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Household Net Worth Plunges By Most Since Q4 2008, As Government Borrowing Surges

Tyler Durden's picture





 

Arguably the most useful report to come out each quarter out of the Federal Reserve is the Z.1, or the Flow of Funds report, which was released minutes ago. And it's a doozy: household net worth (assets less liabilities) in Q2 2010 plunged by $1.5 trillion, almost exclusively due to a plunge in Corporate Equities ($0.9 trillion) and Pension Fund holdings ($0.7 trillion). In other words, the net wealth of the US household continues to track the performance of the stock market tick for tick. And one wonders why the Fed, per Alan Greenspan's admission, is only focused on ramping stocks up to all time highs. Total household financial assets declined by $1.7 trillion to $43.7 trillion, which was the biggest swing factor, as the tangible assets, or housing, was kept flat at $23.7 trillion. Incidentally, to assume that Real Estate value increased in Q2 from $18.7 trillion to $18.8 trillion in Q2, is one of the dumbest things to ever come out of the Fed: we expect that this number will plunge soon after it is realized that the double dip in housing is here, forcing another major contraction in household net worth. On the other side of the balance sheet, liabilities were also flat at $13.9 trillion sequentially. And possibly the most important data point: the change in borrowings, confirmed that everyone is deleveraging except for the government... whose borrowing surged at a 24.4% SAAR, the second highest ever, after the 28.9% surge in Q2 2009. In other words, Keynesianism is alive an well in the US, and any talk of austerity in the US is nothing less than not that funny stand up comedy.

Chart showing total financial asset breakdown: at $43.7 trillion, US consumers are now back to the same net worth levels they had in Q3 of 2009.

The next chart shows the sequential change in key Financial Assets: as expected, equities and pension funds were the primary reason for the change. In fact the total decline in assets of $1.7 trillion was the highest goingback all the way to Q4 2008 when Lehman blew up and resulted in a $4.6 trillion loss in household net worth.

Lastly, the chart that shows changes in borrowings by sector needs no explanation.

We will have much more to say about this report later, as we analyze just how much the shadow banking system has plunged in Q2, following its record $1.3 trillion deleveraging in Q1.

 


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Fri, 09/17/2010 - 12:51 | Link to Comment GoldSilverDoc
GoldSilverDoc's picture

Wanna bet the calculation for "household net worth" is complete and utter BS?  And that the real "market value" net worth is, oh, 60% (generous) of the reported number?

Fri, 09/17/2010 - 13:05 | Link to Comment subqtaneous
subqtaneous's picture

Probably so, but fudged numbers or not, it's one more admission that the great Black Hole of anti-consumption is busily swallowing up every pseudo-dollar created over the past 15 years or so.

 

Gird your loins, kids.

 

Fri, 09/17/2010 - 13:33 | Link to Comment bigdumbnugly
bigdumbnugly's picture

"And possibly the most important data point: the change in borrowings, confirmed that everyone is deleveraging except for the government..."

the old 'do as i say and not as i do' model, ay?...

Fri, 09/17/2010 - 14:14 | Link to Comment NOTW777
NOTW777's picture

LOL - but liesman is explaining "it could be worse"

 

the results of "hope and change" are in and its not pretty

Fri, 09/17/2010 - 13:02 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

Borrowings by Sector ($TN)
____________________________

The charts were all purple
They were spending money everywhere
Tryin' to run from the destruction
You know I didn't even care

They say two thousand zero, zero,
Party over,
Oops, out of time!
So tonight I'm gonna party like it's 1999!

...

http://www.google.com/url?url=http://ilike.myspacecdn.com/play%23Prince:1999:14500:s461011.10273324.4077037.0.2.128%252Cstd_cb97f8cffabe424692665fe7eb1d7275&rct=j&sa=X&ei=852TTJi1HIKdlgfZ4MXAAg&ved=0CCIQ0wQoADAA&q=prince+1999&usg=AFQjCNFeSDS5b8nYIpfjrPMgXbrIe6vqGQ

Fri, 09/17/2010 - 13:09 | Link to Comment NotApplicable
NotApplicable's picture

Meanwhile they spin the purple into the ever lovable Barney.

I love you
You love me
Lets go spend some free money
Without a care in the USA
Let's go spend it all today!

Fri, 09/17/2010 - 12:52 | Link to Comment idea_hamster
idea_hamster's picture

Thank you, and good night.

Fri, 09/17/2010 - 12:55 | Link to Comment Spitzer
Spitzer's picture

now the deflationists can pour over this data in an attempt to find what is inflating and what is deflating and all that bullshit, even though they dont know where inflation incipient hyperinflation comes from.

Fri, 09/17/2010 - 13:40 | Link to Comment MachoMan
MachoMan's picture

Being a deflationist and hyperinflationist is not inconsistent as the terms are not mutually exclusive, they merely represent different points on the same timeline... 

Do hyperinflationists believe it persists in perpetuity?  Why require that of the other side?

Fri, 09/17/2010 - 15:36 | Link to Comment ColonelCooper
ColonelCooper's picture

+1.  Can't one precede the other?

Fri, 09/17/2010 - 16:14 | Link to Comment Glaucus
Glaucus's picture

"Another consideration is that sometimes there is a "deflationary 
head-fake" right before the onset of hyperinflation as the private bank credit money disappears...


With these charts [charts would not translate; see original article below] I am not saying it always looks exactly the same. I am only observing that the common deflationary metrics can fall while credit collapses, but then be immediately followed by a confidence collapse in the currency itself. Deflationists don't see this because they are viewing the economy as if it were a machine. And machines don't flip 180 degrees on a dime like this." -- http://fofoa.blogspot.com/2010/09/just-another-hyperinflation-post.html
Fri, 09/17/2010 - 17:00 | Link to Comment MachoMan
MachoMan's picture

In other words, hyperinflationists rule and deflationists can suck it?  Gotcha...

I'll say it again for good measure.  The two positions are only mutually exclusive at the exact same point in time... 

To put it in question format, exactly what do hyperinflationists believe while they are waiting on being right?  What is the vehicle that gets us to hyperinflation?

Fri, 09/17/2010 - 17:16 | Link to Comment ColonelCooper
ColonelCooper's picture

Bueller????   Bueller???? 

Fri, 09/17/2010 - 19:39 | Link to Comment Spitzer
Spitzer's picture

It should have happened in 2008 but, the inflationists over estimated the intelligence of the investment community. People ran toward the blast instead of away from it. Buying the dollar was the dumbest move ever in 2008 but when everyone is equally as dumb, it makes it look like a smart move.

If people where smart, we would not be having this debate, we would have had hyperinflation by May of 09.

Sat, 09/18/2010 - 00:25 | Link to Comment MachoMan
MachoMan's picture

By that logic, we should have bailed from the dollar 80 years ago... 

Fri, 09/17/2010 - 12:56 | Link to Comment sbenard
sbenard's picture

Household wealth and government debt! Both metrics moving in the WRONG direction!

Fri, 09/17/2010 - 13:00 | Link to Comment carbonmutant
carbonmutant's picture

We should send a copy of this to CNBC along with their Nielsen numbers.

 

Fri, 09/17/2010 - 13:13 | Link to Comment FASB 666
FASB 666's picture

Kill Your Television ( Friggin Now !)

Fri, 09/17/2010 - 13:05 | Link to Comment Gordon Freeman
Gordon Freeman's picture

The Fed will never accurately value the RE component--it would be too catastrophic, and expose the sham of even talking about U.S. "assets"...

Fri, 09/17/2010 - 13:05 | Link to Comment HedgeFun
HedgeFun's picture

Should the goverment bar color be like red rather than purple.

Fri, 09/17/2010 - 13:06 | Link to Comment midtowng
midtowng's picture

I'd be interested as to the breakdown of household net worth by income group. I bet that the working class is getting poorer at a much faster rate.

Fri, 09/17/2010 - 13:06 | Link to Comment mophead
Fri, 09/17/2010 - 13:23 | Link to Comment crosey
crosey's picture

nice rack.

Fri, 09/17/2010 - 17:20 | Link to Comment kathy.chamberli...
kathy.chamberlin@gmail.com's picture

Oh I just had a juvenile blue jay come to my suet feeder.

Fri, 09/17/2010 - 17:39 | Link to Comment RockyRacoon
RockyRacoon's picture

Is that your "tweet" of the day?

Fri, 09/17/2010 - 18:25 | Link to Comment kathy.chamberli...
kathy.chamberlin@gmail.com's picture

maybe, that is ok isn't it rocky. i haven't had one suet eating bird all summer. i had all kinds of birds in my woody creek house. peckers, jay's, flickers oh it was wonderful. so this little guy was adorable, and he has a funny bird song. just been getting seed eaters.

Fri, 09/17/2010 - 13:06 | Link to Comment imapopulistnow
imapopulistnow's picture

So, what happened after the Democrats regain power?

Fri, 09/17/2010 - 13:59 | Link to Comment carbonmutant
carbonmutant's picture

They squandered it on cheap propaganda and expensive bills...

Fri, 09/17/2010 - 14:15 | Link to Comment doolittlegeorge
doolittlegeorge's picture

Johnny Walker Black?  Unfortunately probably not.

Fri, 09/17/2010 - 14:21 | Link to Comment carbonmutant
carbonmutant's picture

a wee dram of Black Bush...

Fri, 09/17/2010 - 13:08 | Link to Comment Eureka Springs
Eureka Springs's picture

SO Frank does just what most in these comments want... manages the worst fall in prices yet... and all y'all want is someone who will use a flamethrowing bulldozer to do it faster.

I bet most of you are writing checks to and voting for the Barney's on the ballot at every opportunity. If not, given your expressed hopes (total destruction), you should be.

Fri, 09/17/2010 - 15:44 | Link to Comment ColonelCooper
ColonelCooper's picture

I see it like this.  If I'm going to fall off the roof of a building and die, I'd rather it be 3 stories than 300. 

I do not think that most people here WANT total collapse, they have just accepted it as inevitable.  I myself, like many here express and you seem to misinterpret, believe that we have passed the point of repairing this, and need to rebuild it.  In order to rebuild an engine it has to be shut down.  We act as though an infinite supply of Marvel Mystery Oil and STP Injector Cleaner will keep it running forever.

Fri, 09/17/2010 - 17:29 | Link to Comment kathy.chamberli...
kathy.chamberlin@gmail.com's picture

excellent analogy, colon. I learned so much about life when I pulled my chevy small block out. learned sooooooo much and I have more to talk about with people. I could even replace my belt on my washing machine. problem with the V8 I didn't know how to put it back in. that is OK though, I realized it and wasn't in denial and needed to ask for help cause that part you want to have precision.

Fri, 09/17/2010 - 19:57 | Link to Comment ColonelCooper
ColonelCooper's picture

Based on your last few posts Kathy, it would seem that the last bag of reindeer dust you picked up hasn't been stepped on too hard.

Fri, 09/17/2010 - 20:06 | Link to Comment kathy.chamberli...
kathy.chamberlin@gmail.com's picture

colon, every day i think i would be a lot better is cheeky would come back and post again. i know he is still alive and well. why doesn't he come back into my life again. i really miss his wit, mostly and his stories.

Fri, 09/17/2010 - 20:28 | Link to Comment ColonelCooper
ColonelCooper's picture

I miss reading CB as well.  I didn't start posting here till shortly before he kind of catted out, but I was a lurker for a long time and always appreciated his shit. 

I think maybe he got sick of people who didn't have the faintest fucking clue what they were talking about jumping all over his shit.  (The old not suffering fools gladly)  I don't mean a classic keynes/austrian type argument or honest difference of opinion, but just plain ass dumbshits.

You have to admit that this place has changed a LOT in the last year.  Not better or worse, just different.

Fri, 09/17/2010 - 22:12 | Link to Comment kathy.chamberli...
kathy.chamberlin@gmail.com's picture

well come on, this is fight club, cheeks†

Fri, 09/17/2010 - 13:09 | Link to Comment phat tails
phat tails's picture

It looks like the insidious plan to march America down the path toward collectivism is working. The banking cartel, a.k.a. the Federal Reserve, needs to be abolished ASAP, along with the IMF and Worldbank. Restore mark-to-market and send these profligate bastards to their graves.

Fri, 09/17/2010 - 13:43 | Link to Comment MachoMan
MachoMan's picture

Quite the opposite...  we are at the point of reckoning for our collectivist endeavors...  the point where isolationism and individualism attempt to reign supreme.

Fri, 09/17/2010 - 14:21 | Link to Comment buzlightening
buzlightening's picture

DITTO!

Sat, 09/18/2010 - 10:32 | Link to Comment Incubus
Incubus's picture

The unwashed masses are droning, "one of us...one of us..." as they hold out their welcoming arms.

It's encouraged all through the educational system and life, peer feedback, group interdependence--anything on the basis of requiring others to form an individual's thoughts.  So, we've ended up as a great population of crippled people, there is no "me," or "I": only what others perceive me as.

That is the new American ethos, the America of ironic narcissism.

When the house of cards collapses, a majority of the population will inevitably perish because they cannot hold the hand of their peers while they suckle one-anothers' teats.

 

 

Fri, 09/17/2010 - 13:11 | Link to Comment williambanzai7
williambanzai7's picture

I don't know who or how this stuff is cooked up, but I suspect its the same people who calculate your taxes.

Fri, 09/17/2010 - 14:02 | Link to Comment carbonmutant
carbonmutant's picture

 I think they're moonlighting from the BLS.

Fri, 09/17/2010 - 13:18 | Link to Comment tahoebumsmith
tahoebumsmith's picture

This whole ponzi reminds me of Enron...Remember the front page of magazine covers?...Ken Lay...Man of the year? Corporate outings on the range in Africa, employees getting paid in stocks that doubled every month? Employees skipping their heels as they entered the tower with pride and joy? New Mc Mansions being bought everywhere by employees whose wealth ticked up by the minute? Then came Oct 2001 and reality set in.... when everybody lost everything.... and they all marched out of the tower crying with nothing but cardboard boxes in their hands! OVERNIGHT!

http://blog.zap2it.com/thedishrag/ben-bernanke-time-cover.jpg

Fri, 09/17/2010 - 13:56 | Link to Comment Caviar Emptor
Caviar Emptor's picture

One of the few times I'll outright recommend watching CNBC: watch "Enron: The smartest guys in the room" if you haven't done so already. Lots of original source materials like incriminating phone recordings between energy traders as they engineered the California energy crisis. 

Fri, 09/17/2010 - 14:29 | Link to Comment Bob
Bob's picture

Compelling and damning video--widely available on DVD, btw. 

Fri, 09/17/2010 - 22:21 | Link to Comment Serenity Now
Serenity Now's picture

+1 on the recommendation.  I just watched it a couple of weeks ago, and it was great.  The phone recordings were eye-opening (and sickening).  And it was very interesting that a female journalist (from Fortune magazine, I think) had figured out something major was wrong with Enron, but no-one would pay attention.

Fri, 09/17/2010 - 17:35 | Link to Comment kathy.chamberli...
kathy.chamberlin@gmail.com's picture

Lay had 3 houses in Aspen right downtown on the roaring fork river. scoudrel and greedy bastard.

Fri, 09/17/2010 - 13:19 | Link to Comment papaswamp
papaswamp's picture

Depression biotchez!

Fri, 09/17/2010 - 13:19 | Link to Comment Comrade de Chaos
Comrade de Chaos's picture

Absent growth in business expenditures - check.

Absent growth in the consumer and business credit outstanding - check.

A recovery that is only in the minds of limited and falling number of beholders & none carbon based life forms - double check.

 

Fri, 09/17/2010 - 13:22 | Link to Comment chet
chet's picture

That's alright.  Net worth is still going up for the Important People.

Fri, 09/17/2010 - 15:12 | Link to Comment Ricky Bobby
Ricky Bobby's picture

LOL - Chet describes it all with just one sentence.

Fri, 09/17/2010 - 16:34 | Link to Comment Uncle Remus
Uncle Remus's picture

Hey wait a minute. I read somewhere we were all equal or something.

If this gets out, we'll have the mother of all petulant frenzies.

Fri, 09/17/2010 - 13:22 | Link to Comment crosey
crosey's picture

So I guess that, in the wake of the new poverty level numbers, we are getting closer to the goal?

Somehow this LedZep gem comes to mind:

http://www.youtube.com/watch?v=RlNhD0oS5pk&ob=av3n

Fri, 09/17/2010 - 13:34 | Link to Comment EllisWyattOTC
EllisWyattOTC's picture

To rephrase something Andrew W. Mellon said

Liquidate Freddie, Liquidate Fanny, Liquidate The Fed, Liquidate GM, Liqudate Banks, Liquidate Labor, Liquidate Stocks, Liquidate the Farmers, Liquidate Real Estate

 

"It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people.”

Fri, 09/17/2010 - 13:38 | Link to Comment crosey
crosey's picture

Hot Damn!...Love it!

Too bad the "rottenness" is running the show.

Fri, 09/17/2010 - 13:37 | Link to Comment Dr. No
Dr. No's picture

A lot of people are buying gold, that is obvious.  People are convering IRA stock money in to precious metals.  Since this is a fed report, are they calculating gold holdings as $42 and change per ounce (as they do their own gold)?  No wonder it shows a decrease in wealth of the individual.

Fri, 09/17/2010 - 13:37 | Link to Comment shushup
shushup's picture

Stock market is holding up - makes perfect sence.

Fri, 09/17/2010 - 14:18 | Link to Comment doolittlegeorge
doolittlegeorge's picture

what market wouldn't like a gold standard?

Fri, 09/17/2010 - 13:38 | Link to Comment Miramanee
Miramanee's picture

This is all we need to know. All eras of massive credit expansion end in “busts”. Review your history. Take the “Panic of 1873” for example. In a nutshell, the economic collapse of 1873 was caused by years of loose railroad financing, at the end of which time too much speculative investment and credit chased a limited amount of real underlying wealth. The results were disastrous. Financial and social chaos ensued. Amazingly, today’s credit crisis, in both scope and number, is far more dramatic. And as a result, tens of millions of Americans are increasingly forced to confront the twin and daunting phantoms, the Scylla and Charybdis, of eventually staggering cost inflation and a simultaneous lack of access to money and credit. Our political leaders promise recovery. But history tells us that the hard times that follow the collapse of credit “booms” do not end overnight. Over 41 million Americans currently receive “food stamp” subsidies, and an estimated 1 in 5 American children lives in poverty. The worst is yet to come.

Fri, 09/17/2010 - 14:00 | Link to Comment Raging Debate
Raging Debate's picture

If world war is avoided, than people can live just fine for a few years on yellow cheese, powdered milk and wheat pasta. I grew up as a kid eating them. I wasn't raised in an ivory tower or sheltered environment.

The result on the public at large though will be a further catalyst of political change. I don't wish powdered milk or suffering on anybody but I do encourage people to have some physical hedging in luxuries for barter and three months food, water and medicine. 

What the United States is going through is exactly what the Russians went through in the mid-nineties. Same group of economic U.S. "advisors" helped the oligarchs liberate the remaining wealth from the Russian citizens. Same cause, same effects. Russia had oil and trains. No one starved. Energy was rationed and a big black market emerged as did the violent crime rate. Methods of self-defense and/or food supply are always wise, even in the best of times. It is a chaotic universe. The U.S. has coal and trains. No one will starve here either. So yes, the worst is yet to come but living your life with total anxiety all of the time isn't healthy either and makes fighting for a better world far less worth it. I know all about, I have lived that life too.

Fri, 09/17/2010 - 14:13 | Link to Comment Miramanee
Miramanee's picture

Agree 1000%! Not anxious here, just honest. Meditation, small communities, family, friends. We will survive.

Fri, 09/17/2010 - 15:57 | Link to Comment ColonelCooper
ColonelCooper's picture

If it ultimately brings about this:

 

"It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people.”

than I am not only NOT anxious, but will welcome the struggle necessary to help bring it about.

 

 

 

 

Fri, 09/17/2010 - 14:48 | Link to Comment Spastica Rex
Spastica Rex's picture

I'm normally just a snark, but I'll step OOC and thank you for your post.

Fri, 09/17/2010 - 14:19 | Link to Comment doolittlegeorge
doolittlegeorge's picture

and loose women and a town called Deadwood.

Fri, 09/17/2010 - 13:42 | Link to Comment Bankster T Cubed
Bankster T Cubed's picture

Madoff LLC sent out statements etc too

same shit

Fri, 09/17/2010 - 13:46 | Link to Comment Dr. No
Dr. No's picture

yep; the difference here is the FED has an army of workers to make these charts.  Poor madoff only had a small office suite and look what he pulled off.

Fri, 09/17/2010 - 13:45 | Link to Comment Humberto Eco
Humberto Eco's picture

They know what is q of Tobin.

Fri, 09/17/2010 - 13:49 | Link to Comment papaswamp
papaswamp's picture

The 'Profit with Cramer' banner has me horse laughing!!!

Fri, 09/17/2010 - 13:54 | Link to Comment Jake Lamotta
Jake Lamotta's picture

Fri, 09/17/2010 - 13:55 | Link to Comment Jake Lamotta
Jake Lamotta's picture

Fri, 09/17/2010 - 13:56 | Link to Comment Tic tock
Tic tock's picture

The report includes the top ten percent of US households?

Fri, 09/17/2010 - 13:56 | Link to Comment docj
docj's picture

The keg is empty.

The pill-bowls are overturned.

The buffet tables are picked clean.

There's puke, crap, and other bodily fluids all over the floor and walls.

LAST CALL!

Then it's "turn out the lights, the party's over."

Fri, 09/17/2010 - 14:59 | Link to Comment SteveNYC
SteveNYC's picture

But that fuckin bearded guy from Princeton keeps shoving alcohol, barbituates, and narcotics into the corpses on the floor!! What's wrong with that guy??

Fri, 09/17/2010 - 15:48 | Link to Comment Kayman
Kayman's picture

No No No   Wait a minute.

You can't leave until you eat that puke, crap and bodily fluids.

signed

The Criminal Elite.

p.s. have a nice day.

Fri, 09/17/2010 - 14:00 | Link to Comment PlausibleDenial
PlausibleDenial's picture

Coming to a theater near you soon....

http://www.youtube.com/watch?v=rYjvxpJf5eU

good night Alice...

 

Fri, 09/17/2010 - 14:04 | Link to Comment Caviar Emptor
Caviar Emptor's picture

Long Hemp

Short Armani

Fri, 09/17/2010 - 14:07 | Link to Comment CustomersMan
CustomersMan's picture

Hi Everyone,

 

My mach-ine crashed and burned but now have a new one and return.

 

I read somewhere of a possible auto-refi Plan that may be in the works.

 

The way it was to work was that all residential mortages would be re-fried, oops I mean re-fied to somewhere near 3% across the board, for all homeowners (all inclusive).

 

This possible?

 

It would put huge amounts of monthly spending money in the pockets of all U.S. citizens, which might be a game changer if it could be done across the board by the Govt. Agencies.

Just askin.

Fri, 09/17/2010 - 14:36 | Link to Comment subqtaneous
subqtaneous's picture

Curious, but how does it 'change the game' by once again incentivizing (giving away) home ownership (to many who already can't afford their mortgage principal) at tax payer expense in a vain attempt to prevent the market from realizing its true value?

 

Putting a little extra money in the hands of consumers who are already in way over their head won't change anything.

 

Fri, 09/17/2010 - 14:41 | Link to Comment Implicit simplicit
Implicit simplicit's picture

Besides, it would be short changing the elite masters of the universe-the banksters; therefore, it will never be done.

Sat, 09/18/2010 - 12:15 | Link to Comment HungrySeagull
HungrySeagull's picture

Suddenly I wonder if the Internet itself is one big money pit acting as a giant sink hole sucking money of people who cannot learn to build thier own machines instead of running to the store to get one.

This is not a personal attack, your comment make me think of this because 15 years ago we had no internet, just a news paper and you had to work with what little you knew back then.

Fri, 09/17/2010 - 14:11 | Link to Comment itsjustgraft
itsjustgraft's picture

this is a stupid post. if you add up all the things that make up net worth in FOF report, you will see that households are in fact the wealthiest theyve been ince the recession.

Fri, 09/17/2010 - 14:23 | Link to Comment doolittlegeorge
doolittlegeorge's picture

and something other than rank speculation suddenly chimes in. i'm an art critic myself.

Fri, 09/17/2010 - 14:11 | Link to Comment Caviar Emptor
Caviar Emptor's picture

As net worth declines, inflation that they tell us "doesn't exist" creeps in:

 

Cotton, already at record highs up 2.4% today

Corn over $5 for the first time since 2008 up 3.5% today

Soybeans up 2.9% today

Wheat up 2.7% today

Copper climbs to 5 month high

Fri, 09/17/2010 - 14:27 | Link to Comment Rogerwilco
Rogerwilco's picture

@Caviar

Yes, commodities are behaving like they did in the Summer of '08. Ditto the markets. We know what happened next.

Fri, 09/17/2010 - 14:11 | Link to Comment Id fight Gandhi
Id fight Gandhi's picture

Reducing debt is not just cutting back, it's by defaults too.

Fri, 09/17/2010 - 14:13 | Link to Comment itsjustgraft
itsjustgraft's picture

also, the markes have rebounded since q2

Fri, 09/17/2010 - 14:18 | Link to Comment Caviar Emptor
Caviar Emptor's picture

But money that's been pulled out for 20 straight weeks amounting to $100s of billions did not participate in the government sponsored pump, offsetting the benefit.

Fri, 09/17/2010 - 14:22 | Link to Comment NumberNone
NumberNone's picture

Oops.  Just stepped in it graft.  The prevailing sentiment in here is that government intervention is propping up market...see the giant purple line above reflecting government debt since the miracle rebound you've cited.  Good luck to you. 

Fri, 09/17/2010 - 14:30 | Link to Comment itsjustgraft
itsjustgraft's picture

the giant purple line is from q2, not q3, and the recovery happened in Q3. the fof doesnt reflect when the borrowing actually happens, it reflects when it was spent(or put in the pipeline to be sent, enacted as policy). thats why the other big line is after lehman when they did tarp/aig bailout

Fri, 09/17/2010 - 14:26 | Link to Comment curbyourrisk
curbyourrisk's picture

2 answers......

 

1) Wage inflation must begin.

2) Interest rates must go up - stop fucking over the savers.

 

Oh yeah....Obama is a prick!

Fri, 09/17/2010 - 14:44 | Link to Comment SteveNYC
SteveNYC's picture

"I am a saver. I have been fucked over"

First step to overcoming a problem, is admitting to it....

Fri, 09/17/2010 - 14:30 | Link to Comment Sudden Debt
Sudden Debt's picture

I guess American households have been wasting money again on viagra, booze, guns and cocaine.

Nothing wrong with that, I can dig it.

Fri, 09/17/2010 - 14:35 | Link to Comment Deflation
Deflation's picture

Total Credit Market Debt increased by 15 billion.

Hey Mako, you said this number would only go down as we descended into a deflationary collapse and the hyperinflationists were all 'nutbags'.

I wouldn't put it past them to fudge the number, but hyperinflation is coming.

Fri, 09/17/2010 - 14:36 | Link to Comment wiskeyrunner
wiskeyrunner's picture

This means nothing when you have the magic index futures. It's getting close to the end of day jam up. We have been in a 40 point range on the Dow for the last 4 hours.

The pros who shorted last night near 10630 on the Dec contract have covered and flipped long are now ready for the lift into the close. How else are the banks going to make money.

 

Fri, 09/17/2010 - 14:43 | Link to Comment SteveNYC
SteveNYC's picture

Most people I know are broke or pretty close to broke, some in severe negative equity situations. Where the fuck is $43.7 trillion hiding????

Fri, 09/17/2010 - 15:24 | Link to Comment Sudden Debt
Sudden Debt's picture

Do they still have a job?

Fri, 09/17/2010 - 15:55 | Link to Comment Kayman
Kayman's picture

Criminal Bankers and Government Employees  $63.7 trillion

American Private Working Class                     (20.0) trillion

 

Fri, 09/17/2010 - 14:47 | Link to Comment Azannoth
Azannoth's picture

Its all good and well that the American people are so bad at Math, otherwise we'd have a revolution by tomorrow morning

 

To be fair pretty much all of humanity lets the bankers screw them in the @ss with willfull ignorance, and you know its not the Evil Bankers or other dictators that get my goat, its the Fuking Willfull Ignorance of the people(beeeeee, baaaaa)!

Fri, 09/17/2010 - 15:17 | Link to Comment centerline
centerline's picture

Seems to me most people have been overwhelmed with informaton (mostly bad information) for so long and so relentlessly that they no longer can apply critical thinking.  They can't sort it out.  Rather it all becomes white noise with a general direction that is the direction of the herd.

 

Mobile technology, TV, radio, internet, etc. - a flood of data.  And an audience that has been trained to have the attention span of a doorknob.

Fri, 09/17/2010 - 15:31 | Link to Comment Sudden Debt
Sudden Debt's picture

About 99% don't have a fucking clue. I had a conversation today with some people about the economic prospects in general. Just casual talk you know.

THEY ARE CLUELESS! Really, they think all is fine again.

They don't care about government debt

They don't care about corporate debt

The mostly don't even know how much turnover the company they work for makes. They mostly think companies make a 95cent profit on every dollar the company makes.

Last week I also discussed things with my own brother to invest some money in silver and gold. Just in case. He doesn't care about that, he doesn't want to think about "the crisis" because he's a buzy man and he's got other things on his mind.

Just inform yourself, and do what you think is important and what's not.

 

Sat, 09/18/2010 - 12:49 | Link to Comment rocker
rocker's picture

Amen SD.   I call them, Media Suckers. 

Fri, 09/17/2010 - 15:10 | Link to Comment markar
markar's picture

The correlations with mid-90s Soviet Union are growing. The big difference is the Russians were used to pain, suffering and deprivation, unlike their spoiled, pampered American counterparts. This will not end well for the USSA.

Fri, 09/17/2010 - 15:18 | Link to Comment centerline
centerline's picture

Hate to say it, but Katrina / New Orleans was an eye-opener to how a welfare state reacts to crisis.

Fri, 09/17/2010 - 15:34 | Link to Comment Sudden Debt
Sudden Debt's picture

It just showed how America has always been.

A society can be judged on how they handly their weakest.

America is a capitalistic country with no socialist backbone.

Meaning = if you can pay for it, and all your dreams are yours.

Otherwise, beat it and drown in the mud.

Fri, 09/17/2010 - 15:39 | Link to Comment Azannoth
Azannoth's picture

"Otherwise, beat it and drown in the mud." And this is how it should be, be prepared or be sorry

Fri, 09/17/2010 - 20:42 | Link to Comment trav7777
trav7777's picture

African demographics behave like african demographics.  Don't attempt to extrapolate

Sat, 09/18/2010 - 13:50 | Link to Comment Saxxon
Saxxon's picture

+1 trav7777.

Fri, 09/17/2010 - 15:21 | Link to Comment kaiserhoff
kaiserhoff's picture

Lost in all the background noise is an important word, "average."  Average my net worth with Oprah's and I am one rich somebitch.  Where can I get a HELOC on that?

Fri, 09/17/2010 - 15:59 | Link to Comment bart.naf
bart.naf's picture

Looked at another way, Z1 D.3 shows that the domestic non financial credit sector is growing at 3.1% YoY.

The financial sector is off 10.4% YoY, total is -1.3% YoY or $844 B.

 

Total financial sector is off $2.4T since the peak in 4Q 2008.

Fri, 09/17/2010 - 17:54 | Link to Comment tom
tom's picture

Actually, the 2q FOF shows that non-financial private sector debt growth turned positive for the first since 3q08, which undoubtedly boosted GDP growth in 2q10. Increases in the pace of non-financial private sector debt growth add to GDP growth, even if they're bum debts that will come crashing down later.

The non-financial private sector took on net new debts worth 1.7% of GDP in 2q10, a turn from shedding debt at a pace of 0.4% of GDP in 1q10.

But looking at the individual sectors, there's a sharpening divide between big business, represented in FOF data as "non-financial non-corporate business", and the small business and household sectors.

Big business has never deleveraged even for one quarter throughout this crisis. The lowest pace of non-financial corporate debt growth was 0.7% of GDP in 2q09. In 2q10 it was back up to 5.2% of GDP. That's not so far below the average page of 7.7% of GDP in 2005-2007. So the Fed and the government have definitely succeeded in persuading big business to renew its racking up of debts.

There are some big problems with this corporate debt-raising. It is generally very low interest and largely long term. A lot of it is held indirectly by households as bonds in retirement savings. A lot is held by the financial sector supported by demand deposits and other short-term money. When rates go up, as they someday must, the value of all that long-term low-interest debt gets hammered. If we get QE2 and serious inflation, the losses on long-term low-interest debt will be staggering.

Meanwhile the household sector continued deleveraging, by 1.4% of GDP in 2q10, in the middle of the range of 1.1% to 1.7% that it has kept up since 1q09.

Small business, represented in FOF data as "non-financial non-corporate business", also continued deleveraging, by 2.2% of GDP, a very slightly slower pace than in 1q10.

http://keynesianfailure.wordpress.com/2010/09/10/delayed-deleveraging-meets-the-keynesian-endpoint/

Sat, 09/18/2010 - 01:17 | Link to Comment tom
tom's picture

Looking closer at the details, I see that the acceleration in the non-financial corporate sector's net debt growth came from "other miscellaneous liabilities", not bonds. This is a category that spikes occasionally with no obvious rhyme or reason. Not sure what it means.

Fri, 09/17/2010 - 18:46 | Link to Comment itsjustgraft
itsjustgraft's picture

you can't say keynesianism was a failure. its not over yet. the handoff has only recently begun from gov stimulus driven economy to a market based economy. it will take a quarter to reset.

everyone is recapitalized.

Fri, 09/17/2010 - 18:46 | Link to Comment itsjustgraft
itsjustgraft's picture

how is keynes a failure when credit and individuals are wealthier on the whole, as the FOF report.

Fri, 09/17/2010 - 19:47 | Link to Comment bugs_
bugs_'s picture

Household net worth numbers don't include whats in the mattress, in the zip lock bag behind the canned goods, etc.

Fri, 09/17/2010 - 20:44 | Link to Comment trav7777
trav7777's picture

This is what I forecast:  gov't takes up the mantle of credit growth.

The system is the master; all must serve it.  Credit must grow or else SHTF.  I told Douchinger too; if you do not borrow, they will borrow on your behalf.

Sat, 09/18/2010 - 01:18 | Link to Comment tom
tom's picture

That already happened since 3q08

Thu, 10/07/2010 - 05:37 | Link to Comment Herry12
Herry12's picture

I found lots of interesting information here. I love zerohedge.
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