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Five Charts That Prove We’re in a Depression and The Stimulus Hasn't Worked
Wall Street and mainstream economists are abuzz that we’re seeing a recovery in the US due to the latest jobs data. These folks are not only missing the big picture, but they’re not even reading the fine print (more on this in a moment).
The reality is that what’s happening in the US today is not a cyclical recession, but a one in 100 year, secular economic shift.
See for yourself. Here’s duration of unemployment. Official recessions are marked with gray columns. While the chart only goes back to 1967 I want to note that we are in fact at an all-time high with your average unemployed person needing more than 40 weeks to find work (or simply falling off the statistics).
Here’s the labor participation rate with recessions again market by gray columns:
Another way to look at this chart is to say that since the Tech Crash, a smaller and smaller percentage of the US population has been working. Today, the same percentage of the US population are working as in 1980.
Here’s industrial production. I want to point out that during EVERY recovery since 1919 industrial production has quickly topped its former peak. Not this time. We’ve spent literally trillions of US Dollars on Stimulus and bailouts and production is well below the pre-Crisis highs.
Here’s a close up of the last 10 years.
Again, what’s happening in the US is NOT a garden-variety cyclical recession. It is a STRUCTURAL SECULAR DEPRESSION.
As for the jobs data… while the headlines claim we’re adding 200K+ jobs per month the sad fact is that without adjustments we’ve lost jobs 1.8 million jobs so far in 2012.
Not only is this data point actually in the JOBS REPORTS THEMSELVES… but it’s supported by the fact that taxes (which are closely tied to actual incomes/ jobs) are in fact below 2005 levels.
Folks, this is a DE-pression. And those who claim we’ve turned a corner are going by “adjusted” AKA “massaged” data. The actual data (which is provided by the Federal Reserve and Federal Government by the way) does not support these claims at all. In fact, if anything they prove we’ve wasted money by not permitted the proper debt restructuring/ cleaning of house needed in the financial system.
It all boils down to the same simple sentence repeated by myself and others: you cannot solve a debt problem by issuing more debt (even if it’s at better rates).
Indeed, take a look at Greece today. The ECB and IMF have spent two years trying to post-pone a real default. Having wasted over €200 billion, they’ve now let Greece stage a pseudo-default (at least in their minds)… which, by the way, has only actually increased Greece’s debt load and crippled its economy.
Just like in the US. And while the topic of a US default is not openly discussed today, it’s evident that what’s happening in Greece will eventually come our way, after first making stop at the other PIIGS countries as well as Japan.
Which is why smart investors are already preparing for a global debt implosion. I recently published a report showing investors how to prepare for this. It’s called Surviving a Crisis Four Times Worse Than 2008 and it’s chock full of information on how to not only survive but thrive during if this particular black swan (or any of the others lurking in the system) comes to pass.
This report is 100% FREE. You can pick up a copy today at: http://www.gainspainscapital.com under the OUR FREE REPORTS tab.
Good Investing!
Graham Summers
PS. We also feature four other reports ALL devoted to helping you protect yourself, your portfolio, and your loved ones from the Second Round of the Great Crisis. Whether it’s a US Debt Default, runaway inflation, or even food shortages and bank holidays, our reports cover how to get through these situations safely and profitably.
And ALL of this is available for FREE under the OUR FREE REPORTS tab at: http://www.gainspainscapital.com
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This is all rather contradictory to the WSJ title today " Is America is back because credit cards are maxed". LMAO. Regardless of the articles subject just headlining that=complete stupid morons. And no, I didn't take the time to read the bullshit. I'm sure it's the typical lie packed bullshit.
Even if those charts were true we need to see the good side here: things could have been worse. I think people should just get more involved, get some more information about debt and act use their finances with responsibility. What about the consume rates? Are there any charts for that?
Well duh!
Trading the Fed market is key. When we are at 1450 on the spx what the hell will you say then. The same thing. This is the 4th largest rally in history. You missed it worrying about economics.
The Tax Receipts by Year graph validates the Rahn Curve, which is an empirical measure of economic performance compared to the rate of government spending developed by economist Richard Rahn.
Dan Mitchell of the Center for Freedom and Prosperity has an excellent video, The Rahn Curve and the Growth-Maximizing Level of Government at http://www.youtube.com/watch?v=uj6lRFXC5rA
Oh, wah, wah, wah...just because we crammed 200 years worth of living into the last 50 is no reason to go pussy.
It's been fun-fuckin-fantastic and I for one, wouldn't change a minute of it.
I haven't even had any grandchildren yet, so screw them!
We just give future generations a really high target to try to hit lifestyle-wise!
Dog
No worries, let's print. Please pass the crack pipe.
Never believed in any "recovery". All those trillions only buffered the banks and helped the optics of the collapse on mainstreet to seem more "orderly".
Missing another chart: Fed Monetary Base.
It was never about stimulating the economy. It was the FED bailing out its owners.
and buying more votes from anyone that will allow themselves to get hooked on Government largesse...
I really don't see many people out there unemployed that shouldnt be. The UNEMPLOYABLE rate in this country is high but cocane is a hell of a drug!
Stimulus only interupts the natural decline that all businesses always experience. Let the weak file chater 7 or 11 or both and allow other stronger companies fill the void and allow the weaker ones to fail.
To Artificially prop any failing Company, the good money always chases the bad, that's usually how they got in that situation to begin with.
-JP
"Chars! Charts! I don need no stinkin charts"
My behind bleeds everytime I go to the grocery store, by gas, or look at the empty store fronts.
No doubt its the greatest depression and we've been in it a while, just that we've been in this 'suspension of disbelief' green-shoots thingy too...but that wont last long at all. The 'denial' phase never lasts. Next will come the anger phase, which wont be pretty at all....not in THIS country with like 250 million firearms all over the place.
"anger" phase equivalent to a drug addict where the effects of hallucigens wear off and there's no new fix in sight.
After anger come resignation and emotional depression. Perfect sentiment to offer the wars of all wars to those weary of mental poverty and frustration.
Beware of those that will cheer for it, for they will be told to seek those who are opposing it.
My guess is that back in the 20s and 30s they figured out that fraud and increasing the money supply led to very serious problems.
As a result, they did the only thing they could do to fix the problem, which was restructure the banks and wipe out a bunch of bankers and fraudsters and then recapitalize and build again with a cleaner country balance sheet ... and gold to back things up.
It is clear that Bernanke and the fraudsters have no intention of hitting the reset button until they are good and ready. They may think they are so smart that they can skip a couple of steps OR they are just trying to stretch things out for now with no intention of ever fixing things. Weimar aint good for anything.
"It all boils down to the same simple sentence repeated by myself and others: you cannot solve a debt problem.."
...without removing the whole fuckload of bankers.
Sorry. The U.S. did not lose 1.8 million jobs in January and February this year so far.
Yes we did. Before you make an ignorant comment just go to the BLS website. Plain as day it lists the total number of jobs for December 2011, January 2012, and February 2012.
The total number of jobs unadjusted is 1.8 million below the level of Dec 2011. THAT MEANS THERE ARE 1.8 MILLION LESS JOBS THAN TWO MONTHS AGO.
Unless you believe the government seasonal adjusted lies that claim there can be more people working than jobs available?
And yes that number includes part time jobs. The number is based on the total number of taxable jobs, 1099 and 1040s received. No it doesn't include under the table illegal alien hired out of the back of Home Depot jobs, so in that context you could be somewhat correct. However with the estimated couple million jobs filed with fake SS numbers there may be many jobs that are counted that aren't really even held by a real person.
Also you only count as unemployed if you actually try to claim unemployment. Most part time workers are not eligible for unemployment so they never even try to file. Most young people do not file for unemployment as well.
Another fact is that almost 6% of available jobs are actually held by someone working another job. Two jobs held by one person does not equal 2 people working. So really the total number of people working is 6% lower than the total number of jobs.
Jubilee will work.
But jubilee wont happen....a central banker would rather slice his own jugular rather than mark up his losses and write off your debt.
Jubilee is a very interesting structure. But in order for it to work, it has to be part of the debt machine. It has to be transparent and understood by everyone. The practical effect was that lenders would not lend out past the Jubilee year. All debts were dismissed that year, so no-one borrowed past it. It was a structural prevention of over indebtedness. Now it's too late. There could be an international Jubilee, say, 50 years from now, established today. But it wouldn't help the present debt problems. Unfortunatly default and the removal of social contracts, rioting, etc is baked in the cake.
I disagree. Jubilee can still happen. When the leaders resign to the fact that all their trillions of trick paper couldn't revive the patient. What else can they do? You know, Humpty Dumpty fell off that wall and .. "
Humpty Dumpty is still broken. That's the problem. The longer this drags on, the more confidence is waning. More people are finding information on the web because they're searching for answers. They will wonder why their own situation is not improving when government says the economy is recovering. The web is anonymous and whoever is asking the questions, isn't exposing their own misery to friends and neighbours.
The first step is always to search for answers, followed by dialogue and sharing of experiences. When more and more people realize that they are being lied to and that TPTB are producing illusions and wealth-from-nothing for themselves without any regard for the people, than you have the classic setup for a revolution.
TPTB know this. The Greek debt default and debt cut by 75% is the precedent. That IS a jubilee on a national level. More will follow. There simply is no alternative.
The most important and telling statistic about the state of the economy is the food stamp participation rate. This number is not seasonally adjusted or in any other way screwed with by .gov.
46+ miillion on food stamps, up 20 million since 2007, almost 15% of the US population.
Is there any doubt in anyones mind we are in a depression?
http://www.fns.usda.gov/ora/MENU/Published/SNAP/FILES/Participation/Techpartrate2007-2009.pdf
stimulus = stealing.
why would this not work? hasn't it worked
in the past?
'Stealing' doesnt work unless there is something to steal.
5 Reasons to buy Graham's Investment Guide:
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Hrmm.....I can't think of any.
Well theres plenty of other 'investment guides' I'm sure that said you really got to buy momo equities and all that garbage, and you may be happy had you followed that guide right now but maybe 1 day soon you and many others will wish you had not followed that advice and paid more attention to guys saying you better get out of paper and into some physical assets because things arent good and all youve got is an imaginary 'market'.
It is what it is, and a depression is not pretty. These charts would be even uglier if they were real rather than nominal.
And it will not end until The Collapse. It COULD be ameliorated by prison terms for bankers, mark to market for real estate, dissolving the Fed and a COMPLETE HALT in spending. Not a cut in the increase.....but a complete HALT in spending on everything until the debts are cleared.
That would cause The Collapse....but at least let us rip the band aid off now, clean out the pus and gangrene and even amputate if necessary. Otherwise, the gangrene will spread and when the inevitable Collapse comes it will kill the patient instead of allowing him to live albeit with reduced capacity (ie....my amputee analogy)
We are done as a country with being great....let us concentrate on being better....and debt free. As long as we are in debt we are slaves.....fuck that whole land of the free bullshit delusion.....
We enslaved ourselves.....let us break those shackles now. It's going to hurt like hell......but its better than being Greece.
Greece actually got their jubilee, at least partly. It's a precedent imo. More to follow. Now lawyers are sorting it out. Nice touch. We're oh so civilized and sophisticated these days. Wars were fought for less back in the days. Not these days, not yet anyway.
The wealthy elite knows they have no alternatives to accepting massive debt cuts or exchange their old debt for new debt which is worth considerably less. That has the same mechanics as a "reset" or a "jubilee" without calling it that.
America will get theirs but not without a massive cut to entitlements across the board. That could get ugly, and even uglier than Greece. But there simply is no alternative other than a complete shock to the system and a restart, ie by world war and massive collateral damage and destruction.
the Greatest Depression, indeed
Don't forget these two:
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http://i42.tinypic.com/elx88.png