On The Demise Of Animal Spirits

Just one more QE-episode... growth will come in two quarters, we promise... housing has bottomed... stocks 'signal' all is well. We have heard these 'meme's a thousand times and yet still what is borrowed is given to shareholders and animal spirits (judging by the dismal confidence among small business leaders) remain mired in the quagmire of uncertainty and risk aversion. Nowhere is this more evident than the roll-over (and now falling) demand for new loans across global credit markets. This is not large public companies borrowing at ultra-rich spreads, courtesy of Bernanke's financial repression forcing supply into IG and HY markets, to merely charm pension funds with dividends; this is real demand for credit (per loan officer surveys) all turning down as the balance-sheet-recession continues.

Chart: Morgan Stanley

Comments

[The Swedish Chef]

So we topped out. We all knew it was going to happen.

Is it only me or is there a wedge slowly forming? US demand should bottom at around 15, then top out at 65 around 2020.

[Ginsengbull]

I don't know much about the numbers, but I do know that Ben Franklin said that it's better to go to bed hungry, than to wake up in debt.

[Half_A_Billion_...]

The animal spirits are on the first class to Singapore

[markmotive]

What do you expect when the American Dream is dead?

http://www.planbeconomics.com/2012/12/07/the-american-dream-to-me-has-be...

[Knightbk]

Blabla, it's all bullshit. Do any of the dire predictions here happen? No.

[prains]

I predict that one day you will experience "deer in the headlights" other than that as a certainty I couldn't tell you the time of my next shit.

[csmith]

ZIRP means time value of money is ZERO.

Therefore money value of time is ZERO.

Therefore it doesn't matter if you invest today, tomorrow, next month or next year.

There is no urgency to do anything. Animal spirits are DEAD.

[The Swedish Chef]

That´s what continous QE is about. Invest today so you don´t miss out this months fresh $85 billion.

[disabledvet]

when your expectation is for higher prices and you get instead prices collapsing...what's the problem again? http://www.dailyfinance.com/2012/11/30/mcdonalds-dollar-menu-sales-strat... "McDonalds moving back from it's premium pricing model"?!!! "more towards a value approach"??? wow, lord knows i go to McDonalds "for the premium product i so desire." maybe if they'd throw in some housing with that 69 cent cheeseburger more people would actually come...

[economics9698]

When bankruptcies are allowed to occur prices decline, deflation.  Less money available to purchase existing goods.

When central banks print money and bail out bad loans and finance bad ventures, housing, inflation occurs.

When supply decreases, companies closing, and the money supply is stable inflation occurs.

When supply remains the same but monetary expansion occurs there is inflation.

Prices are like a bee hive, they are everywhere, some up and some down.  Trying to measure them is kinda stupid but economists try anyway.

[jomama]

came for some indian hippie shit, left disappointed.

[prains]

jopyjamas

3 yrs 17 weeks and that's it?? MDB runs circles around that and weakness is his greatest strength, we need more than that T.

[q99x2]

Hey that looks like that happens before every recession.

[Disenchanted]

Unsurprisingly, in a money-based market economy the financial industry, with the central role already mentioned, will be of special interest to rulers and their associates in the “private” sector. “Historically, state intervention in the banking system has been one of the earliest forms of intervention in the market system,” Grinder and Hagel write. They emphasize how this intervention plays a key role in changing a population’s tacit ideology:

In the U.S., this intervention initially involved sporadic measures, both at the federal and state level, which generated inflationary distortion in the money supply and cyclical disruptions of economic activity. The disruptions which accompanied the business cycle were a major factor in the transformation of the dominant ideology in the U.S. from a general adherence to laissez-faire doctrines to an ideology of political capitalism which viewed the state as a necessary instrument for the rationalization and stabilization of an inherently unstable economic order.

In short, financial intervention on behalf of well-heeled, well-connected groups begets recessions, depressions, and long-term unemployment, which in turn beget vulnerable working and middle classes who, ignorant of economics, are willing to accept more powerful government, which begets more intervention on behalf of the wealthy, and so on—a vicious circle indeed.

Fiat money, central banking, and deficit spending foster and reinforce plutocracy in a variety of ways. Government debt offers opportunities for speculation by insiders and gives rise to an industry founded on profitable trafficking in Treasury securities. That industry will have a profit interest in bigger government and chronic deficit spending.

Quote from:

How the Rich Rule

[Disenchanted]

He concludes that article above with this:

The conventional understanding of rich and poor, capitalism and socialism, is profoundly misleading. A corporatist, mixed economy institutionalizes financial privilege in ways that are overlooked in everyday political discourse—in part because of the ideological deformations created by the system itself. As Austrian-school macroeconomist Steven Horwitz put it in a lecture this year, one need not be a Marxist to see that the state is indeed the executive committee of the ruling class.

In my opinion today's ruling class = the captains of financialization aka banksters.

[Being Free]

There's a theme developing here.  Looks like we're in real Dire Straits

Always worth another replay: http://www.youtube.com/watch?v=uoaBjHYsDAg 

[shovelhead]

Dem animal spirits be a flat cat on da freeway.

Send dat Bernank to scoops em up en tell "Day ain't no dead cats round heah, day jist restin' a bit."

[SKY85hawk]

Who can say without 2012 data?????????

[toomanyfakecons...]

Looking for your cat? Check under my tires.