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Yastrow: “We Are on the Verge of a Great, Great Depression”

George Washington's picture




 

 

The news that frequent CNBC guest Peter Yastrow of Yastrow Origer (and formerly with DT Trading) told CNBC that "We’re on the verge of a great, great depression. The [Federal Reserve] knows it" is going viral today.

But this is not news to anyone who has been paying attention.

As I pointed out
Tuesday, billion dollar fund managers agree: the government never fixed
the underlying economic problems, so we'll have another crash.

I provided details last month:

As I noted in January, the housing slump is worse than during the Great Depression.

As CNN Money points out today:

Wal-Mart's core shoppers are running out of money much faster than a year ago due to rising gasoline prices, and the retail giant is worried, CEO Mike Duke said Wednesday.

 

"We're seeing core consumers under a lot of pressure," Duke said at an event in New York. "There's no doubt that rising fuel prices are having an impact."

 

Wal-Mart shoppers, many of whom live paycheck to paycheck, typically shop in bulk at the beginning of the month when their paychecks come in.

 

Lately, they're "running out of money" at a faster clip, he said.

 

"Purchases are really dropping off by the end of the month even more than last year," Duke said. "This end-of-month [purchases] cycle is growing to be a concern.

And - in case you still think that the 29% of Americans who think we're in a depression are unduly pessimistic - take a look at what I wrote last December:

 

The following experts have - at some point during the last 2 years - said that the economic crisis could be worse than the Great Depression:

***

States and Cities In Worst Shape Since the Great Depression


States and cities are in dire financial straits, and many may default in 2011.

California is issuing IOUs for only the second time since the Great Depression.

Things haven't been this bad for state and local governments since the 30s.

Loan Loss Rate Higher than During the

Great Depression

In October 2009, I reported:

In May, analyst Mike Mayo predicted that the bank loan loss rate would be higher than during the Great Depression.

 

In a new report, Moody's has just confirmed (as summarized by Zero Hedge):

The most recent rate of bank charge offs, which hit $45 billion in the past quarter, and have now reached a total of $116 billion, is at 3.4%, which is substantially higher than the 2.25% hit in 1932, before peaking at at 3.4% rate by 1934.

And see this.

 

Here's a chart summarizing the findings:

 

(click here for full chart).

Indeed, top economists such as Anna Schwartz, James Galbraith, Nouriel Roubini and others have pointed out that while banks faced a liquidity crisis during the Great Depression, today they are wholly insolvent. See this, this, this and this. Insolvency is much more severe than a shortage of liquidity.

 

Unemployment at or Near Depression Levels

USA Today reports today:

So many Americans have been jobless for so long that the government is changing how it records long-term unemployment.

Citing what it calls "an unprecedented rise" in long-term unemployment, the federal Bureau of Labor Statistics (BLS), beginning Saturday, will raise from two years to five years the upper limit on how long someone can be listed as having been jobless.

***

The change is a sign that bureau officials "are afraid that a cap of two years may be 'understating the true average duration' — but they won't know by how much until they raise the upper limit," says Linda Barrington, an economist who directs the Institute for Compensation Studies at Cornell University's School of Industrial and Labor Relations.

***

"The BLS doesn't make such changes lightly," Barrington says. Stacey Standish, a bureau assistant press officer, says the two-year limit has been used for 33 years.

***

Although "this feels like something we've not experienced" since the Great Depression, she says, economists need more information to be sure.

The following chart from Calculated Risk shows that this is not a normal spike in unemployment:

 

As does this chart from Clusterstock:

As I noted in October:

It is difficult to compare current unemployment with that during the Great Depression. In the Depression, unemployment numbers weren't tracked very consistently, and the U-3 and U-6 statistics we use today weren't used back then. And statistical "adjustments" such as the "birth-death model" are being used today that weren't used in the 1930s.

 

But let's discuss the facts we do know.

 

The Wall Street Journal noted in July 2009:

The average length of unemployment is higher than it's been since government began tracking the data in 1948.

***

The job losses are also now equal to the net job gains over the previous nine years, making this the only recession since the Great Depression to wipe out all job growth from the previous expansion.

The Christian Science Monitor wrote an article in June entitled, "Length of unemployment reaches Great Depression levels".

 

60 Minutes - in a must-watch segment - notes that our current situation tops the Great Depression in one respect: never have we had a recession this deep with a recovery this flat. 60 Minutes points out that unemployment has been at 9.5% or above for 14 months:

 

Pulitzer Prize-winning historian David M. Kennedy notes in Freedom From Fear: The American People in Depression and War, 1929-1945 (Oxford, 1999) that - during Herbert Hoover's presidency, more than 13 million Americans lost their jobs. Of those, 62% found themselves out of work for longer than a year; 44% longer than two years; 24% longer than three years; and 11% longer than four years.

 

Blytic calculates that the current average duration of unemployment is some 32 weeks, the median duration is around 20 weeks, and there are approximately 6 million people unemployed for 27 weeks or longer.

 

Moreover, employers are discriminating against job applicants who are currently unemployed, which will almost certainly prolong the duration of joblessness.

 

As I noted in January 2009:

In 1930, there were 123 million Americans.

At the height of the Depression in 1933, 24.9% of the total work force or 11,385,000 people, were unemployed.

Will unemployment reach 25% during this current crisis?

I don't know. But the number of people unemployed will be higher than during the Depression.

Specifically, there are currently some 300 million Americans, 154.4 million of whom are in the work force.

Unemployment is expected to exceed 10% by many economists, and Obama "has warned that the unemployment rate will explode to at least 10% in 2009".

10 percent of 154 million is 15 million people out of work - more than during the Great Depression.

 

Given that the broader U-6 measure of unemployment is currently around 17% (ShadowStats.com puts the figure at 22%, and some put it even higher), the current numbers are that much worse.

 

But it is important to look at some details.

 

For example, official Bureau of Labor Statistics numbers put U-6 above 20% in several states:

  • California: 21.9
  • Nevada: 21.5
  • Michigan 21.6
  • Oregon 20.1

In the past year, unemployment has grown the fastest in the mountain West.

 

And certain races and age groups have gotten hit hard.

 

According to Congress' Joint Economic Committee:

By February 2010, the U-6 rate for African Americans rose to 24.9 percent.

34.5% of young African American men were unemployed in October 2009.

As the Center for Immigration Studies noted last December:

Unemployment rates for less-educated and younger workers:

  • As of the third quarter of 2009, the overall unemployment rate for native-born Americans is 9.5 percent; the U-6 measure shows it as 15.9 percent.
  • The unemployment rate for natives with a high school degree or less is 13.1 percent. Their U-6 measure is 21.9 percent.
  • The unemployment rate for natives with less than a high school education is 20.5 percent. Their U-6 measure is 32.4 percent.
  • The unemployment rate for young native-born Americans (18-29) who have only a high school education is 19 percent. Their U-6 measure is 31.2 percent.
  • The unemployment rate for native-born blacks with less than a high school education is 28.8 percent. Their U-6 measure is 42.2 percent.
  • The unemployment rate for young native-born blacks (18-29) with only a high school education is 27.1 percent. Their U-6 measure is 39.8 percent.
  • The unemployment rate for native-born Hispanics with less than a high school education is 23.2 percent. Their U-6 measure is 35.6 percent.
  • The unemployment rate for young native-born Hispanics (18-29) with only a high school degree is 20.9 percent. Their U-6 measure is 33.9 percent.

No wonder Chris Tilly - director of the Institute for Research on Labor and Employment at UCLA - says that African-Americans and high school dropouts are experiencing depression-level unemployment.

 

And as I have previously noted, unemployment for those who earn $150,000 or more is only 3%, while unemployment for the poor is 31%.

 

The bottom line is that it is difficult to compare current unemployment with what occurred during the Great Depression. In some ways things seem better now. In other ways, they don't.

 

Factors like where you live, race, income and age greatly effect one's experience of the severity of unemployment in America.

 

 

 

 

In addition, wages have plummeted for those who are employed. As Pulitzer Prize-winning tax reporter David Cay Johnston notes:


Every 34th wage earner in America in 2008 went all of 2009 without earning a single dollar, new data from the Social Security Administration show. Total wages, median wages, and average wages all declined ....

And see this, this, and this.


Food Stamps Replace Soup Kitchens

1 out of every 7 Americans now rely on food stamps.

While we don't see soup kitchens, it may only be because so many Americans are receiving food stamps.

Indeed, despite the dramatic photographs we've all seen of the 1930s, the 43 million Americans relying on food stamps to get by may actually be much greater than the number who relied on soup kitchens during the Great Depression.

In addition, according to Chaz Valenza (a small business owner in New Jersey who earned his MBA from New York University's Stern School of Business) millions of Americans are heading to foodbanks for the first time in their lives.

***

The War Isn't Working

Given the above facts, it would seem that the government hasn't been doing much. But the scary thing is that the government has done more than during the Great Depression, but the economy is still stuck a pit.

***

The amount spent in emergency bailouts, loans and subsidies during this financial crisis arguably dwarfs the amount which the government spent during the New Deal.

For example, Casey Research wrote in 2008:

Paulson and Bernanke have embarked on the largest bailout program ever conceived .... a program which so far will cost taxpayers $8.5 trillion.

[The updated, exact number can be disputed. But as shown below, the exact number of trillions of dollars is not that important.]

So how does $8.5 trillion dollars compare with the cost of some of the major conflicts and programs initiated by the US government since its inception? To try and grasp the enormity of this figure, let’s look at some other financial commitments undertaken by our government in the past:

As illustrated above, one can see that in today’s dollar, we have already committed to spending levels that surpass the cumulative cost of all of the major wars and government initiatives since the American Revolution.

Recently, the Congressional Research Service estimated the cost of all of the major wars our country has fought in 2008 dollars. The chart above shows that the entire cost of WWII over four to five years was less than half the current pledges made by Paulson and Bernanke in the last three months!

In spite of years of conflict, the Vietnam and the Iraq wars have each cost less than the bailout package that was approved by Congress in two weeks. The Civil War that devastated our country had a total price tag (for both the Union and Confederacy) of $60.4 billion, while the Revolutionary War was fought for a mere $1.8 billion.

In its fifty or so years of existence, NASA has only managed to spend $885 billion – a figure which got us to the moon and beyond.

The New Deal had a price tag of only $500 billion. The Marshall Plan that enabled the reconstruction of Europe following WWII for $13 billion, comes out to approximately $125 billion in 2008 dollars. The cost of fixing the S&L crisis was $235 billion.

CNBC confirms that the New Deal cost about $500 billion (and the S&L crisis cost around $256 billion) in inflation adjusted dollars.

So even though the government's spending on the "war" on the economic crisis dwarfs the amount spent on the New Deal, our economy is still stuck in the mud.

Why Haven't Things Gotten Better for the Little Guy?

Government leaders make happy talk about how things are improving, but happy talk cannot fix the economy.

Two fundamental causes of the Great Depression, and of our current economic problems, are fraud and inequality:

There are, of course, other reasons the economy is still stuck in a ditch for most Americans, such as encouraging too much leverage, bailing out the big speculators, failing to break up the mammoth banks, and failing to spend wisely, where it will do some good. See this and this. But fraud and inequality were core causes of the Depression, and our failure to address them will only prolong our misery.


 

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Thu, 06/02/2011 - 07:36 | 1331729 Manzilla
Manzilla's picture

Everything isn't just alright it's SUPER! Thanks for asking.

 

Just imagine Uncle Ben or Timmy in the place of Big Gay Al:

http://www.youtube.com/watch?v=1gAlxfNBWvY

Thu, 06/02/2011 - 06:54 | 1331702 mogul rider
mogul rider's picture

For the "I have to have info immediately on my JPOD and I want this depression to end" crowd, the long emergency must really give you fits.

Just think every morning you wake up and it gets slowly worse. It must bother you greatly knowing Marty Armstrong's 2015 crash is still 4 years away.

The hyper inflation crowd said we'd have it by now (John Williams in particular) It has not happened. We have deflation in  many core areas and inflation in a few driven by spec cash from the chairsatan. Is that hyperinflation? No it's a short term party fuck and when the cash register shuts off at the end of the month the bottom will probabaly fall out of the market and everything else a'la 2008.

 

Why you say? Cause the elites are cashed out now unlike 2008. Joe Public is holding all the crap and it can easily be taken out now with little colateral damage to the elites. Hedgies will get slaughtered but that is what those fuckasses are for.

 

Where are PM's going? Who the hell knows. Many of you sit on your side of fence absolutely sure of your convictions cause that is what you taught to do all your life. Take a side.

You are about to have that notion bend you over. You see your stridency is your failure.

Adapt or perish bitchez cause everything you hold dear is just part of the machine world.

 

You absolutely know that gold is going to 1850 then 5000.

You absolutely know crude is goign to 200.

You absolutely know that Silver's real number is 135.

My point,

They are about to turn off the machine world electricity.

 

You are on your own now.

Thu, 06/02/2011 - 07:53 | 1331750 monkeyboy
monkeyboy's picture

Do you have a date for when they're going to flick the switch?

Need to add "get more candles" on my to do list.

Thu, 06/02/2011 - 06:29 | 1331694 Heroic Couplet
Heroic Couplet's picture

None of this is news. It's been in place for the past 11 years. If you're unemployed, get to your local Republican leaders' offices. Conduct your job search from there. The address, computers and fax machines should be yours. The Republican tax cuts have been in place for a decade. Where are the jobs in the US?

Thu, 06/02/2011 - 05:43 | 1331681 monkeyboy
monkeyboy's picture

So this is bullish for the markets?

 

;^P

Thu, 06/02/2011 - 03:44 | 1331633 Spirit Of Truth
Spirit Of Truth's picture

The fundamental problem is that man as a species is literally insane:

http://www.spiritoftruth.org/Thesis/Intro/

What is the cure?

Thu, 06/02/2011 - 01:23 | 1331561 Gadocat99
Gadocat99's picture

After you read any current economic/political article, if you will say these words: "They are trying to destroy the United States", it will all make perfect sense.

Thu, 06/02/2011 - 00:11 | 1331487 Freddie
Freddie's picture

CBS "News" 60 Minutes video talks about O's Hope & Change Depression. Meanwhile, CBS and the rest of the news and all of TV kiss the Kenyan Mugabe's arse at every turn.  Scum liberal news media, TV and Hollywood.

Wed, 06/01/2011 - 22:33 | 1331285 the grateful un...
the grateful unemployed's picture

so who is the guy who walks into the background and grabs his nards about 2:20 into the piece. nice move really, yeah we got your market hangin

Wed, 06/01/2011 - 21:43 | 1331133 Laddie
Laddie's picture

JPM's Kelly just said today that there won't even be a recession and it is a GREAT TIME TO BUY A HOUSE. GW, wrong on Fukishima, which is no threat to anyone, even in Tokyo where it was announced today by Brian Williams on NBC that background radiation is now normal there and in rest of Japan.

So you see GW the economy is STRONG, and there is no health threat even in Japan from the BIG FUK.

The above is from today's news and the worst part is the lemmings will accept it just as in my sarcastic commentary.

This is what MSM is telling the American people.

GW is right as much as anyone on ZH is right, time after time after time.

Keep up the good work GW!!!

Whatever the State saith is a lie; whatever it hath is a theft.
-- Nietzsche

Wed, 06/01/2011 - 22:38 | 1331300 Greenhead
Greenhead's picture

Sorry I'm late to the commentary but I disagree with the conclusion "Fraud and inequality" are the cause...  They are important but are not the cause of the problem.  The Fed's easy money, fiat printing, money expansion, low interest rate promotion was the cause in both cases.  Fraud certainly is part of it, "magic money" certainly is fraudulent at some level and corporate cronyism coupled with political cronyism and vote buying are part of the problem as well.  There will always be inequality, get over it. 

The problem is when inequality is protected and insured by corporate cozying up with the government to protect their turf and discourage competition.

Read Mises' "Theory of Money and Credit" for the easiest explanation of the boom bust cycle caused by interest rate manipulation by central banks.  Oversimplifying and playing to class envy and warfare is beneath the other work GW has done. 

Wed, 06/01/2011 - 23:06 | 1331361 AurorusBorealus
AurorusBorealus's picture

For many years, historians taught that overproduction and the extension of credit were the primary causes of the Great Depression.  Workers produced more than they could purchase, credit expanded to consumers (financing of automobiles and new appliances) to make up the difference.  The expansion of credit led to default, on the part of consumers and investors, followed by a run on banks.

This all changed with the revisionist history of economists, which began in the 1960s.  The Federal Reserve's tight monetary policy, the gold standard, trade barriers, and so forth became the primary causes of the depression.  The historians who spoke of overproduction and credit expansions were all marxist-leninists.

Whether those all historians were Marxist-Leninist or no, they were correct.  Monetary policy, Smoot-Hawley and so forth were secondary to the depression and inconsequential.  Today the world is much more complicated in that the Americans and their government borrow to pull overproduction from many parts of the world where laborers can never hope to afford anything they produce and the entire global overproduction matrix is tied up in the global-dollar-reserve financial system.  But the hallmarks of overproduction are there.

The only solution is allow the large financials to collapse and deflate all currencies so that workers and wage-earners can afford to purchase goods and services.  All wealth cannot be held in the few cups closest to the money spigot.  And that is the world we live in today.  After the inflation, there will be depression, the likes of which only God can comprehend.

Wed, 06/01/2011 - 23:17 | 1331388 AurorusBorealus
AurorusBorealus's picture

The tragic result of the revisionist history is Ben Bernanke and his ilk who wrongly believe that a hard-money policy caused the depression and therefore the solution is easy money.  The fact of the matter is that monetary policy does not have the power attributed to it.  In their attempt to better "manage" the economy, this time around, they have financed enormous inefficiencies, which will take all the worse of a depression to clear out.  One such inefficiency is the entire U.S. economy.  Another is all of club med countries, who like the U.S., produce much less than they consume.

Wed, 06/01/2011 - 21:08 | 1331035 OutLookingIn
OutLookingIn's picture

 

 Yea? or Nay? On Depression.

If you have money or enough money - Nay.

All the rest of us - Yea.

Now, where does the majority lay?

I thought so.

Wed, 06/01/2011 - 21:05 | 1331021 Careless Whisper
Careless Whisper's picture

GW, now ur linking to Stiglitz and Soros? WTF?

Wed, 06/01/2011 - 20:34 | 1330952 PulauHantu29
PulauHantu29's picture

With all the wars going on how can there be a depression. Didn't WWII pull us out of the other Depression?

Wed, 06/01/2011 - 20:41 | 1330980 Use of Weapons
Use of Weapons's picture

The trick to a successful war revamp of the economy is to have countries with fantastic industrial prospects losing. Losing to the extent that they have nothing, and it all has to be rebuilt from scratch. [GE - reactors - note well].

Afgan, Iraq, Libya - these really aren't cutting the mustard for investment opportunities. If you didn't notice, nor were Vietnam, Korea or Cambodia.

>> Deadly irony: this is no longer possible anyhow, since all the major transnational capital companies are at work within them anyhow, so output cannot be maximised, unless you can find one truly scorched earth scenario. And that, at this point [given the lack of military in opposition] is the neutron option.

 

p.s.

 

Good article, thanks.

Wed, 06/01/2011 - 20:40 | 1330976 George Washington
George Washington's picture

NO.
Wed, 06/01/2011 - 20:22 | 1330927 Caveman93
Caveman93's picture

Huh?? I thought everything was recovering just fine as I sit here collecting my weekly Funemployment check. Weird, just weird.

Wed, 06/01/2011 - 20:10 | 1330903 garden empire
garden empire's picture

 The QE's, Tarp, and other handouts of the last two + years did me a personal favor.  It slapped me out of my consumer stupor and basically put a neon sign in my window that said "WE ARE BUYING YOU TIME YOU IDIOT, NOW USE IT WISELY, AND DON'T SAY WE DIDN'T WARN YOU".  So that is exactly how I have used this time.  2 + years ago, I would have never been this prepared if the rug was pulled out from under me. Their intention was never to fix the problem, it was to buy time.  I believe that with every ounce of my being.

Thu, 06/02/2011 - 00:08 | 1331482 Creepy Lurker
Creepy Lurker's picture

Spot on. I was in the same consumer stupor, then one day I woke up, looked at the news and said to my spouse, 'Holy fuck Babe, they're monetizing the debt!' I've been scrambling as best I can ever since, but I still worry it's not enough.

Wed, 06/01/2011 - 20:03 | 1330884 bullet357
bullet357's picture

Leave the city Now while you can.  Two words to live by in the coming days: FOOD & AMMO

Wed, 06/01/2011 - 21:09 | 1331032 Reese Bobby
Reese Bobby's picture

Which city?  Should we bring our food and ammo?  And can I wait until tomorrow?  Where should we go?  Will you keep posting your wisdom/instructions here so we'll know what to do?  So many questions, so little time...

Wed, 06/01/2011 - 20:03 | 1330882 bullet357
bullet357's picture

Leave the city Now while you can.  Two words to live by in the coming days: FOOD & AMMO

Wed, 06/01/2011 - 20:03 | 1330881 bullet357
bullet357's picture

Leave the city Now while you can.  Two words to live by in the coming days: FOOD & AMMO

Wed, 06/01/2011 - 20:03 | 1330880 bullet357
bullet357's picture

Leave the city Now while you can.  Two words to live by in the coming days: FOOD & AMMO

Wed, 06/01/2011 - 19:52 | 1330853 Atlantis Consigliore
Atlantis Consigliore's picture

I love it when a plan comes together,

first you destroy the storage of wealth of the middle class:  homes by increaseing the supply with fraud and no doc loans,  for lending to the POH and disenfranchised, regardless of qualfication.

 

then you destroy the value of the dollar by

printing TARP, QE 1, QE2, and bank bailouts,

 

then you get everyone on the DOLE,

42 million on foodstamps, destroy 8 million jobs, and make the corps hoard 2 Trillion in cash offshore,

 

then you regulate the business class to death

with laws, regs and Czars,

 

then you wait for that little disaster, another N Loreans, or Fuckuyoushieeda, 

and of course on Que,  you pull out the

Madoff, whos been stealing robbing and thieving the system with the regulators for 10 years. +;

 

the result:  destruction of the US Economy;

a welfare state, whith 55% on the dole

the needers feeding off the makers,

with the POLS, and the printers, and the

crooked gangsters lobbying and pointing fingers.

Socialism:  looks like Soros and his lefty ilk

broke it good this time;

Nothing to watch here,  fuggedtabout it, and

watch Prancing with the Printers, and American

Lobbyists.  LOL

sniff:  I love the smell of 6 million homes

burning in foreclosure in the morning.>

Wed, 06/01/2011 - 19:48 | 1330846 P-K4
P-K4's picture

The article loses credibility right about here, "  The following experts have - at some point during the last 2 years - said that the economic crisis could be worse than the Great Depression (i.e. specifically Bernanke, Greenspan, Krugman, Soros)." I would sooner trust a crack addict in Detroit with my life before I would believe these guys.

 

Other than that, the article is spot. All stated facts and reasoning will be used to support raising the debt ceiling in the Finance World of Bizarro.

Wed, 06/01/2011 - 19:17 | 1330741 Buck Johnson
Buck Johnson's picture

The US and Western banking manipulations of the market reminds me of the Startrek Voyager episode "The Year of Hell".  In this episode the ship is fighting a powerful species that was made possible by members of the same species changing the timeline in order to get things "right".  And in so doing made their species extremely powerful and where fighting the ship over the course of a year.  They eventually figured out what was going on and capt. of voyager rammed the Krenim timeship destroying it and moving the timeline back to what it should be. 

Our market manipulators (the fed, govt., banks, etc.) are the Krenim.  Making changes in order to keep things "normal" to them.  The problem that the Krenim and our manipulators didn't and couldn't figure out is how can you perform heart surgery on yourself.  Meaning how can you manipulate a system successfully that you are a part of.  Just like the alien time shifters, their objectives where just out of reach.  You keep adjusting the variables to delay or enable a condition not taking into account that their are variables that you may never be able to account for because of your blind spot that all systems and individuals have (it's just second nature).

People in the market know that a monster is looming just under the water, and they want onto a shore any shore to weather out the outcome.  They don't know what the monster is, but they know it's there waiting and watching.

Wed, 06/01/2011 - 23:59 | 1331473 Creepy Lurker
Creepy Lurker's picture

The Butterfly Effect. (the movie)

Wed, 06/01/2011 - 21:26 | 1331066 Reese Bobby
Reese Bobby's picture

Banking Cartel reminds me of the NY Yankees.  They have every advantage but still manage to mainly fuck everything up while only they get rich.  Meanwhile the owners jack up prices so high the true fans stop going to the games and a bunch of yuppie douche-bags get the good seats and sit on their hands.  Many keep hoping the lowly NY Mets will make a run to fix things but their owner has lost his money to some finance cock-sucker who the Yankees knew was a ponzi scheme.  But there could be a Krenim or two on Boston or Philly...

Wed, 06/01/2011 - 19:11 | 1330724 Madcow
Madcow's picture

 " ... temporary ..."

- yes. from 1940-2005, we had falling commodity prices and rising financial asset prices. Starting in 2008, that dynamic went into reverse. But it is only temporary.  As the virtuous cycle lasted 7+ decades, the vicious cycle of rising commodity prices and falling financial asset prices should only last a couple of decades.

Wed, 06/01/2011 - 19:13 | 1330721 kito
kito's picture

one bad day and everyone is calling for the sky to fall. stagnation has its ups and downs. nothing has really changed, but it doesnt mean we are heading over the cliff yet. that wont happen until bond buyers change their perspective. and judging by today, they love them treasury hotcakes

Wed, 06/01/2011 - 19:25 | 1330755 akak
akak's picture

And by "bond buyers", you of course mean the Federal Reserve itself (and almost exclusively).

So when do you expect them to "change their perspective" on bonds?

Wed, 06/01/2011 - 20:09 | 1330889 huggy_in_london
huggy_in_london's picture

the street is short ... it could run a fair bit more.  

Wed, 06/01/2011 - 20:33 | 1330888 huggy_in_london
huggy_in_london's picture

and also, you are in an asset price deflation ... only reasonable that fixed income rallies

Thu, 06/02/2011 - 09:40 | 1332033 kito
kito's picture

bond buyers, who eagerly snapped up spanish bonds today, are a long way off from turning on the u.s. we would have to see the end of greece portugal spain ireland before sights are turned on us. we are still the only game in town. still the bastion of safety. and if fixed income rallies becuase there is asset deflation, then isnt the bond market telling us u.s. treasuries have worth?

Wed, 06/01/2011 - 19:07 | 1330715 rsnoble
rsnoble's picture

Well being known for a total asshole when i've been drinking, like now, I will go on record and say that I have a feeling ill be getting a lot more sex during the depression than I normally would.  Sorry, but after all the doom and gloom and ranting and raving I do I have to have something to look forward to, even if a carton of eggs gets me a headjob and not my good looks.

Wed, 06/01/2011 - 18:36 | 1330633 Kreditanstalt
Kreditanstalt's picture

YASTROW SAID IT ALL!  Well done...

Wed, 06/01/2011 - 18:27 | 1330592 @Watcher
@Watcher's picture

The Fourth Turning

An American Prophesy

by William Strauss & Neill Howe

 

(see Googlebooks)

Wed, 06/01/2011 - 18:18 | 1330577 ebworthen
ebworthen's picture

 

Notice that Yastrow says "The bears had better be careful because dividend paying stocks are hard to beat."

Exactly.

This is precisely why we will have QE3.

The FED is pumping equities and the markets to recapitalize banks and investment houses via pension and private (household) money.

They want to force investment in equities versus savings, precious metals, or paying down debt; the banks and the governments are insolvent - therefore they must bleed the assets of the middle class as the poor don't have any and the rich will flee and/or hide it overseas.

 

Wed, 06/01/2011 - 18:15 | 1330534 Parth
Parth's picture

Since I immigrated to USA I have had few opportunities to go camping, hunting and fishing (India my native country is simply too crowded and polluted to do that). I can't wait for this greatest depression. Marshmallow toasting tips anyone?

Wed, 06/01/2011 - 21:19 | 1331071 blunderdog
blunderdog's picture

Oh, this is easy.  *I* used to be a Boy Scout.

Light the marshmallow on fire.  Let it burn for about 3-5 seconds.  Blow it out.

LET IT COOL!  The inside will be very gooey and will stick to your lips and badly burn you if you don't play it safe.

Enjoy the crispy outside and gooey sweet center.

Wed, 06/01/2011 - 20:13 | 1330872 gmj
gmj's picture

Do not hold your marshmallow with your fingers while toasting it. 

Do not toast your marshmallow over any heat source that is clearly emitting Cherenkov radiation.

US Dollars are a cheap and readily available source of fuel for your fire, and are easily ignited.

Marshmallows made in China should not be exposed to open flames.

Any leftover marshmallows should be packaged into a MBS (marshmallow-backed security) and sold to Goldman Sachs.

Thu, 06/02/2011 - 00:33 | 1331515 GreenSideUp
GreenSideUp's picture

Hahaha, love it!

Wed, 06/01/2011 - 17:49 | 1330474 @Watcher
@Watcher's picture

So what's new.

Idiots at CNBC "reveal" something that's been long in the making.  Dumb@ss mainstream media.

Wed, 06/01/2011 - 20:42 | 1330975 Bob
Bob's picture

And blaming it on US wages being out of line/uncompetitive, our only hope being to somehow get those wages down . . .

 

Wed, 06/01/2011 - 17:32 | 1330441 Texas Ginslinger
Texas Ginslinger's picture

"Purchases are really dropping off by the end of the month even more than last year," Duke said. "This end-of-month [purchases] cycle is growing to be a concern."

To cut costs, Wal Mart could close their doors and shut off the lights & HVAC the last week of every month.

 

Wed, 06/01/2011 - 19:17 | 1330736 akak
akak's picture

But then, wherever are you going to buy all that dog food whose rising price was formerly  the very nexus of your financial angst in this forum?

Wed, 06/01/2011 - 17:34 | 1330436 Atlantis Consigliore
Atlantis Consigliore's picture

Quick, we need a tax increase on small business, and more regulations to teach them a lesson if they wont hire;

Hey Chicago;  hurry up; dummy, open them

Casinos, and buffet lines,  let the FED print

markers,  we got $ 8 B of munis to sell? 

Rename Chicago, Athens by the Lake.

A crises is a terrible thing to waste?

Sniff sniff sniff,  I smell 6 million homes burning.

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