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Weekend Reading
- More on GDP:
- GDP Report is just plain wrong (Chris Martenson)
- Wacky waving inflatable arm-flailing GDP report (Melting Pot Project)
- Been down long long it looks like up (Econbrowser, h/t Paul)
- Falling Imports versus falling Exports (Ritholtz)
- The next brewing scandal: Chase serves itself first in mortgage mods; MBS bond holders up in ARMs (DebtWire, h/t Paul) - "You have Barney Frank and the government raising all this noise about hedge funds and investors, and you have Chase … taking half the borrowers’ interest payment each month"
- Who is Capco? (NYT)
- S&P says investors can't sues over high ratings on Lehman Bonds
- After $182 billion taxpayer rescue, is AIG on the verge of collapse (DailyFinance and NYT, h/t Ernst and Paul)
- The new trends - hot chicks and guys with guns blogging on the recession (Infowars, h/t Stephen) (WalStreetPro has nothing to worry about)
- Jeff Immelt dictating GE's media policy again: Voices from above silence a cable TV feud (NYT and Salon, h/t Bill)
- The Goldman Sachs media coverage net mapped out (Fabius Maximus)
- Mark-to-Market is back: With a Vengeance (The Atlantic, h/t Lloyd and Steve)
- Manhattan mixed-used property values fall by half, Massey report shows (The Real Deal)
- Tim Geithner: US unemployment may not peak until the second half of 2010 - do lagging indicators stretch decades behind the curve? (Bloomberg)
- Alt-A loans and pesky resistant subprime loans: the lingering mortgage beast (Dr Housing Bubble)
- Timing of CRE recovery pushed back; 2/3rds expect further price drops of > 10% (LoopNet, h/t Justin)
- PIMCO's McCulley: no rate increase until 2011, please buy PIMCO's bonds now (Bloomberg)
- Zuckermann, Roubini and Ferguson on the recession (CNN Video, h/t Aditya)
- Default increase curbs bankruptcy lending as recoveries dwindle (Bloomberg)
- Jeffrey Sachs blames Greenspan for the Economic Bubble (Fora TV)
»
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I liked this from Chris Martenson
"For example, the imputed value of "owner occupied housing" is a non-cash 'addition' to GDP meant to capture the value that people derive from their houses, due to the fact that they own them and do not pay rent to themselves in order to live there. If this does not make sense to you, that means you are normal."
This is counting double. Presumably the rent was paid for when you bought the house, and guess what, you are paying property taxes and utilities which are often part of the rent.
GDP is a fake number. It has nothing to do with "product". It is a made up number meant to go up year over year no matter what is happening.
Time to look at only hard numbers, like sales tax receipts and payroll tax collections, and the numbers on payroll. The rest of the numbers are fake.
The economy and wall street are an amusement park funhouse. Nothing but distortion mirrors, wobbly foundation, screaming, dark slides, and air being blown up your ass.
If GDP is fake, then it's time to start ignoring the macroeconomists. They can't be trusted to give us an acurate measure of economic activity. To hell with the krugmans and larry summers of the world. They're sychophants for the state.
so true.....
gdp is a synthetic reflective
number which is composed of
numerous other data series....as such it can be
mangled and mutated at will....
it's an understandable venture to want to measure
economic activity but gdp has many deficiencies
which make it highly dubious....
the preferred gas is helium.....
john williams covers the methodology of
gdp from whom it sounds like martensen took
his example....
check this one out from associated press: fort meyers, fla condo highrise has 32 floors and ONE tenant. that's right, ONE! url below:
http://hosted.ap.org/dynamic/stories/U/US_LONELY_HIGHRISE?SITE=KVUE&SECT...
Geither won't rule out tax on middle class
http://blogs.abcnews.com/george/2009/08/geithner-wont-rule-out-new-taxes...
Greenspan says more housing downturn
http://www.reuters.com/article/marketsNews/idUSN0248059020090802
Fucking great
and why is it geithner who is making tax policy....
does that not belong to the congress??
I was able to knock out a pot of coffee reading this one by Martin A. Armstrong, "How All Systems Can Collapse Over Night". Very interesting with notable parallels to what is going on now.....supports the old adage to know your history.... http://www.scribd.com/doc/17880556/How-ALL-Systems-Can-Collapse-Overnight-709
he doesn't provide sources for his claims. It's an interesting opinion, but not more.
Damn TD - Do you EVER sleep? Good links for the weekend pause and reflect.
Every weekend I get bearish, and every weekday I trade em from the long side and make good money.
But it is great to stay grounded, at that is what ZH excels at.
Keep up the excellent work.
From the Ritholtz link above...
"
What were the specifics of the GDP data regarding import/export?
-Real imports of goods and services decreased 15.1%
-Real exports of goods and services decreased 7.0%
So in Q2, both consumption by us of overseas goods and services and by them of US made goods and serivces declined significantly. The Differential between imports and exports - who dropped fastest - was the key to this quarter's GDP data.
According to Bloomberg, Decreasing Exports subtracted 0.76% from GDP. At the same time, falling Imports added 2.14%. Net contribution of the fact that Imports are free falling twice as fast as Exports are = 1.38%.
"
So imports and exports are flying into the ground at different angles - splat is splat - but positive to GDP?!
I realize decreasing imports as part of a sound resetting of the economy makes sense, but I think this is not what the BAU-types have in mind.
Oh green shoots, why are you so prickly and poisonous?
Pete
I like how Martenson touched on the media coverage of the GDP on Friday. Within seconds the AP had the same story all over the country and probably the world with the smae exact picture of some machinists (who I hope actually have jobs) saying how GDP declined less than anticipated and with very little insight into why qtr 1 was revised lower.
I realize we are in the spin zone but the media really needs to cut the shit and start peeling back some layers. Don't they get sick of the taste of ass?
Revulsing what journalism and the media has become in this country. The media used to work for the people, now it works for the government. A 180 degree turn to the worse.
Just look at these headlines, posted one after another on Bloomberg:
•Job Losses Probably Eased in July as U.S. Manufacturing, Housing Steadied
•Geithner Says U.S. Unemployment May Peak in 2010, Recession Is `Easing'
I always worry that I'm the only one that sees this shit (meaning I'm crazy). But I can't make this up.
I understand the need for a little pumping and cheerleading to make everyone feel ok, but this is getting out of hand.
It's like Kevin Bacon at the end of Animal House.
Just imagine what it is going to be like when they print a positive GDP number later this year.
william colby said that every major news outlet
in america was managed in one or another by the
cia....
of course he later decided in the middle of a
late dinner that he needed to go fishing
around midnight - as you do -
without his life jacket and left the patio door
open.....unfortunately he must have caught
an exceedingly powerful fish which pulled him
into the river causing a good old fashioned
drowning accident...
Sad, but awesomely told.
Summed up nicely.
Summed up nicely.
Edumication from previous GDP postings and the ones above provokes two dichotomous feelings. First, the steel in me, elevates rationale, to respond calm, to sublimate, to self-manufacture gentrification. The second however, inundates visceral passions to join an arcane Montana mountain group that is preparing for the next jousting against the new world order.
But, I guess I will just go for a run and soothe the mind and soul, and have solace that we are all getting fucked just the same.
More great news in the unemployment front
http://www.marketwatch.com/story/unemployment-benefits-to-dry-up-for-15-...
1.5 million to run out of benefits. Claims will be low and voila we have hit the bottom.
In all likelihood, unemployment benefits will be extended. lots of talk about it and specifically, see the article today on huffpo re: Romer's comments about white house working with Congress on it after august recess. there's even a quote from DeMint (R-SC) who supports extension.
This clip alone makes the invention of the Internet so worth it. i haven't laughed out loud at a computer screen like I just did ever.
http://www.liveleak.com/view?i=ad9_1248287916
that was AWESOME! thank you for posting.
That's a catchy hymn.
All this mental gymnastics, stats, etc is all fun and great. BUT, cant this be boiled down to just a few simple facts:
Unemployement - increasing
Which is bad for consumer spending, debt reduction, and home sales
Federal and State deficits - increasing
Which will lead to higher taxes and lower entitlements
Ageing population - extra costs on the next generation both in the form of medical costs and time
All these items will be direct and indirect taxes on everyone, great during a recession huh?
Seriously, i ask seriously, where is the good news? Are the masses still hanging their hats on the insatiable greed of Mr and Mrs Moron? and the greater fool theory.
I am as pro-America as can be, but i am scared for the well being and future of our country.
The answer is not a socialist union, is it? I dunno anymore....
DaLev, you nailed it!!!!
there are actually people out there in DENIAL. They actually believe the USA can continue to create DUMB Financially Illiterate COnsumers in the middle of a great recession! They are hanging their hat on this. As zerohedge and denniger have posted, Consumer Debt has increased since the 1950s all the way until just this past year. 50 years of a debt bubble and people think we have bottomed? this is 70% of the GDP!
The other thing people are hanging their hat on is that the USA will continually be able to fool the Chinese, fool the arabs, etc into buying our bonds.
its all a ponzi scheme or greater fool theory in process
can any of you afford to lose 50% on your stocks again if 1 of the above scenario doesn't work out?
denial or complete ignorance
"In other words, the headline extended claims number of 6,416,250 is off by more than 2.6 million. And one also needs to add in another 352,000 from various state programs."
http://globaleconomicanalysis.blogspot.com/2009/08/weekly-unemployment-c...
I perceive a breakout!
http://1.bp.blogspot.com/_nSTO-vZpSgc/SnPPnErrW5I/AAAAAAAAGjM/0pdiNTJOim...
OK. Now I'm worried.
Remember the Chapman prediction of a bank "holiday" (failure) in September? Lots of banks closing for a few days and some of them never reopening? Those that do devaluing whatever funds you've deposited?
Well...
Call up Washington Mutual's customer service line @ 1-866-888-5935. Select option 1 "mortgage payments, taxes, payoffs..." and you'll hear a charming little message that begins by telling you how "excited" WaMu is to be a part of JP Morgan Chase. "...strength and security..." blah blah blah. But here's the interesting part:
Down for three days in September.>/b> Coincidence, I'm sure.
Time to build and Ark, it has rained 50 out of 60 days in the NCY area since June 2, unreal. Haven't turned on a sprinkler or watered anything this entire summer and we are not in August.
And yet, we have the worst drought in decades in Texas at the same time.
That's because they're supposed to float their ark down here. I mean, this is Texas we're talking about. Where the hell else should they be going?
Send all your water here please, Pheonxi hasnpt had any water in months.
Love the clip of Marla saying this ain't no recession this is a recession !
+1 !
Tyler, how about an informal role call from your readers, on the following....create your own economic indicators:
questions like
1. do you feel you have job security
2. is a raise on the way
3. do you think the company is in the hiring, firing, or status quo mode
4. moral is _____
5. hours working...outa job loss fear, or understaffing, or spending too much time reading blogs during the day you have to make it up at night
Um, hello? How about DO YOU HAVE A JOB. Don't forget that one.
http://scottlocklin.wordpress.com/2009/08/02/the-three-stooges-of-the-hi...
The 3 stooges of the high freqency apolypse by Scott Locklin
Saluzzi as Moe - "...blathers on about a lot of things, and I don’t feel like picking apart all the points in his various white papers on the subject. Joe appears to have a lot of time to go on television and indignantly blather about the evils of “high frequency” trading, despite the fact that his company appears to do exactly what “high frequency” traders do. The only difference between Joe and his tormentors seems to be that firm does it manually and in slow motion."
Wilmott as Curly - "...is someone who should know better than his latest New York Times drivel. I can understand why Paul is sore about the high frequency guys. Presently, high frequency guys are making money and hiring people. Wilmott’s line of business is selling educational and recruiting services for quants. Unfortunately, Paul doesn’t know anything about high frequency or any form of algorithmic trading, can’t sell educational services catering to this type of trading desk, and probably doesn’t place many people with algorithmic trading desks of any trade frequency. Paul’s business is providing education and recruiting services for structurers and hedgers. As such, he probably feels left out of the high frequency party."
Schumer as Larry - "...he’s such a dirtbag I can’t even bring myself to attempt to comment objectively. If GETCO or Citadel had him on the payroll, no doubt he would be less protective of the “consumer” who Chuckie just saddled with a couple trillion dollars in debt. As Bob Dole once put it, “the most dangerous place in Washington to be is between Chuck Schumer and a microphone.”"
"High frequency guys provide the service of buying and selling when you want to buy and sell, and they take a risk that the market will move against their book. You pay them to take this risk. In the dark ages before decimalization, this was a pretty simple business to be in, and as far as I know, nobody complained about it."
I do not think that is accurate. HFTs create an illusion of demand and are there only on the upside. They can be turned if selling pressure gets intense. They are taking no risk.
Sure.
And there are no problems at the AIG sub's because they all have re-ins with their friends while their parent has determined that the assets of the sub's are contractually committed to the FPU and the re-ins of the international regulatory arbitrage and side letter/CDS operations.... Outside of whatever a state regulator may say. Hence the drive for helicopter Ben to "hold his nose" and pay through the nose. He needs the foreign central banks in the countries that are effected by the AIG scheme to continue to play along in the great monetization and FX game.
Providing the needed liquidity with downside potential indeed. Next you'll be saying that now is the time to invest in REIT's and CMBS.....
WOW! That was arrogant!! Calling Paul Wilmott a stooge? You have balls. It is like saying that Soros does not know anything about currency speculation.
What are your credentials?
Looks to me you are reading the quotes above as coming from me. Those are from Scott Locklin. ( http://scottlocklin.wordpress.com/about/ )
Locklin also wrote just a couple of weeks ago a much discussed takedown of N. Taleb.
Here:
http://scottlocklin.wordpress.com/2009/07/17/nassim-taleb-clown-of-quant...
Well, for one thing, unlike Paul, who doesn't even seem to have read a good book on the subject, I have actually done a little algo trading, and consider it my primary business.
Lighten up: he told me Curly is his favorite stooge.
-Scott
I am with you on Chuckie S. This is the one that got the run on a bank by saying it was bankrupt. Regardless, you do not cry fire in a crowded theater.
In reference to FASB and MBS, especially the residuals of the early reworks at WaMu and Wachovia's option arm and Golden West units the resolution of what kept and is keeping the zombies dancing, namely held to maturity is finally being faced up to by the accountants. If this is an effort at providing resolution since many in W.D.C. want to believe the banks are well on their way to profitability then the clarity many of here have been desiring may well come to pass.
It remains to be seen if the so called green shoots can stand up to the treatment the FASB is contemplating. However, I would be looking at how the Fed, Treasury, OTS and the FDIC can add on to their structure of regulatory forbearance to keep the illusion alive for a few more quarters while they await the great expected deliverance from all of the "sidelined cash" and "pent up consumer demand" to save them once again.
The PSYOP is driving to its inevitable conclusion...
Time to break out the popcorn and your fav bev...
Thanks for a good recap TD and assoc.
Today I have been perusing the big S&P earnings file, and what I see for Q2 is that the productive sector has been hit the hardest: industrials, materials and information companies have fared the worst.
Burlington Northern and CSX each had revenue off 25%; Caterpillar, 40%; Dupont, 25%; Fedex, 20%; Gannet 18%; IBM 13%; Micron 26%; Ntl Semiconductor 39%; steel producers, 60+%, etc, etc…
These companies reflect the real GDP.
I only see growth where I don’t want to see it: military contractors (war profiteers) and health care (an aging population sucking up capital through a horribly inefficient semi-socialist, lawyer-crippled system).
Soylent green is people.
It's only a matter of time.
Chris Martenson's Blog
"In the scheme of things, one might question whether a country that routinely lies to itself, and then accepts those lies, then reprints those lies, and ignores the obvious discrepancies, is really on a sustainable path to recovery, complete with green shoots, or whether it is merely leading itself astray."
I like that.
Great comment.
This is the what sunk the central planing model. Folks who derive their status, wealth and opportunity from meeting or exceeding estimates or targets. The fact that the whole mess is simply lying to itself is overlooked because those in power want to believe the lies. Their positions and power are dependent upon them and selling it to the great Narod of society. The problem once again is that the great Narod can see far more clearly than those subsisting within their bubble worlds can. I wonder when we will see folks selling burnt out light bulbs at flea markets?
Thank god I'm not the only one with a disturbingly unhealthy obsession with missesmakawimaxton from youtube.
(The new trends - hot chicks and guys with guns blogging on the recession)
No, you just read and write about that >:)
Dreamer
Chris Martenson is a talented individual. His reasoning sounds pretty much right on the money. It would be nice if someone who had the resources could look back at S&P 500 earnings and plotted them vs reported GDP. Short of someone actually making a George Orwell's 1984 Mininstry of Information, I am thinking this is quite do-able, and a pretty good bullshit detector.
Is that reported GDP or fully revised?
I think we've already seen what you are looking for.
If you came up with exactly what you describe it would simply be counter argued as lagging or whatever.
Bottom line is, if it looks like it, smells like it, I don't have to eat a sandwich full of it to determine that it's Bullshit.
he raised an interesting question and applied
lame to no analysis to the answer.....
if a 15% drop in corporate revenue resulted in
a 2.3% drop in pce then mathematically we know
that corporate revenue is a small % of pce -
very small.....that may or may not be true but
absent further information that would be the
correct conclusion if you accept both numbers
as being credible (which he does not for
reasons circular)
he needs to dig into pce further and demonstrate
what data series feed pce and show that corporate
revenues are a large part of it....then he
needs to tell us where his corporate revenue
numbers derive and compare with the bea numbers...
he may be right in his assumptions but without
this additional supporting evidence i would
not be surprised if he could be
outwitted by a potted plant.....
to answer my own question and martenson's
i looked here:
http://www.bea.gov/newsreleases/national/gdp/2009/pdf/gdp2q09_adv.pdf
you can see what categories compose pce....
then ask, what % of these numbers were generated
by sp500? you can see some large one's like
non-profits which are not going to appear on
sp500....you will also say to yourself that
the sp500 does not account for all of this
this activity....
mr martenson needs to visit the wizard of oz....
this is analysis which gives bears a bad name...
Do you seriously believe the SHIT that comes out of the US Dept of Commerce?
You must already being visiting OZ (maybe pro weed and tax?)
But seriously, you're trying to discredit someone using .GOV stats, please.
If you beleive it, buy it. If you don't (me), don't!
martenson made a huge logical and analytical
error in assuming that the sp500 revenues were
the main component in pce figures.
it is quite evident that the revenues of the
sp500 are not all that compose the pce data
set....and i provided an example of a reasonably
large source which could not be on the sp500....
as such there are factors other than sp500
revenues which drive pce....martenson is
extremely naive in his understanding of
data...
the problem in this case is not the data so
much as the understanding of the data....i do
not throw the baby out with the bath water.
US Dollar just cracked again, further than Friday. Getting ugly as I type.
For those of you who use contrarian sentiment measures, the 10 day dollar bulls sentiment reading fell below the March 08 low reading of 10.8 on Friday to 9.7. If you recall, the dollar reached a significant low in that time period. Can it go lower from here, sure, but a snap-back rally is coming.
Roubini going to be on CNBC World later, for anyone flipping channels.
Simple question: Can Citi group survive once mark-to-market accounting is reinstated?
Chris Martenson's website just stopped functioning. Might take longer than half a day for it to recover.
Pigs wearing lipsticks can fly...