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Former OMB Director Debunks The Economic Recovery Myth
There is propaganda, and there are facts. For anyone seeking just one concise, definitive and completely true (as in fact-, not hope- based) explanation of what has happened to the American economy in the past 2 years, we suggest this presentation by former OMB director David Stockman, whose 10 minute appearance on the CNBC's strategy session left the hosts with absolutely nothing to retort. Among his observations: the government sector for the first time in history is shrinking: "the reason is that governments are broke... we are going to have to cut back government employment." And it gets scarier: "if you take core government plus the middle class economy (65 million jobs), that's the breadwinning economy, if we take some numbers - how many jobs in the "core economy" in November - zero; how many jobs since last December: net zero; how many jobs since the bottom of the recession in June 2009: still a million behind from when the recession ended." As to whether the economy can grow without employment growth: "I can't imagine how it can because employment growth generates income growth which is the basis for spending and saving ultimately and we are not getting income growth out of the middle class." And the stunner: the job "growth" has come almost exclusively from the part-time economy (two-thirds). Why is this a major problem: "there is 35 million jobs in that sector, with an average wage of $20,000 a year: that is not a breadwinning job, you can't support a family on that, you can't save on that. Those jobs will not generate income that will become self-feeding into spending." As for the biggest condemnation, it is reserved to what Zero Hedge has been claiming for two years now is a completely broken market: "I can't explain the market... I don't know what it is pricing today, I don't think the market discounts anything anymore, it is purely a daytraders' market that is trading off the Fed, trading off the headlines. One day it is manic, the next day it is depressive, and we can't draw any conclusions." And scene.
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+1 paper gold is not gold. Backwardation here we come!
RobotTrader, How do you post images in comments?
for risk appetite, keep an eye on the $SSEC, chinese stocks led the way down and back up in 2008. I'd imagine the same would happen today. The SSEC is sitting on 200 and 50 DMAs after the 50 crossed on top of the 200.
as for gold, chart the spy versus gold. divergence started happening beginning of 09: gold was pretty stable while the market crashed and recently rally in gold has been bigger than the rally in stocks.
it's scary shit regardless. i know the market's knee jerk reaction when shit hits the fan is to go into the USD but mr.market is starting to go into PMs AND the USD, e.g. during the north korean artillery strikes on november 23rd.
so we see that in both risk on and risk off scenarios, gold goes up. I haven't seen another asset that does that in my short career.
Special powers = Tyler/ZH. Must be a contributor.
$SSEC and steel stocks are late stage plays.
These are usually the last sectors to rally. So weakness in China right now is not an immediate concern, if this bull cycle plays out like 2003 - 2007.
That's quite an extrapolation considering 07-10 was nothing like 01-02. Every CNBS contributor is smoking hopium that this market will repeat 03-07. Already it's diverged. 04 was not like 10.
If China cannot lead the global "recovery" then who will...never mind the indebted developed nations printing money will lead the charge!
[If China cannot lead the global "recovery" then who will...never mind the indebted developed nations printing money will lead the charge!]---Bill Lumbergh
IMHO, there IS no recovery happening now or in the near future. Too much debt, too much corruption, too many trade imbalances, too much trust in government, too much fragility and complexity in systems, etc. The list goes on and on.
Forget China. On balance, they're as bad off as we are in the U.S.
The economic catastrophe is presently unfolding. It may not feel like it yet, but we are living in historic times. As for recovery, I can't imagine seeing real "green shoots" until long after that now discredited phrase is long forgotten. Am personally hoping for green shoots beginning 15 to 30 years from today. At least one full generation---and I consider that optimistic.
Have a nice weekend.
(If your post was meant to be sarcastic, my apologies. Disregard my Reply entirely.)
It might take 10 to 15 years or it could take 5 to 10. It all depends on when the bad debt is cleared out. Between 1930 and 1933 the GDP contracted by over 35% and there was wide spread panic and suffering as many banks failed. However, the bad debt was largely cleared out (at the expense of the speculators who purchased it) and in 1934 GDP grew at a 10%+ clip. After that the USA grew into the largest and most powerful economy in the world.
[...in 1934 GDP grew at a 10%+ clip. After that the USA grew into the largest and most powerful economies in the world.]---Lucius Corneliu...
I absolutely appreciate your reliance upon history as a guide. Thanks for your post.
Check out how the economy turned south again in 1938. The recovery you referred to in your last sentence is commonly attributed to post-1945. Enter, U.S. industrial might and Brettonwoods accord. Not to mention most other countries' industries were playing catch-up after the devastation of the war. We, the U.S., kinda had a clean start, built-in advantages holding the world's reserve currency, diplomatic leverage due to our nuclear/military supremacy. And hey, we're Americans...with a capital A.
When Bernanke was reconfirmed, I told people there's GOOD news and BAD news. The GOOD news is Bernanke is an expert on the Great Depression; the BAD news is, this is gonna be different.
I hope you're right and I'm wrong about our prospects for recovery.
Personally, I think Bernanke's days are numbered. He is following the Japanese play book which prolongs the agony of deflation and passes private bondholder losses to the public. I doubt that the American public has the patience to put up with it for much longer. My guess is that this will be his last term.
Lucius and Founders Keeper-another historical example is the post WWI recession and Cal Coolidge's handling of it. He drastically cut spending, cut Gov't payrolls, terrible times for 18-24 months, and then the mess was over for a while.
Whiting has some interesting writing on Silent Cal, e.g.:
http://www.abebooks.com/servlet/SearchResults?an=%22edward+elwell+whitin...
Quite a different approach from Hoover/FDR or Our Dear President (and crews, obviously)
- Ned
(Coolidge's daughter made a bet that her friend could not get Cal to say more than two words. Cal's answer? "You lose.")
[WWI recession and Cal Coolidge's handling of it.]---New_Meat
Thanks for your post. I love the story of Coolidge's handling of the economy. It's a crime the progressive socialists have scrubbed that valuable experience from our school history books.
I think we are on the same page...note the use of quotations around my use of the word recovery as I think all we are seeing is papering over of problems in developed nations...as for emerging nations there may be long-term fundamentals but first a few bubbles need to pop.
There's absolutely no possibility that this "bull cycle" plays out like 03-07. Why ? It's not 2003. In many, many, highly significant aspects. Steel stocks are not a late stage play; they are a no play. Over-installed capacity.
"At the present time, gold is trading in lockstep with the SPX as a "risk asset"."
rt, you've been selling that line for a good part of the past year, but the truth is gold has outperformed the s&p rather handily lately. funny how a direct comparison of the s&p versus gold is not one of the 24 charts you posted. if posted, it would invalidate your statement above. the bottom line is the s&p is trading at about a 14% discount to gold and is in a continued downtrend against said inedible yellow metal.
You stick with that thought sir and we will see what happens. As with anything in the market..this is a giant poker game.
"there is 35 million jobs in that sector…" Did he actually say this?
Tut tut. There are 35 million jobs in that sector…
Tylers have typos too.
TD / Anyone. Explain IWM OBV below spring levels with price hitting news highs. http://stockcharts.com/h-sc/ui?s=IWM&p=D&yr=1&mn=6&dy=0&id=p74191422100&...
Dave Fry/etfdigest has weekly breakout and $80 resistance, besides OBV, look at selling volume over green bars. IWM is HFT fav, constantly burning shorts on meltups, I don't think it's anything else than momo, rsi can go over 70, so it's not done. Fundamentals say small companies are hurting, can't even finance payrolls, for 3 yrs now, there is nothing fundamental here, imho.
it was very refreshing to listen to Mr. Stockman. reading his body language the center anchor (with the white shirt) was physically uncomfortable discussing such doom and gloom.
he could not wait to go back on CNBS script.
I liked David Faber once (the one with the white shirt). Unfortunately, he took a shill pill.
+1000!
More David Stockman videos from past week:
Bloomberg
http://www.bloomberg.com/news/2010-09-09/david-stockman-says-banking-sys...
Colbert
http://dickjoe.vodspot.tv/video/5039747-david-stockman
So sad, I remember when Colbert had good writers.
From Ritholz:
Over the years, I have described myself politically as a “Jacob Javits* Republican.” For those of you unfamiliar with the Senator from NY, Javits was a social progressive, a fiscal conservative, “a political descendant of Theodore Roosevelt’s Progressive Republicanism.”
After he “retired” in 1980, the GOP took a very different turn: The emphasis on Fiscal conservatism was lost. Balanced budgets were no longer a priority. In terms of electoral politics, the embrace with the Religious Right was a deal with the devil. It married the party to a backwards combination of social regressiveness and magical thinking. Ideology trumped facts, and conflicting data and science was ignored.
In short, the party became more focused on Politics than Policy.
I bring this up as an intro to David Stockman’s brutal critique of Republican fiscal policy. Stockman was the director of the Office of Management and Budget under President Ronald Reagan. His NYT OpEd — subhed: How the GOP Destroyed the US economy — perfectly summarizes the most legitimate critiques of decades of GOP economic policy.
I can sum it up thusly: Whereas the Democrats have no economic policy, the Republicans have a very bad one.
The details are what makes Stockman’s take so astonishing. Here are his most important observations, of which I find little to disagree with:
I find it fascinating that the most incisive criticism of the irresponsible GOP policies has comes from two of its former stars: Bruce Barlett and now David Stockman. Sure, Krugman, Stiglitz, DeLong and others have railed against Bush policies for years. But it seems to take an insider’s critique to really give the debate some punch.
Its funny, but when I criticize Bush, I get accused of being a liberal Democrat (I am not). I am simply giving my honest perspective of an utterly ruinous set of irresponsible policies that did lasting damage to America. The critiques of Obama does not generate the same sort of reaction. I suspect brain damaged partisans of the left suffer from somewhat different cognitive deficits than brain damaged partisans of the right.
Here’s to hoping that reality-based economic policies are somewhere in our future.
>
Note: Brain damaged partisan comments will be unceremoniously deleted
Aristarchan note: All the above comments are Mr. Ritholz's.:)
Friedman actually had experience as an underling trying to implement the failing FDR programs. He learned what didn't work.
He went on and had success fixing other countries such as Chile at their request.
Friedman also consulted with China on free market reforms, also at their request. They've done pretty well the last 25 years.
I think Stockman is exactly right to point that out that the Fed has broken the free market and is an obstacle. I think the monetary system is cornered.
Some just want the system to work. Others just want the system to work for them. If the member central banks were steel companies there would have been bankruptcies and consolidation. But not these guys -- as long as the banking cartel mothership can print infinite money.
Ah, yes. Applies to our "elected" puppets. The financial scientists and the political scientists play the game while the People spiral into impoverishment.
Oops.
Great post. Some of these are points I've brought up here on ZH.
The central question of the post-crisis world will be: is the post-Bretton Woods economy designed by Friedman-Nixon-Reagan dead? There is good reason to believe the answer is : yes.
If there is an inability to control inflationary forces then the entire edifice collapses. Keep in mind that lots of inflation is being hidden by the deflationary components of biflation which artificially bring the gauges down. It's probably a dirty little secret that Bernanke wants this situation to persist.
Below is an interesting link to an earlier David Stockman and his trashing of Reagan's "trickle-down" theory of economics as basically being a "Trojan Horse" designed to benefit the wealthy.
http://rationalrevolution.net/war/trickle_down.htm
Yes if we all just pay more taxes everything will be alright!!! NOT!
Of course it was designed to benefit the wealthy. But what Reagan did not expect is that the rich would end up increasingly divesting from America and/or hoarding their wealth. He hoped that the money would be re-committed to the US economy
Of course...the normal Republican theory of trickle down. It only trickles down when things are really good...and it did not trickle down that much during the Reagan years....massive deficits and defense spending and the death of inflation caused the economic boom. When things are really bad - like now - trickle down is a loser's game.
Politics is the distraction.
Politics is the carrot on the stick.
Consider that you are being led by both sides, or that they are being led by others.
I guess Stockman's economics are malleable, is he selling a book?
I saw him bashing low taxes, low spending again recently.
Next, he's bashing the current Fed injections of "economic heroin" into the system.
I agree with him here, but what does he really believe? Apparently not Friedman.
Skeptical as OMB directer, he "couldn't figure out what was going on with all these numbers" back in the 1981 Atlantic article.
Why is he being dragged out on propagandavision now like Jimmy Carter? Surely it's the end of times.
You mean if some vacuous journalist doesn't tell us that almost all hiring done in October is for seasonal/temporary labor, then it wasn't.
JHC, since when has the November/December holiday season not demanded hiring almost exclusively just temporary labor?
Just Google "UPS 50000", read the results and extrapolate.
Past wasnt so good, present sucks and the future (dont go there)
My net takeaway is that prices for things will continue to drop becasue you can't sell stuff to poor people. Yet, I still see food, gas and rental markets staying strong. Food and rent - the essentials - will take up a larger % of every families monthly income. What I think will be fascinsiting is the Obamacare stuff that begins to hit in 2012 and 2014. Think of all those part time $20,000 workers noticed by Stockman. All those people - the majority will qualifiy for the "Fed subsidy" to paid a monthly premium set by the "market" with no price controls. If debt is soon to operate at 120% of GDP, then how can the govertment overnight afford for debt to support Obamacare? You can'y run the economy on those ungrowing 65 million jobs alone. Shivers.
They don't care. They want those 65 million to go away. Useless eaters (in their eyes). It isn't about the people or the HC insurance, it's about the money. They have both the people and the Gov giving them money now. They knew the people could not afford the ridiculous premiums they charge and would soon not be able to pay it. ( See Cdad- defunding) Until the people AND the Gov can't. But it won't matter then.
http://en.wikipedia.org/wiki/Japanese_asset_price_bubble
Ben is bent on creating an asset bubble. May as well take advantage of it rather than bitch.
Ross investing in banks- http://www.cnbc.com/id/40495369 BAC over 12 bullish. Wouldn't banks benefit with rising treasury yields?
I AM A FIRM BELIEVER THAT QE 7 WILL SOLVE ALL OF THESE PROBLEMS.
I do wonder why Benny B. is slacking with this QE 2,3, 4, 5 and 6 because those clearly won't work...
The reason why I took QE 7 is because number 7 is my lucky number.
I do have another lucky number and that's 69, so if QE 7 fails, QE 69 will work guaranteed!
Get back to work..!
The EU owes the U.S. 8 trillion, we know Ireland does not have it ... Lol'
The US owes BELGIUM 320 billion!
That's all I need to know :)
So you guys try to get your money back from Ireland, Spain, Greece and Portugal. Good luck with that :)
ps: It's 3.2 trillion, not 8.
"The US owes BELGIUM 320 billion!"
ROTFLMAO.
So take it up with them...I don't owe you shit ;-)
All your Guiness are belong to us, Ireland.
- Thirsty American sick of totally tasteless, or worse yet, skunk American swill.
He's like your over-indulgent grand mother. As soon as Wall Street or the well connected corporates start whining again, he'll be right there with boatloads of 'liquidity'. There's zero resistance to whining in every level of government. That's because they know how fragile the situation really is.
My thoughts on this video:
QED
I hate math!
This is a great piece! Should have had this before now.
I saw all I needed to see on the Black Friday vids. People getting trampled and lives lost for the almighty right to materistic bullshit from China.
Its to far gone to bother saving and quite frankly why would you want to.
The beast is starving. The establishment (State) is now providing psychological media messages to rope in the undetermined market segment.
Sheeple Contractors Part 1 This Is Excellent Motivation To Help Out Dr. Henry Kissinger!!!!!
http://www.youtube.com/watch?v=Up0qMlxX3V8
Excellent stuff . Just highlights the fact that few investors seem to do much analysis beyond the initial headline figure .
This guy obviously doesn't listen to Nancy Pelosi.
Enabling the unemployed with benefits in perpetuity is the best way to stimulate the economy. Just ask any economist.
Pelosi would tell Stockman to take a Pomo and 2 QEs and wake up feeling yourself again.
Whenever I wake up feeling myself, I realize I need more really close friends in my life.
be glad to be your friend, Sandi, but gotta warn you my life is a wreck :)
Likeable but economically ignorant puppet, nurtured on Marx and Alinsky feels he is the new Moses leading us into the promised land of the utopian New World Order. Unfortunately, and beyond his ideological comprehension, the SS troopers of Wall Street have already established their version. So Andy Stern can rant all he wants about the Workers of the World Uniting (for what, pray tell?) and the Gorists will still attempt the AGW scams through the malinvestment of assets into wind and solar and hybrids, until one morning, in the not too distant future, when it will become obvious that no amount of wealth or power may be truly sustainable. Retribution is such a frickin' bitch when the mobs descend.
"the reason is that governments are broke... we are going to have to cut back government employment."
I will say...again...for the one millionth time...ahem...
They will shrink government, cut taxes and allow the people to prosper, voluntarily or otherwise!
If you think that any US government will be able to cut your Taxes ,
you are devoid of any Reality and living in la la Land.
We just might have to sent you to Abu Ghraib for Rendition and a bit of psycho-torture and a little of your favourite water-boarding so you come to your senses ? Who will pay for Guantanamo bay or the 680 failed assassination attempts on Fidel Castro's Life by the CIA ? Who will pay for US troops shooting at civilians and Dick Cheney's War Crimes around the World ? Who will pay for the Heroin Shipments by US Troops coming out of Afghanistan to euthanize the world and who will pay for the corruption of US security companies, US Con-de-struction companies and murderous henchmen bogus governments installed in Iraq and Afghanistan ? Who will pay for Israels Zionist Nazi expansion into Jerusalem,Palestine the west bank and it's attacks on Lebanon and Mossat's murderous missions into Iran Syria or Dubai ?
It is obvious that you don't want to pay your US Taxes, but how else will you finance a totalitarian state?
There are about a million USD you (each American tax-payer) are in Debt right now: http://www.usdebtclock.org/
Paying more Taxes will be the easy part.
Waking up to the new Austere US Reality will be much harder.
I would ask what's crawling around inside your head...but it's clear it's worms.
There are about a million USD you (each American tax-payer) are in Debt right now: http://www.usdebtclock.org/
This implies I took on a debt. I did not.
Like I told the very dense Belgian fellow..."I" owe no one anything.
If you think I do, come and get it ;-)
Molon Labe, Bitches!!
Unless they decide to take it out of New York's hide. In that case, I'll just go fishing.
"Unless they decide to take it out of New York's hide. In that case, I'll just go fishing."
Exactly.
It would be kinda like going out for dinner and a show...LOL.
What are you insane! What will all the psychopaths and slugs do for a living? :-)
"What are you insane!"
Well I could be.
"What will all the psychopaths and slugs do for a living? :-)"
The pigs will have to learn to fly.
Thrown from the tops of various buildings.
"Have faith, or splat!, you devils."
Tried flying once, didn't work.
I do not know much about Mr. Stockman but I believe him to be one of the few who can see what is occurring and explain the situation in simple terms. Unfortunately we do not have another ten of him to take over political roles to effect real change.
Explanation of what has happened to America:
The American dream has now turned into a Nightmare.
welcome to your new normal: http://www.usdebtclock.org/
Corporations circumventing the rule of law.
Thats it, covers your three topical observations.
I think ZH is 'preaching to the choir' at this point.
The systemic issues are merely getting worse...in many cases globally. I guess the only question I want answered is, how long?...which I suppose most would like to know. But given the acceleration of those hedging for bad times (heavy gold/silver buying...Costco now carrying 'emergency food supplies'...which BTW are at great prices)...one must feel things are closing in on the 'correction'. I guess what I find amazing, given the history of the US, is what a bunch of pansies we have turned into. Though we may point at the Greeks or Irish and say wow you all are messed up...the US situation is much uglier. We are just so huge it is taking much longer for the pain to reach the nervous system.
And since it is the holiday season...I lift a glass of whiskey to TD et al...as well as the regulars here. This truely is an free mind and educational space.
How long? If you think the US, or any other country is going back to the good old days, think again. If you're open minded, unlike some at ZH, I sugguest you start reading these folks:
http://www.chrismartenson.com/
http://theautomaticearth.blogspot.com/
http://www.kunstler.com/index.php
http://www.maxkeiser.com/
Personally, the US has maybe 5 years before it goes down. If you can afford to prepare yourself, that should be enough time. BTW, your post is dead on, no pun intened.
I'll be impressed if it goes 5 yrs.. Perhaps not due to the US, but some other global entity collapsing. I actually thought thing would come apart this winter...but it looks like the can, can be kicked further down the road...maybe they can make it to this time next year...
Great links.
Being open minded means being capable of accepting ideas you disagree with. My idea is that the world will not ultimately fail...it will not be allowed to. To allow it to do so would be the height of stupidity. It will change...but not fail.
Morph, not start over.
Just like we always have.
Failure within 5 years is hyperbole. Are we facing a crisis? Most definitely. Have we faced similar or even worse in our history? Yep. Did we survive and prosper? Yes we have. So, IMHO the current system will be forced to restructure, there will be a lot of pain, but the sun will still rise in the morning and set in the evening and we will eventually get through it. Our species has survived this long because we adapt to our environment. Life will go on.
Another CNBC fluff interview. David Stockman said a few correct things, but I'm sure he was told not to go too far with the real data / bad over the cliff news. He did almost say Depression, but stopped, and called it a Recession. What BS!
In reality, without the simple math to define it, a depression is only a depression if people suffer severe multi-year strife...or at least I think that is what it is. In reality, it is a term that is not well defined, and is used by almost everyone to make a point one way or the other.
Most of the MSM miss a very big number. Not only were 7 million jobs lost since Dec 2007, 2 million jobs where never created for the college graduates of Dec 2008, May 2009, Dec 2009, May 2010 and Dec 2010. Stockman never mentions them in his interviews. Most of these students never had a full time job while attending college, so they never appeared on the unemployment rolls. I wonder if U16 accounts for this forgotten population. What happens when 2 million college grads start to default on billions in student loans or take to the streets in protest over higher interest rates on those loans?
Record banker bonuses that's what happens.
I wouldn't spend too much time worrying about all of this, the govt is just queueing the tee for the QE3, otherwise known as Captain Trips. You get the flu that's not the flu, then it morphs a few times, you get sicker and die. 99.9% percent mortality.
Everyone who is left is rich beyond their wildest dreams (and there is no more energy crisis!) Then you get to choose between Boulder, CO or Las Vegas. If you make it to Vegas, say hi to the Bernake for me.
Wealth is created purely by the productive work of humans. Whether they get help from animals or machines, it is only human effort that creates wealth. Not the movement of paper nor the stacking of gold.
Should 99.9 percent of all humans die, those few left over better figure out quickly who's going to do the scut work like growing food, driving the delivery trucks, maintaining the power grid, fixing the water system, etc.
Sitting on a pile of gold left by all the dead will feel mighty good until all the MREs have been devoured and the lights flicker out.
Deflation is the only way out.
I realize this is a radical notion for those accustomed to Bernanke's (as well as Krugman's) lies and distortions, but it is true.
http://mises.org/daily/4602
Yet here Bernanke is, for the last who knows how long, basically saying that The deflation is what caused the Great Depression.
This is one of the greatest myths ever perpetuated, yet no serious analysis is ever presented by anyone in the Lame Stream Media or Ivory Towers to counter such folly.
Bernanke should really think long and hard about continuing on the fool's journey he has taken. He really is engendering a deep anger amongst the American People. That not all of them have targeted him as the source of much of their frustration is a buffer that The Bernank won't enjoy much longer, nor will Congress or Obama be spared from the rage that is accruing.
I am not accustomed to anyone's lies and distortions, but in my view, deflation is NOT the way to go. You opinion does not become my truth, nor will my opinion, become yours.
Why isn't deflation a far better option than stagflation, inflation or hyperinflation?
Or default?
What are the risks of deflation that outweigh the risks associates with the syndromes above that so worry you?
Bernanke is guaranteeing STAGFLATION, letting commodities speculation take over, this should be a CRIME. He should be indicted for this, crushing the middle class with $90 oil, etc, the grocery stores have been told by food manufacturers they can no longer not pass it thru. RICH SPECULATORS KILL ANY RECOVERY!
Only a revolution will end this, I firmly believe.
dup
First, deflation is natural and good.
Second, it is almost impossible to have a coherent conversation about deflation and inflation today, for several reasons. Perhaps the two most important of them are: (1) the government statistics are total lies; (2) due to central planning (and execution of those plans), some prices are rising like crazy, while other prices are slowly falling... and how to relate them is non-trivial.
Third, to talk about "deflation" after massively huge bubbles like the late 1920s and the recent real-estate bubble is absolutely, positively insane to the point of overt intellectual corruption. To compare anything to those bubble levels or rates of change of statistics during the bubble is comparing against insanity as the baseline.
Also, to even talk about manipulating the economy is pure totalitiarian central planning criminality. The solution is the close down the federal reserve, close down 95% to 99% the federal government of the USSA, return to a pure gold standard (no fractional reserve practices whatsoever)... then let the chips fall where they may. Oh, and since fiat, fake, fraud, fiction, fantasy debt-based "money" is utterly unconsitutional, all debts denominated in that "money" are null and void, and should simply default.
In other words: RESET.
Well, I think you've pretty much knocked it out of the park.
Nice hitting!
"Also, to even talk about manipulating the economy is pure totalitiarian central planning criminality."
A grand slam.
[...then let the chips fall where they may.]---honestann
I agree. Thanks for your post.
Things do seem to be moving to a higher level, but at exactly what point does the system break? I doubt anyone knows, so untill that time we all can give our opinions without events proving otherwise.
A couple things to note though:
1) these two CNBC guys have recently interviewed several critical-of-the-
establishment types so the takeaway is that thinking of CNBC
as one monolithic enity probably isn't correct. This CNBC --so painfully
from the Northeast -- twosome deserve some credit.
2) Need I remind you all that David Stockman effectively got canned by the
Reagan administration because he spoke the truth. As such I am inclined
to think of him as one of the good guys.
Stockmans message was everyday fair at Zerohedge, so there's nothing at all
shocking about it. And if he has a book due out soon, well I'd say that's
a good sign that he didn't retire massively wealthy from having looted the system.
We need more insiders (former & current) coming forward, they should be
actively encouraged to do so... for their own good and that of their children.
"Now Main Street's whitewashed windows and vacant stores
Seems like there ain't nobody wants to come down here no more
They're closing down the textile mill across the railroad tracks
Foreman says these jobs are going boys and they ain't coming back to your"
http://www.brucespringsteen.net/songs/MyHometown.html
Nothing Stockman said is amazing or beyond the capabilities of reasonably informed setient life forms to understand. But of course, it got on CNBS which is amazing...except that no one is WATCHING CNBS anymore...so, why not? The salesmen (the ones selling ad time) can't sell time for much money given the ratings, so who cares if Goldki...Goldman Sucks doesn't buy time....Silver and Gold hucksters' money is still green.
And with such low ratings, it's unlikely that the huge 1.5 Sigma chunk of the population that centers on an IQ of 95 is paying attention...or will hear even a whisper of this. So the central planners in Warshington and NYC could really give a rats ass at this point.
Maybe time to watch a little CNBS in the coming months...with Tin Foil hat on and battery packs fully charged, of course.
yeah...I'm banking on it being real entertaining: watching 'em sweat & twitch and search for words as the cog diss starts to kick in
LOL, yeah.
It's interesting to note that at one point the co-host commented, "I don't agree with you but..." but he never went on to say why he didn't agree with the guest...I love these deer in the headlight moments at CNBC...
I noticed that as well. It seems to me that the CNBC cheerleaders have the intelligence of well trained parrots. Heaven forbid that they actually have independent, critical reasoning skills.
If you drink a fifth of Vodka a day for a year, you're health will decline.
"I don't agree with you but..."
If you jump out of an airplane at 5000ft, sans parachutte, you will likely suffer severe injuries.
"I don't agree with you but..."
Using a fork to remove bread stuck in a connected toaster is quite dangerous.
"I don't agree with you but..."
The sun has a high probababilty of rising in the east, come morning.
"I don't agree with you but..."
Could the commentator in the white shirt be any more inane, any more useless? Every time he chimes in, it is with some nonsense comment that has really nothing to do with the topic.
The fact that makets went up even though unemployment is high and sticky os not all that surprising. Of course these economist types love to say what Stockman said - that markets dont discount anything, they just move around manically for no good reason driven by short term traders - so there- now I can go back to collecting my govt. pension and smile at the stupidity of the rest of the world.
The next big test for the markets will come when unmeployment starts reducing in a sustained way and the Fed is forced to start snugging things up - probably at least a year away. High unemployment keeps the fed in easy mode . Corporate profits have not been adversely affected by high unemployment ( primarily among high school dropouts by the way). No surprising. There is not much demand for low or semi skilled labor in the modern economy.
So then your Economics types will say - but if unemployment is high people wont have money to spend and that will kill corporate profits. balderdash! Most multinationals get less than half of their revenues from the US ( probably concentrated in high school grads and above). The consumer base in the rest of the world is expanding. So you have to be stuck in an extremely narrow frmaework to think US consumer demand is all important.
I agree with what you are saying about the multi-nationals having zero loyalty to America (while still heavily involved in raping us for all they can through political bribery). However, I think unemployment is a huge problem for the USA because it leads to further price deterioration in housing, reduced tax base for all levels of government which exasperates the budget deficits. To me, it seems more and more like a Taleb "black swan" event is brewing whereby that one last snowflake of debt creates an avalanche.
Tyler:
It seems like we are at a point where we must create a jobs program using taxpayer money, including educating people on how to work and live in a globalized society (i.e. spend your dollars inside your borders where you can), and rebuild our manufacturing for the 22nd century.
People can argue over Autrian vs Keynesian, even though most don't seem to have a real grasp, but we are very close to imploding, which could cause huge political instability throughout the world.
It is time for a modern WPA/CCC solution?
We're not that "close to imploding" as long as the current bread (EBT cards) and circuses (TV) hold out.
"WPA jobs" are a short-term band-aid on demand, but ultimately untenable as the income transfer from the functioning economy to the dysfunctional part can't go on indefinitely.
We will see higher unemployment and use of said 'bread' for years unless we bring back income growth which means people going to college and learning to do something useful and the return of our manufacturing economy for those who already have skills but are being prevented from using them by the "artificially high labor supply" (to use a PC term for Chinese slavery) to the great benefit of the people who have seen their incomes grow in this economy (generally in the form of capital gains or campaign bundling).
Only a complete moron would believe that Americans are incapable of exceeding the productivity of the Chinese, if given a chance, but we don't get to use slave armies (outside of the aggie sector and the perma-temps shuffling Chinese crap into trucks for delivery who can't unionize).
Americans have not been presented with an option that would change any of this in their elections for decades.
oldie but goodie:
Jan. 5, 2010, 5:47 p.m. EST
TrimTabs suggests government manipulated stocks
Analysts say government's financial rescues have fueled conspiracy theorie
http://www.marketwatch.com/story/fund-flows-firm-suggests-government-bou...
Reaganomics anyone?
Yeah, you thought it was rain!
You folks - please dont fall for the old used-car-salesman ploy = of you have to let me mug the old ladies or else things would be much worse-the universe will collapse!!!!
Yeah - really? A punk kid who mugs grnma in the aley and takes $50 off her - hets a jail term. Bennie boy has mugged ALL the old ladies in checking accounts - to the yune of $700 billion and counting - handing the loot to his massssters ( Igor image). WTF is a Priceton phd good fur dese deys eh?
hick!!
That was absolutely classic. You can almost see the pricks trembling from the thought of the torches and pitchforks coming out and coming for them. They won't be inviting Mr. Stockman back any time soon lol. I bet they are still having nightmares.
You can almost see the pricks trembling from the thought of the torches and pitchforks coming out and coming for them.
Pricks ... every last one of them!
kuminsky - or whtever - classic - underperformance,..overperformancxe alpha... no i mean beta .... huh? Morons all of them.
is it possible to have equity markets hit new highs - while employment hits historic lows..
evidently it is.
printing fiat destroys the value of labor (work)
which intern destroys the value of fiat..
seems the bernak is truly committing econocide
The Fed has organizational dementia..
The congress is the enabler.
as long as americans continue to hand over money to ty cuminskies of the world they fully deserve everything they get - oops - surprise!! ( like a wet fart)
This disaster of a network, this cartoon show for adults, this all day commercial for the brokerages must be taken off the air and completely re-tooled to simply supply numbers reflecting the current market prices and NOTHING else.
Stockman is 100% correct, but he might as well be from the 1800's instead of the 1900's as far as his perspective, which is correct but which we really learn nothing. Of course we need job creation-where is the revelation in that?
I said in a different topic that a positive close on a day like Friday would indicate a government run market. Well, that's what we've got. Don't expect a crash, except when such a crash will fulfill a particular government wish. The US that we grew up in as kids is dead. Long live the Soviet state of America.
I wouldn't be suprised to see the gov. run market ramp it down before the re-vote on Thursday.
This has been typical when they want to make a point of what will happen if the tax cuts don't go through, especially the capital gains. 12/7 would be a good day for the scare.
good call!
Bruce Springsteen & The E Street Band - Downbound Train
http://www.youtube.com/watch?v=aZJRaReb2Vc
Kinda sad it only took @25 years for this song to be accurate of the mood again.
high unemployment amongst a section of the US population that has lwo/no skills and very high expectations is not a disaster for the world, not a disaster for the global corporations that serve the world. This is not a hard concept to understand.
It is somewhat liberating to understand that the past 30years of so of all the academics, nobel laureates, al gores, economists , presidents etc etc - all a collosal failure. The only thing good that has happened is a handful of technologists that have actually advanced technology. All the rest - we'd be better off without it - all of it - all the academic work on econ, finance , all of wall street - everything - a collosal waste and failure.
Can you be more specific - because the 1970's sucked.
What do you make of this?
"He is the multi-millionaire minister with his own private plane whose portfolio includes responsibility for Britain's homeless.
But Grant Shapps may have taken his ministerial brief too far – he has taken to sleeping on a camp bed in his parliamentary office.
Mr Shapps is one of a growing number of MPs sleeping in the Commons after new rules were introduced curbing expenses claims for overnight stays in London."
http://www.telegraph.co.uk/news/newstopics/mps-expenses/8181141/Minister-for-homeless-is-sleeping-in-his-Commons-office.html
I wonder if Barney Frank has a camp bed in his office?
Just on Cnn during a discussion on the EU and it's failure ..we had this reply from the Head of the council on Foreign Relations, R Haass..I paraphrase:
" The USA has avoided the troubles in the EU because of the Historic interventions and policy of Greenspan and Bernanke..History will praise them for avoiding a EU type breakdown"
Are the elites that delusional or are they benefiting that much from this fiat mess??
My guess his pals at the CFR are positioned very well to benefit from the coming collapse of the FRN. NWO is less tinfoil hat each passing week.
I love the frugality tips on using government programs to provide you with health care. Is it frugality when someone else foots the bill?
On that note, a good tip would be to go to the ER for any and all types of health concerns, then skip out on the bill. Remember, they're required by law to treat you regardless of ability to pay, so screw those greedy nuns at Our Lady of Perpetual Suffering Medical Center!
Your comment made me laugh. Thanks. Mark
There is no recovery from the human condition, economic or otherwise, only release. But in the meanwhile, I'll arm against today's slings and arrrows with a sword and magic helmet: PM's for the sword, ZH for the helmet.
2008= Once in a lifetime event. Bernanke saved us from the second american Great Depression... TIME'S MAN OF THE YEAR 2.0
The doom is over now...Nothing else is coming.
Why should any politican 'cut' debt when they can get doomers like you people rushing out to buy gold and guns thinking they can pull the trigger at any moment? It works.
Time to face the facts, get over it and move on. Make money and be happy.
Warren Buffett is on record. He would look like a complete fool if it all collapsed on him anytime soon (1-3 years).
Nothing is coming. Soon that is accepted. The healthier you can start living. All this doom is very 'taxing' on one's personal health
Buffett said the top 400 earners, according to the IRS, averaged $400 million ($1.6 Trillion) and only paid 16% average income tax, and that has to change. It's the only quote I think he'll ever be remembered for, for me anyway. (Those evil derivatives WMDs he ended up trading, making him the greatest hypocrite)
You play the sheeple's advocate convincingly. The 'doomism' you deplore is the lifestyle of insight and self-reliance the ZH crowd pursues by choice. Il faut cultiver notre jardin. Chip at life's fretwork if you will, but why half express yourself? On the other hand, the two cubic feet of flesh I call myself requires more vital cultivation. Anything less is a deliverance that does not deliver. Good luck, Mark
fail troll is fail.
Most job offers are now $8-10/yr unless skilled like machinists. All temp, most part time. This is the plan the rich have for us, to work for Asian wages. Over $2 billion a month consumer spending is people squatting in homes up to 32 months before foreclosure. U/E benefits make up the rest. The market is all Primary Dealer-driven, it won't be fueled by job growth that I can see. The wealthy will find ways to not work or drop off the grid, to avoid the taxation coming, someone has to pay taxes.
Mercury Retrograde (appearance of going "backwards") is widely accepted by Astro followers as leading to a breakdown in communication, technology, and transportation. Dec 9 Starts the Retrograde.
During retrograde is considered a bad time to start a new venture or enter contracts.
You don't have to believe it, but you should react to it. Do this one fairly simple thing.
BACK UP YOUR COMPUTER SYSTEMS!
Link below is a practical computer backup procedure I wrote in 2009. Don't be intimidated by it. You don't have to do every step. Each step that you do take, great reduces chances of a catastrophic loss.
A drive image is SO POWERFUL. Do a drive image, even if you do nothing else!
http://oahutrading.blogspot.com/
Oh classic! see that guy in the white shirt @ 7:35 turn to the other guy.
Excruciating. man were they uncomfortable. - get me outa here i need a shower!