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Rosenberg On The Visible Hand Of Central Planning
So you thought communist states go down without a fight? Wrong: here is Rosenberg who explains why both China and the US are now actively involved in the business of propping up anything and everything. And totally off topic, Rosie confirms that the liquidity trends in the mutual fund industry continue to deteriorate: "As for liquidity ratios, equity funds portfolio manages have theirs at an all-time low of 3.4%, down from 3.8% in June. Tack on the fact that there are really not very many shorts to be covered – since the market peaked in April, short interest is 4.3% of the S&P 500 market cap (in August 2008 it was 6%) and there’s not a whole lot of underlying fund-flow support for the stock market here." In other words, throw in a few more market down days, a few more weeks of redemptions (and at 16 weeks in a row, there is no reason why this should change), and the liquidation theme will promptly be added to the new normal.
THE VISIBLE HAND
The two largest economies in the world are being sustained by the long arm of the law. At least in China it’s to be expected that a communist country would be fuelled by command central, but in this miracle story, below the surface it is becoming abundantly clear that Beijing is becoming increasingly involved. The front page article of the Monday NYT uncovered how the economy is delivering its red-hot growth rates: “New data from the World Bank show that the proportion of industrial production by companies controlled by the Chinese state edged up last year ... investment by state-controlled companies skyrocketed, driven by hundreds of billions of government spending and state bank lending.” No wonder the Chinese economy and stock market have diverged.
Is it really much different in the U.S.A. today with every 1 in 6 Americans now receiving some form of government assistance? More than 50 million Americans, from food stamps, to Medicaid, to extended jobless benefits, are on one or more taxpayer-supported programs. This likely explains why this depression does not have that 1930s feel of despair to it. But a depression it is.
In a depression, radical changes occur in terms of social norms and spending behaviour. In recessions, people don’t cancel their life insurance policies — as one example. But in a depression, tragically, this is what happens — almost 35 million Americans now have no such coverage, up from 24 million five years a go. This reflects the focus by households to pay down their debts at all costs and how companies have bolstered profits — by eliminating benefits. See More Go Without Life Insurance on page C1 of the Monday WSJ.
It’s not just households and businesses that alter their behaviour in a depression. That goes for any entity with balance sheet constraints — like cash-strapped state and local governments who are closing hospitals en masse to cut costs (see Cash Poor Governments Ditching Public Hospitals on page C3 of Monday’s WSJ) and at the same time, boosting taxes (on the same page, see States See Pickup in Tax Revenue).
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Wait a second, I was watching CNBS, I thought...
http://www.youtube.com/watch?v=IPiNIzSM3RQ&feature=related
This Rosenberg guy must be just some lunatic with an axe to grind. All is well!!
Nice find. It gave me the chills.
Watching that puts that metallic taste in your mouth.... You know, the one that only a gun barrel can cure.
Since that song was sung in the 1930's, the odds are good that the singers are all dead now.
Whoops Ford -10.7%...the consumer is offline.
Nevermind Ford and GM sales plunges, the FED has stocks that need to be pumped and dumped! Ramp futures +2.5% where offloading of insiders shares will churn all day, tomorrow probably down 2%. The new normal. Wash rinse and repeat to search out any retail brave to scalp!
Re: Central Planning
Off-topic but this is a little bit closer than yesterday.
http://ready.arl.noaa.gov/ready2-bin/javaanim.pl?id=GFS&mdl=grads/gfs&fi...
Didn't Katrina change course and pick up strength, crossing over Florida instead of heading up the coast? Just putting that out there. If it follows the warmer temps toward the gulf, it'll get bigger, but most likely it looks to be cooling down a bit and going north. It's lost 10 mph on it's maximum sustained winds since I checked last night.
I'm paraphrasing something I read last year...
Weather forecasts are often wrong. However, they are correct just often enough that you can't ignore them.
When talking about people on government assistance, don't forget government employees, and their burden on any recovery. Especially their lifetime, defined benefits pensions that's gonna suck all of the liquidity right out of the market.
Well, until the Fed starts "swapping assets" in the next round of Cash for Clunkers.
ONE OUT OF 4 WORKING PEOPLE WORK FOR THE GOVERNMENT:
http://www.data360.org/dsg.aspx?Data_Set_Group_Id=228
So when you look into the unemployment numbers, you should take 25% of the original number, subtract that from the remaining number and recalculate the unemployment number. But nobody ever did this because the number would make you sick.
In the privat sector, employers are cutting benefits like mad man.
But if you work for the federal government, I guess you get about every benefit I ever heard of.
Working for the Federal Government - Benefits
Federal government employees enjoy a wide range of "family-friendly" benefits that go far beyond insurance and retirement. Each agency is free to offer its own benefits package. The following is a sample of the benefits available to permanent Federal employee.
Federal Employees Retirement System (FERS)
Thrift Savings Plan (TSP)
Social Security
Medicare - Part A
Federal Employees Health Benefits Program (FEHB)
Child Care Subsidy Program
Long Term Care Insurance Program
Student Loan Repayment
Employee Development
Retention Allowance
Relocation Bonus
Recruitment Bonus
Work/Life Programs
Family Friendly Leave Flexibilities
Leave and Holidays
Federal Employees Group Life Insurance (FEGLI)
And that's not including the 3 to 6 months out of the year where everybody paying taxes is actually working for the government, too!
Not to be picky (because your point is valid)...but I don't believe that Federal Employees get Social Security.
Pretty sure you are right about virtually all government employees with a defined benefit plan (our local teachers for example). They ALSO DO NOT CONTRIBUTE TO SOCIAL SECURITY.
Military personnel pay into Social Security, and like many other contributors my age, probably won't ever see a dime of it.
Federal civilian employees working under FERS (the new retirement system) pay into Social Security, are eligible for TSP (the federal government's 401K plan) and get a employer match up to a certain percentage.
Civilians working under CSRS (old retirement system) do not pay into SS and can contribute to TSP but get no employer matching contribution.
All the above pay into Medicare.
+ 100
It's going to take patience to get this one right because we are seeing every conceivable effort, and some inconceivable, to keep the markets at artificially high levels. In my view, without shorts, there is no upside to this market. Throw in the fact that cash positions are tight and retail redemptions, equity buying power is likely being replaced with levered buying power and we all know how that story ends....
You mean the stuff that begat the dot.com bubble, which begat the real estate bubble, which now resides on the Fed's growing balance sheet, which is teetering on the backs of the increasingly unemployed tax payer? We do indeed know how it'll end, back to whence it came: DJI 5000.
Agreed - or lower but timing is the key.
who cares about those at the bottom----their expendable, economy recovers great if not fed will keep the $ flowing can't lose
Unfortunately those at the bottom are not expendable,they make things work and spend their cash on living.Its this kind of arrogant attitude that have got everything into deep,deep,shit.Be careful those at the bottom won,t starve peacefully they,ll come looking for those at the top.
Interesting punctuation, but seldom have truer words been uttered.
Yep, without the bottom, there would be no top. The gods can't subsist without the power of worship.
WARNING:
Do Not read Rosie while holding a straight razor, gun, knife, pillow, brick, golf club, bat, shovel, bowling ball, chain saw, nail gun, hammer, running the car with the garage door still down......and so on and so forth.
Rosy always stops short from realizing that the currency is getting destroyed.
global centralized command economy political MONSTER
Remember the cold war? The psyche of America was focused on defending America against the communist threat.
Look at us now. Our leadership is doing everything in their power to expand government share of the economy, as well as expanding the degree of command economy. We are now morphing into the very thing we vehemently opposed and decried as evil so recently people still believe those things exist.
And this is happening under the explicit control of the master bankers and their whorebag scumbags at the highest levels in our government.
The irony is that central planning in America came as a result of "defending our freedom". There were several major junctures during The Cold War where the US government nearly tipped to full autocracy. That's what Eisenhower warned about in his farewell speech. Vietnam protests and Watergate were confrontations with an overly authoritative military-industrial complex owning most of the government and ruling people's lives accordingly.
Today we face the same challenges again. In the name of freedom, we've laid the groundwork for an authoritarian government. It started with the Patriot Act and elements of the War on Terror. It grew during the financial crisis when banksters took over the running of the Fed and Treasury. There's a risk with so many Americans already out of work or about to lose their livelihoods, the economy on the defensive and the Fed owning or planning to own so much of US assets that we reach another tipping point toward an autocratic form of government. I call it the blackest swan of all.
I mostly agree, except on the origins of the phenomenon. If I was pressed to actually give it a starting point, I'd go much further back than the Patriot Act, maybe before this last ice age.
I've heard that same story. Does not inspire much confidence that we will "do the right thing".
Doing the wrong thing in the service of personal gain was burned into our ROMs a long time ago.
No, come on! In some ways the "freedom" in the US has always been an illusion, or perhaps and ideal that was not quite lived up to, but even as recently as the 1970s we didn't have the heavy hand that exists now. As the control freak generation has aged (badly) they have sought greater and greater control over the lives of regular folks. The pendulum did swing back a bit because of Vietnam, so maybe that's why I think of the '70s as being relatively open, but the doublespeak as never been so bad or so blatant as it is right now. It's all just pathological lying at this point--even when you can easily refute something some official says, it doesn't chasten them becuase they know that the majority of people are not going to go check the facts. So that's why the government can get away with saying things like "the Iraq war is now over." WTF?
The Iraq war is over...there. Caviar Emptor makes a good point. Although the government has always played with "freedom," it has never taken down three huge skyscrapers in New York before. It has never before literally translated the fear of energy and economic collapse into the fear of a terrorist who could blow up anyone and anything anywhere. It has never created a war that has no clear ending, enemy or boundary. Never before has the term "terrorist" meant so many things, a definition that dwarfs the simple communist. The patriot act, war on terror, and Gitmo are an unprecedented blatant dismantling of most of the Bill of Rights. In the meantime, the financial control and corruption has caused more damage than any terrorist could ever dream.
I would think 1 in 6 is a ridiculously low number, depending on how we define "government assistance." Most government jobs are simply welfare jobs (providing services for which no real market demand exists), so these should probably count as assistance too. Many other people are employed in industries which depend almost entirely on government support or demand. The vast army of lawyers in this country is only employed because of the byzantine legal system and hopelessly corrupt Federal government. This is an indirect form of assistance. How many workers are actually producing something of value that someone else would willingly purchase? How many others are living off those few? That is the true measure.
+1
All government employees are "overhead". Many might be necessary overhead, but they are all simply overhead.
When you talk about the "ancillary" industries (even in the private sector) that exist for the sole purpose of servicing this overhead, the distortions in the "true" economy are utterly fantastic.
(The "true" economy actually produces goods-and-services to increase society's wealth. The fact that *no* children in the United States go to bed hungry is an example of "everyone in society having wealth".)
Among other things, this is why the current trend is irreversible: Removal of the overhead, or cutback on the parasite, will kill the patient.
I have high hopes for the phoenix from the ashes. However, the patient is already dead.
There's also the costs of complying with government. Lots of private business overhead is wasted on just bookkeeping for the government so that thugs don't come knocking.
Shoot, you can't even get married without paying fees to the government, as if we need permits and permission to form families... Oh, wait. We do.
Not really. That's natural law, human rights. Marriage itself is little more than a legal contract protecting and codifying joint custody and property held in common (hence, the doctrine backing the gay right to marriage). Under natural law you can chose any adult human for your mate, have intercourse with whoever you want so long as they consent, have as many children by your mate as you like, and raise your children in whatever manner pleases you so long as they are not endanger, nor become a burden on society. And the State will support you 100% on all counts. It might be different in other parts of the world, but in the West that is how it is.
Sweet, 'cuz I've never been one for marriage, anyway. Or family, come to think of it. And since I don't pay taxes, it wouldn't make sense to get married.
Ummm...that's either sarcasm or idealism, I can't tell which. Maybe both.
I'll help you out: It is neither and none of those.
I'm actually surprised you didn't know all that, though in truth most people don't. Read it again carefully, without holding in your mind any thoughts about the Bible or the Pope or parochial Blue Laws or any other appeal to divine authority.
You can mate how you like. Fuck whoever can consent. Birth as suits you. And raise your children without undo interference. Simple as that. It is so obvious nobody even thinks about it.
That's like saying you can piss whenever you feel the need. Yet, piss in the wrong place...
Never had the CPS come knocking? No "criminal" record? No stamped mental disorders? Is your child vaccinated? My list could go on, but then you'd just really think I was crazy and probably come take my house cats (family) away from me.
But, yeah, if you're totally "normal" then you're totally free to live a "normal" life.
The sky is blue; just stating the obvious.
...now that is the real problem with these parasites...they do everything in their power to stop an entrepreneur dead in her tracks....try to start up a company in California and you are faced with the Feds and the State folks. If OSHA isn't enough, then you get CalOSHA...if the EPA doesn't do you in, there is always The Department of Fish and Game...and then there is always Workers' Comp. which supports countless attorneys and chiropractors in our fair state...
+1000. A huge number of Gov. ' jobs ' are de facto welfare positions. Show up, get a check with fantastic benefits, work an hour a day, spend 7 hours a day on internet, phone, breaks, make sure the little box that needs checking is checked, if it isnt, then shut down that idiot businessmen's business and fine the hell out of him. Think this is an exageration ?? Think again, I have seen it firsthand, over and over again ad nauseum.
Well said SamuelMaverick.
+1001
I can vouch for this personally. At the agency where I work there are hundreds of "managers" who don't actually manage anyone and only perform hamster-on-a-wheel make-work such as you described. They also get paid upwards of $125k a year.
Don't forget about adding internet porn to that lists of how to kill time while working for your government.
...hey, at least they can do no harm while pre-occupied with that...I say more porn = better government.
"Is it really much different in the U.S.A. today with every 1 in 6 Americans now receiving some form of government assistance?"
No it's not. At least they're building massive energy systems and buying resources everywhere. Little better return than war.
mutual funds? we don't need no stinking mutual funds. we got the ppt, cnbc, ayn rand disciples, larry, pisani
I've read that my avatar, Soros and the rest of the boys have a direct line to the NY FED. None of 'em has said that it's gonna crash or that they're short. Instead, most of them have loaded up on equities. I.e. they know the FED is buying, they know QuereEasingDeux is coming. Will they be right about the market surging/not plunging - I dare to say that they'll be wrong! Maybe PTJ, Bacon, Kovner and Soros will hedge when it gets dirtier, but the Tigers/Robertson and Buffet are gonna get fucked. Proper fucked.
Oh, and yeah, will someone please call Stephen Covey, I read his book in the shitter, and they have some factual errors. On page 8, I quote: "Though todays credit card society makes it easy to get now and pay later, economic realities eventually set in, and we are reminded, sometimes painfully, that our purchases cannot outstrip our ongoing ability to produce. Pretending otherwise is unsustainable". Well Steph-O, that's not right anymore, a reprogramming package from Ben Bernanke will arrive within short to your mailbox. The title of your next book is recommended to be: 7 habits of highly indebted people. Chapter One recommended title: GET IT NOW NOW NOW, NEVER PAY! And you thought there was no free lunch, chucks Stephen, you silly (Bawnee Fwank lisp) goose.
What? Did Soros recently change his tune or are you joking?
The U.S has been playing fake it til'' we make it for some time now. Looks like China has been playing a stealth version of the same game. If you haven't watched the YouTube videos of Chineses bridges to no where and the world's largest mall being esentially empty, you may want to dig those up.
It's a question I often pose but here we go again: How long can the central bankers continue the charade? How long can they play fake it till we make it?
It's days like today that make me wonder. They can push the markets around at will and basically do what ever they want. Some days I beleive nothing will stop them and this will continue on for infinity.
What can stop the non-sense? What could be the death blow to the CB's???
They can play this game until entropy devours them.
Give it another 12 months.
If those building projects in China had been a fleet of destroyers or something else destructive, we would be praising them for being so destructive while still managing to be a creditor nation. At least they're building stuff, and at least they're not going into debt to do so.
China is building a lot of stuff like empty apartments and shopping malls that will quickly depreciate into worthless-ness, particularly when you consider the quality of construction of Chinese RE. They are building a nice train system, though. I wish the U.S. was doing that.
...please advise when you get an answer...
It's called "queasing" now.
No I didn't make that up, someone else did
dup
I agree with Rosy. There is more to horrific unemployment figures than meets an eye. At this stage of "recovery" small businesses start hiring people, because they are more flexible and capable of using the slow down for their advantage (those that survive.) The fact that small firms are not hiring is a sign that they are unable to compete with large global, government supported (through trade and other legislations) corporations. As the result of smaller guys are unable to compete and there won't be much of innovation in the next few years, hence there won't be much real growth.
We are so fucked , thank you our glorious republican and democratic leaders.. and fuck you.
Oh, but it's hard for small businesses to compete with unemployment benefits unless you're willing to pay someone under the table so that they can continue to get paid NOT to work the rest of the week.
The boomers don't need life insurance anymore.
Insurance is just a way to trick people out their savings and investments, anyway. Needing insurance is like needing a drug addiction.
elaborate, please...
If you do not have small kids and huge debt that will be payable by your spouse, you don't really need a life insurance. And those life insurance policies that promise an investment return, those are just a clever way for insurance firms to collect ever growing fees without much benefit to policyholders. (The exemption is a transfer of wealth in between generations, but those should be analyzed on case by case base and work only if one has some real wealth, let's say beyond few millions.)
p.s. Might have slight bias in here, hate insurance sales force. :) Consider those one of the least trusted professionals just after RE developers and prior to car salesmen.
Heh! I briefly was one of those in my various "careers", and I do emphasize "briefly"...:)
I agree that life insurance isnt needed if no kids and debts that the spouse can't manage alone. Having been a "rep", I know most of its unnecessary...
I like to get more info on other people's opinions sometimes...:)
Why put all of your money and trust into someone else's hands, especially for taking care of your family? 'Savings and investments' is the responsible way to go. Over spending (no savings) and buying "insurance" from someone else, well, only after taking lots of blue pills.
It's just another way to not save and over spend and not think about it too much.
If you saved and invested instead of buying insurance for your life, house, car, meds, etc. the worst case would have you actually using that money in emergencies, which is what it was for, no?, but if things go well, then you get to retire comfortably. See?
dup...
I suspect the next Fed 'Aktion' will be the expansion of its balance sheet and the purchase of another $2t or so of mortgage- backed (GSE?) securities.
I would expect this to be announced at the next FOMC meeting, in fact. It would help real estate and add a few hundred points to the S&P.
It's also FREE! Who cares what the Fed holds in its vaults?
Expect unemployment to rise another 2 - 3% as companies trade workers for Fed cash. Is this counterproductive or what?
Expect a flat yield curve as Eurozone buyers crowd into longer Treasuries (even as China dumps theirs). A demand for short term credit ('silent' run on money markets) might push up short rates and give an inverted yield curve @ 80 basis points against the 5yr. 100 bp against a frantic 10yr.
I don't expect a crash as all the major Wall Street entities are already zombies and the market is populated by pros and their computers. There is no 'retail investors' left in the markets to stampede.
The U.S has been playing fake it til'' we make it for some time now. Looks like China has been playing a stealth version of the same game. If you haven't watched the YouTube videos of Chineses bridges to no where and the world's largest mall being esentially empty, you may want to dig those up.
It's a question I often pose but here we go again: How long can the central bankers continue the charade? How long can they play fake it till we make it?
It's days like today that make me wonder. They can push the markets around at will and basically do what ever they want. Some days I beleive nothing will stop them and this will continue on for infinity.
What can stop the non-sense? What could be the death blow to the CB's???
deja voodoo...
Is your record broken? Did you feel like no one was reading the first post?
the usa is in an irreversible decay for the next 40 years....it is cursed by foolish leaders and the arrogant sociopathic rockefeller banksters....its people are dumber yet....
Who's this off his rocker feller you are talking about?
I resemble that remark ... the "dumber" part I mean ...
Give me another sixpack.
My "breakfast with dave" just came back up on me...
How about cash for underwater houses/mortgages? Obama buys your underwater house, burns it down and builds you a new one. Gives the fire department something to do and the illegals can be put back to work.
JMK suggesting digging holes and filling them in as a wealth creator. Why not new houses for old ?
And all the new appliances will keep China rolling along.
Hey guys and gals- Happy Days are Here Again. !!!!
Geez, these guys are trying to float the Titanic, when a new ship needs to be built.
This is not going to end well.
Updated S&P500 charts:
http://stockmarket618.wordpress.com
>>
What can stop the non-sense? What could be the death blow to the CB's???
>>
The one thing they are not looking for. The one thing that renders the deflation vs inflation and gold vs bonds BS argument silly.
Oil. Behold the graph of your death. Oil prices are higher by 50% than in 2005, but Saudi Arabia let Russia have all that sales revenue. Ask yourself why:
http://www.crudeoilpeak.com/?p=1800
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