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Guest Post: Monetary Malpractice - Dysfunctional Markets

Tyler Durden's picture




 

Via Gordon T. Long of GordonTLong.com,

One of the first axioms of analysis is: "Garbage In, Garbage Out"! If your data is flawed, everything you do with it and the decisions stemming from it are flawed and dangerous to your financial health. Experienced analysts will often be found relentlessly checking, rechecking and validating their inputs and assumptions.

If only our economists and the sell side analyst community were this diligent. But then it isn't their money. Only a year-end bonus for the 'extras' in their life is at risk.

If economic practitioners were held to higher standards of accountability, they simply wouldn't accept the raft of fundamental data points that are the pillars of most economic assessment. I am talking specifically about government inflation numbers such as CPI and PPI, the Deflator and GDP growth statistics and true debt levels using sound GAAP accounting principles and reflecting off balance sheet special purpose entities, contingent liabilities and financial guarantees. The list of government reporting irregularities is pervasive and for unknown reasons, simply accepted.

It is incredulous that we can just accept, without challenging, the statistical hyperbole of Hedonics, Substitution, Imputation and Proportional Distribution, justifying inflation numbers that don't even pass the common sense of an unemployed high school dropout. I don't mean to disparage the high school dropout, but I do point the figure at the 'six figure' analysts who accept this tripe as gospel, and from whose analysis fiduciary investment decisions are made with the unsuspecting public's hard earned savings.

This problem has been going on long enough that flawed data has resulted in broad based asset mispricing and malinvestment.  Data points have become so distorted, as to be delusional, and have left the markets dysfunctional. How else do you explain $2 trillion excess investor savings over loans now sitting at US banks? How else do you explain Capital Investment (CAPEX) falling faster than Felix Baumgartner from 128,100 feet?

This is the third in a trilogy on Monetary Malpractice, so I will refer a lot of the discussion on the chart to the right, to those wishing to read MONETARY MALPRACTICE: Distortions, Deceptions and Delusions or MONETARY MALPRACTICE: Moral Malady.

I would like instead to focus on the specific mechanism by which Monetary Malpractice has now delivered Dysfunctional Financial Markets. Before I drop you into the 'gearing' of it, let me show you the bottom line results.

LINKAGES

Dysfunctional Markets exist when normal and expected 'causes and effects' no longer occur.

FALSE PREMISES
If you distort the inflation data through misinformation and manipulation, then all data stemming from it is obviously flawed. If in turn that data is further distorted, then the delusion becomes greater until it disconnects from reality and the system becomes dysfunctional.

Let us therefore start with Inflation, remembering:

"Inflation is first and foremost a monetary phenomenon."
Milton Friedman

The manipulation and distortions presently occurring in the government's CPI & PPI inflation numbers are so significant that it requires an exhaustive discussion. An extensive number of presentations with leading analysts on this specific subject can be found in the Macro Analytics Library. I have compiled the following chart to best summarize the areas that must be covered in such a review.

John Williams at ShadowStats.com has done meticulous and invaluabe service in tracking the insidious changes the government statistians have implemented to effectively achieve what I refer to as Uni-Directional Inflation. Nothing they do ever makes it larger, only smaller. This is so prevalent, that as the chart from ShadowStats illustrates below, the distortions now understate inflation by over 10%, if we assumed that in 1980 we knew what we were doing or even if we didn't, how we have inflation explode on a comparative basis. This has profound implications and cascades through to GDP Growth reporting and the Mispricing and Malinvestment decisons that subsequently result. 

 

IMPUTATIONS
Of all the inflation distorted items in the category of "Uni-Directional Inflation" in my chart above, the one that few undertand, and even fewer publically discuss, is the concept of "Imputations".  Imputations are fundamentals about dollars that do not exist  and dollars that do not even change hands. They are in some instances a replacement measurement of “notional value”.

The following table summarizes the degree to which they are applied and the magnitude of their current distortions. (The details are discussed in: Economic Growth - Fake Numbers, Real Growth, Consequences of Lies.)

 

FALSE GROWTH

This level of distortion will quickly become fatal as corproations make investments based on expected economic growth. As we will show, corporations have been forced to stop believing government numbers. Their revenue and sales have shown reality is simply quite different from government distortions.

The reason John Williams started tracking government statistical adjustments was because his corporate accounts couldn't rationalize the difference.  This was years ago and has now grown into an independent business operating a government "ShadowStats" service. Using simply ShadowStats inflation adjusted numbers, GDP growth is overstated by minimally 10.5%.

 

HOW THE DISTORTIONS GROW
If you have false Inflation and false Growth, you will foster Mispricing and Malinvestment.

MISPRICING
When an investment does not YIELD more than  REAL  inflation, plus a premium to REFLECT the additional risk of the underlying asset class, you have not only a poor invesment but an asset that is mispriced. An asset's value is based on this being achieved.

Monetary Malpractice of unsound money will consistently lead to mispricing.

When a nation's growth and inflation are overstated, the nation's currency is overstated.

By our measures and many Forex professionals, the US dollar is presently overvalued by 40 - 60%. This has resulted in the following:

MISPRICING IMPACT: DUE TO US DOLLAR & RISK DISTORTIONS

  • US DOLLAR Example: It is Cheaper to 'offshore' than build where the dominate market exists -- RESULT: 44,000 Manufacturers leave America over a 13 year period.
  • US DOLLAR Example: It is often Cheaper to throw away a Durable Good rather than Repair it. -- RESULT: Complete destruction of Service Repair Industry (From Appliance repair to Cobblers)
  • US DOLLAR Example: Personal Goods (from shoes, clothing to household consumables) Rise slower than Disposable income -- RESULTS: A 70% Consumption dependent economy emerges.
  • RISK Example: Cheap Corporate Financing makes a Leveraged Corporate Retail Chain more competitive than Small Independent Family enterprises. -- RESULTS: "MA & PA" Replaced by corporate chains & an over-stored America
  • RISK Example: Leveraged, Bank Financed Buyouts are More Lucrative than Cash Stable Enterprises Innovatively Investing with Long Term Plans. -- RESULTS: Gutted Industrial Base and Volatile Financial Markets.

SUSTAINED AND ACCELERATING MISPRICING

Mispricing will continue to occur and worsen due to:

  • Massive amounts of debt are being allowed by regulators to be kept "off balance sheet".
  • Whether structures such as SPVs, SPEs,  SIVs etc., debt and material obligations are given no visisbility to investors in making valuation and pricing assessment.
  • Murky Contingent Liabilities agreements and Guarantees are presently unreported  as 'off balance sheet' items. Extremely large derivative SWAP agreements are being unreported with potential collateral demands.
  • Large "material financial impact information" such as Shadow Housing Inventories and delayed foreclosures are being given forebearance by government regulators. This is stopping the price discovery process from working effectively and keeping prices artificially inflated. This is being done to protect collateral values and defer loan loss write downs.
  • Government is pressuring credit rating agencies to maintain elevated credit ratings on sovereign debt. This is distorting the risk free and risk adjusted valuations.
  • Sustained cheap money is allowing excess leverage to be used against investments that would be considered malinvestents if money was priced anywhere close to historical norms.

This list is only the tip of the iceberg since  sustained Monetary Malpractice with its consequential Moral Hazard and Unintended (or INTENDED) Consequences has resulted in broad based mispricing and dysfunctional markets.

MALINVESTMENT
A malinvestment in its most basic terms is an investment that does not produce more than it costs in real terms. A Malinvestment in Austrian Economics terms is one that is OVERPRICED due to excessive leverage available whether it be credit availability or abundance of paper fiat money created out of thin air.

FLAWED & OBSOLETE ACCOUNTING
In the current Dysfunctional Markets, to an ever increasing degree, it can not be determined if an investment is a malinvestment, because the amount of debt, financial contingencies and financial guarantees are hidden from investors by offshore entities. Without visibility to this information no determination can be made.  The entire global bond debt market, which approximates $200 Trillion, hinges on this blatant obvuscation.

NON-PERFORMING LOANS
If markets weren't dysfunctional and malinvestment running rampant, then the 'canary' of non-performing loans wouldn't be as prevalent as it is. Whether we are talking consumer debt from mortgages and HELOCS (Home Loans) to student loans, levels of delinquencies, forced refinancing, defaults and personal bankruptcies are at all time highs. If it wasn't for historic and unprecedently low interest rates, which allow commercial and government debt 'roll-overs', we would be witnessing bankruptcies on a massive scale. Malinvestments are presently being 'papered' over by the printing presses of the central bankers.

CAPITAL EXPENDITURES
When money is as cheap as it presently is, then it would be expected that opportunities should be endless to put money to work based on substantially lower hurdle rates. This is not the case because malinvestment is so pervasive, that CFO's cannot see satisfactory risk adjusted investments. Corporate takeovers are down substantially, IPO's are nearly non-existant and corporate capital expenditure is in near free fall as shown to the right.  This is astounding when considering that REAL interest rates are negative.

SAVINGS VERSUS LOAN LEVELS
If investments weren't seen to be mostly malinvestments, than why is there $2 Trillion more in bank savings than in bank loans? These are bank deposits paying close to zero. The short answer is there is nothing worth investing in when considered on a real, risk adjusted valuation basis.

LEVERAGE REQUIRED AND DEBT HELD
Many investments today are currently only profitable through the application of excessive, cheap leverage. Based on the 'greater fool' philosophy of investing, leveraged investors hope to 'flip' and be out before cheap leverage shifts against them.

CONCLUSION

DYSFUNCTIONAL MARKETS

Markets have become so dysfunctional with so much cheap money chasing so few real opportunities, that collateral values within the rehypothecation process are now in jeopardy and exposed to collateral contagion.

Real economic growth cannot return without real top line corporate growth. It simply isn't there as is seen by falling CAPEX and money going into savings.The financialization focus continues to be strictly on bottom line growth and specifically non operating income. This is the area where the financial engineers are employed today. This works for profits in the short term but strangles growth and profits in the long term.

 

"In America the smartest engineers are primarily engaged in creating financial ways to take money out of the pockets of other"
Chinese Government Economic Official

What would things look like if the Fed wasn't engaged in Monetary Malpractice?

  • Interest rates would be higher,
  • People would save more and spend less,
  • Government would spend within its means,
  • People would spend within their means,
  • There would be decreased consumption,
  • People would invest more,
  • Stock values would track company value and efficiency more closely,
  • Government would shrink,
  • America would produce and manufacture more,
  • Trade deficits would shrink,

The economy would recover and become healthy.

 

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Sun, 01/27/2013 - 16:08 | 3189411 francis_sawyer
francis_sawyer's picture

Who got paid to come up with all those charts & graphics? Hot damn! [there's a USE for college graduates after all]... Can you imagine sitting thru THAT PowerPoint presentation in the conference room?...

~~~

http://www.youtube.com/watch?v=vmWZl-Fm5GY

 

Sun, 01/27/2013 - 16:19 | 3189427 Popo
Popo's picture

I stopped reading after he misquoted Milton Friedman.   "First and foremost"?    Fail.

Sun, 01/27/2013 - 16:21 | 3189431 akak
akak's picture

He also mistakenly used the word "incredulous" in place of "incredible".

Sun, 01/27/2013 - 17:11 | 3189498 RafterManFMJ
RafterManFMJ's picture

Still it's better than CNN, right?

Sun, 01/27/2013 - 17:55 | 3189554 Muppet Pimp
Muppet Pimp's picture

This is a profound post.  Really sums it all up.

This level of truthiness is also why Gordon T Long is not allowed among the mantle of our Ivy League Quack eCONomists.  Truthiness is not allowed in that group, only loyalty to the failed statist doctrines will do.

Interestingly enough, when the failed doctrines begin to become so obvious even a 5th grader can see it, the high preist of Bullshit shifts his preaching such things as alien attacks and trillion dollar coins.  Hmmm.

Sun, 01/27/2013 - 18:06 | 3189570 francis_sawyer
francis_sawyer's picture

 "Garbage In, Garbage Out"!... Could have stopped there... [but when you get paid by the word]...

Sun, 01/27/2013 - 18:35 | 3189590 Muppet Pimp
Muppet Pimp's picture

FYI anytime profound stuff is talked about on chat it gets all jiggered up so here it is on the main page (click up or down just to show this post is visible please)

 

Muppet:

is the consensus view on hsbc buying all that silver that they are going to cover their massive shorts? (I am taking at face value those who claim they are way short btw)

Muppet:

if all that talk is true, the silver guys should not sell to the manipulators

Muppet:

fuck em

Muppet:

cut em off

Muppet:

if it is a known truth that they are doing what folks say they are doing (naked shorting of PMS) the silver producers should cut em off

Muppet:

or at least sell to an intermediary to mark up the price and make a profit

Muppet:

or through 10 intermediaries, lol

Muppet:

cut em off while they squeeze supply forcing max pain bitxhez

Muppet:

the manipulators need max pain

Muppet:

so they don;t do it again

Muppet:

they need to have burned fingers

Muppet:

or worse

Muppet:

or if the us federal gubmint was not complicit they should be buying up that supply to sell to our people

Muppet:

the mint ought to get on the horn and buy up the supply

Muppet:

we got money for every nation on earth it seems, and we got fiat

Muppet:

if O gave a shit about his people he would buy the supply up for us

Muppet:

(i know this is simplistic rambling)

Muppet:

but if the mint is out of silver, and HSBC is getting it in poland, why doesn;t the mint try a little harder for crying out loud

Muppet:

HSBC is convicted money launderer

Muppet:

fuck them

Muppet:

play hardball

Muppet:

if we can dole out money around the globe we should not be playing second fiddle to HSBC of all things

Muppet:

WTF

Muppet:

throw the poles a bone if you have to, it is all fiat anyway

Muppet:

not like we have a budget or anything

Muppet:

a dove just came back

Muppet:

have not had doves in some time...like a month or so

Muppet:

COOL

Muppet:

they were always in pairs, Ill let you know if #2 shows up

Muppet:

why was all of that erased

Muppet:

my chat just went upside down

Muppet:

the newest posts moved to the bottom, oldest to the top

Muppet:

WTF

If this post is visible hit up or down plz and if you have the resources or knowledge to investigate do so.  Thanks

 

Sun, 01/27/2013 - 18:47 | 3189609 Muppet Pimp
Muppet Pimp's picture

In summation for those who don't want to read that:

 

Why is the US mint out of silver while HSBC buys it no problemo from the poles?  Is US .gov complicit in allowing a known money launderer to secure supply while they hold out on their people?

Sun, 01/27/2013 - 19:30 | 3189696 clara-to-market
clara-to-market's picture

Final analysis?

We're screwed.

Fuck Ben Bernanke.

http://www.angrysinner.blogspot.kr/2013/01/sunday_27.html

Sun, 01/27/2013 - 16:08 | 3189413 DoChenRollingBearing
DoChenRollingBearing's picture

The more flawed the data, yes, the more garbage comes out.  I think we all know that here at ZH.  I learned this lesson years ago.  The best things to buy (and verify!) in these times of lies and market rigging are precious metals.

Replacement bearings for your cars would be a close second though especially if you own Korean ones...

Sun, 01/27/2013 - 16:34 | 3189446 I think I need ...
I think I need to buy a gun's picture

Bearings are holding their value right now as well ;)

Sun, 01/27/2013 - 16:45 | 3189461 knukles
knukles's picture

Not only flawed I/O relationships, but analytics as well.
For example, long term historical returns in capital markets are not distributed normally as might be pictographed (so simple a caveman, etc) by a Poisson or Gaussian distribution, but rather can be well described as Leptokurtotic.
Which means that there is a significant main mean and as one moves toward the tails which are longer and more expansive than the norm, one also finds "mini means" of significance, so to speak.
One might then reasonably conclude whilst overlaying conceptually longer cycle theory and human behavior that for Extended Periods of Time, the "normal" distribution within which one is resident (stasis if you will) rests in a "mini mean" far far away from the main mean.
Thus explaining longer term market trends (long cycle, generational, Kondratieff, etc) which might display a central tendency mired in lengthy periods of overly positive or negative (above or below  long term normal) outcomes.
Thus, mean reversion might take upon new meanings with respect to numerical valuation for extended periods that seem to grossly diverge form the Long Term mean.  Can such be our current economic malaise?
Further, the relationship between the main and mini means has been postulated by some to be of a relatively fractilious nature....

Now, this line of thinking has actually been around for some 20+ years.  Which I remember well as having been told that I don't have a clue, STFU and if you talk like this anymore you're loosing all your credibility, will not be allowed to speak with clients, and will get fired.  Not that it helped much that I'd told one of my bosses who was a big muckety muck in the FAF in answer to his question as to why I was not pursuing my CFA charter, that "I had no interest in re-memorizing the token knowledge which has so admirably allowed active managers to under-preform efficient capital markets."
Only later to be told after another superior returned form one of the "original behavioral finance" symposiums at "Harvard" that I might find that field valuable and interesting.

And some of you you wonder at times about money management firms, eh?

Sun, 01/27/2013 - 21:16 | 3189956 fonzannoon
fonzannoon's picture

knuckles you should have sat there and sold proprietary products while telling your clients you have no conflicts of interest like a good boy and not made such a stir. It's good livin!

Sun, 01/27/2013 - 17:17 | 3189504 TexasAggie
TexasAggie's picture

In the computing world, GIGO (Garbage in, Garbage Out) is replaced by the following GIGO (Garbage In, Gospel Out) is what the MSM, LSM, Most of the TV Networks are spouting is the last, Garbage in, Gospel Out.

 

 

Sun, 01/27/2013 - 16:15 | 3189425 q99x2
q99x2's picture

Really good article.

Last conclusion about what would happen without FED intervention is a bit optimistic.

Sun, 01/27/2013 - 16:42 | 3189457 TrustWho
TrustWho's picture

...got obama re-elected

Sun, 01/27/2013 - 16:46 | 3189462 Son of Loki
Son of Loki's picture

China losing its manufacturing edge:

 

Manufacturing companies are bypassing China and moving factories to cheaper locales in Southeast Asia. Lever Style's Stanley Szeto explains why his company is gradually moving production to Vietnam and Indonesia.

 

 

http://live.wsj.com/video/why-clothes-might-not-be-made-in-china-much-lo...!BD74F821-AA8A-4F4D-B7D2-60BFC3DFB763

 

Ralph Lauren moving 25% of their manufacturing out of China...Wow!

 

Globalization....

Sun, 01/27/2013 - 17:30 | 3189516 laomei
laomei's picture

Not really a big shockerl.  China has stopped supporting the drive for basic level manufacturing for a while now.  It's a main contributor to pollution and the return just isn't very high.  The big deal however will be that these brands which wish to stay in the Chinese market, will be required to maintain manufacturing facilities to a degree or they will face an effective market lock out, with domestic brands taking their place.

 

The current generation is also not all that cool with the idea of low-level factory work for meager pay anymore.  A good number still are, but the regions that need to be targeted for it are not ideal for export activities.  Moving on up the value chain and taking a bigger piece of the pie is what awaits.  Those factories you're building and investing in, will be making goods for Chinese companies in under a decade.

Sun, 01/27/2013 - 16:47 | 3189466 Troy Ounce
Troy Ounce's picture

Great article. Solid research. Thanks

Sun, 01/27/2013 - 16:54 | 3189479 PUD
PUD's picture

No, he is incorrect in his assumptions. We can never ever hope to prosper so long as fractional banking, usury and debt money are the foundations of the system. 

This is a mathematical issue not an ideological one.

So long as debt money is the cornerstone of a global financial system the ill effects of compounding money supply, debt, interest on accruing debt etc will result in the same fate.

I matters not how honest or honorable the players are. So long as money equals debt we will reach the point of saturation regardless of rules, laws, regulations,supervision or prudence.

It's the math of exponents

It's the math of compounding

This basic truth is lost on everyone and hence, no matter what anyone does, we remain mired in the same shit.

The only solution lies in sustainability. Sustainability in resource use and the creation of money... the dis-solution of nationalism and disparate currencies and agendas. 

The only solution is a philosophical one not a monetary one. A change in the zeitgeist. A change in the agenda of humankind away from self and towards equality and survivability. This cannot and will not be done without a complete overhaul of the current mindset and an abandonment of the status quo. You can change the gears all you want but if the blueprint is flawed the machine will still break.

If the fed was gone but the mindset and functionality of the system of debt money remained, nothing would change. Who says higher interest rates would be a good thing? People would save more? Perhaps but borrowers would also pay more wouldn't they? There is no good or right interest rate...all usury systems end up dead in the end...it's math not policy

Sun, 01/27/2013 - 16:59 | 3189487 Colonel Klink
Colonel Klink's picture

All the pretty pictures up top just verify that things are 100% fucked up.

Sun, 01/27/2013 - 17:14 | 3189500 slingshot
slingshot's picture

Nothing matters except price  --  Everything else is meaningless  --   Take advantage of markets fluctuations up and down  -  Markets overextended, profits sliding,

economies going nowhere ,ect. ect.  nothing matters at the moment  -   Central banks are in charge,  EU will ease again soon ---bubble in process.  Just short the eminis when your favorite emas dailies  crossover down then buy the dip when they recross up -  repeat forever

 

Sun, 01/27/2013 - 18:57 | 3189623 adr
adr's picture

The problem is all the dip buying keeps sending everything higher. To the point where it becomes unprofitable to engage in any sort of commerce.

We are already at the point where input costs are so high, and retail price pressures are so great, that there is no money to be made for anyone.

If you can't raise retails, because nobody will buy, and you can't cut costs, because you already cut everything you can, what can you do? If each unit costs $5 and you have $3 in overhead to pay for, break even is $8. To make some profit you wholesale for $9. You hear that the retail of $20 isn't selling but 25% off is. The retailer has 50% of their margin tied up in overhead, profit is about $5. Selling for 25% off is more or less break even for the retailer. If the only price the good will sell for is $15, the retailer is going to come at you with a wholesale price of $7, something you can't do.

About the only thing you can do is try for $8.25 for $17 retail. Now you only make $.25 and most likely can't run your business because cash flow is too tight. The retailer just saw their profit cut 90%.

This is what I deal with on a daily basis. I could really give a fuck about what the stock market is doing. All you are doing is booking paper you hope to use. What good is a bank account that increases if there is nothing to buy with it?

Sun, 01/27/2013 - 17:35 | 3189524 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

As one of the few stock bulls on zh (or rather inflationist) I just want to tell you guys if you don't fight the fed by buying silver Bernanke will continue to rape you.

Sun, 01/27/2013 - 17:40 | 3189533 Atomizer
Atomizer's picture

Its a good thing my silver is in physical coins. :)

Thanks for warning

Sun, 01/27/2013 - 17:51 | 3189549 jonjon831983
jonjon831983's picture

No worries, plenty to go:

 

"Carney Says Flexible Central Banks Not ‘Maxed Out’ on Policy"

http://www.bloomberg.com/news/2013-01-26/carney-says-flexible-central-ba...

"Coene Says ECB’s ‘Nuclear Deterrent’ Ideally Left Unused"

http://www.bloomberg.com/news/2013-01-26/coene-says-ecb-s-nuclear-deterr...

Sun, 01/27/2013 - 18:35 | 3189595 Stuck on Zero
Stuck on Zero's picture

Hedonics.

The banks switched to Tungsten from gold because gold became too expensive. 

The Mint switched from Silver to Copper.

People switched from beef to chicken.

Networks switched from drama to real TV.

Congress switched from leaders to kleptocrats.

 

Sun, 01/27/2013 - 18:40 | 3189596 Practical Cogitator
Practical Cogitator's picture

"Using simply ShadowStats inflation adjusted numbers, GDP growth is overstated by minimally 10.5%."  

Ask what incredible levels of distortion and malinvestment those lies have created?  How might your decisions have changed had you known that all those supposed green bars of quarterly GDP growth were not green at all, but red!

How could this be happening to such a proud and formerly productive country?  [Hint: cheating, lying, stealing, collective corruption across the board -- governmental, institutional, personal, everywhere from top to bottom]

Gordon T Long's answer is shown graphically, beginning at the senior-most levels of Uncle Sam's bureaucracy and the uppermost reaches of the entire American economy, with GDP adjusted for John Williams' ShadowStats CPI.

 
Sun, 01/27/2013 - 18:39 | 3189600 adr
adr's picture

The stock of one of the retailers I sell to is near to hitting all time highs. I just found out that three buyers, including mine, have been fired. Open to buy dollars have bee cut to zero, and te current on shelf inventory has never been lower.

I didn't receive a single order in December, and now I need to wait for another buyer to be assigned before I can get any orders. Reps I know that represent other corporations arein the same boat. Before my buyer was fired, he told me the company had no cash. Margins were compressed so much due to discounting to get rid of product, that there was no profit.

Yet, the stock market keeps taking the paper higher. Business couldn't be worse, stock could never be better. Something has to give, its pretty impossible for business to improve to match the stock price.

In the past two weeks I have heard some disturbing things about Target, Best Buy, Gander Mountain, Walmart, Dick's, Hibbett's, Sears, and JC Penney. All centered around lack of cash flow. Either the people in the entire buying and selling chain are lying, or the executives are. I don't know why a buyer would lie and say there is no cash, if there actually is. After all his job is to buy.

The executive on the other hand has every reason to lie. The majority of his compensation is tied up with the stock priceof the company. He tells the truth, the stock plummets. Telling the truth could cost the guy $100 million or more.

Who do you think is lying?

Sun, 01/27/2013 - 22:17 | 3190102 JR
JR's picture

The proof is in the reality of our "lyin' eyes," not in the believing of the Bernank. Thanks again, adr.

In watching retail shopping in recent weeks there’s little doubt in my mind that a large part of the primary cash flow is coming from stimulus – taxpayer money funneled to the “preferred” recipients. Biggest days are always EBT pay days.

The facts show that the [Obama] Administration’s policies “have resulted in a record expansion of government benefit programs to include over 100 million Americans.”

According to the government report, The Obama Administration: A History of Undermining Work Requirements For Welfare Recipients August 2012,When the Obama Administration announced on July 12, 2012 its plan to allow States to waive work requirements for welfare recipients,” it struck “at the heart of the successful 1996 welfare reforms that marked the first time welfare recipients were expected to work or prepare for work in exchange for benefits.”

Continuing: “Under the Obama Administration plan, States could apply to count as 'work' many activities previously rejected by Congress. A 2005 report by the nonpartisan Government Accountability Office noted that some States counted as 'work' such 'activities' as bed rest, personal care, massage, exercise, journaling, motivational reading, smoking cessation, weight loss promotion, participating in parent teacher meetings, and helping a friend or relative with household tasks and errands. (In 2006, the TANF program was altered to prevent States from counting these activities as work.)"

While figures show that more than 100 million people in the U.S. were receiving some form of Federal welfare - figures count mean-tested welfare, not Social Security or Medicare - in Q2 of 2011, they also show that  at the same time, “the share of the U.S. population that is working has plummeted to levels not seen since the early 1980s.”

Say the authors: “Starting with its failed trillion-dollar 2009 stimulus plan, the Obama Administration has taken repeated steps that increased the number of people collecting benefits across a range of programs like welfare, unemployment, food stamps, health care, and various refundable tax credits. At the same time, the Administration has engaged in a systematic effort to undermine work requirements that existed in a small number of government benefit programs such as welfare and food stamps. The Administration has even allowed millions of Americans with significant personal savings and assets to qualify for government ‘anti-poverty’ benefits.'"

For the specific programs, such as Providing States billions of dollars used primarily for more welfare checks, go to http://waysandmeans.house.gov/uploadedfiles/democrat_efforts_to_eliminate_work_requirements_august_2012.pdf

These “enormously expensive” Obama Administration benefit policy changes have cost a total of “over $500 billion to date since 2009.”

Just as informative in regard to the source of much U.S. ”consumer spending” is the report, NM Can’t Do Much About Abuse of EBT Cash, Tackles Other Issues by Jim Scarantino December 7, 2012.

It begins: “EBT cards intended to help needy families have bought vacation cruises out of Miami and illegal drugs in Spokane, Washington.  They’ve been used to gain entrance to Graceland, Disneyland, and Universal Studios, and many far less family-friendly establishments.

“In Boston, a jailed heroin dealer instructed a friend to tap EBT cash for bail money.

“An unlicensed tattoo artist in Minnesota accepts EBT cards.  They’ve been used inside Florida bingo parlors, dog tracks and bowling alleys.

“EBT cash has been spent in Hawaii…by people from Missouri supposedly too poor to buy their own food but resourceful enough to travel to islands in the middle of the Pacific Ocean.

“The problem is nationwide and skyrocketing (see reports collected below).  Billions of dollars flow through EBT cards. Once the cash is withdrawn, it is spent at the card holder’s discretion without any trace of where it went or what it purchased.

“In our first report on EBT abuse [1], we showed New Mexico EBT funds over a two month period being accessed in 45 states, including Hawaii.  Our second report [2] detailed how EBT money was used in a strip club, bars, liquor stores, smoke shops, a ski resort, a bowling alley, casinos, and may have purchased money orders to send New Mexico welfare funds out of the state, and maybe out of the country.” …

http://newmexico.watchdog.org/16557/nm-cant-do-much-about-abuse-of-ebt-cash-tackles-other-issues/print/

So much for "consumer spending," the American "economy," and recovery.

Sun, 01/27/2013 - 22:49 | 3190187 Kingkongballs827
Kingkongballs827's picture

Don't Wait. Burry your Guns, Gold, Ammo, and Food Now. Can be sealed with Nitrogen to keep moisture out for life. 

http://www.ebay.com/itm/160963721916?ssPageName=STRK:MESELX:IT&_trksid=p3984.m1555.l2649

And if you think you can go buy all the Stuff in Home Depot, go do it!

 

Sun, 01/27/2013 - 23:01 | 3190208 dolph9
dolph9's picture

Yeah, I mean Lance Armstrong = Amerika.

If you haven't figured this out yet, the joke's on you.

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