on Sun, 07/26/2009 - 23:23
#15746
This is an excellent review of the problems faced in the past year. Truly excellent rear view mirror material, and if you had published it 12-18 months ago it would have merited careful thought.
But how long will ZH focus solely on the negatives? TIll there are no more? Do you honestly think that capital markets make it easy on investors and bottom simultaneously with all these indicators?
Start by reading and absorbing an entire earnings release or conference call, not just cherry picking examples that support your point of view. How about mentioning the industry commentary from PKG on their call? Or the uniform commentary of economic stabilization from the rails?
Balanced commentary is not a sign of weakness. It is a sign of maturity and confidence in your ideas. You do not provide any balance, which can only mean that you also lack said maturity and confidence.
You have been wrong - dead smoking wrong - for thousands of Dow points. How many more will it be before you admit to being wrong? The market "doesn't get it." The market is "manipulated." Please.
You got it wrong. Man up and admit it. Your commentary and negative view has cost ANY reader who has followed it real profits. If you cannot get your call right, then you are no better than the other sources of infotainment that you so regularly denigrate.
Oh - and spell check would help. Wells Frago? Or are you so clever that we should just focus on your "big picture" and overlook the fact that you don't even care about the most basic typo editing.
You are slowly becoming that which you mock.
on Sun, 07/26/2009 - 23:32
#15750
Grammar Nazi/Shill?
Too bad for you, people still have their guts and can't be fooled into jumping into a market that has been pushed up by our President's Working Group, and since most people don't really know the details of all the manipulations that are very blatant, they will read your words and unfortunately, get WRONG info. Either you are ignorant or you are a LIAR.
on Mon, 07/27/2009 - 00:01
#15761
Ummm... Where to start?
Spelling and grammar are different things. Really. They are. You can look it up.
And honestly, you need to understand that stating an opinion is different from having facts. Stating an opinion loudly is not the same as doing the work. You have lots of opinions (what you seem to call a "gut") and no facts. Good luck with that.
The one thing that makes this website truly great is that it asks everyone to think for themselves. Not just listen to the conspiracy theories, the crackpot ideas about GS and others. But really think. This site gets a lot of things flat out wrong. Accept that.
Go read some conference calls. Go learn how to understand financial statements. Stop relying on ZH - or any other website - for your ideas.
on Mon, 07/27/2009 - 00:18
#15764
You sound like the same anonymous i replied to before you replied to me, so if it is you, i can only say, there you go again....you are speaking as if you know about me, and you don't, so maybe you are just ignorant, and that is better than being a liar, so good for you.
on Mon, 07/27/2009 - 00:56
#15771
Play nice you two.
on Mon, 07/27/2009 - 04:24
#15793
can we please, please get rid of the anons? So people at least know to whom they are replying. Besides junking, recommending messages would be a nice feature.
on Mon, 07/27/2009 - 05:11
#15803
How about an IP hash , giving an id.
on Mon, 07/27/2009 - 13:05
#15997
We're considering this.
on Mon, 07/27/2009 - 16:38
#16195
I agree with the recommending messages feature. Some anons are great, some not so much, but they shouldn't be banned.
on Mon, 07/27/2009 - 14:29
#16086
That whole article is facts and Data. Some of the most important data in fact, which paints a pretty clear picture of how much trouble the US consumer is in, with an economy dependant on 70% of it's GDP from the US consumer. Did you even read it??
on Mon, 07/27/2009 - 03:56
#15790
I vote all of the above, Ignorant and a Shill! Good call.
on Mon, 07/27/2009 - 08:59
#15865
One of the things that I have observed is that the fundamentals can be crap but yet the markets go up for a long period of time(i.e. the recent period).
Zero hedge can be very right about the valuations in the economy and the market can move against that for a long period of time.
The market can remain irrational longer then you can remain solvent.
ZH will just have to take the abuse for the short term and in the long term they will probably be right.
on Sun, 07/26/2009 - 23:24
#15747
Wells Frago? mispelling on pg. 47 on the report. This must be a bogus report!...NOT...excellent work zerohedge. Question: If we all feel the same way, then who the fuck is buying stocks?
on Sun, 07/26/2009 - 23:44
#15753
Must be all those dummies who like to make money.
on Mon, 07/27/2009 - 03:58
#15791
Just fools getting greater by the moment !
on Mon, 07/27/2009 - 18:28
#16289
climbing the wall of worry? earnings getting revised up, p/e's come down and the market appears cheap to the casual observer. too bad there is little, if any, revenue growth except in a few areas.
on Sun, 07/26/2009 - 23:24
#15748
Thanks for an amazing compilation of facts. As TD has said, "when facts speak, even the gods listen."
Please do keep up the good work! With your help a lot of folks are choosing the "red pill" and waking up to the real issues behind the curtain in the US and global economy and investment markets. It's scary stuff, but better than the alternative.
on Sun, 07/26/2009 - 23:24
#15749
Interesting hypothesis here.
http://www.leap2020.eu/GEAB-N-36-is-available!-Global-systemic-crisis-in-summer-2009-The-cumulative-impact-of-three-rogue-waves_a3359.html
on Sun, 07/26/2009 - 23:33
#15751
The Preface says it all: US Consumer is 70% of GDP. How any thinking person could believe that a credit based crisis can be cured with 'joblessness' is dangerous, and should not be left alone with a checkbook, let alone the world economy.
dot.com here we go again (seems to me 'better than expected' was in vogue then as well).
Ironic that the result of this hype is that the Obama admin is setting up the 'biggest class divide' EVER, given his rhetoric...
Btw, Obama now skipping the Kool-aid and just passing out the pills, so BYOB ...and meet you on alpha centauri.
on Sun, 07/26/2009 - 23:47
#15754
Let me see if I'm reading this thing right. This is actually, "The End Of The End Of The Recession"?
All I know is...never bet against the house.
on Sun, 07/26/2009 - 23:56
#15755
Even a house of cards?
However, i do agree with you, and those who say that you better not be short at this time...but that doesn't mean it is safe to be long either.
on Mon, 07/27/2009 - 00:37
#15768
If this was a house of cards...it would have crashed long ago.
Thinking "Long" is all we've got.
on Mon, 07/27/2009 - 00:53
#15769
My cognitive dissonance,
I do agree with you, but the reason i said what i said about the house of cards, was simply to temper what you said. House of cards is a dramatic metaphor, but, from what i understand, so many factors are lined up increasing our country's potential for that metaphor to become reality.
on Mon, 07/27/2009 - 03:54
#15789
Reversion to the mean + Social Reset= Tough times ahead for many years imo.
on Sun, 07/26/2009 - 23:58
#15758
But wait.....you guys are not journalists....How can you put things like this out? Where do you get off challenging the REAL journalists...like Charlie "4 martini lunch" Gasparino?
Hey Gas-Bag. Put this report in your hat and f'n smoke it!
We are all Tyler Durden!
on Mon, 07/27/2009 - 00:00
#15759
I asked the princess why she was continuing to purchase useless crap on credit with such economic uncertainty ahead and her reply was 'because im depressed'. Take that recession!
on Mon, 07/27/2009 - 00:00
#15760
Looks like the only bright spot in the entire report was Wall Street's earnings and bonuses, great work ZH Team!
on Mon, 07/27/2009 - 00:06
#15762
I feel sorry for these stock market guys, conflicted they are. Up or Down? Who <del>knows</del> cares? The NYSE & Nasdaq are arm & leg of the Federal Reserve. The traders don't care, but stock dudes and dudettes, please understand if the stock market goes down the Fed dies.
I'm not kidding. It's a matter of institutional credibility! Helicopter Boy has a gun in his mouth right this minute!
Meanwhile, energy dude(tte)s can digest this:
http://www.theoildrum.com/node/5606
This is an energy crisis. The Japan bubble started after the Yom Kippur oil cutoff in 1973, the USA bubble started after the 1982 Iran- Iraq war/tanker war. Both bubbles were results of oil price recessions. Oil price hikes post- 1999 fed the asset bubbles and rising Fed Funds rates post 2003 - caused by oil price hikes - popped them.
It's all oil, nothing monetary/fiscal will have any effect whatsoever on this crisis. Don't believe me, look out the window. Peak Oil happened in 1998. Check your EIA prices. Nothing except conservation will work. This will not happen because of denial and 'habits' so collapse is inevitable. Then conservation will happen.
Cool, no?
on Mon, 07/27/2009 - 00:06
#15763
An excellent summary. While it's "preaching to the choir" for your readers, let's hope this format sees a new and wider audience.
Bernanke's town-hall tonight was indicative of one thing: Fear. He knows this is going to fall apart in a devastating collapse. He wants his name to be clear, and he wants things to hold together just long enough for him to get out of office.
Unfortunately for Mr. Bernanke -- these things can't be timed so easily.
The clock is ticking. The green shoots were just more borrowed money.
Cash up people, this is going to hurt like hell.
on Mon, 07/27/2009 - 00:20
#15765
Hi,
I teach at a University. I will use these crisp and clear charts in my class this fall. In the past I have used the Credit Suisse Charts on Monthly Mortgage defauts:
http://www.brownstoner.com/brownstoner/archives/2009/01/trying_to_throw.php
the Baltic Dry Index, the movie Money as Debt, and the movie The End of Suburbia, to get the point across about where this thing is headed. The students care, deeply, once you slow it down and explain to them what is going on. I have seniors and they can't get jobs. They know something is up and are relieved to know more about why.
I mean it when I say keep up the good work.
Thanks
Ms. Creant
on Mon, 07/27/2009 - 14:39
#16097
'A crude awakening' is another good one.
on Mon, 07/27/2009 - 00:28
#15766
Sometimes there is a disconnect between the real economy and financial markets - specially when there is massive reflation underway.
An easy money reflation typically inflates assets with an inflationary bias. This time its emerging markets. Look at the YTD performance of China, India, Russia, Brazil.
Right now the global financial system is under the deluge of liquidity - from ZIRP, monetization, guarantee of all TBTF debt, fiscal deficits and in China bank lending running at 30% of GDP. US sovereign debt (Fed + states) will likely grow $3 trillion this year. Up more than 70% relative to the biggest year for private credit in 2007.
Traders can skin the cat either up or down as long as dogmatism is not part of the equation.
on Mon, 07/27/2009 - 01:42
#15774
comprehensive report. these conditions should narrow our trade deficit.
take a look at what happened to the Nikkei225 ... http://finance.yahoo.com/q/bc?s=%5EN225&t=my&l=on&z=m&q=l&c=
when their big bubble burst in 1990. warren buffet wants all of you buy and hold types to sell your bonds and buy stocks. buy, buy, buy. good luck with that.
on Mon, 07/27/2009 - 03:03
#15780
Fuck reflation--it's all a ruse. We will deflate before any hyperinflation comes to roost. And most of the above comments are very intelligent and well thought out. BRICs, emerging nightmares--all interesting folly. But be that as it may, we are still Atlas. When we catch a cold, the world catches the flu.
Making money in the short term means sitting out (my choice) or buying into the bear market rally. There are easy picks and easy stops--think hedge fund favs like Potash, Mosaic, Freeport, Rimm, blah, blah, blah. It could go on another 6 months but that is what bear market rallies do--once bullish sentiment reaches near the extremes of the levels of October 2007 you know you are at the top. There are daily market sentiment measures for short term trading, and the longer term Investers Intelligence sentiment readings of Bull verses Bear that will measure very high levels in the coming months. We are nowhere near the top of this rally. Bears beware--historically after a 16 month decline, it takes a real fools game to get everybody back in for the tanking.
We are in a long term cycle. For those of you who do not study cycles, just understand that financial history repeats itself, for decades and hundreds of years. The data is there. We had a stock market bubble that ended in early 2000. Greenspan created the housing bubble--a never ending saga. But underneath it all, was a credit bubble. It's Japan all over again--bad bank debt and all. It is unsustainable, will seize every bank with conservative lending practices, and every household and corporation living through/and or by credit. Cash is king and while the dollar will suffer, those not in debt will be much better off in the coming years. Get the hard assets you need and the rest in safe harbors. Don't count on the FDIC --they are down to $13 billion. Fuck you when your bank goes down. Be smart. Don't expect Sheila to bail you out. In less than a year the FDIC will be a long waiting line with empty promises.
What I am saying is nothing new, but I knew it in 1999. I am also up 400% since then in terms of net worth and I have never been long the market except March 9th this year. The long wave 60-70 year cycle is at hand. Debt on all levels must be wrung out-- Personal, Corporate, and Government. And it will be so. We can blame HFT, Goldman, fiscal policy, Bernanke, Paulson, and everyone else in the markets. But none of it really matters since we are in a cycle that must correct itself in order to be reborn. Even if Ron Paul was in charge of government finance, it would not matter because the toxic waste is still there in the TBTF banks and all shadow operations. It will be written down to zero. It's inevitable.
The ultimate survivors will be those that don't follow the crowd, don't get short too soon, and let sentiment tell you when the suckers are all in. And expect the unexpected. Bear market rallies are vicous--and Dow 10,500, S&P 1075--not impossible, even probable. After all, ZHer's, the word on the street is that everything is getting better. Just dont fight the tape! Think 30's. And keep your assets, should you have them, safe. I will not tell you how to do this. It's up to you. But full disclosure, I am diversified in metals, safe banks, and one hell of a mattress. Then I will just use them the way I have since 1999--short enough to keep on living and not be greedy.
on Mon, 07/27/2009 - 04:46
#15800
A turning anyone?
Excellent. Thanks
on Mon, 07/27/2009 - 07:05
#15822
What safe bank? Third party risk is my biggest concern for both internet brokerage and my primary bank. The street has a rating for state banks, but I was interested in your thoughts.
T.D. this is an area where we could all benefit - it would be nice to know the best capitalized/highest credit rated Brokerage and Bank for the savers.
on Mon, 07/27/2009 - 08:15
#15840
"Fuck reflation--it's all a ruse."
Of course it is; the debt is so huge that any effort to inflate it away is madness.
"We will deflate before any hyperinflation comes to roost."
Yep, probably, but the end result still is hyperinflation. It's all about tax revenues and costs of servicing the empire, the Treasury market, and the dependency classes (poor/seniors). Those lines on the chart (revenues/costs) have already crossed.
Nightmare scenario, that IMO is looking more and more likely: the thing that needs to deflate is U.S. lifestyles, to bring wages in line with other wage slaves making sneakers for $0.50 an hour. Once the green shoots die, we will enter a sharp deflation. Unemployment skyrockets; what's left of the middle class begins to liquidate what's left of their savings in order to survive. Demand for government safety net spending skyrockets at the very same time as tax receipts crater. Foreign lenders, having their own problems at home, and correctly seeing the U.S. situation for what it is, keep their money at home.
For the U.S., the choice is stark: default through non-payment, or default through printing press? Either way, the result is the same: the currency ain't worth shit, and real wages fall further.
My strategy hasn't changed since 2007: metals, dollar shorts, and real assets hedged by a huge cash position. The purpose of the cash position is to survive the deflationary period without being forced to liquidate the dollar shorts in order to survive. The dollar shorts will be desperately needed on the "other side". In other words, the purpose of the cash position is literally to defend the metals through the deflationary period.
If someone could explain to me why the deflation will not self-reinforce and therefore not result in U.S. sovereign default as described above, I would be very indebted to them (pun intended) and will be transformed into a raging deflationist.
on Mon, 07/27/2009 - 10:13
#15908
With a per captita GDP of $100k, the US can contract by 90% and still be 10x richer than China, or many other countries.
Surely, no one thought this inequality could last for ever. The writing has been on the wall for a while.
Read a book about how fast communications in China are developing. They know how rich we are, and they want it for themselves. The late teens / early twenties workers in big towns are just like us, and there are billions of them.
The rise of the internet has brought a revolution in desired equality to the 3rd world, comparable to what happened with the printing press in Europe.
on Mon, 07/27/2009 - 13:40
#16021
What alternate universe do you live in? US GDP per capita for 2007 was only $48,500, or slightly less than half your figure.
And your demographic take on China is all wrong. Because of their "one child" policy, there are actually more people over 30 than under 30. Your estimate of "billions" is off by a factor of five at least.
Thanks for playing, though.
on Mon, 07/27/2009 - 22:14
#16451
and to be really anal we should purchasing
power parity as a comparison
of transnational living standards.
on Mon, 07/27/2009 - 02:37
#15782
yo dude, you commie bunch of b*****ds shouting down the great USA - its just plain anti American what your saying. You must be a terrorist or some thing because we all know then green shoots are everywhere - in fact I've been smoking a few of them and things are looking better all the time.
PS - i woulda posted this 30mins ago but having trouble with those darn numbers
on Mon, 07/27/2009 - 13:44
#16024
Yes, smoking the green shoots is a well known way to enhance your arithmetic capability.
on Mon, 07/27/2009 - 02:55
#15783
excellent presentation. thx for your efforts.
on Mon, 07/27/2009 - 03:04
#15784
will any future reports address the currency crisis in the us dollar? (assuming you also see this as a significant issue...)
on Mon, 07/27/2009 - 03:32
#15785
The dollar rallied during the collapse of the market into March 2009. What do you think it will do in the next leg down? I think it will do the same, as a safe haven for fear of devaluing by China pegged to it and others holding our debt. But lookout below..there will be a turning point and it will crash. I suspect some type of political or global restructuring unpegging the buck to commodities. Conjecture, yes. Thought about for 10 years, yup. Other opinions, widely welcome.
on Mon, 07/27/2009 - 03:51
#15788
Howard,
I think the USD will go up in the next exposure of some nasty banking/credit surprise. History shows that money will rish in to the senior currency. The risk is that China will revalue while US devalues...But in a Credit Crisis v2, there will be a rush to USD as it is the best of a bad of fiat as reserve currency status still holds!
on Mon, 07/27/2009 - 04:20
#15792
China takes a major risk by unpegging to the dollar, as we are their largest trade partner. What hurts the buck. hurts them. They are kindergartners in the financial markets on this level--except they have been smart to trade arms for long term oil contracts in Africa. But other than that, when the dollar goes down, they bite it. This is their concern and no amount of rhetoric on their part will decouple us. They don't want to look like donkeys although they have had to buy dollar denominated debt to stay somewhat hedged by their own ignorance. They chose to peg to the US$ with a narrow float. Awwwwwwwwwwwwww.
I think the dollar will be the safe haven and increase in value as equities collapse...but in the longer term--say past 2012--it is a toss up. A 50/50 gamble on who's in charge after the fall. Time will tell.
on Mon, 07/27/2009 - 08:15
#15841
not only limited to africa and oil.
they've been active in central asia and also with strategic metals such as nickel, iron, and copper.
on Mon, 07/27/2009 - 13:56
#16045
I mentioned this last week - the CAD$ has moved from $0.85 to $0.92 in the last three weeks. Very little "QE" here in the Great White North, and our budgets were in surplus until recently. If you're going to invest in a fiat currency (as opposed to metals), the loonie is pretty attractive.
on Mon, 07/27/2009 - 03:36
#15786
Excellent...
When it comes - and it's gonna come - that is, the official call that the recession has ended - who makes that call and what is the criteria?
NBER? One quarter of anemic non zero growth (and two negative to call a recession on)?
Don't get me wrong - I do not and will not subscribe to that lie when it comes.
I just don't want to get crushed by all the "happy dancers" in the street.
In another forum I said I wanted to be sure - when the call came - to be wearing a rain coat - with rain hat - for protection when the "recession is over' pundits all ejaculate at once - buy that would be too crass to say on ZH I think.
Pete
on Mon, 07/27/2009 - 03:44
#15787
I think it is most appropriate in this forum to surmise massive ejaculation--it's called a top. But it has yet to happen and it takes time to get all the suckers lined up for the multi-orgasmic event. Last one was in Oct 2007..give em time. Everyone likes a mutual orgasm.
on Mon, 07/27/2009 - 04:29
#15794
The presentation fails to account for the impact of fiscal stimulus from the US in the later part of the year and the current impact of China's fiscal spending.
Revenue increase is happening now due to the Chinese fiscal spending and will kick in further once the Obama fiscal spending kicks in over the next several months.
But your presentation fails to quantify that...
on Mon, 07/27/2009 - 04:29
#15795
There should be found a policy that will allow growth in the real economy (not GDP) without the financial industry front-running its productivity and manufacturing/sevices expectations. Hence, in this repect we have to change the consumer-driven real economy into something that will not be influenced by trade imbalances and FX rates as much as it is now. I propose 3 new grand projects that will be the new Apollo missions: build a fusion nuclear reactor, find the cure for (most types of) cancer and build infastructure to capture asteriods in orbit for resource extraxtion. Neither is based on consumerism and if the 3 tasks are divided across the world (Americas, Europe/Middle East and Far East) FX rates will be less important.
on Mon, 07/27/2009 - 04:41
#15798
Don't ya know that the foundations of fractional banking will never allow such an event to transpire?
on Mon, 07/27/2009 - 04:31
#15796
Correct me if I am wrong but don't you have to cash in your chips for legal tender before you make any money in this market,and when that happens, given the fundamentals underpinning this market only a small percentage will get through the exits before the door slams shut.Until then your profits are figures on a piece of paper.
on Mon, 07/27/2009 - 04:38
#15797
The stranger and more disparate the data set become the stronger will the purveyors of this effort to boost confidence through even greater efforts along these lines. If one lie does not work, try bigger lies until traction is achieved. Echo's of monetary policy anyone?
I would like to add my limited bits of copper to the deep pool of discussion concerning the quality of the Fed's balance sheet. As time goes on it will become ever more challenging for the Fed to extract itself from the conundrum of fixed long term, non-treasury "assets" without enhanced multiplier effects in various markets, especially broad swaths of the asset backed universe. The story of the FDIC and its guarantees I suspect will also garner more attention as the summer turns to fall & winter.
on Mon, 07/27/2009 - 08:20
#15845
IMO the Fed, having extended $13Trillion in credit and guarantees, sits astride the financial system and already is in over its head. The Fed is overleveraged, but has a printing press.
on Mon, 07/27/2009 - 05:10
#15802
the pumping up of the stock market was the only play anyone had to keep some semblance of societal normalcy intact.
people view it as a store of value. just like they think social security and medicare are not really a problem to worry about now.
amazing that the intangible store of value has such perceived substance.
on Mon, 07/27/2009 - 05:26
#15804
Why did you leave out the part about unicorns, puppies and lambs romping in a meadow of green shoots underneath a blue sky filled with rainbows?
on Mon, 07/27/2009 - 06:47
#15815
That's Obama's job
on Mon, 07/27/2009 - 05:57
#15805
ZH, Great work. Now, if I could just find that cyanide.....
on Mon, 07/27/2009 - 05:59
#15806
Tyler,
My read of this is that CIT will be the Lehman for fall 2009 as Lehman was for 2008. The collapse (happening now) of CIT will dramatically affect the small business owner. Do you see this as the catalyst for the next large move downward in the markets coupled with horrific 3rd qtr numbers as the consumer has stopped buying and the current 2nd qtr earnings are based on cost cutting vs. top line growth?
-Silence Dogood
on Mon, 07/27/2009 - 08:49
#15861
The combination of CIT's collapse and a minimum wage increase makes for a lethal cocktail for the US economy. No bueno.
on Mon, 07/27/2009 - 06:07
#15807
"Concrete (just ended a four month decline) and asphalt (up two months in a row – spiked 4.8% MoM in June) -- could be early sign of global infrastructure spending percolating"
Or it could be the result of the small portion of the stimulus which was actually given to local governments to help fund "shovel-ready" infrastructure projects. Most shovel-ready projects happen to be repavements of existing worn out roads. They, therefore, provide asphalt sales, and some concrete sales, but they don't last very long, and don't indicate that more projects on the way, since most infrastructure projects take years of study and engineering to get to the shovel-ready stage, and local governments remain strapped for funds for that study and engineering. So the spike could be just that - a spike.
on Mon, 07/27/2009 - 06:57
#15818
The Infrastructure projects were a couple of paving projects on high traffic roadways so it was most visible to the sheeple.
Most states kept the majority of the stimulus money to pay down their debt not to create jobs. "administrative fees"
on Mon, 07/27/2009 - 06:08
#15808
Rally!
on Mon, 07/27/2009 - 06:30
#15811
Apocalypse Now- Take a bow, as the earlier piece on new media outlined there is a need for aggregating information and you are satisfying that need with this definitive piece. We see before us the trees, the forest, and the jigsaw puzzle assembled. We hear the mellifluous and true sound of the signal as we tune out the cacophany of a hundred disingenuous talking heads promoting confusion.
A few more points to note:
Many of the categories with an increase in PPI/CPI are impacted directly by petroleum costs which increased over the last few months (including poultry).
Bill Gross purchased significant treasuries a few weeks ago, and if anyone had an incentive to get inside information/assurances on rates it would have to be PIMCO (no inflation fears near term - definitely deflation). In addition, the Taylor interest rate factor indicates that the FED rate should be -5% (impossible to go below zero) and there are calls for an increase in the money supply to adjust for this (stimulus #2 - this one better reach businesses/consumers not bank hoarders to impact money velocity). Bernanke's latest testimony satisfied all present that inflation is not a real concern for quite some time.
What does this mean? This transition period for the world was probably known ahead of time, hence the "Hope" and inevitable "Change" we will need to go through. It also means that the establishment knows how bad it is, that we are in a depression, and they are engaging in behavioral finance. Why encourage and hint at inflation? Because your reaction as a consumer would be different under an inflation versus deflation/depression.
"We're out of money"(Obama) and "We have to spend money or go bankrupt"(Biden) are honest and candid comments. We may already be in a managed and controlled collapse, the only question may be the speed/timing of it(won't be announced, watch the $USD). The only thing that could look inflationary is if they run the $USD into the ground, then a currency crisis would look like Zimbabwe (hyper-inflation). There have been rumors of a bank holiday in August/September in the Hat Trick Newsletter.
Thanks TD, we want the truth and we can handle the truth!
on Mon, 07/27/2009 - 06:51
#15817
Simply amazing. Strengthens the argument that the US population has become 99% sheep. There must be a sheep gene in the breeders gene pool that has become dominant. Imaging running this shit by the population who founded this country. They'd rip your toenails off, slowly...
on Mon, 07/27/2009 - 06:58
#15819
Great, but this story is only 50%.
What about "trust"?
Trust will initiate inflation, currencies to go haywire and governments to fall.
A lack of trust will initiate "das Endspiel". I haven't seen it in your presentation.
on Mon, 07/27/2009 - 07:03
#15821
So please tell us about it. Break it down.
on Mon, 07/27/2009 - 08:01
#15836
Hard facts, great, but "das Endspiel" will be initiated by soft facts: people fed up by another promise of green shoots and "next month it will be better".
The ZH community already made their decision, but the majority of the population still has to cross the Rubicon.
I agree, there will be no improvement end 2009, no green shoots, etc. All in line with the presentation. But the big problem of the government and Wall street will be the trust factor, or actually the lack thereof. Once the trust factor is gone (ZH community calls it denial), we'll see the anger, bargaining, depression, acceptance (h/t Kuebler-Ross):
- Hyper inflation is a currency event initiated by money printing and as a result a lack of trust in the authorities and their agents. The attitude of China towards the Dollar is one example of a lack of trust. Exploding taxes for the middle class (to pay for the bank bail-outs) will, with the realization of the fraud, initiate loathing of- and rejection of governments' money.
- governments will fail & fall because people will go to the street to protest as they have been lying to over and over again.
- currencies will go up and down because of a lack of trust.
So, the hard fact are only 50% of the story, the psychological impact, the loathing and anger after the period of denial, will be real proof of the pudding. Thereafter the hard facts do not matter anymore.
on Mon, 07/27/2009 - 07:47
#15830
First, I to am tired of seeing so many "Anon"; certain posters are really woth weighing their thoughts, others not so much. It would be noce if everyone had a nom de plum.
This presentation was about facts and data; yes, there was a smidgen of value judgements included, it was not 100% non-biased, but for the most part it was crunching the numbers. "Trust" or any other sentiment was not included- this was an incredibly well-done compilation of the piece-meal facts and data we have seen ZH focus on over the last few weeks/months. It is very wise to pause at some point to summarize it all into a big picture.I see no one the clowns on CNBC actually shut up and listen to without constant interruption as much as Rosie- Rosie in public, Tyler, Marla et al in private, share gravitas. I expect this piece will see huge circulation, and alluded to or linked to on many blogs.
Trading is up to the individual; the market can climb this wall of worry, certainly, but that wasn't the point.
on Mon, 07/27/2009 - 07:26
#15825
The American people are overly optimistic Ipod-wearin' monkeys dancing to the organ grinder's tune! Dance monkey bitches! Dance!
on Mon, 07/27/2009 - 07:30
#15828
The worst depression ever is upon us now. This past weekend I spoke with some business owners in a great little NE coastal town reliant upon tourism and consumer spending (in many forms) including no waiting for a table at most eating establishments these days. One owner of a small inn has never "seen it this bad" during the forty years she has owned the place. There are empty shops in a place that doesn't see empty shops and more will close as this year passes. Mostly middle class to lower upper class incomes visit this area.
When the "economist" throw out the bullsh*t theories and bullsh*t models and fess up to the reality that this bullsh*t recovery is based on bullsh*t quantifiers and a bullsh*t, maybe then we will be able to do something about this mess. However, based on our recent socio-political history, I say we are doomed!
on Mon, 07/27/2009 - 10:19
#15913
The regular middle-class in a median $400k house is probably wondering how the feck to pay the mortgage, and praying the property market unfreezes at a somewhat higher level than the 30-40% drop that affected the lower end.
They are toast, and they are starting to realize.
Charles Hugh Smith on oftwominds.com reckons we only need a tax revolt / debt walkaway in 4% of the true middle-class and things will start to change very rapidly.
I'm sure BB got a pretty scary whiff of this in his 'town-hall meeting'.
on Mon, 07/27/2009 - 07:40
#15829
Municipal benefit packages will eventually (soon?) break every major municipality in the United States. The math isn't even close to working. People will do a case study on our society in the future and ponder in bewilderment how Public Employees were allowed to unionize and hijack communities. Municipal employees in big cities are egregiously overcompensated. Put their jobs up for bid.
on Mon, 07/27/2009 - 07:52
#15831
View failed to take into account the tremendous boost from the Micheal Jackson stimuli.
on Mon, 07/27/2009 - 07:55
#15832
Fine, the recession isn't over. The report doesn't mention the stock market but isn't it a good time to be long when times are bad? As the dollar weakens won't demand for American products and companies increase? The conclusion that economic news correlates with the stock market has been killing bears for nearly five months.
on Mon, 07/27/2009 - 07:58
#15833
Fummy how Obama failed to deliever the budget report in July and delayed it a month! Hmmm it must have been REALLY GOOD so he can go back to his fiscal spending orgy. The denial in Washington goes unabted.
The Chinese equity markets are running at redline (it will blow soon), the EU banking system collapse will be the next shoe which nobody is talking about. They are screwed.
If we can manage to get these two to blow up before Pelosi (i mean obama) get their way then we could have the next leg down and massive dollar squeeze, equity blow up and bond market rally. I know it sounds crazy but probably more likely than SP 3000
on Mon, 07/27/2009 - 08:08
#15838
Is there a piece like this making the bullish case? Otherwise, why the *?! is the US market up almost 50% since March 9? That rally looks like it's totally insane, but there you have it. Re-risking?
on Mon, 07/27/2009 - 10:26
#15918
The bullish case embodies reversion to the mean revenues that will lead to blow out bottom lines due to how much has been cut. That and bubble economics. I've not seen even a suggestion of a bull case that deviates meaningfully from those points.
on Mon, 07/27/2009 - 22:27
#16466
factors other than fundamentals can drive
market prices...
some include short squeezes, sucker money,
desperation.....any declining economy can have
bull markets as oftentimes occurred between 1929
and 1954 when the djia at long last reached
1929 highs....
i also strongly believe that markets are
aggressively manipulated....also, many people
trade by charts rather than by fundamentals....
when this includes institutional and large
scale program trading let the fundamentals be damned....
but in the long run the market will revert to the
basics -
with p/e ratios so high and with an economy still
collapsing in major ways, there is no basis
whatsovever for current p/e ratios....the market
must and will contract to match earnings
reality....i just have no idea
when that will be.....
that is no reason to not play the swings but i
do not believe that there is a bullish case
for the economy for the next 12-18 months and
that is being very optimistic....
on Mon, 07/27/2009 - 08:17
#15843
Words, lots of fucking words. And pretty graphs, and charts, and more fucking words.
You Gen X tards don't get it. You think this is some intellectual exercise, you're right - they're wrong, blah blah blah.
OK author, for your next assignment - in 2000 words or less - what's the fucking solution to this economic malaise?
Bet that little paper won't be forthcoming. That would take vision, and passion, and leadership abilities.
We need a fucking General, not some god damn reporter.
Ann R Key
on Mon, 07/27/2009 - 12:06
#15976
Yeah, "Ann R Key" is just exactly what we need right now.
You sound exactly like the old men I knew when I lived in Eastern Europe in the early 90's: "we need a leader, a strong man, to tell us what to do!"
Change is scary, "Ann". It helps to understand what's happening before you go hit the streets. Words, graphs, charts and more words are what humans use to communicate, and are useful in creating coherent thought and formulating action plans. TD has proposed plenty of actions that would make immediate improvements in the functioning of our financial markets, which is a start in finding a "fucking solution to this economic malaise."
Lech Walesa won a Nobel price for jumping the fence at the the Gdansk shipyard, which took plenty of balls. However, he's generally considered by even the most patriotic Pole as a cretin, a destroyer and not a builder, an embarrassment. Not very good with words, and forget about analysis altogether.
So, storm the barricades, "Ann". Paint signs, throw rocks and chant your empty slogans. Just leave the heavy lifting of establishing a rational and intellectual basis for the "new normal" to those capable of thinking, not just lashing out.
on Mon, 07/27/2009 - 14:02
#16052
oh my...someone escaped from belevue.....
the solution is quite simple
1. sharply curtail public spending especially
that foolish faux oil war in the middle east
2. stop ALL economic stimulus - let the markets
work off all bad debts without government
interference
3. abolish the federal reserve
4. return to the gold standard
5. lower taxes and regulation
6. provide incentives for investment and capital
formation.
7. fire some generals.
all of these measures in time would produce a
solid recovery.
on Mon, 07/27/2009 - 14:37
#16094
Awesome anony! And it also might help the reader to read more than this one post before he judges, since he quite obviously has no idea of the history of articles posted by the ZH crew.
on Mon, 07/27/2009 - 16:03
#16170
Yes the irony is awesome. But sorry friend, I've been reading this drivel for months now. Watched young Tyler go from being truly anonymous to the rage of the internet. Now nearly every other financial dolt in blogtown is linking to this joint.
But back to the article in mention, which should have been titled Hash, More Hash and Re-Hash, and is nothing more than TD's attempt to prove he's got a bigger one than Dennis Kneale. The uber-bear vs. the uber-bull, I so don't give a shit. There are bigger fish to fry, of which, most of you, are clueless.
"Ann"
on Mon, 07/27/2009 - 17:48
#16251
Hi Ann,
Yea, i agree about the fish, but to get the fish fried, you have to have the right ingredients, and educating the public in tangible bites is like the batter and the hot oil--you know this stuff and it is hash and rehash for alot of us, but it is really important numbers and facts for people who haven't seen all of this before, so it is the oil and the batter to help bring people together for the big fish fry.
So, again, ZH hits a home run for the fish friers!
on Mon, 07/27/2009 - 18:01
#16264
Ann...there is a contributors forum on ZH and I would invite you to share with us your thoughts about the bigger fish to fry. I am particularly interested in those matters that some of us might be clueless about. Speaking for myself, I am clueless on a number of topics and enjoy spending my time reading about said topics to further my education.
I hope to read your thoughts on the contributor's forum soon. Thank you.
on Mon, 07/27/2009 - 18:13
#16273
deadhead, i stepped over the "bigger fish" idea thinking that anony is frustrated with details that he might already know. But, I see what you mean. This publication is a great reference for many of the fish that i know about. I wonder, what are the bigger fish--alot of big fish discussed on this blog.
( i am really enjoying this fish and big fish fry analogy)
on Mon, 07/27/2009 - 21:08
#16406
Back to the Gold Standard? Dude, you're lost.
Winston Wolf.
on Mon, 07/27/2009 - 22:37
#16473
not even close to being lost.....anyone who
trades away instrinsically valuable assets (gold)
for something which
is nothing but a medium of exchange (frn) managed
by immoral money changers in a private
banking cartel is way lost and should seek
installation of a clue phone....
gold is the
standard to cleanse the fecal backup introduced
into our economy in 1933.....gold alone is the
source of freedom and its abandonment the
subservience to slavery.....
gold now and always.
on Mon, 07/27/2009 - 08:18
#15844
"Obama’s Healthcare plan is a wealth redistribution mechanism"
Yes, from insurance companies to humans.
on Mon, 07/27/2009 - 08:28
#15849
Obama's health care plan is a tax increase, nothing more. We will all pay more, and get less, and the difference will accrue to the government. Its purpose is to support the Treasury market, and that is also the reason for the urgency. That is also one of the major purposes for cap-and-tax. What do you think they talk about at G-20?
on Mon, 07/27/2009 - 08:59
#15866
Wow, that may be the most nonsensical conspiracy theory I have ever read, and that is a high hurdle!
You don't understand cap and trade at all? It is a new market for Wall Street, another giveaway to big business. Not that complicated.
on Mon, 07/27/2009 - 09:39
#15887
If you see these measures as primarily anything other than "revenue enhancements", you are the conspiracy theorist, not me.
If the purpose of revenue enhancements is not to support the Treasury market, then what? What is the subject of EVERY meeting between U.S. and China these days?
One need only engage in thinking that extends more than one move into the future. Does no one play chess anymore? Are you suggesting that the government doesn't know it needs revenues?
on Mon, 07/27/2009 - 11:12
#15951
What conspiracy do you think I am promoting?
Again, do you have any understanding of cap and trade? If the goal is to enhance government revenue, a carbon tax would be better, and is better. Giving credits away and letting Wall Street create a market is a simply that, a giveaway.
As to the other things you bring up? Chess? Government doesn't need revenues? Okay, if you say so!
on Mon, 07/27/2009 - 12:04
#15975
Again, the one-dimensional thinking. Are you telling me that the bill now before us will be the final product? Are you telling me that the opportunity to raise taxes by auctioning rather than giving away future offsets will be passed up by CONgress? An overt carbon tax would generate too much popular opposition. Incrementalism, see?
"Government doesn't need revenues? Okay, if you say so!"
Can you read?
http://www.bloomberg.com/apps/news?pid=20601087&sid=acY016BvYo5c
"Geithner Pledges Smaller Deficit as China Talks Start (Update2"
on Mon, 07/27/2009 - 12:33
#15984
No, I sure never said (or wrote) those things. You should not have to ask, just refer to what is written.
Okay, I believe you, you have no clue what you think or say. Cheers!
on Mon, 07/27/2009 - 13:48
#16029
Apocalypse Now- Hi Erich- The government needs funds to continue doing what they do, in fact they have many new grandiose plans and think they can spend your money better than you can, but the problem is that tax revenues are dropping 20%+. Companies pass along increased costs (CBO itself said healthcare would increase costs and carbon trading costs would increase the delivered supply chain costs) to the consumer (us) in the form of your final price - it is a de facto tax even if it is not called a tax on the face of it.
Now carbon credits if done right could just be a tariff to even the playing field between the developed and 3rd world countries, but India and China already said they are not going to play along so most likely no strategic benefit just higher prices (a tax). Do you care how they pick your pocket between taxes, interest, gas, & higher consumer prices? - the question you have to ask yourself is if you will have more or less disposable income as a result (disposable income = choices, liberty, & freedom).
on Mon, 07/27/2009 - 08:32
#15850
there is going to be a great shorting opportunity. As the market rises, the opportunity gets better.
on Mon, 07/27/2009 - 08:52
#15862
If consumer spending is so important for GDP, how about the income needed to sustain that spending, since credit is not going to be an option for a long time?
The word income is mentioned twice in this presentation, one to claim that "organic-based wage income" is still declining, and the other time to instigate a class warfare position against taxation for the high income brackets (i.e., in favor of the upper income class) and against wealth redistribution (e.g. healthcare reform). So populists, fasten your seat belts.
And class warriors, start shooting, but first state which side are you on. Have fun!
on Mon, 07/27/2009 - 09:02
#15868
Good points.
on Mon, 07/27/2009 - 09:05
#15869
Green Shooooooots - new home sales + 384k
on Mon, 07/27/2009 - 09:28
#15879
This is an incredible deck. ZH you are doing an amazing job. Keep up the stellar work.
on Mon, 07/27/2009 - 09:34
#15883
Wonderful. Not bad at all at your first shot at a comprehensive cover of events. I can only assume your continuing reports will be more refined and insightful. If you could update this quarterly as a template that would be excellent.
CRE, oil, $, treasuries, and a more in depth view on munis would be greatly appreciated.
Thanks for all you do. The truth will set you free!
Shanky
on Mon, 07/27/2009 - 09:34
#15884
Wonderful. Not bad at all at your first shot at a comprehensive cover of events. I can only assume your continuing reports will be more refined and insightful. If you could update this quarterly as a template that would be excellent.
CRE, oil, $, treasuries, and a more in depth view on munis would be greatly appreciated.
Thanks for all you do. The truth will set you free!
Shanky
on Mon, 07/27/2009 - 09:41
#15888
I don't believe the American people are zombies accepting this 'happytalk greenshoot bs' anymore. The story in the NYTimes about people walking away from debt is the tip of the iceberg. People know that their banks are corrupt with the explicit help from their government. They understand both parties are responsible for creating the oligarchy that is today's USA. Once people lose respect for the institutions (think government, banks, courts), you are well on the way to a disintegrating society.
Politicians are aware that there is no respect for them. Obama frantically tries to pass a healthcare reform bill to help calm the crowds. Ben takes his show on the road as the masses begin rumbling for a Fed audit. Banks are sweating because more of the little people are telling them to shove their credit card debt and mortgage debt up their ass. The little guy knows the 'recession is over' talk doesn't jive with the pink slip he just received that week.
I agree with John Talbott's comments in Slate. The people understand completely how corrupt the system is, they just don't know how to organize to fight it. Actually, walking away from their bank debt may be the best way to fight the corrupt system. I suspect people will start withholding taxes too. I think government cronies and banksters are sweating because they know the money orgy is coming to an end and they just don't want it to stop. When people refuse to pay their debts and their taxes, the government has to respond. They can either lock everybody up (highly unlikely) or begin cleaning up the problems.
on Mon, 07/27/2009 - 09:42
#15890
It was so good until... you blew it:
"Reagan's lesson" was that you could use fake economics ("supply side" fairy tales) to justify more "government by greed"--lowering taxes on rich people.
You miss the point! The rich have manipulated the system from taxes to trading to clubby CEO compensation! AMERICA HAS FALLEN TO GOVERNMENT BY GREED AND MANIPULATION! THE SHARE AND SHARE ALIKE SOCIAL CONTRACT HAS BEEN DESTROYED! When you talk about "Reagan's lessons" you're siding with the bad guys! The libertarian solution at this point is totally heartless. You're still in love with your money.
Come up with a better plan. The rich in America need to give back a little. We need a new social contract. Read Strauss and Howe's The Fourth Turning for starters.
on Mon, 07/27/2009 - 10:23
#15916
<<>>
Define "a little" since the amounts that I've had confiscated by various government entities and have voluntarily given to non-government entities would rarely be classified as "little".
on Mon, 07/27/2009 - 14:28
#16087
Apocalypse Now- This is just transparent class warfare. The real truth is that income was the most highly correlated to IQ level before this economic downturn (now it might actually be political influence). This is just a fact and not a value judgment, but people with smarts have generally found a way to get ahead. Where this turns evil is when people use the corporate veil to do things they would not want put on the front page of the newspaper associated with their name - the corporate veil needs to be pierced. A good start would be who owns the FED, and who owns the shareholders of the FED, and who is the majority shareholder of those entities?
As for lumping all rich people together, it is a logic fallacy of parts to the whole. The wealthy provide jobs, and last time I checked roughly 50% of the public were not paying income taxes - this means 50% are being supported by the other half (including a burdened middle class).
When the government infringes on the pursuit of life, liberty, and the pursuit of happiness through high taxes the rich people will have the means to relocate their capital and production to friendly countries (already happened with manufacturing). When everyone is poor then who will support the other 50%, because nobody will have the incentive to work 80 hours a week or go to school for 8 years if the reward will be higher taxes. The system has to be fair for all based on principles.
Nothing is free, we can't even kick the can down the road and claim our children or grandchildren will pay for it, since our foreign funding credit cards are maxed out. This means that you are just robbing from Peter to pay Paul in the present. The money's gone, the only way to get more in the short term is more taxes, but they need to focus on principles that stimulate JOB CREATION. It's the economy stupid, and the economy is JOBS.
Each corporation acted in its own self-interest to increase profit by off-shoring and shifting manufacturing to lower cost countries - the result is that in aggregate we exported many jobs, increased corporate profit margins in the short term, but shot ourselves in the foot since 70% of the economy was consumer spending driven (the government could have made policies that protected its own consumer base - who can buy when they don't have a job and their credit is shut off). This is greed, evil, and ultimately moronic.
Don't let the powers confuse you regarding who the guilty are. 1. Bankers & corporate lobbyists (names?) in what amounts to "kickback" schemes 2. Government & corporate individuals (names?) acting in their own self interest instead of their constituents or other stakeholders 3. Americans who do not organize in the face of extreme organization at the top capstone of this pyramid scheme 4. Voters who vote in Santa Claus and others that tell them what they want to hear even though they know it's not true at a gut level - like it's not your fault it's the rich people and we are going to tax them more. 5. An entitlement mentality that is corrupting the self sufficient mentality that develops character from hard work. Everything we may want or need is not necessarily a right - since almost nothing material is free, someone has to work for it, and taking from them to give to you is actually infringing on their rights.
on Mon, 07/27/2009 - 09:47
#15895
I'm pretty much a believer in the double-dip theory of this recession. After Xmas, when the giddiness of the holiday disappears, there will be more layoffs, companies will find out that they over-produced for the season, banks will still be lending less (see today's WSJ piece on 2Q), etc, etc, etc. Back down the rabbit hole we go. Hope and change we can believe in will turn to despair and cynicism about US economic policies.
Still, I'd give this presentation maybe a B overall. Here's how I'd score it:
Scope/inclusiveness: A (maybe a bit more on the Fed's special programs)
Depth/research: B (accumulates much info not routinely reported by the MSM; I suspect a strong Rosenberg hand here)
Balance: C- (OK, you need to present & explain some of the "green shoots" and how they balance out (NOT!) the bad economic news/prospects).
It is useful to have this broad look at the US economy all pulled together in one place. It is very hard to pull all this pieces together, and I appreciate you doing so.
on Mon, 07/27/2009 - 22:38
#16475
double dip? has there been a rise from the first?
on Mon, 07/27/2009 - 09:59
#15905
Agree with #15890. Reagan was the frontman for the corpocracy that sold the people the notion that it was great to be American and anybody could be rich. His 'morning in America' schlock was the 80's equivalent of the green shoots. The Reagan era was the beginning of the destruction of unions (the one place where working people had a say in the corporation), the flood of illegal immigrants who helped to push down wages and working conditions for all Americans and the 'greed is good' mentality on Wall Street. Reagan ushered in the beginnings of this mess.
on Mon, 07/27/2009 - 10:14
#15909
Awesome! Great easy read summary
Thanks ZH and Rosie
on Mon, 07/27/2009 - 10:17
#15911
SEC, CFTC Asked to Investigate Goldman Sachs' Special Privileges Ahead of Cap-and-Trade
http://www.breitbart.com/article.php?id=prnw.20090727.DC52105&show_article=1&catnum=4
http://greenhellblog.files.wordpress.com/2009/07/seccftc-july-24-2009.pdf
Get those bastards!
on Mon, 07/27/2009 - 10:23
#15917
what will the effects of state Government spending reductions be on the economy?
what will the increase in Fed government taxes have on the economy?
Don't worry about who gets taxed we will all pay for Washingtons waste one way or another.
on Mon, 07/27/2009 - 10:35
#15925
great work. reinforces what i have been telling all my clients for the past year.
70 is the 100.
businesses will operate at 70% of capacity, 70% of prior gross margins, and 70% of historical average selling prices.
gs, jpm, et al excepted.
any that can survive in that environment, will emerge as behemoths once/if this ever ends. those that can't....
well you know the drill...
on Mon, 07/27/2009 - 10:36
#15926
sorry about that. should have previewed first. meant to say 70 is the new 100.
cheers.
on Mon, 07/27/2009 - 10:43
#15929
Very nice work TD. I agree the trend in housing is higher occupants per household as the jobless can't afford their own place. Demographics may play a big role as retirees look to downsize housing from McMansions to something with a smaller cost overhead (taxes, heating, maintenance etc..) We may see the sheeple start to pour into stocks based on the last few months market performance but it will be at their peril. I don't know where the new jobs will come from.
on Mon, 07/27/2009 - 10:48
#15931
The story most in need of telling - would be about the overweight, cumbersome behemoth which resides in DC.
The real dragon resides 230 miles south of Wall Street.
on Mon, 07/27/2009 - 11:32
#15958
Great writeup, I am still reading through it and enjoying.
Page 47 - "Wells Frago" could use a fix.
on Mon, 07/27/2009 - 12:07
#15977
I enjoyed this report, but what does it mean GOING FORWARD? How many more years of slow to no growth are we looking at with high unemployment etc?
on Mon, 07/27/2009 - 12:07
#15978
Will we retest the March lows etc?
on Mon, 07/27/2009 - 12:16
#15980
This is all fine and dandy, but tell me the month and year unemployment for those with a Bachelors degree or higher reaches 40%. That's the only statistic that matters, because that's the Revolution Statistic.
on Mon, 07/27/2009 - 12:33
#15982
The quiet revolution is underway: walking away from debt and tax obligations. Why pay when bankers have a free pass?
on Mon, 07/27/2009 - 12:52
#15993
Not a little irony in MCC, aka Chest, intro a segment on HFT aka the moronic bloggers. CNBC is a joke
on Mon, 07/27/2009 - 13:42
#16022
Nothing about the deterioration of the supply chain. Unless you view these statistics through that lens, they are meaningless.
on Mon, 07/27/2009 - 13:50
#16033
Why don't you put a date on this document somewhere? Stupid.
on Mon, 07/27/2009 - 14:48
#16048
...
on Mon, 07/27/2009 - 14:19
#16077
oh that would make a material difference....
....if the lack
of publication date makes it unusable it's your
loss....given the tenor of your comment there
is absolutely no additional information available
which would appeal to your intellect.....
on Mon, 07/27/2009 - 13:54
#16038
Any executive summary, conclusions, and recommendations would help.
on Mon, 07/27/2009 - 13:56
#16047
You must be a banker.
on Mon, 07/27/2009 - 14:14
#16068
sounds more like an mba candidate....precisely
the types who created the disaster...
on Mon, 07/27/2009 - 14:40
#16101
Zing!
on Mon, 07/27/2009 - 14:40
#16102
I hope everyone here has at least read Black Swan by Nassim Nicholas Taleb.
on Mon, 07/27/2009 - 17:51
#16253
jim rogers is talking about a black swan where the market goes to astronomical numbers backed by NOTHING...
on Mon, 07/27/2009 - 16:55
#16215
It's like buying a Ferrari....if you have to ask how much you probably shouldn't be looking at it.
Tyler can you please tell me how to think as well....
on Mon, 07/27/2009 - 13:55
#16040
i give this a solid A.....i would give an A+ when population and inflation adjustments are made to certain time data.....however, this is was excellent information.
on Mon, 07/27/2009 - 13:55
#16041
How can the "Consumer" be 70% of Gross Domestic Product? Consumption and Production are not the same thing. That they are somehow convoluted in a government statistic shows the inherant unreliablity of the statistic.
And since according to Keynesians, the "consumer" is the key to the economy, I wish someone would tell me how to get a job as a "consumer." It has to be easier than be a "producer." And certainly more respected by the government and main stream economists.
on Mon, 07/27/2009 - 14:00
#16050
Dude, with no date on your document it becomes completely unusable.
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