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No Ride on the Gravy Train Without An Engine
It is becoming increasingly clear that the US economy once again fell off a cliff in May. Commodity prices have dropped like a stone, the Baltic Dry Shipping Index has shriveled by 40%, and new home sales have fallen to the lowest levels since the Second Ice Age.
These markets are figuring out that for the first time in history, the world is attempting to pull off an economic recovery without an engine. Every recovery since WWII has been lead by the US, and strong growth here then trickled down to Europe and Asia. But the US was relatively a much stronger country then, before its share of world GDP shrank from 50% to 24%.
The problem today is that, Except for the US, every major economy is now simultaneously discovering religion, cutting spending while raising taxes, with hugely deflationary consequences. Fiscal austerity only works when you have expansionary neighbors, and these days there are none of those to be found.
During 2009-2011, the dissipation of stimulus combined with the expiration of the Bush tax cuts will pare GDP by 4.6%. That means that Obama has to come up with 8.6% in growth over two years from elsewhere, just to get to my own ultraconservative forecast of 2%/year, a tall order indeed. Britain is undergoing a 2.5% haircut, and world wide it comes to 2%.
Scribbling a few quick calculations on the back of my racing form, that comes out to $1 trillion that is being sucked out of the world economy. Even China is reigning in spending, although taxes are not much of an issue there.
What are the consequences for asset prices everywhere? The oceans of red ink bleeding from your screen last week told the whole story.
To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two and a half years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.
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Cue up the Chris Cornell vocals............ dum dum dum...... Black hole sun won't you come..... wash away the tears ........ Black hole sun won't you come won't you come.
That is what we are going to get when the debt bubble implodes!
dude all you have to do is close your eyes
and while clicking your heels together, repeat
"I love big brother"
over and over
Hard to disagree as I'm seeing the market screaming up.
So what if it's on no volume; it's still up. So what if Uncle Ben is doing all of the buying; it's still up. PPT? Who cares, it is still UP!!
Every day I come to this site and read that the world is ending. Every day some headline screams "IT'S ALL OVER!!! RUN FOR THE HILLS" or "BUY BEANS AND BULLETS; SOCIETY IS GOING TO COLLAPSE!!!'
How about this one "DOW SHOULD FALL TO 5000; S&P TO 600!!!!'
Yet every day the market moves around, little up and little down like it has done since it all began. The grocery stores are still open, gas is pretty cheap and life is good.
Who cares about the U3 or U6, profits are up, up and away so somebody is working and spending. Spin it how you like, but AA didn't lose money and it looks like no one else is either. Housing market? EU crisis? I hear grasshoppers chirping as the market moves around, a little up and a little down.
Obama is bad for business? The voters are fed up and won't take it anymore? Yeah, right. November 2010 is a political lifetime away and 2012? Don't make me laugh by insinuating that what happens now will be remembered then by this population.
Hard to buy all of this doom and gloom stuff, but I'm trying. Soon to go broke shorting this market, yet again.
DOW 12000, S&P 2000 anyone?
No Mas,
"and life is good."
What planet you on?. 22% unemployment.............
I guess it depends on EACH persons personal plight.
"Obama is bad for business?"...........Uhmmmmmm, Hell yes.People do not know whether to shit or go blind, in business, personal spending, planning their lives....(because of HIS policies,Bills passed)
You call that GOOD?.
Whatever your smoking/snorting, send me some, Pleeeeze.
The only thing I am snorting is reality. I go out to eat and without a reservation, I get no table. I drive in Chicago, LA, San Fran or Seattle and I sit for hours in traffic. I go to any store and there are crowds. I saw more homeless in NYC during the boom-boom 90's. Airplanes are full so I am grateful I operate my own aircraft but I will tell you that Class B reservations are always overbooked with private jet traffic. Tell me things are slow on the 405 or the Ike at 5:30. IF NO ONE IS WORKING, WHO THE HELL IS ON THE DAMN ROADS AT 5PM ON EACH COAST SLOWING ME THE HELL DOWN?? JOB SEEKRS? HERE'S A HINT. IT'S 5 F'ING O'CLOCK - NOBODY'S GIVING INTERVIEWS!!
Do I think life is good for the unemplyed? Do I think Obama is good for business. HELL NO, but I have yet to see any concrete evidence that anyone gives a damn; I mean really gives a damn. He and his cohorts told the electorate in so many words that they intended to destroy the private sector middle class in the country and they have been true to their word. The voters have gotten what they asked for so how can you say things are not good. I am not in the habit of having sympathy for total and absolute morons. Honestly, who with an IQ of better than 100 couldn't what these folks were going to do?
I see hoards of fat folks lining up at Micky D's and the local Apple store, wating in line to get fatter and spend money on yet another trinket. I believe Americans have their cable tv, football and beer and very few care about anything else.
Do I think life is good enough for the big boys to make tons of money (banks or otherwise) and keep the staus quo? Absolutely.
And for today at least, I refuse to bet against it. Is this stuff rigged? Are these earnings estimates a joke? Well of course, but what's the difference? Sheeple or bots or the feds or whoever push the price up when they are "beat" so I have to go with the flow.
For right now, I have to say life is good. I don't see evidence to the contray. You talk about the unemployed like they give a damn. I don't see it. We are a nation of PC pansies who will do nothing but take our handouts and beg for more, and there appears to be no bottom to the handouts available. If I paid much attention to the opinions on the board, I would have dug a fallout shelter months ago.
News flash: the world is not ending.
"For right now, I have to say life is good."
I'd hate to catch you on a bad day.
You have the same LIEphone app as Bernanke!
SPX was 1550 in early 2000. A decade later its 1,100.
Why are the bulls or anybody else always talking about screaming higher? Its flat for 12 years and down huge against cost of living.
Thats right No Mas...
"Market screaming up 70%" since the crash lows of March 2009, now the bear market rally is fading the S&P sits right where it was in 1998 ( around 1080 ).
Its not the end of the world, its a giant ponzi scheme.
http://www.mrci.com/pdf/stocks.pdf
yeah man! who gives a shit if it's all lies! Yeah man! Who cares if the banksters are stealing billions every fucking day from the treasury! Yeah! We're kicking ass as a nation man, hell yeah! Who gives a fuck about the people who can't find jobs! Let them eat shit dude! Yeah dude. Fuck yeah.
That is the funniest one paragraph rant I've ever read. Please post more often, that was gold. Whoever junked you should be kicked in the junk.
Makes you think of Team America from the creators of South Park. "Team America, Fuck Yeah!"
Dirka dirka dirka...
Jim Cramer says we've hit the lows for the years, and he gave the all-clear. So, I'm buyin'.
So, once again the US is the sucker being the only nation w/o the balls to live within its means?
Yes, and on purpose............all one has to do is look at the NEW BILLS passed, and the cost's that go with them.And the unfunded mandates.
Add that to what Bush left behind(pocket change compared to where we are now).
Bama is spending 5 Billion a day, Bush spent less than 2/3rds that,and he was BBQ'd............burned in effigy.
Looks like the new plan, is GOP/Independents take Congress(House at least, and 6-8 seats in the Senate).
Jan 1st,2011 ALL these NEW taxes kick in, we think it's bad now?,,,,,,,,
Bama will blame the total MELTDOWN on the NEW Congress............hide n watch.( because of his Programs).
The WORLD banks outstanding DEBT is a Quarter QUADRILLION USD's.........
Takes me wayyyyyyyyyy back to an old song, "Burn Baby Burn,disco Inferno"
More like "Dante's Inferno"
Only nation? What planet do you inhabit?
screw fake growth - screw wild-eyed profits
since no one saves for a rainy day anyway when they do get massive profits then why not force everyone to run things within reality for a change
Austerity - what does that even mean? And raising taxes, how is that austerity? Put a range extender in every new car,and sell it near cost, that would be austeritiy- it's not like the taxpayer didn't contribute (cash for clunkers) to the Auto industry, how about we get some austerity we can believe in, heh?
Yes the Sequel "Nightmare on Wall Street 23599" is available to view now ... the scariest real life drama you will ever see.
YES WE CAN!!