This page has been archived and commenting is disabled.

We're Entering Another Economic Collapse... Right As Inflation Hits LIft Off!

Phoenix Capital Research's picture




 

 

By all counts, the latest ISM (a measure of manufacturing in the US) was a complete and total disaster. In August the ISM hit 49. Anything below 50 is considered a recessionary rating.

 

However, things are even worse below the surface. The ISM is made up of several components. Its Production component is back to May 2009 levels. The New Orders component is back to April 2009 levels.

 

And worse of all, Prices Paid is up to 54, up from a reading of just 39 in July.

 

In simple terms this tells us that inflation is hitting “lift off” in the US at the very same time that we are entering a recession that could be on par with that of 2008. And with corn and soybean prices at or near record highs, we could be on the verge of a stagflationary disaster combined with a food crisis at the very same time.

 

We get additional confirmation of a major economic contraction from corporate earnings. Recently we’ve seen earnings forecast cuts from Fed Ex, Bed Bath and Beyond, Proctor and Gamble, Adobe, Starbucks, McDonald’s and more.  Indeed, when you remove financials, S&P 500 earnings FELL year over year for 2Q12.

 

This is hardly indicative of a strong economy. The fact a record number of Americans are on food stamps doesn’t bode well either. And the Rasmussen Employment Index indicates worker confidence is at levels not seen since the FALL OF 2008!

 

What does this tell us? That the US Federal Reserve has failed miserably to generate an economic recovery, despite spending trillions of Dollars in bailouts and expanding its balance sheet to $2.8 trillion in size (it was just $800 billion before the Crisis):

 

  1. Median income today is lower than it was during at the end of 2009 (when the recession supposedly ended)

 

  1. The percentage of Americans on food stamps has increased from 11% to nearly 15%

 

  1. The average unemployment duration has increased from 30 weeks to nearly 40 weeks

 

  1. The civilian employment to population ratio hasn’t budged

 

 

I don’t see any of the above pointing towards a “recovery.”

 

To top it off, the ECRI (which is a much better predictor of recessions than the National Bureau of Economic Research or NBER) believes that the US re-entered a recession in June.

 

And this is happening at a time when inflation is soaring due to the Fed’s money printing/ loose monetary policies. Agricultural commodities have risen some 20% since the last recession supposedly “ended.” Over the same time, Oil has risen by nearly $30 per barrel.

 

There’s a word for an economic contraction marked by high inflation: it’s called stagflation, and the US is in it big time.

 

Folks, this is the reality we’re dealing with. The Fed has gone “all in” in its efforts to stop the debt implosion… and it’s failed. All it’s done is unleashed an even more serious inflationary storm than the one we were already facing.

 

The time to start preparing is now. The printers are running. The Great Currency Debasement has begun. Some folks will walk out of this mess winners. Most will walk out as losers.

 

At Phoenix Capital Research, we’re taking steps to insure our clients are among the winners. We have a host of FREE Special Reports devoted to helping readers prepare for the coming Debt Implosions in both the US and Europe.

 

We also feature a special report devoted to inflation as well as which investments will perform best during periods of high inflation (periods like the one we’re entering).

 

All of this is available 100% FREE at www.gainspainscapital.com

 

Best Regards,

 

Phoenix Capital Research

 

 

 

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mon, 09/24/2012 - 13:22 | 2824929 DaveA
DaveA's picture

I recently browsed Craigslist to see where in the USA I could find the cheapest two-bedroom apartment for rent. Except for a few high-rent cities, it's $800/month everywhere. What a coincidence -- that's exactly what Section 8 pays for a 2BR apartment! One building manager even told me he prefers Section 8 tenants because they always pay on time.

Spending my own hard-earned money on a place to live, I have to bid against Ben Bernanke's printing press. Thank you Sir, may I have another?

Sun, 09/23/2012 - 23:46 | 2823407 acompletedouche
acompletedouche's picture

Who cares about this?They will just print another few quadrillion

Or what ever number comes after that.

Sun, 09/23/2012 - 23:42 | 2823401 acompletedouche
acompletedouche's picture

Who cares about this?They will just print another few quadrillion

Or what ever number comes after that.

Sat, 09/22/2012 - 15:00 | 2820715 Zero Govt
Zero Govt's picture

"..the US Federal Reserve has failed miserably to generate an economic recovery..."

expecting the subversives of society to produce a bed of roses is a tall order

Sat, 09/22/2012 - 14:13 | 2820603 Jack Sheet
Jack Sheet's picture

A simple message to Graham Bummers from a simple person with simple tastes:
FUCK OFF and don't pollute the top line of ZH with your copy and paste bullshit.

Sat, 09/22/2012 - 11:54 | 2820276 XtraBullish
XtraBullish's picture

Graham PLEASE PLEASE PLEASE STFU and quit trying to frighten me out of my long positions which are infinitely better than cash which you have been advocating since 666 on the S&P four years ago. The Sky is NEVER going to fall EVER and with Benjie B. and M Drag-gee revving CTRL-P, your advice is lame and cash is trash.

Sat, 09/22/2012 - 11:49 | 2820258 tictawk
tictawk's picture

"Folks, this is the reality we’re dealing with. The Fed has gone “all in” in its efforts to stop the debt implosion… and it’s failed."  

You are correct that the Fed has gone "all in" but a DEBT IMPOSION means DEFLATION not HYPERINFLATION.  Prices of Assets are still declining and some food prices are up but not enough to cause hyperinflation.  Any inflationary rise will collapse bonds and make the debt burden even bigger.  So yeah, Bernanke can light a match but in a debt rainstorm, its not going to burn.

Sat, 09/22/2012 - 12:36 | 2820363 Quinvarius
Quinvarius's picture

Show me one single example of a nation on a fiat currency that underwent a debt implosion that did not result in massive inflation.

Do you people ever read anything?  Stop watching CNBC for advice.  Go look at what actually happens.  Figure out why it happens that way.  Stop pretending it is going to be different here.  It hasn't been different yet.

Sat, 09/22/2012 - 13:08 | 2820431 akak
akak's picture

 

Show me one single example of a nation on a fiat currency that underwent a debt implosion that did not result in massive inflation.

Exactly Quinvarius!

That is what infuriates me about all these deflationary eggheads and flat-earthers --- their COMPLETE and arrogant ignorance of ALL of monetary history, wherein every nation suffering the kind of financial collapse and debt explosion we are experiencing today has, inevitably, also suffered a significant if not total debasement of their (fiat) currency as well. 

To believe that the completely unbacked and capriciously-issued fiat currency of a spendthrift government facing unpayable and exponentially growing debt is somehow going to become MORE valuable as a result of that rising and unpayable debt is the very pinnacle of absurdity if not outright insanity.  I can hardly believe that such a preposterous thesis even needs to be debated here.

Sat, 09/22/2012 - 11:25 | 2820216 Diesel Seven
Diesel Seven's picture

Inflation is driven by too much money chasing too few goods. Look it up-fun spreadsheet exercise--OECD site should have data: per capita resource consumption numbers of the Central Planning Countries (US, UK, EMU & Japan) could not be maintained when factoring in the aspirations of a China or Brazil. As they get richer (and we get poorer), look for them to bid up asset prices. Right now inflation is being seen rampantly in areas where money can flow--stock prices have been pushed way high (in the aggregate) by unsustainable real earnings growth rates. People need to start thinking more like an engineer ( and/or survivalist) and less like a tenured economics professor, as the longer that the current trends continue, the worse the chaos wiil be when things fall apart. The sad fact is you can't pull 10 pounds of shit out of a 5 pound pail. Even the iPhone 5 might not save us (sarcasm). Eventually purchasing power parity adjustments will be forced on the deficit spenders. Don't know when, but it will happen sooner or later--don't listen to the Krugmans of the world without extrapolating the effects of their actions.

Sat, 09/22/2012 - 11:56 | 2820279 Winston Churchill
Winston Churchill's picture

The major adjustment will only happen with the demise of the petrodollar.

China,among others has been very quiet since Uncle Ben announced Qeternity.

As they say in the B movies:"too quiet".

Sat, 09/22/2012 - 11:13 | 2820190 sosoome
sosoome's picture

best contrarian indicator on the web

Sat, 09/22/2012 - 10:47 | 2820150 Heroic Couplet
Heroic Couplet's picture
  • How many food stamp users are represented by Republicans in Congress?
  • Mit Romney, Bain & Co: how many US jobs did he send offshore?
  • If you're unemployed for more than 26 weeks, you need to be in a Republican's office conductng your job search. You need to understand the 27 trillion sitting in Cayman Islands accounts means there is no debt crisis in the US.
  • If the finance sector employment shrinks to 1950 levels, good.
  • The dollar amount of damage caused by Phil Gramm needs to be totaled and sent to Phil Gramm. Lucky the bank cartel has lived to see derivatives blow up in their faces.
  • Celebrate the ACORN pimp and prostitute! that tactic was turned around and thrown right back in Republican faces!!

 

Sat, 09/22/2012 - 13:54 | 2820564 stocktivity
stocktivity's picture

iwonder how many of those people on food stamps bought or are planning to buy the new iphone?

Sat, 09/22/2012 - 12:28 | 2820340 gggunchi
gggunchi's picture

Arguably the worst post on here.  

 

VC's are not put together to create "jobs."  They are there to make money.  And before you tell me how Romney shouldn't run on this platform if he was to make money and not jobs (duah), reflect seriously how phony you boy's job "savings" numbers are.  

 

Obama is arguably the worst president since Carter.  He is worst than Bush II, and thats saying something. 

 

Vote straight ticket (D), but when all this comes crashing to the ground, you have no one to blame but yourself.  I would gladly sell all Obama supporters into abject slavery if there was a market for it.  

Sat, 09/22/2012 - 09:32 | 2820058 northerngirl
northerngirl's picture

Nothing new to see here.

Sat, 09/22/2012 - 09:19 | 2820049 Ancaeus
Ancaeus's picture

High prices for corn and soybeans:  Don't you think those could be caused by the disasterous farm year that we have just had?  Thus, we would have falling supply against a sustained demand.  Monetary policy is nowhere in sight.

High prices for oil:  Don't you think that could be caused by an economic recovery and greater consumption of oil?   Thus we would have increased demand for oil against a fixed supply?  Again, monetary policy is nowhere in sight.

You may be right about wht is happening.  But your argument is, in my opinion, very weak.  There are much better explanations that have little to do with monetary policy.

Sat, 09/22/2012 - 13:59 | 2820572 stocktivity
stocktivity's picture

If you shop for groceries at all, you must be noticing the smaller packages but the same price. They are sneaking inflation on us.

Sat, 09/22/2012 - 13:30 | 2820492 El
El's picture

I'm no expert, but my understanding of the situation is that draught has played a role in the rising costs for corn and soybeans futures, but we had surplus stored, so current prices aren't really reflecting the draught conditions. We will be paying much more for beef and pork next year, but right now there is a glut from everyone butchering early due to the draught and rising costs of feed. Maybe someone more articulate can explain this better than me or point out where my understanding is not correct.

Regarding your oil argument...demand has significantly dropped. From Reuters yesterday:

U.S. oil demand fell in August, hitting the lowest level for the month in 15 years, industry group American Petroleum Institute said on Friday. Petroleum demand dropped 4.3 percent from a year earlier to 18.573 million barrels per day.

http://www.reuters.com/article/2012/09/21/usa-api-monthly-idUSL1E8KL62W2...

Shrinking sizes selling for higher prices is the norm. My beloved sugar free black-cherry jello now only contains FOUR
cups instead of six, yet is selling for more. My cereal box that was 14 oz. two years ago is now 12 oz. and sells at a
higher cost. Everyone else can say or think as they wish, but I KNOW we are seeing inflation. It is as plain as the
groceries in my shopping cart and the gas in my tank.

Sat, 09/22/2012 - 08:06 | 2820000 Withdrawn Sanction
Withdrawn Sanction's picture

The civilian employment to population ratio hasn’t budged

It's actually been falling again for several months.  Now at levels not seen since the early 1980s.

http://research.stlouisfed.org/fred2/graph/?chart_type=line&width=1000&h...

Still supports your basic conclusion (no recovery), but it's sloppy research just the same.

To top it off, the ECRI (which is a much better predictor of recessions than the National Bureau of Economic Research or NBER) believes that the US re-entered a recession in June.

Aside from the false positive given by ECRI recently mentioned by others here, the idea that NBER is in the prediction business is silly.  They wait months (and sometimes years) to render a call on when the US entered or exited a contraction.  They are necessarily backward looking (as opposed to fwd looking/predictive), and their rationale is to avoid having to restate recession start/end dates. You can disagree w/their methodology and rationale, but they are not in the prediction business.  

Sat, 09/22/2012 - 06:49 | 2819972 egoist
egoist's picture

Freight trash hauling is down, another indicator. Utilities (in my area) have radically jacked up their rates.

Sat, 09/22/2012 - 15:24 | 2820766 Zero Govt
Zero Govt's picture

go black (free) market as much as you can

the Monopolist Matrix of Govt regulated extortion rackets, from big tobacco to Utilities, big pharma and energy Corpse, will stagnate and die

compare the price of a packet of cigarettes over the past 10 years to 1gsm of coke ...Big Co's and Big Govt deliver absolute shite, the free market delivers

Sat, 09/22/2012 - 03:53 | 2819928 walcott
walcott's picture

 

There are apple shareholders. Push it to the Limit.

http://www.youtube.com/watch?v=vT8OU5WtfkQ&feature=related

Sat, 09/22/2012 - 03:31 | 2819922 Peter Pan
Peter Pan's picture

You are right about one thing and that is that the fools at the FED believe that the transmission mechanism works by trying to affect asset values and  all this has done is to produce inflation that is not consumer or business demand related.

Sat, 09/22/2012 - 01:30 | 2819884 steve from virginia
steve from virginia's picture

 

 - Nobody has any money, how can that be inflationary?

 

 - Those few with money are not spending it. Those who are credit-worthy are not borrowing. How can this be inflationary?

 

 - Finance lending into asset markets is not good for business ... which must sell goods at a profit ... to those who are not in asset markets. If profits cannot be earned then credit must be had in the place of profits. Businesses must appear to earn money, many have been strangled of cash flow since 2008, at some point the loans/lines of credit are cut off, then what?

 

 - When fuel prices 'lift off' they instantly crash: using (wasting) fuel does not pay for either the fuel or the credit needed to meet the 'lift off' price. Fuel price 'tops' have declined steadily since June, 2008. No inflation there, either. High prices is too high.

 

All the different sectors of the world economy are interconnected. This means when one sector is hobbled, all the others are effected.

Sat, 09/22/2012 - 14:10 | 2820592 stocktivity
stocktivity's picture

"nobody has any money"

Bennie and the Feds have the answer....jack up stock prices so us sheepie think we are richer. Then we can go out and blow money on shit we don't need. Businesses do better and start hiring because we dopes are blowing money left and right on the latest ishit and emptying store shelves. Unemployment goes down and Bennie and the Feds are heroes. Unless of course we sheepie aren't as stupid as Bennie and the Feds think.

Sat, 09/22/2012 - 12:31 | 2820350 Quinvarius
Quinvarius's picture

In Weimar no one had enough money to survive either.  Delusions and idiotic theories are not going to protect you from the hyperinflation. 

Sat, 09/22/2012 - 08:36 | 2820021 Son of Loki
Son of Loki's picture

 << Nobody has money now. >>

<< I don’t see any of the above pointing towards a “recovery.” >>

 

These are even more reasons why I think "housing sales" are Bogus. Either that, or the lenders are back to their old games of zero-down loans which means housing is head for another steep drop as Shiller predicts. I understand many houses are being bought by investors but I also see lots more houses For Rent (empty) then ever before.

Rental Bubble? as some other poster indicated awhile back.....possibly.

Sat, 09/22/2012 - 01:08 | 2819877 Peter Pan
Peter Pan's picture

This is the economy with tunsten money, tungsten interest rates, tungsten politicians and bankers, tungsten housing, tungsten jobs, tungsten education, tungsten pensions,.......shit, I never knew that tungsten is such a versatile metal.

Sat, 09/22/2012 - 09:05 | 2820043 AGAU
AGAU's picture

Did you drill your bars yet?

Sat, 09/22/2012 - 00:32 | 2819841 Element
Element's picture

 

 

"To top it off, the ECRI (which is a much better predictor of recessions than the National Bureau of Economic Research or NBER) believes that the US re-entered a recession in June."

 

ECRI said same thing in 2010, US recession within 10 months, but didn't eventuate.  This had not happened before.

Macro data and signals they transmit are all distorted by QE and chronic systematic Govt statistics manipulations, so the monitoring and trend indicators are increasingly unreliable, nearly useless as reliable guides.

What matters is velocity of money, durable goods, inventories, credit supply, and capital flight.

Equities are more or less irrelevant since the market, banks and Govt are each discredited and illegally-operating zombies.  They are only there as a necessary facade over the ponzi's inability to 'back' debt with real assets.

Fri, 09/21/2012 - 23:31 | 2819818 One World Mafia
One World Mafia's picture

Until they save the economy with this?

Years to Regeneration and Antiaging via Stem Cells and Gene therapy per George Church

http://nextbigfuture.com/2012/09/years-to-regeneration-and-antiaging-via...

Fri, 09/21/2012 - 23:20 | 2819807 SilverFish
SilverFish's picture

SPAM!

Fri, 09/21/2012 - 23:15 | 2819804 Binko
Binko's picture

The Fed has most assuredly NOT "gone 'all in' in it's efforts to stop the debt implosion". 

The Fed has gone all in to keep the massive piles of filthy riches flowing to the vultures at the top of the crony pyramid. And to hell with the consequences to the country as a whole. 

The only question is whether or not they actually believe the babble, doublespeak and misdirection they spout to justify their actions. Probably, since it makes them, their pals, their family and their descendents rich. Being made magically rich while millions of others are impoverished will tend to make people believe anything necessary. 

Sat, 09/22/2012 - 12:39 | 2820370 Quinvarius
Quinvarius's picture

Indeed.  The Fed is only assisting the banks when it comes to QE. 

Fri, 09/21/2012 - 23:06 | 2819801 tescher
tescher's picture

Give me a break Chicken Little

Fri, 09/21/2012 - 22:40 | 2819778 tony bonn
tony bonn's picture

the 2008 recession which began in 2001 NEVER ended - the usa is in severe and irreversible economic decline....the stock of leaders for this nation is the absolute most pathetic in our history - and that took some doing especially as you recall the clinton-bush disaster....

the bob dole of 2012 is running around making a fool of himself while the greater fool indonesian glides into office on a fake birth certificate which couldn't get him a driver's license in georgia or illinois.

Fri, 09/21/2012 - 21:29 | 2819713 max2205
max2205's picture

You should walk out

Fri, 09/21/2012 - 20:58 | 2819690 eddiebe
eddiebe's picture

Gloom and doom and misery, we get it.

Fri, 09/21/2012 - 20:26 | 2819653 petolo
petolo's picture

Graham, you must proceed from Philanthropy 101 and give some free advice like everone posting @ ZH.

Sat, 09/22/2012 - 10:56 | 2820163 vast-dom
vast-dom's picture

could be...on the verge....could be....on the verge....could be....on the verge......could be...on the verge....could be....on the verge....could be....on the verge......could be...on the verge....could be....on the verge....could be....on the verge......could be...on the verge....could be....on the verge....could be....on the verge......could be...on the verge....could be....on the verge....could be....on the verge......could be...on the verge....could be....on the verge....could be....on the verge......could be...on the verge....could be....on the verge....could be....on the verge......could be...on the verge....could be....on the verge....could be....on the verge......could be...on the verge....could be....on the verge....could be....on the verge......could be...on the verge....could be....on the verge....could be....on the verge......could be...on the verge....could be....on the verge....could be....on the verge......could be...on the verge....could be....on the verge....could be....on the verge......could be...on the verge....could be....on the verge....could be....on the verge......could be...on the verge....could be....on the verge....could be....on the verge......could be...on the verge....could be....on the verge....could be....on the verge......

Do NOT follow this link or you will be banned from the site!