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Where We Are?
My last comment on economic hypochondria generated a great deal of anger on Zero Hedge where the comments got nasty, so I want to address some of the valid criticism.
Mr. Wesbury's assertion that the economy is "fine" is ridiculous, and I
did edit my post to bluntly state this. When the official unemployment
rate stands close to 10% and wider measures of unemployment are almost
twice that figure, things aren't "fine".
But I agree with Mr. Wesbury that
far too many people have taken gloom & doom views to the extreme,
and that the US economy might be in better shape than these people are
willing to admit.
Last week, the Liscio Report posted an interesting comment on their blog, Where we are?:
Here’s
an updated guide to “where we are”—how the U.S. economy is faring
relative to the average of previous financial crises around the world.
Though individual details vary, we’re following the script pretty well.
In
the graphs of four major indicators (click on chart above), the lines
marked “average” are the averages of fifteen financial crises in
thirteen rich countries since the early 1970s, as identified by the
IMF. GDP isn’t shown because the experiences were so varied that the
averages were meaningless. But for the indicators shown, the averages
do illustrate some tendencies worth taking seriously.
Employment
Though
the U.S. peaked later and bottomed earlier than the average, and also
rose higher and fell harder, the trajectories of the two lines are
still remarkably similar. Note that after hitting bottom, employment in
the average experience grew very slowly. If we’re in for anything like
that average, then we’re likely to see employment growth of only about
35,000 a month over the next year—less than a third what’s necessary
just to accommodate population growth. That suggests that we could see
an unemployment north of 10% in about a year.
CPI
Given
the gyrations in energy prices over the last couple of years, reading
the headline CPI has been very difficult. But the gyration does seem to
be around the average line. And core CPI—for which we don’t have
international data—is tracking the average pretty tightly. If inflation
follows the script, it should continue to decline into next year. With
core inflation at around 1%, it’s reasonable to expect that we could
go into mild deflation sometime over the next few quarters.
Interest Rates
Rates
on 10-year Treasury bonds have fallen harder in the U.S. than in other
crisis-afflicted countries, but the trend is typically down for almost
four years after the onset of crisis. Further declines in U.S. rates
seem like a stretch, but the likelihood of an upward spike looks
remote.
Stocks
Stocks fell much harder in
the U.S. than they did in the wake of the average financial crisis,
though they did enjoy five quarters of nice recovery. As with interest
rates, further declines seem unlikely; in fact, the average increase
from here would be around 7% over the next year.
So, all in
all, we’re getting pretty much what we might expect out of our major
economic and financial variables: a weak, choppy recovery with a
deflationary undertow.
I think this is a fair and
balanced comment, but again, it's a very US-centric view of the world.
If you factor in robust growth from emerging economies, central bank
intervention and the extraordinary liquidity in financial markets, the
path to recovery might surprise the staunchest naysayers.
Finally, it's Sunday, and I'll leave you with some food for thought from George Friedman, CEO of STRATFOR,
who believes China “will collapse” in the coming decade and that
America will be the primary beneficiary. Mr. Friedman's views are
controversial but well worth listening to.
»
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Leo, seriously...China collapsing? A US-centrist view? I think we've passed beyond those rather nominal and empty thresholds...they are benchmarks that mean nothing whatsoever. Anyone with half a brain left is already looking toward a complete collapse of the system, in this country and every other (because, a global economy paired with such petty nationalism has REALLY done us a shitload of favors, amirite?), and I pity anyone who is reverting to useless nationalist fervor in the face of the overwhelming and bald-faced evidence that we're being manipulated by a cartel that could give a shit less about how round or slanted your eyelids are. Much like the machines in "The Matrix" used human beings as batteries, we're basically being used as self-supporting slaves. Perhaps the concept of currency once facilitated an easier exchange of goods and services, but now...it's just a path to leveraging the elites against the non-elites. As Carlin once said, "There's a club, folks, and you and I ain't in it."
I ripped on you with your last post because I felt that it was rather absurd to point to signs of economic growth in the context of a global system that's monitored and influenced by a few sets of hands...how can ANYONE applaud the continued existence of such a sham? It is not free, it is not right. I'm going to give you a thumbs-down on this one for the simple reason that at least one of your numbers, once again, sucks...only the vastly ignorant or uninformed are quoting 10% unemployment anymore. REAL under/unemployment is running somewhere around 18% to 23%, depending on the source. Regardless of the actual number, it's a hell of a lot worse than what you'd be led to believe by the stooges who have a vested interest in keeping this worthless parade going.
Next, there's the "extraordinary liquidity" in the financial markets to which you point. Okay, great! So...now that I'm on the hook for such "liquidity," where is the benefit? I'm sorry, man, but...I actually work with my hands. I'm one of those sorry bastards who made a conscious decision in life that being able to transform raw materials into something that people wanted, or being able to repair the broken machinery that most ignorant slobs regard as being run on pure voodoo was a nobler calling than sitting at a fucking desk and shooting TPS reports from one cubicle to another. Given that, at least in this country, that level of "financial innovation" that seems to have replaced the manufacturing/craftsmanship base as the preferred career choice, has seriously amounted to a veneration of making mountains out of molehills, in which the object is to find willing investors, promise them some easy return by parking their money in some vehicle or instrument or whatever, and skimming from it to make a living, despite having created ABSOLUTELY NOTHING beyond needless complication.
In short, it's not whether you're bullish or bearish, my man...it's rather that I think you've missed the point entirely. I've read some stuff of yours on here that I thought was decent, but...the last one was sad, and this one, despite your intention to apparently "balance out," or whatever, is still sorely lacking. Both were written in a context that really demonstrates what you said in a comment in the last one...you're well aware of the system, but you don't have the steel in your spine to take a stand against it. I can excuse the blatantly ignorant more readily than I can you for proposing something so defeatist. For shame.
Defeatist? Apologetic? Some of you are so keen on a revolution that will simply never happen. It's a shame that you're stuck in this mindset because it closes your mind to see only what you want to see, negativity.
Sir, I have an eleven year old daughter...do you really think that I enjoy this endless parade of bullshit? I'm truly apologetic that I find the idea of playing games with other peoples' earnings to be sort of appalling, especially when it's blatantly obvious that the system is gamed to the point of no return, but maybe that's just the difference between you and I, so I'll let that one go.
However, we can get technical about this, if you like...since the Fed is ostensibly employing a system of measures that heavily mimics Japan's response to their own downturn in the late '90's, just what makes you think that anything should get better? And, if you want to try to run and hide behind the idea of "emerging economies," allow me to remind you that there are no nations that exist anymore that are not tangled up in the web of the global economy. For fuck's sake! How else was it that the indigestion of the US housing market, and the fuckery therein, spread like wildfire?
At the VERY LEAST...don't try to tell me that all of this is "in my head." If you want to point to some positive signs for your investors, well, then go ahead...more power to you. However, if you're going to extend that sales pitch to people without any sort of vested interest in your dog and pony show, don't be surprised if we take you to task. And, yes...I stand behind my claim that you have a defeatist attitude, save for your sunny-side-up line to your audience. Go ahead, and enjoy your big fish/small pond position. I'd rather try, even for naught, to stand for what's right, and what I see now ain't even close.
Have a nice life, pal.
Here is what everyone sees
THE FOUR HORSEMEN
http://williambanzai7.blogspot.com/2010/08/four-horsemen.html
The buffoons in charge are too busy fighting the first Great Depression to understand why this time certainly is different.
Why Tyler keeps posting Leo´s views is beyond me but it is Tyler´s site and among the best available, period. But Leo is a second rate apologist and scratch his thin ego and the bar room brawler emerges. Don´t waste your time discussing anything with Leo. The pension funds are largely destroyed because of people like him. Fuck him and every herd following pension manager whore of the establishment ... and salvage what remains of your pension funds by getting as much out as you can. Again fuck Leo and all those whore like him.
If and when China collapses Uncle Sam will be the poor old proverbial monkey trying to shove the cork back in the elelphants ass.
While China is a repressive regime, it is responsive
to the sentiments of its citizens.
Change in China is likely to come from within the ruling
classes. What happens if too many military officers lose
their condo's?
Leo, 10% unemployment for another year will bring the consumer economy to a halt or no growth and therefore pressure on CPI . Low interest rates over long period is the root cause of our problem so why celebrate low rates just to buoy wall st? In fact your beloved pension funds are forced to gamble with hedgy icons--another leverage bubble-- while the individual investors are bailing out. Lastly at some point our debt will impact reserve currency status and then we are doomed to deleverage like Greece. RE asset values will not rebound to provide stimulus either. Only banks are in a sweet spot but it will not save us all. Austerity is on its way so prepare accordingly or give any constructive suggestions to Giethner , Big Ben or your local Chamber of Commerce
George Friedman is just another Ivy League parasite pig trash blood sucker with his snout deep in the swill bucket at the NWO RAND Corp., the American clone of the beastly Tavistock Institute in the UK.
http://en.wikipedia.org/wiki/George_Friedman
Well put, and not wimpy. And most US economists are also feeding at the corporate trough. We need more Ravi Bactras and Nasem Talebs and fofoas.
I think you mean Ravi Batra and Ravi Batra is a bleeping moron. Nassim Taleb on the other hand has contributed significantly to economic research. Do you read by the way?
Actually I was wondering if a US financial collapse would be good for China?
Sure, cause then they won't buy all our oil that we need.
I happen to agree, however I don't think the timeline will be 10 years but sooner
If I had money to invest right now, I'd give 1/3 to Leo, and 2/3 to Peter Schiff.
Maybe that's why you ain't got no money?
Ain't got not none, used it all to buy silver liberties ;)
I just finished rolling 40 silver Eagles. Two nice, fat, shiny tubes.
You and I need to go fer a beer!
You've got money. Fuck Leo, you're on the right path.
This is not rocket science. Of course they can't sustain economic growth at that level. Their markets will shrink as the economies of the North America and Europe continue to deteriorate. Once you have millions of Americans begging for minimum wage jobs, you can shift capital back into the United States for production. Wasn't this the plan all along? To destroy the middle class and the Unions and create cheap labour in the US again. As the Chinese begin to organize and demand higher wages and benefits, they simply shift the jobs out. This is economic blackmail. This is an element of globalization. It's not conspiracy theory. It just seems like a fact of life to me. That said, I just failed the math quiz to post twice, so I'm obvioulsy not that smart.
Leo, can you please explain to Tyler why Central Bank interventions are good for the economy? Tyler seems to be naively convinced that we're fucked, as he thinks central planning does not work. Please educate him.
Perhaps the difference is that some people just want no part of 'working central planning'.
It is quite possible that what you would trumpet as a great success of central planning would be viewed by others as descent into tyranny.
Forgot to make my /sarcasm more obvious. The failures of central planning are self evident. Those who justify money printing and resource allocation with fancy sounding words like Quantitative Easing and Stimulus suffer a delusion that no amount of facts to the contrary will help them understand that central planning does not work.
Tyler, Bruce and others have warned us of the evils of QE. I take a different view based on my reading of financial history in books like Graham Turner's, No Way to Run an Economy.
While I often disagree with Leo's opinions, I also think all ideas are welcome and seeing the same problem from different angles is a big plus.
The key is to differentiate between facts, biased facts and opinions. Only a stubborn person will not listen to others and repeat to himself that he his right and there is no other way.
However I still think we're in deep shit.
Keep up the good work Leo, I enjoy reading your stuff (even if... ok ok kidding)
Leo,
you take a more optimistic view of things, ok. To get the discussion more on a useful track, IMHO it is necessary to state whether you believe the official numbers or, for example, the numbers from Shadowstats.com that give a different view with way higher unemployment. Williams stated that money is loosing purchasing power way faster then the official CPI claims, while the total amount of money and credit (M3) is shrinking.
More globally, the US is not doing that well, neither are the EU and Japan. To balance that there should be a boom in the rest of the world; hard to believe but even harder to prove otherwise.
Until proven to be incorrect, I personally take research from the Netherlands to be realistic; that is a country with a significant part below sea level and thus with risk of flooding. That provides a sense of real danger with no need to fear an imagination.
Trimtabs does a damn fine job also. Of course, they'll be dismissed also.
How is a creditor nation going to collapse before the US does ?
The US already has: observe zombie mega banks. Psst.. don't tell anyone.
Cheerleading for the PPT and Pumpers:
$1000 an hour.
Alienating an entire website:
less than 700 words.
Flushing ones credibility down the crapper in a public display:
PRICELESS!
Being a prick on some blog while hiding behind a pseudonym takes a lot of courage.
So true...so true....and yet so is the point that you're a stooge for pension funds, unfortunately.
But, I'm sure futures will open up +80 or so, in your honor. So, hang in there lil' tiger.
You really have no clue of what you're talking about...it's pathetic!
Quisling!
I'm comfortable with your personal opinion of me. Actually, I'm flattered that you think I'm an embecille. Otherwise, I'd be like you and I just have too many principles and integrity to be a knee-pad wearing fluffer for a few bucks. But, hey, that's just me.
Correction: I don't think you're an imbecile, I know it. Keep up your blowhard responses, I'll just ignore you.
Correction: I don't only think I do not care that you think I'm an imbecile, I know it!
leo, why are you publishing charts from those scumbuckets at the imf ?
Useful idiot.
JFC, China going to collapse? China is making strategic energy deals all over the world Obviously taking PO seriously) and has manufacturing capacity.
We (US) on the other hand have useless academics in charge who have convinced an ignorant public that we can green energy our way around PO and won't even admit to PO in public. We also have manufacturing capacity, although I don't think that the bullshit unemployment, CPI and GDP numbers we manufacture are of any use.
Who is going to collapse is backwards here, we simply are not dealing with any of the massive issues that now face us...
I think China will fall like Japan, there is a lot of similarities in economic behavior. The biggest difference though is that Chinese banking can continue to make loans because the state will force it which will things all the worse for China when this bubble does pop. Further as the non-performing assets/loans become more visible in the Chinese economy the people wil become very irritable, annoyed, and unemployed.
I am hopeful the US can emerge with an Austrian mindset. Keynesian thinking has been the genital warts that has been passed to each developed and developing country. China likewise has a debt based currency like ours, and a Keynesian/monetarist central bank with more authority than ours, and a central government with more authority than ours. So even the smallest market "steering" has huge implications for the Chinese economy.
For the time being the Chinese have the worlds largest reserves, fine and dandy, but what happens when we default and on top of that we stop consuming? He is right that China's economic growth is based widely on exports and domestic consumption is still very infantile. I wouldn't say they are our "hostage".
So my theory is that China's housing bubble will pop, the govt will try to stimulate as they're American friends have told them to do, and when that fails and unemployment starts to shoot up again, they'll stimulate again, and again, until they are no longer a creditor country, but a debtor country. I have no idea what they will do about social unrest or what will come of it. They will deflate, not like us and stagnate like the Japanese. Europe, and U.S. and Russia will not be able to consume Chinese goods and the only other economic powers will be India and Brazil who really don't need China for much of anything, much less can they afford Chinese goods.
I think for a period of years after China fucks up, the world will go through a rather long stagnate period until someone figures out hey govt screwed us and we need to get rid of it to grow our economy. India and Brazil will be the economic powers, but nothing really that is that significant, kinda like two gray spots on a black balloon.
I’m 63. In my lifetime I have seen the Chinese go from such poverty that they were literally eating each other to such prosperity that they now have 50-mile-long traffic jams. If the Chinese could hold their nation together during massive starvation I think it safe to say that they will survive any future difficulty.
The global deadbeat most likely to crash and burn is the USA parasite empire. Stand outside any convenience store and watch the parade of obese welfare recipients waddling out with 30 ounce slurpies and lottery tickets and cigarettes. In China people like that starve.
When I go to the grocery store or Walmart I find myself looking at all the pathetic, obese, crippled wastes of human life that our government has seen fit to keep alive. At one local grocery, I have seen waiting lines for the "Rascal" motorized shopping carts. WTF??
When the system crashes, the initial cleansing will be quick and painful.
Also, one needs to remember that China is a very repressive regime and civil unrest over any number of issues could turn very nasty very quickly. My guess is that China, like Japan will be allowed to progress right up until they are judged as becoming uncontrolable, and that is when some precipitating series of events will bring China back down to earth. The problem I have with this sort of scenario is that it assumes we have the capability to pull such a thing off without causing a worldwide conflagration....or perhaps that is just part of the plan. Since the UN and the usual suspects in the SuperClass have been talking for years about 50-80% population reduction, any scenario should be seen as within their playbook.
Lends a whole new meaning to "blood in the streets".
War is the method used by the Military Complex to gain sway over the control of government. They have taken control from the people. They make their money through other people dying. Associating these psychopaths with benevolent government is the path to government by force.
Hello America.
+ false flag terror attacks
+1. It seems that commentators see a collapse around every corner. And your comments regarding PO are right on target. In England and the US, this issue is being spun instead of facing it....and when we do face the issue, we start wars in the Middle East.
Oil production is hanging by a thread and that thread is called Ghawar. 2 of the 3 supergiant oil fields have collapsed in production. We have had an exponential increase in the number of oil rigs, over the past 10 years, to keep oil production flat. That fact alone should send shivers down people's spines. folks need to know that the main concern of our energy secretary Chu is green house gas emissions and global warming. Still.
We have become too stupid to survive...
You sound pretty knowledgeable about oil production and decline rates. I definitely recommend "Crash Course" by Chris Martenson.
Our stupidity is a direct result of the poisons in our food (aspartame, flouride, MSG, GMO corn) and reliance on the corporate media. The privately held central bank is a disaster in slow motion. This situation will end in mass poverty throughout the world....although many billions are already stuck in hopeless poverty.
Do you have a source for the exponential rise in rigs? I know Baker Hughes used to put these figures out.