One definition of insanity is doing the same thing again and again and expecting different results. Unless the government substantially changes its approach, unemployment will keep rising.
As the U.S. prepares to embark on a new round of Federal Reserve quantitative easing, there are plenty of reasons to doubt that it is the right course for the economy and job creation. Here’s another: The voyage might have to be aborted — or at least diverted — soon after QE2 leaves the dock because the Fed may be sailing into a political hurricane. Even before the anticipated launch of the next round of Treasury purchases — it’s expected to be made official on Nov. 3 — the Fed’s unmistakable signals have fueled commodity price gains as the dollar has sagged. Since the Fed’s Sept. 21 policy statement, crude oil had surged more than 9% to above $83 a barrel on Wednesday, approaching its highest levels since October 2008. (Oil prices did retreat on Thursday.) The risk for the Fed is that such price increases will be felt in the economy long before any modest positive impact from lower interest rates.
David Rosenberg debunks the five main "recovery" myths that have gripped the mainstream media, which, of course, always eager to put three extra layers of lipstick on the piggy truth.
Let’s be honest. Forget recessions, forget even Depressions, the US is an empire in decline.
You can literally see it crumbling right in front of you. Just start looking at how people live, eat, and act on a day to day basis. Look at how our Government runs itself, how it manages our affairs, how it spends our tax Dollars. Look at how our justice system works, who it protects and who it punishes.
It’s all out there, right in the open for you to see. You don’t need an expert degree or some kind of advanced education. It’s OBVIOUS to anyone who bothers looking around.
The fact we don’t admit it doesn’t mean it’s not true.
Albert Edwards On Terminal Competitive Devaluation, The Nuclear Option, And How The Fed's Policies May Start An All Out WarSubmitted by Tyler Durden on 09/21/2010 19:06 -0400
The recent intervention by the BOJ has quickly become the most contentious decision in global economic circles, with many wondering now that the world economy is off on a course of radical currency devaluation, who will be next, and how far will this game continue? If Albert Edwards, whose latest piece rhetorically asks (and answers) "what do devaluation, high unemployment, inequality and food prices spell? C-H-A-O-S" is correct, this could be the beginning of a rapid descent in which central banks around the world are all forced to use the nuclear option: ceaseless FX devaluation, but one coupled with an endless increase in the money supply a process which can only have one outcome - that predicted recently by Eric Sprott when he said that "we are now paying for the funeral of Keynesian theory." However, the biggest threat is that this most recent invocation of the nuclear option is coming at a time when the world is least prepared to handle it - social imbalances are at unprecedented levels, and if, as many predict, the price of key food products is about to surge (courtesy precisely of these failed central bank policies) to a point where the great unwashed end up on the wrong side of hungry, from there, to armed conflict, the line is very, very thin.
If the way to classify the September stock move as "a confounding ramp on disappointing economic news" gets you stumped, here is Rosenberg to provide some insight. Just call is "deflationary growth or something like that." And as for the NBER's pronouncement of the recession being over, Rosie has a few words for that as well: "this recovery, with its sub 1% pace of real final sales, goes down as the weakest on record."
Rosenberg Joins Anti-HFT Crew: Notes Massive Equity Outflows, Blames Churning, No-Volume Melt Up On HFTSubmitted by Tyler Durden on 09/16/2010 12:10 -0400
One more man awake to the farce that are stocks. Although this being a man as realistic as David, it is not much of a conversion. We can only hope that by 2099 Mary Schapiro's just as blatantly incompetent successor will finally dare to take on the Wall Street lobby and bring some normalcy to capital market topology, instead of nickel and diming micro prop shops which do nothing worse than what the biggest Supplementary Liquidity Providers do on a daily basis. Speaking of, it has been a while since Irene Aldridge was on CNBC defending the practice of small- and medium-investors scalping.
In our last primer we looked at how money is created and destroyed in our fractional reserve banking system. We examined the implications of this process on inflation (which buoys asset prices like real estate) and deflation (which crushes asset prices).
In that primer I suggested that one of the main catalysts for a contraction in the money supply would be a decline in real estate prices which become self-feeding. This will dampen demand for mortgages and home equity lines of credit, the two largest generators of bank-created money, and will also cause people to save and pay off their debts as they no longer feel as wealthy. This has the effect of 1) Shrinking the aggregate money supply, and 2) Slowing the velocity of money. In this primer we will examine the question of how fairly valued Canadian real estate really is. We will use quantitative measures that are universally accepted to examine this question, rather than the qualitative fluff that is rampant in most discussions of real estate values.
Ever get the feeling that the Bureau of Truth is not being completely truthful? Feel like the ADP is to the NFP like the ISM to the regional Fed Surveys, and as the surging Mfg ISM employment diffusion index is to the plunging Service ISM employment diffusion index (i.e., both can not possibly be correct)? You are not alone. David Rosenberg summarizes which recent data releases are so blatantly incomprehensible, one wonder when the government will announce an AXA Rosenberg-like computer glitch and say all its data for the past 12 months has been compromised. Either that, or we await the introduction of the Birth/Death adjustment to every single data series released in America imminently.
A quick review of how accurate we were in our highly contrarian calls (don't call me a Permabear) for the year 2010.
Mort Zuckerman Laments "The End Of American Optimism", Takes His Criticism Of Obama To A Whole New LevelSubmitted by Tyler Durden on 08/25/2010 16:54 -0400
Mort Zuckerman has not kept his displeasure with Obama's economic policies secret. A mere two months ago, the Boston Properties Chariman penned "Obama Is Barely Treading Water" - one of the most critical missives by the corporate oligarchy targeted at the president. A few days ago, he followed up with an even more angry op-ed for the WSJ, titled simply enough: "The End of American Optimism" which concludes simply that the gridlock in the economy, driven by the two sets of opposing interest of Wall Street and Main Street is strategically spilling over into the political arena, and that the country is pretty much doomed to years of economic deterioration unless a clear, independent leader emerges in the meantime (and whose candidacy is not tactically "blocked" by the money lobby of Wall Street, which is the only party more than happy to preserve the status quo): "if
the economic scene these days is daunting, the political scene is
downright depressing. We have a paralyzed system. Neither the Democrats
nor the Republicans seem able to find common ground to address what is
clearly going to be an ongoing employment crisis. Finding that common
ground is a job opportunity for real leaders."
When Fairfax Financial purchases $23 billion worth of protection (notional value) against the threat of deflation in the coming 10 years, you have to wonder whether financial retraction looms ahead...
Rosenberg Interview: "If You Don't Believe In A Double Dip, It's Because The First Recession Never Ended"Submitted by Tyler Durden on 08/13/2010 12:32 -0400
Sick and tired of CNBC "interviews" in which the speaker is given 15 seconds inbetween commercials to explain why the economy is in the toilet, before another talking head from the dodecabox appears and starts spouting painfully ridiculous things? So are we. Which is why we refuse to link to David Rosenberg's earlier presence on CNBC, and instead we present Rosie's following 26 minute interview with the WSJ which is a must watch for all who want to listen to exiled Merrill Lyncher express a coherent realistic thought before some CNBC associate producer screams "cut to commercial for incontinence pills." And, true to form, Rosie starts off in style: "If you don't believe there's going to be a double dip, it's because the first recession never ended. If there is going to be a double dip, the odds are certainly higher than 50-50." For those who follow Rosie's daily letters via Gluskin Sheff (which would be all of our readers), the insights won't be particularly new, but it is always great to hear a rational and sensible human discuss things as he sees them, not as his trading book demands he sees them.
In a unorthodox piece by the WSJ, which goes direct to discussing some of the less than pleasant possible outcomes of central planning, Brett Arends asks "could Wall Street be about to crash again? This week's bone-rattlers may be making you wonder" and says: "way too many people are way too complacent this summer. Here are 10 reasons to watch out." And without further ado...
We already noted that last Friday's NFP number was a major disappointment for everyone objective enough to acknowledge it for what is was. Here is David Rosenberg's even more aggressive condemnation of the continuous lack of economic recovery in this country, whose only impact it appears is to drive futures higher (not regular hours trading mind you - it is far easier to push the market in a desired direction when there are ten people and a few computers trading).