Out Of The Fiscal Cliff And Into The Fire: Art Cashin On The Real Economic Malaise

Tyler Durden's picture


Forget the Fiscal Cliff: it is merely a much needed economic distraction for the next 3-4 months (distracting from what? Why Europe of course). Yes, it will be resolved, and yes taxes will go up, and yes, debates over it will most likely be carried over into 2013 and nothing will be compromised until the ultimate debt ceiling deadline (because it is really a Fiscal Cliff-Debt Ceiling package deal) is hit some time in March 2013, but eventually one or both parties will cave, right after the market plunges to put it all into the proper perspective as it did around the time of TARP and the August 2011 debt ceiling debate, and a resolution will materialize. The bigger issue has nothing to do with the Fiscal Cliff, which is indeed a sideshow. The bigger issue, as Art Cashin explains, has everything to do with a secular decline in the US economy, where a 1% growth rate will soon be the "New Killing It", where millions more (in part-time workers) will soon be let go, and where businesses no longer generate the cash flows needed to stay open. Art Cashin explains.

From Art Cashin

He Laughs And Smiles Like Santa But Sounds A Bit Like Scrooge – One of my most anticipated research reads is Kate Welling's package called "Welling on Wall St". It invariably provides that rare combination of insight and entertainment. Nobody gets more out of an interview than Kate and she's been doing that for decades. In the most recent Welling on Wall St, she did a marvelous interview of Bloomberg's Rich Yamarone.

Rich is a good friend (part of our occasional dining group) and a treasure trove of anecdotal insights and comments of CEOs and CFOs around the country. Their companies range from the local to the multi-national. Rich compiles the Bloomberg Orange Book monthly, reflecting the economy through those quotes and comments. He has a grueling speaking schedule as Kate drew out in the interview. Here's a bit that made me wince:

The fiscal cliff actually doesn't seem to be all that problematic. What is problematic is just that the economy is slowing and people are not coming to stores. The small retailers are saying customers are not coming into the stores. They don't have good traffic and they're losing a lot of sales to the internet.


The other thing that is actually quite disturbing is that – if I go give a speech to 400 or 500 people in a specific city, for instance a Chamber event, and it's a doom and gloom speech because I am a very big bear on the economy now – this is what has been happening: Some people will always come up and say, "Hey, you know, I agreed with this, I disagreed with that." But lately they've been adding, "But you're 100% right, this economy is much weaker than anybody in the press is letting you know or leading you to believe." And out of an audience of 400, I have recently been getting 25 to 40 people coming up to me after the event saying things like, "I didn't raise my hand because we're at an event where my competitors are sitting across the table from me and I didn't want to advertise this, but I'm folding my business after Christmas. My name is on top of the 100-year-old, four generation family business, or a 75-year-old, third-generation business, and I have to shut the doors. But I don't want to do it before Christmas because then I have to answer all these questions and I'm going to be an embarrassment to my family." That's a very powerful statement.

Under further questioning from Kate, Rich maintains that he hears that lamentable refrain from a dozen or more folks at such speeches. That's not a pretty picture at all.

Source: UBS

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Tue, 12/04/2012 - 11:27 | 3032443 francis_sawyer
francis_sawyer's picture

Shouldn't Art be busy penning some sloppy red-nosed 'Christmas Tale' to regale us with over the holidays?... [Or was that it]?...

Tue, 12/04/2012 - 12:19 | 3032609 onelight
onelight's picture

Chinese farmer shot the (first?) last unicorn ever seen...coincidence??


Tue, 12/04/2012 - 11:29 | 3032447 SheepDog-One
SheepDog-One's picture

No worries, Boehner just offered up 2.2 trillion scalps! 

1%....killin' it.

Tue, 12/04/2012 - 11:35 | 3032467 Caviar Emptor
Caviar Emptor's picture

GDP 2.7%.  GDP Deflator: 2.7%. Nuff Said.

Tue, 12/04/2012 - 11:50 | 3032503 Everybodys All ...
Everybodys All American's picture

Where was it we read that the Fed accounts now for about 2.4% gdp and growing.

Tue, 12/04/2012 - 12:47 | 3032683 GAAPpreNixon
GAAPpreNixon's picture

YEP! And someday they will admit this GREATEST Depression began in 2007. The only difference is that the modern versions of "Bonnie and Clyde" are running Government Sachs.

Tue, 12/04/2012 - 13:28 | 3032801 Money_for_Nothing
Money_for_Nothing's picture

It's being called the Great Recession. Which is correct because the economy has continued to drop while inflation gives the appearance of a recovery.

Tue, 12/04/2012 - 11:29 | 3032451 asteroids
asteroids's picture

The fall of living standards and the destruction of generational weatlth. The FED knows this is happening and doesn't give a shit. They gave up on moral hazard a long time ago.

Tue, 12/04/2012 - 11:39 | 3032469 TruthInSunshine
TruthInSunshine's picture

I am not one to comment on anecdotes much, but in this case will make an exception, since what is relayed by way of Rich Yamarone's experiences in hearing business owners after his speeches is so eerily identical to what I hear on a near daily basis from small business owners (3 to a few hundred or so employees).

The economy truly does suck, and the level of cognitive dissonance amongst the public is perilously high due to endless lies & spin by government spokespersons, the incredibly corrupted main stream media, #BigGovInterferingWithMarkets, and various proxies of the feudal lords, such as Bernanke & Co. and The BLS (Bureau of Lies & Stories).

At the very least, many here have been bothered by the cognitive dissonance enough to explore the red pill/rabbit hole. Just one very recent example:

Record, Blowout Black Friday (and Grey Thursday) Sales; Retailers In Heaven!!! Manna Raining Down!!!!  Ooooops, maybe not... 


The Confidence Fairy Cometh

Tue, 12/04/2012 - 12:32 | 3032619 Jay Gould Esq.
Jay Gould Esq.'s picture

It is becoming more apparent: the vexatious, deleterious effects upon business and the national economy due to the passage and approaching full-implementation of ACA.

Tue, 12/04/2012 - 12:50 | 3032695 GAAPpreNixon
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Tue, 12/04/2012 - 11:38 | 3032473 Caviar Emptor
Caviar Emptor's picture

Downsizing. It's the new national passtime.

Tue, 12/04/2012 - 12:20 | 3032617 Winston Churchill
Winston Churchill's picture

I thought rioting was, or is it baseball ?

Tue, 12/04/2012 - 13:50 | 3032889 twh99
twh99's picture

In some cases going "Galt".

Tue, 12/04/2012 - 11:38 | 3032475 Stuck on Zero
Stuck on Zero's picture

No price is too high to pay to advance the cause of globalism.


Tue, 12/04/2012 - 11:55 | 3032525 1100-TACTICAL-12
1100-TACTICAL-12's picture

Life is all skittles & unicorns here in the NWO...

Tue, 12/04/2012 - 18:48 | 3033188 James
James's picture


Tue, 12/04/2012 - 11:49 | 3032501 Harbanger
Harbanger's picture

Most Businesses except the select few with political connections, are in "save their ass" mode with this anti-capitalist Obama administration.  I don't blame them for down sizing or just closing up shop. 

Tue, 12/04/2012 - 12:31 | 3032641 Mrmojorisin515
Mrmojorisin515's picture

you still don't get it do you?  Obama or Romney, wouldn't have made a difference.  The corps are keeping themselves alive at the expense of small family biz, hell everyone for that matter.  WE MUST OWN EVERYTHING! INCLUDING YOUR SOUL! not to mention both parties

Tue, 12/04/2012 - 12:45 | 3032676 Harbanger
Harbanger's picture

A small family biz is also a "corp", genius.  You've been programmed by leftist schooling and talking points.

Tue, 12/04/2012 - 13:05 | 3032737 11b40
11b40's picture

It is obvious that he means big, multi-national corps are choking the life from us small business owners....self-employed, partnership, LLC, or Sub-S - life is a bitch for untold numbers of us.  The super-effecient, predatory corporation knows only that it wants "more".  They seek out any pockets of profit that can be found, and go after it like a heat-seeking missle.  Category after category, they drill down to find every percentage point and squeeze out any competitors they find living there.  They wil crush you with low prices, then once you are gone, the prices go back up to even higher levels.

You think Romney would do anything differently?  Well, maybe he would.  He would find evermore effecient ways to drain the Treasury and off-shore even more production.

Who programmed you, genius?

Tue, 12/04/2012 - 13:27 | 3032804 Harbanger
Harbanger's picture

So you blame multi-national corps for chocking the life out of "your" business?  Obamacare and his new regulations and taxes are not a concern to you? I don't believe you're a small business owner as you say.  You're just parroting leftist talking points like a good little hope and change drone.  I hope you enjoy the full misery that socialism will bring to you and yours.

Tue, 12/04/2012 - 13:53 | 3032904 Mrmojorisin515
Mrmojorisin515's picture

leftist? please define what a leftist is.  In 2008 when shit was hitting the fan, some small biz owners who didn't have any debt in certain fields might have been able to go gangbusters with the failure or even rightful downsizing of some improperly run national corps (in the field of aftermarket autoparts).  Instead debt markets were kept afloat with bailouts and the status quo prevailed. 

Tue, 12/04/2012 - 13:55 | 3032914 Mrmojorisin515
Mrmojorisin515's picture

who was president then?  "i've abandoned free market principles to save the free market." 

Tue, 12/04/2012 - 14:08 | 3032966 Harbanger
Harbanger's picture

Bush was President, you get a star.  Progressives, leftists, statists, crony capitalists, whatever....... Just different words to describe the same pile of shit. 

Tue, 12/04/2012 - 15:13 | 3033175 flattrader
flattrader's picture

>>>So you blame multi-national corps for chocking the life out of "your" business?<<<

Yeah, you moron.

A TIF'ed Walmart will put more Mom and Pop small businesses out of business in a community within two years than anything coming out of DC.

It's facism stupid.  Not socialism.

Welfare for the Wealthy.  Tax breaks for global mega corporations.  That's the new reality.

Tue, 12/04/2012 - 15:51 | 3033311 Harbanger
Harbanger's picture

Socialism and Fascism are both ideologies of the left, genius, but what would you know.  You're been pre-programmed with an old operating system.

Tue, 12/04/2012 - 17:59 | 3033656 flattrader
flattrader's picture

You are indeed the pre-programmed one.

Fascism for the right is just "business as usual" or "how business should be."

Tue, 12/04/2012 - 11:29 | 3032452 Jim in MN
Jim in MN's picture

It's not a distraction from Europe. 

It and Europe are both distractions from corruption-based Japanification: the PLANNED, policy-based Lost Generation for the industrialized nations' middle class families.

Obviously working like a Satanic charm.

Tue, 12/04/2012 - 11:41 | 3032480 Caviar Emptor
Caviar Emptor's picture

Japan is biflationist nirvana: 20-years of deflation while the cost of a bowl of soup rises to new Everest-like peaks. Coming to a neighborhood near you.

Tue, 12/04/2012 - 11:49 | 3032499 gjp
gjp's picture

Agreed, Europe itself is a distraction from the global monetary tyranny which is led by the US and UK.  Every media narrative is avoiding the truth that our money system is corrupt to the core and the oligarchs should be lynched.

Tue, 12/04/2012 - 12:20 | 3032616 DonutBoy
DonutBoy's picture

What's going to happen in America is going to be ugly to be sure, but you are making a mistake to call it planned.  It implies their's someone at the controls of the plane with a clue how it flies.  We should be so lucky. 

I understand why people despise the Bernank, but I do not.  I pity him.  He was a chosen successor, not too bright.  He was just supposed to follow the last guy's gameplan for a decade then retire to academia.  With O's re-election, Bernanke's place in history will be much larger and much uglier.  The Fed chairman who killed the dollar.

This is not a pull-back or a deflationary spell.  This is the globally synchronized end of fiat currency.  No one planned it.  Many marginalized pundits could now be said to have forseen it.  It could be forestalled with Reagan/Volcker like commitment to the dollar, but we gave that up.  I don't believe Romney would have made much difference, but with 4 more years of O - the path is chosen.  We are Greece writ large and we will print until our currency fails.

Tue, 12/04/2012 - 11:30 | 3032455 slackrabbit
slackrabbit's picture

Thats what I have been saying.

They know its over, and are just letting everyone have a nice Xmas.

So enjoy it folks, because 2013 is gonna be a shitter of a year ...

Tue, 12/04/2012 - 11:47 | 3032496 buzzsaw99
buzzsaw99's picture

you ain't just whistling dixie. 2013 is going to be hard on many people who don't even see it coming.

Tue, 12/04/2012 - 12:17 | 3032607 Bad Attitude
Bad Attitude's picture

I believe more than 2013 is going to suck. I believe it is terminal. The economy has been fatally wounded.

I don't think even Deal Leader sees it coming.

Buy beans and bullets while you still can.

Tue, 12/04/2012 - 13:13 | 3032761 ElvisDog
ElvisDog's picture

Beans and bullets?

Pasta and pitchforks

Ramen and RPG's

Tuna and Trebuchets

Tue, 12/04/2012 - 11:31 | 3032459 The Gooch
Tue, 12/04/2012 - 11:35 | 3032466 Super Broccoli
Super Broccoli's picture

"I don't want to do it before Christmas because then I have to answer all these questions and I'm going to be an embarrassment to my family"

And to your workers' families :-)


Aaaarrrr i guess this shit will be over soon, have sold my company and am waiting for that big fat reset, not trying anything previous to that !

Tue, 12/04/2012 - 12:08 | 3032565 Harbanger
Harbanger's picture

Sometimes you're better off doing nothing than breaking your ass for nothing.  That's the shared misery of socialism.

Wed, 12/05/2012 - 00:54 | 3034782 Anusocracy
Anusocracy's picture

The left believes in socialism for the poor and the rich.

The right believes in socialism for the rich and the poor.

Tue, 12/04/2012 - 13:48 | 3032843 11b40
11b40's picture

Be glad you found a buyer & hopefully, you walked with a pile of cash.  I should have sold mine, or even just closed shop.  4 years ago, I could have walked away, but nooo.  When the SHTF, I decided to tough it out.  Downsize, downsize, downsize.  From 16 people in 5 locations to 3 people in 1 location.  From 6400 sqft of office & showroom space, to building an oversized home office.  When you have been successful for over 30 years in something you built from scratch, it is hard to give up.  When you have seen ups & downs and found a way to ride out any storm, it is hard to come to terms with "this time, it may be different".  When you have to let go people who have been with you for over 20 years, well, there is a lot of pain, anger, depression, and fear.

But I am a tough guy.  I am smart.  I am aggressive.  I know my business and my industry, and people know and respect me.  I can do this....is the mantra that runs through your head.  So you fight.  You slash your salary, then reduce it some more, then stop taking anything just so you can stay in the game.  You dip into savings, then into the pension plan, and you juggle the bills.

Eventually, things do start to improve...but it is slow.  Agonizingly slow.  Finally, it is better.  The expenses are being covered, and a little salary is coming back.  Things are on the right track, but still there is a realization that things will never be like they were 5, 10, 15 years ago.  The potential is no longer there.  The customer base has deteriorated, the competition is more fierce, the margins thinner, the opportunities fewer......and you are running out of time!!  The pension plan that would have provided a comfortable retirement has been decimated, the savings are long gone, and you are running out of time!!

That's my story, but it's also the story of so many small businesses today.  Men & women who knew the risks, but put their own skin in the game and rolled the dice anyway....who worked hard, were smart & talented, but still found the deck stacked high against them.  People who not only believed in themselves, but also believed in the promise of America & the Capitalist system.  People who tried to play by the rules, only to be crushed by the criminals.

Oh well....lunch time is over.  Time to get back to work!

Tue, 12/04/2012 - 11:36 | 3032468 tooriskytoinvest
tooriskytoinvest's picture

Black Swan: America’s economic future is a disaster. Next crash, bigger, longer than 2000 and 2008 combined. We are our own worst enemy. U.S. GDP on the road to zero growth by 2050. 

Tue, 12/04/2012 - 11:36 | 3032470 Dr. Engali
Dr. Engali's picture

I hear this story quite often. A lot of the owners are trying to sell or get out any way they can, it just isn't worth it to them any more. I'm sure there will be a lot of activity come January or February .

Tue, 12/04/2012 - 12:26 | 3032627 Winston Churchill
Winston Churchill's picture

Two of my suppliers told me last week that they would close their doors

for good at Christmas.As I only have half a dozen business suppliers,

thats not a good ratio.

FOWARD to the socialist Utopia.

Tue, 12/04/2012 - 13:18 | 3032771 ElvisDog
ElvisDog's picture

You only have to look to France to see the future of the U.S. (coming very soon). Preferred (i.e. union-based or political donor) businesses will never have to lay off their high-priced labor due to endless government bailout (ala Peugeot in France). The only good, secure jobs will be in the government, government-provided jobs such as teachers/cops/firefighters, union manufacturing jobs, and jobs within the military-education-healthcare monopolies. Everything else will wither and die.

Tue, 12/04/2012 - 14:44 | 3033108 flattrader
flattrader's picture

Forward to the corporate facist state.

There.  Fixed it for ya.

Tue, 12/04/2012 - 15:57 | 3033331 Winston Churchill
Winston Churchill's picture

Its not orth arguing the point.But Nazi was the abbreviation for :

National SOCIALIST German Workers Party.

Its semantics as fars as J6P ,the effects and modes of control are identical.

Tue, 12/04/2012 - 11:36 | 3032471 LongSoupLine
LongSoupLine's picture

Although Art has been part of the problem ( hello..UBS?) He nails this one regarding the political distraction techniques and the small business state of the union.

Fuck you Congress, Bernanke and Obama. Fuck off.

Tue, 12/04/2012 - 11:37 | 3032472 wonderatitall
wonderatitall's picture

burn it, stomp it and push it over. when its down, shoot it and bury it. the blue state model of nazism must fall and the axis of evil, DC,SHITCAGO AND NUYALK must burn so the rest of the world can be free from their obama bankers. the greatest thing the devil did was blame everything on bush so that they can do everything bush did....

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