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What Is A Depression Anyway, And Why We Continue To Be In It?
You will pardon us for posting two excerpts from David Rosenberg today, but this one is a must read, and explains more clearly than anything written on the matter why America is currently, and without doubt, in a depression, due primarily to ongoing secular changes in consumer and investor behaviour, something not experienced during mere recessions. As such any intraday or short-term bounces in the stock market that merely confirm that there was a liquidity injection by one player or another, or a successful short squeeze engineered by the wily folks at the custodian firms or due to simple headfakes, are completely irrelevant (especially with record implied correlations), as the long-term trend has only one way to go in the long-run. Down. Of course, those who believe they can time the moment when the last lingering support pillar collapses and everything tumbles down, are more than welcome to keep trying their top-ticking. We are confident that when the mass exodus begins, the HFT liquidity "support" of the market will be alive and well, and provide everyone with a perfectly acceptable exit price level...
WHAT IS A DEPRESSION ANYWAY?
A depression, put simply, is a very long period of economic malaise. A series of rolling recessions and modest recoveries over a multi-year period of general economic stagnation as the excesses from the prior asset and credit bubble are completely wrung out of the system. In baseball parlance, we are in the third inning of this current debt deleveraging ball game.
You know you’re in a depression when interest rates go to zero and there is no revival in credit-sensitive spending.
The economy is in a depression when the banks are sitting on $1.3 trillion of cash and yet there is no lending going on to the private sector. It's otherwise known as a liquidity trap.
Depressions usually are caused by a bursting of an asset bubble and a contraction in credit, whereas plain-vanilla recessions are typically caused by inflation and excessive manufacturing inventories. You tell me which fits the bill today.
When almost half of the ranks of the unemployed have been looking for a job fruitlessly for at least six months, you know you are in something much deeper than a garden-variety recession. True, we can’t see the soup lines; the soup lines are in the mail — 99 weeks of unemployment cheques for over 10 million jobless Americans. Don’t be lulled into the view that we are into anything remotely close to a normal economic cycle.
Basically, in a depression, secular changes take place. Attitudes towards debt, discretionary spending and homeownership are altered for many years, or at least until the scars from the traumatic experience with defaults and delinquencies fade away. That is why, as per last week’s data releases, we saw existing home sales slide to 15-year lows and new home sales to record lows despite the fact that mortgage rates have tumbled to their lowest levels in modern history. There is no economic model that would tell you that declining mortgage rates should lead to lower home sales.
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, that is what happens - almost 35 million Americans now have no such coverage, up from 24 million five years ago. This reflects the focus by households to pay down their debts at all costs and how companies have bolstered profits - by eliminating benefits.
More fundamentally, in a recession, the economy is revived by government stimulus. In depressions, the economy is sustained by government stimulus. There is a very big difference between those two states.
After all, we are now in a situation where every 1-in-6 Americans is 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. That transcends the definition of a recession.
In a recession, everything would be back to a new high 33 months after the initial decline. This time around, everything from organic personal income to employment to real GDP to home prices to corporate earnings to outstanding bank credit are still all below, to varying degrees, the levels prevailing in December 2007.
Let’s be clear: After all the monetary, fiscal and bailout stimulus, the economy should be roaring ahead, as would be the case if the economy were coming out of a normal garden-variety recession. The fact that there has been no sustained response to all these efforts by the government to turn things around is a testament to the view that this is not actually a traditional recession at all, but something closely resembling a depression. That, my friends, is exactly what the bond market is signaling, with Treasury yields rapidly approaching Japanese levels.
For all the chatter about whether the recession that started in December 2007 ended sometime last year, here is what you should know about the historical record. The 1930s depression was not marked by declining quarterly GDP data every single quarter. In fact, the technical recessionary aspect to the initial period following the asset and credit shock goes from the third quarter of 1929 to the first quarter of 1933.
What is important to know is this; in that initial four-year economic downturn, from 1929 to 1933, there were no fewer than six — six! - quarterly bounces in GDP data. The average gain in these up-quarters was 8% at an annual rate! But because they proved not to be sustainable, the National Bureau of Economic Research (NBER) refused to declare that the recession officially ended, even though the stock market rallied 50% in the opening months of 1930 on the belief that the downturn was about to end. False premise. And guess what? We may well be reliving history here. If you’re keeping score, we have recorded four quarterly advances in real GDP, and the average is only 3%.
I can understand how emotional the debate can get over whether or not we have actually just stumbled along some post-recession recovery path or whether or not this is actually a depression in the sense of a downward trend in economic activity merely punctuated with noise that is influenced by recurring rounds of government intervention. The reality is that the Fed cut the funds rate to zero, as was the case in Japan, to little avail. Then the Fed tripled the size of its balance sheet - again with little sustained impetus to a broken financial system. Government deficits of nearly 10% relative to GDP, or double what FDR ever ran during the 1930s, have obviously fallen flat in terms of providing and lasting impact to the economy.
This is going to sound like a broken record but it took a decade of parabolic credit growth to get the U.S. economy into this deleveraging mess and there is clearly no painless “quick fix” towards bringing household debt into historical realignment with the level of assets and income to support the prevailing level of liabilities. We are talking about $6 trillion of excess debt that has to be extinguished either by paying it down or by walking away from it (or having it socialized). Look, we can understand the need to be optimistic, but it is essential that we recognize the type of market and economic backdrop we are in.
The markets are telling us something valuable when (after a period of unprecedented government bailouts, incursions and stimulus programs) we had a 2-year note auction that saw the yield dragged to new record low of 0.46%. Instead of lamenting over how attractively priced equities must be in this environment, market strategists and commentators would bring a lot more to the table if they tried to decipher what the macro message is from this price action in the Treasury market. Conducting stock market valuation analysis based on unrealistic consensus earnings assumptions does nobody any good, especially when these estimates are in the process of being cut.
If the Treasury market is correct in its implicit assumption of a renewed contraction in the economy, then we could well be talking about corporate earnings being closer to $60 or $65 in the coming year as opposed to the current consensus view of almost $90. In other words, we may wake up to find out a year from now that whoever was buying the market today under an illusion of a forward multiple of 12x was actually buying the market with a 17x multiple.
How’s that for a reality check?
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Depressing Bitchez!
Makes me laugh every time. Lighten up Junkers...
No matter how depressing the post is every time I see this "(insert topic) Bitchez!" I laugh at the simplicity and almost like optimism.
Precisely. -1 junk. Is SkyNet just auto-junking any post with 'the b-word' now? Pisstake.
Bitchez.
I think that's my personal record Junks! Sweet.
A recession is when your neighbor is out of work.
A depression is when you're out of work.
boohyah!
Time to add 535 (or so) additional jobless claims on November 4th!
More realistic to cut Government bureaucracies, pay and pensions 30% across the board.
And if you're both out of work? "This time is different": this phrase needs to be reclaimed from optimistic shills...
And an aggression is when you smack your neighbour in the head with a piece of 2x4
I just came up with this idea a little while ago, and decided to share it here.
I have a great idea that would kickstart the beginning of a recovery.
*** Reinstate the itemized tax deduction for personal interest for perhaps three years.
People won’t be forced to refinance their homes to get the deduction – which is substantially impossible now for most since their homes are worth squat compared to before. If you have personal interest and you itemize, you get the deduction. Period. To put it cynically, the more you spend, the more you save courtesy of Keynesian economics. The cost to the Treasury might even be offset by a supply side effect for a couple of years, given the depressed nature of the economy at this time.
For this small effort, you make supply siders ecstatic because they will have a real example of the theory actually working. You boost credit. You boost sales. You boost employment. You boost GDP. You boost the stock market without HFT shenanigans needed. There’s no downside. Nada. Not a single one.
Now, somebody with access and influence … please sell this idea. It should be an easy sale if it gets heard by the right people.
Why not just have the government stop spending so damn much, and wouldn't require so much tax revenue, printing, borrowing, and conjuring? Reduce the size of government, and you solve a raft of problems.
+50
+1
Edmon, the true solution is not politically obtainable if everyone is still in denial of reality.
In 1921 Harding and Andrew Mellon pulled the US out of the Wilson depression by slashing federal spending and federal salaries 50% and passing it on to the taxpayers.
Institute term-limits first to take career risk out of the equation for politicians. Until then, nothing will change...
Even before term-limits, eliminate Congress seniority privileges.
Great idea. That gives us more of what we really need:
1) government distortion of the marketplace
2) more borrowing for consumption
What, pray tell, will you do for an encore after the consumer becomes saturated with debt at the new, higher level, he is incented to incur with this stimulus?
Don't take this personally, but you people are not too bright about this. Yes govt needs to downsize and stop wasting money. That won't save the economy though.
To fix the economy you have to get people active in it again. Grumpy complaining doesn't add anything except maybe you impressing yourself. If sales tax holidays can distort retail sales then a more permanent solution can have a more profound effect that lasts for several years. It might even pay for itself and generate a surplus over the cost of the itemized deduction via real economic growth over time. It won't save the world, but it will make a positive difference.
Possibly people also need to downsize and stop wasting money [they don't have]? Anyway, what would your idea do to tax receipts (which are already 1:1 with newly issued debt)? Not so sure there's absolutely 'nada' downside...
This is a keynsian argument, that you fix a spending problem with more spending. Instead of a tax break, how about a direct payment? Didn't work so well during BushII. I might agree with you to some extent if the USA had lots of savings from times of great success, but it doesn't, because it doesn't pay to save money when interest rates are so damn low, artificially or otherwise. What the people have is debt, and lots of it. What the people need is freedom from debt, and lots of surplus.
Has nothing to do with bright or dull, has to do with disagreement on empirical evidence. Starting at the bottom, nothing every pays for itself when it comes to government, or just about anything else. It's a nonsense statement. I've heard that argument used by town councils regarding growth - "growth will pay for itself". Until they came back with their hands out for a few hundred million more of taxpayer dollars for infrastructure improvement due to overburden. It's a recurring theme. Anytime someone says anything will pay for itself - RUN. Not only will it not pay for itself, it will always end up costing a great deal more money. Government is infamous for underestimating costs. Name one government project, scheme, etc that ever came in under budget, or even within 30% of budget? They exist, but they are few.
The economy can't be saved BECAUSE of the government. They are the problem, not the solution. Inviting them to take another crack at it is poison to the wellbeing of the country. People aren't active in the economy because of government action. That was the plan - make the sheeple dependent on the government, so they look to it to fix the problem. But it didn't work 100% - people stopped taking part in the economy. They retrenched. And that's precisely what they should be doing. While the government bails out banks that should themselves have failed, citizens don't have that luxury - they cut back to make ends meet, and even fail. They may not understand the concept of a trillion, but they know it's ominously bad.
With $100+ trillion in IOUs not including interest, the US won't have a surplus for decades, and any dollars that it does get will be matched 4 to 1 in new spending, most of it for interest. If government stopped spending money, then by extension it would stop wasting money, so I'll take that point.
Don't think that letting it fall is not a feasible plan - that's the point - it needs to fall, and desperately so. When you prop up failure, you don't get success, you get more failure. Only after failure gets too top heavy and falls over can you begin to get some success again. That's the whole point of TBTF - they should have let them flatline. The government has it's finger in the pie right up to it's armpit, and until it extricates it, nothing will improve.
You smaart, must have a PhD in Wreckonomics.
I agree. We need more cra$h for good car parts. Another $8,000 kiss to sell houses nobody wants or can afford. And how about another trillion$ to hire more govinmint professional nonworkers. Did I get that right? Money for more incompetent teachers, corrupt cops and firebugs. Yes!
Obama, steal bond money from first order purchasers, give money away to people who do nothing, save the failures, prop up the theiving banks to steal more.....
No dude, it has to collapse to right the wrongs in a people that forgot you have to be honest and pay for people to produce, not steal their means to produce, then raise taxes.
You mean "spending" again and incurring debt... no thanks. Keynes says that when people stop spending the gov't takes up the slack. Which makes the "consumer" hold back even more to offset the stupidity. Like the old married couple who counter each other's quirks, the people tend to counter the goofy machinations of its government.
But Rockster, I think the bum has a point. It's just on the wrong page.
I too believe you have to get people active in the economy to fix it. But I also think THIS economy needs a long needle in the neck and a humane injection. Until the big "defucking" happens, there's no point in putting people to work applying makeup to a corpse.
Time for the old married couple to fix things up, either with a divorce or a couple of handguns. Once the bickering ends, the survivor can start again with a clean slate.
Do you not think that giving the government additional revenue, at this juncture, would be a huge miscalculation on the part of the productive populace of this country? What is your approach to the end game? How do we ween ourselves off? When three years is up and nothing has changed except to the downside, how do you propose we correct the situation. What does the world environment look like at that point? Have other countries taken the bitter pill and are they in better shape to compete or threaten our reserve status? Part of the problem with kicking the can down the road is we expect all things to remain equal... the world is too dynamic for that. Anything other than reining in the size and scope of the government is kicking the can down the road. Of course, we've been snookered in that by doing so, we hasten the rise of our unmasked robber baron overlords... but this is the predicament we've chosen.
Wow. My mistake.
I guess the subtitle for ZeroHedge should be, at least for the people on this side of the submissions, "Don't Just Do Something. Stand There and COMPLAIN!!!"
I like the main articles and have learned a lot from them but never spent much time in the comments. Now I know why. I'm going to keep reading ZH because it's an amazing work and is changing the world for the better. Comments, though, are a waste of electrons. If you're not negative and filled with pseudo-economic ideas, you're not welcome. I'll delete my account in a couple of days if such a thing is possible.
Bu-bye.
A society/government/economy sometimes reaches a point at which doing more of the same is not a solution. It needs to be torn down and rebuilt. We are there.
Should you decide to hang around ZH you might add to your info base. What could it hurt besides bruising some preconceived notions?
There needs to be a giant rebalancing, both of debt, and attitudes, at every level from the individual to nation-states. We haven't even begun that process, but none of the replies can be anything but unfairly caricatured as 'stand there and complain'.
But I won't bother saying anything further as it would be a waste of electrons.
Edit: as ever, Rocky says it better.
dead hobo, I think the thinking on zerohead is let the bad debt default. Tear the bandaid off in otherwords and get it out of the way so the economy can get back to debt creation of the good variety (i.e. sustainable).
At least your suggestion moves debt creation back in the hands of individuals. The question is whether it would be sustainable at the end of the day (e.g. without deductions). And would it in the end create a bigger over-leveraged populace.
This is Fight Club. Don't be a cry-baby.
You really lost everyone else - in agreement or not - at "...y'all are not so bright about this..." I think that even the bravo and leo show might have disagreed with you out of principle.
Your main mistake is that instead of defending your position, you are running away, brave sir robin. A couple of ZH'ers even asked you specific and legitimate questions about your plan, which sort-of dismisses the echo chamber charge. Why not respond?
If you've read ZH as much as you claim, I don't see why you don't just stop reading ZH altogether. Many of the articles herein are merciless in their mockery of the selfsame ideology you propose.
Pretty much spot on there, Mr. Plume. Even Johnny Jizz will hang in there in the face of total adversity. Wait, I'm not really saying much there am I?
If continue to read the articles here for any length of time, you would realize and understand that your idea runs counter to the economic, financial, political, and social reality that Zerohedge presents. Think it through dude, the archetypes are the primary players from the book/film Fight Club. Read the book and/or watch the film, and really think about what it's saying. Don't get it twisted, this isn't some wing of the Republican Party, or even an offshoot of the Tea Party; this is fucking anarchy. The entire fucking system needs to blow the fuck up. Reset button, bitchez.
Incomes need to rise. Not going to happen until China gets the peg and protectionism returns.
Spot on. We (the consumers) are being blamed for not spending like we used to. There is a reason why we aren't consuming like good consumers should. Wages have barely moved in recent years, at least since the start of the current economic calamity. To add to things, wages will probably only deflate even more from where they are now. Just look at the labor market.
it would keep the chinese drywallers busy too.
Oh Please, the CB's have that reserved for them only. You need to make a million a year and at least 10 million in bonuses each year. Otherwise, pay the taxman. They don't want the economy to get better. Their yachts are already jamming the docks.
The Great Collapse looms before us.
Great article.
One thing I would add as a businessman and entrepreneur is that there is only so long a company can keep up the appearance of good "earnings" by cutting R&D, maintenance, capital replacement, layoffs, squeezing employees to work harder, etc. Not to mention accounting gimmicks.
At some point you hit the wall with all of the above. Then earnings suffers, perhaps even disproportionally to any further decline in revenues.
Then add to that (or subtract from that) collapsing p/e multiples...
Interesting how the Intel pre-announcement has long been forgotten. INTC was held up by the bulls as how strong business spending was going to be, and the strength of the consumer/PC refresh cycle. Have one-off/odd ISM number, and it is off to the races.
I recently closed a business. One of my qualified office staff has sent dozens of resumes out in a fairly active West Coast city. Not a single response.
All of the talking heads on CNBS ignore the amount of pain and uncertainty being felt out there. Will change attitudes for years (or maybe just until IPad 2 comes out).
Cheap Puts :)
That goes for 'small business' as well. Stores are bailing out of our local upper middle class strip malls faster than a Jet Blue flight attendant can exit an airplane....I think you're correct, the 'killer wave' is upon us...
Not so great.
Once again, Rosy misses the big picture.
Bonds crashed in the 30's and bonds crashed in the 70's, why will today be any different ?
I wonder if the last couple of days has been a reversal for bonds? I'm no technical analyst, but a double top in TLT?
What has changed? What is the effect of a universally accepted, consolidated world reserve currency without a viable challenger? What is the deterrent factor when a bond crash causes mutually assured destruction? What happens when the entire world says "all in" on the dollar?
I agree that, eventually, the bond market will crash. However, I believe there are other factors likely to be necessary before it happens. Obviously these things pop up out of "nowhere", but I just don't think we're there yet.
The other question is that we're on the precipice of a decision for austerity... we've reached the end of our credit rope. Knowing that we're going to be corralled into more responsible spending (not a high standard), what will this do to the longevity of the bond market? My guess is that it will push the timeline of our demise.
I know what your saying but just the fact that Rosy goes on these rants without even mentioning gold is just not right. In his world, treasuries are gold, it doesn't even cross his mind that treasuries have not had a long history of being a safe haven asset.
I am incredibly curious as to what gold does on the next leg down. My guess is that it does not present quite the buying opportunity many are hoping for... given we are at the early stages of the last flight to quality... each successive flight to quality leads to a larger portion of gold in the ol' portfolio. Only matter of time before a failed auction.
That, my friends, is exactly what the bond market is signaling...
IMO, the signal is corrupted by Bernanke's interference.
But what about mining stocks? Is it still bad to pick specific stocks?
I am 60% in specific stocks. You just need a pair of balls, they have been taking off lately
Asian renewable-energy-solution suppliers? ;O)
I'm still looking for mine as well. They took off months ago...
lol
Odd that someone junked you for that, no?
For me, it's the lack of specialty knowledge that keeps me away from trading stocks, but I'm still watching them and have noticed that gold and silver mining companies have been doing very well as the overall markets seem to sour. I use Tickerspy to track gold and silver mining stocks against some of the big players like GS, Soros, Paulson, Buffett, etc. Up about 20% in the last month.
GDX, GDXJ, SIL
The market seems to be betting that a GOP takeover of the House will produce gridlock Congress and prevent more job killing bills. The problem is that the big damage has already been done; Great Depression #2?
...and a GOP "takeover" will do exactly what to global credit contraction? GOP could take over all branches and the economy will still be in the crapper for at least 5 more years. Only thing that will help us is lube for the credit contraction that needs to take place to get to sustainability.
The gridlock will allow the credit contraction to continue, if not accelerate. Will also force us into austerity, giving us a stay of execution... albeit modestly brief. Welcome to a continued attempt at a controlled demolition. (more of the same, albeit in different fashion).
The GOP takeover should be the necessary catalyst to start bringing this fucker down; government spending is the sole prop holding the zombie up. Anyone with any illusions that voting in hardcore conservatives is going to mean sunshine and rainbows for the average citizen's personal finances are completely delusional. It's going to be exactly the kind of medicine we need, but the medicine is going to taste like shat-upon black liquorice.
Officially entered the depression in January 2009. Should be about 6 years. Maybe mid way through 2015 we get better....
But the real Depression hasn't hit yet. Wait until the Federal Government defaults, reduces spending by 50% and the entitled take to the street in howling protest. Then it will bottom and a few months later we can start to recover.
Rosie's what and why........bitchez!
a depression is when the numbers compiled at Shadowstats.com are a close resemblance to the numbers compiled during the depression.
a most recent update from Mr. williams calls for hyperinflation soon.
file:///var/folders/3v/3vowWzK+E08vHtu0mm561E+++TQ/-Tmp-/com.apple.mail....You seem to have posted a link to a copy of the file in the /var directory of your Unix box (mac?). We can't get to that one without your IP address and a webserver! :)
Try this URL instead: http://www.shadowstats.com/article/hyperinflation-2010.pdf
It was never a recession, but I think calling it a depression gives the illusion that things will eventually bounce back with the US once again at the top. If this a global rebalancing, then we may be in for a new normal in the US and not a temporary depression at all.
A grand finale. Like the end of a fireworks show.
lol
Maybe. I'm not necessarily saying things will get a lot worse; I'm mostly saying that things won't necessarily get better.
Agreed. This is a movement of power from West to East. Why? Because the collapse in employment is structural, not cyclical. Unless you believe that all those auto industry jobs and all those factory jobs exported to Asia are going to come back. Maybe I'm missing something, but I just can't imagine that happening, no matter how long you stretch out the timeline.
If you extend the time-line way out, and if the US becomes a third world country, would there not be an incentive to move manufacturing back over here for the same reasons it was outsourced in the first place? I know that the US becoming a third world country is a pretty far out assumption, and I will also give that this would take decades upon decades. However, just for the sake of argument, couldn't this be a potential scenario where manufacturing does return to the US?
Hmmm, maybe it's just because I live in California, but I have no trouble seeing the US as a Third World country. In fact, it seems like we're well on the way. Extremes of wealth and poverty, with massive unemployment and a shrinking middle class? Check. Forty million Americans who can't feed themselves without government help? Check. Blatant corruption in financial markets, political structures that are totally unresponsive to the popular will, debt that will soon reach levels that are mathematically impossible to unwind? You got it.
IMO manufacturing won't be saved by making American wage levels lower than those in Asia. What will save us, I believe, is that American free enterprise will shake off government interference and get to work in new fields. Forget the smart grid and "shovel-ready" highway jobs. Rural electrification and the Interstate Highway System were (part of) what pulled us out of the last Depression. What will work this time, given the reality of Peak Oil, are new technologies in transportation, energy generation, biotechnology, etc. There are still a lot of very smart people in this country working in R&D, and that, coupled with our dominant position in global food production, may be what leads us out of this mess and into a brighter future.
Excellent post, not to be overlooked!
Yeah, people who argue over whether or not this a recession or a depression are ignoring the elephant (and dragons and tigers and the extinct North American sloth).
And this comment gets junked why? Someone long North American sloths? I think giving Geithner a login might have been a tactical error.
Dragons, bitchez. (I want at least 4 junks or you're not even trying anymore.)
The collapse in employment is not structural. It was engineered. China is now a member of WTO. Make them follow ALL the rules, and the mfg jobs come back to North America. Get rid of NAFTA and they come back to the U.S. Secondary Benefit: The United Suckers is no longer a laughingstock in China and Mexico.
I must admit I'm not doing my part helping the "recovery". My savings rate is around 40% now, counting debt payments, retirement and building up cash reserves.
Ditto. Except, about 60%+ savings rate... and paying down debt to make it even higher. Probably going to downsize houses too (if not rent)... take the equity and run.
there is intelligent life in the states after all.....everything he said was good except the part about socializing debt.....plow under the debtors and the creditors....start anew with a strong aversion towards debt...throw the criminals in jail starting with greedscab and evil ben....turn the cia on rockefeller center just like it did to the wtc....
An excellent article... it pretty much says it all in a nutshell. I am torn between sharing it with my oldest who is a junior in business school and needs to know what's going on around him, and not sharing it because I don't want to kill his hopes and dreams. What to do, what to do....
Share it! Otherwise he may begin to believe in unicorns and start tokin on the hopium.
I dunno man, ignorance is bliss.
http://www.jahozafat.com/php/sounds/?id=gog&media=MP3S&type=Movies&movie=Matrix"e=matrix62.txt&file=matrix62.mp3
Share!!! Maybe include a teaser question asking the B-schooler for an opinion of what junior sees.
I get good responses, sometimes, from my kids, they are thinking too, sometimes.
He's weaned already. Your job is getting him ready for the real world. Sorta like sending them to a religious environment, you can do your part, they have to accept or reject the data. Filtering the world for them is over. There is no Santa Claus.
Share it anyway. Remember, if the hopes and dreams aren't viable or if he doesn't have the willpower and tenacity to see them through, someone else will kill them for him. What you don't need to do is make it all mad-max bullshit doom, as no matter how bad things appear to be, there will be major opprotunities ("blood in the streets") for those willing to adapt.
Good thoughts all... thanks.
BWAHAHAHAHA!
To thesapein's "what if": and what if this is a depression and a global rebalancing?
I don't believe China or anybody else escapes the depression. But definitely the global order gets redefined as we eventually re-emerge. And it's pretty clear the US doesn't come back out as top dog.
Looking at some of the possible outcomes, the U.S. may be a vastly smaller state the next time around... and be in a relatively spectacular position from which to emerge... the variables are too large... and excess capacity is excess capacity, whether it be in china or elsewhere... the bubble will never be so large.
That's what I think we should be discussing instead. It's a debate still to be had. Right now, we're still stuck thinking in terms of a temporary recession/depression that is assume and not argued for. In time, I suppose.
Cart before horse perhaps ?
The other day ....a previous Bear Stearns/govt. official ...Wayne Angel....gave a briefing on Bloomberg....the essence of a solution that needs to be in place.....
................................
Wouldn't it be great if the US enterred a new golden age....STARTING NOW ?
Simple solution....
Put the money in the hands of the voters/public first....
This means eliminating the individual/corporate income taxes ...to be replaced with a very broad based tax....a tax that would limit the size of government to no more than 10%.....
Why 10% ?
Very simple....
Taxes are just "add ons" to prices....
In order to have a competitive economy....prices have to be reasonable....the more reasonable the prices....the bigger the economy....
But there is even more to the story....
What about "individual" freedom ?
Would THIS not be a catalyst for success ?
Just think about the psychology of this....
What if an individual woke up knowing that there would never again be income taxes to pay ever again...?
What would THIS do for the core small business reasons in the US ?
......................................
Another issue is volume buying...ie WMT can contract to pay far less ...and then put in a store beside the other store....thus driving the other store out of business.....
Perhaps pricing schemes need to be different....
......................................
Also the exchanges are now serving the banks ....not the public....THIS needs to be reversed....in that banks should be only servicing RETAIL....not stealing from them by unfair advantages....
......................................
Simple changes in tax structure...and exchange structure....WILL/CAN provide for the next GOLDEN AGE in the US.....
Take a page from Caligula. Force Senators wives/husbands into prostitution. For added measure include Congressmen and the spouses of bureaucrats. Use the funds to retire the debt.
He was a jolly sort that understood the value of a senator.
You can't retire debt in a fractional reserve economic system. That's the beauty of it. It's complete inequality and usary nature.
ewww, that's gross.
This implies forcing them to take money for something they now do for free.
Feds are having a good ole time stimulating every crony, but few of the folks walking down Main St., not that I think stimulation is a good idea to begin with, since I'm a laissez faire sort of person. Just sayin'!
Whatever, I'm gonna watch Jersey Shore tonight on sweet vodka and sunkist.
I've been meaning to ask Tyler. You once said "Our Great Depression is our lives".
That being said I contend that this Depression is not our lives.
ugh...I just got cancer from reading that post.
Do your part tomorrow take whatever cash you can out of the system via ATM, crash this system for good so we can start over.
or yesterday
USA needs savings & Investment, not more consumption & debt. Housing is not investment, it doesn't increase output, efficiency.
Since the Fed & others have decreed no return on investment for the foreseeable future, there will be no improvement in the economy.
Print to prosperity doesn't work, just makes the holders of Fed paper that much poorer. Like the decline of the Fed dollar since good 'ol Nixon removed the Gold standard.
When business had profits and tax liability an investment tax credit would have worked.
thinking of quagmire of today's business enviornment are there any more tax liability's?
Does anyone know where immediate statistics on Govt tax revenue can be found?
Both witholding and non witholding?
That would be a true indicator of what's happening.
Trim Tabs. Of course the Labor Dept. figures are totally different (wrong-manipulated-falsified, take your pick).
I still don't understand why Rosenberg has to keep explaining this. Current conditions are self-evident.
GG
"D-Cycle" is a more appropriate term: the secular forces that drove a deflationary depression are in competition with our existing credit-based expansionary system.
As to paying people to dig holes in the ground, it's a great idea. It keeps an idle workforce in the habit of going to work instead of sinking into depression at home, and keeps the managerial class in practice ordering them around. I'm not being snarky, it actually is a good long-term investment in US labor skills.
If... if you expect there to be jobs in the future that will need people in practice. If you expect those jobs to never come back, the above strategy is not worthwhile. And neither is any other government cap-ex investment in the future of the US economy. Like bridges, roads, and flu vaccines. And this is what Davos Man thinks.
Also, repeal the AMT (Alternative Minimum Tax). It is what keeps the states from skimming the Fed income tax take. I'd rather have the states spending that money, since most (not my Cali) have functioning governments.
these suggestions would acheive peanuts compared to the outlawing of lobbying
When lobbying is outlawed, only outlaws will have lobbyists.
In other words, no big change.
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