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David Stockman's Non-Recovery Part 1: Post-2009 Faux Prosperity

Tyler Durden's picture




 

Few others are better equipped to comprehend both the insider's and outsider's perspective on what the government, the Fed, and the banks are doing in this so-called 'recovery' we are experiencing than David Stockman. Nowhere does he detail this better than Chapter 31 of his new book 'The Great Deformation'. In this first part (of a five-part series), he explains just what happened after the US economy liquidated excess inventory and labor and hit its natural bottom in June 2009. Embarking upon a halting but wholly unnatural "recovery," doing nothing but igniting yet another round of rampant speculation in the risk asset classes. The precarious foundation of the Bernanke Bubble is starkly evident in the internal composition of the jobs numbers.

 

Via David Stockman's book The Great Deformation,

After the US economy liquidated excess inventory and labor and hit its natural bottom in June 2009, it embarked upon a halting but wholly unnatural “recovery.” The artificial prolongation of the Bush tax cuts, the 2 percent payroll tax abatement and the spend-out of the Obama stimulus pilfered several trillions from future taxpayers in order to gift America’s present day “consumption units” with the wherewithal to buy more shoes and soda pop.

But there has been no recovery of the Main Street economy where it counts; that is, no revival of breadwinner jobs and earned incomes on the free market. What we have once again is faux prosperity. In fact, the current Bernanke Bubble is an even sketchier version of the last one and consists essentially of the deliberate and relentless reflation of financial asset prices.

In practice, this amounts to a monetary version of “trickle down” economics. By September 2012, personal consumption expenditure (PCE) was up by $1.2 trillion from the prior peak, representing a modest 2.2 percent per year (0.6 percent after inflation) gain from the level of late 2007. Yet half of this gain—more than $600 billion—reflected the massive growth of government transfer payments, and much of the rebound which did occur in private consumption spending was concentrated in the top 10–20 percent of households. In short, the Fed’s financial repression policies enabled Uncle Sam to fund transfer payments for the bottom rungs of society at virtually no carry cost on the debt, while they juiced the top rungs with a wealth effects tonic that boosted spending at Nordstrom’s and Coach.

The Fed’s post-Lehman money printing spree has thus failed to revive Main Street, but it has ignited yet another round of rampant speculation in the risk asset classes. Accordingly, the net worth of the 1 percent is temporarily back to the pre-crisis status quo ante. Needless to say, successful speculation in the fast money complex is not a sign of honest economic recovery: it merely marks the prelude to another spectacular meltdown in the canyons of Wall Street next time the music stops.

DEFORMATION OF THE JOBS MARKET: THE ECLIPSE OF BREADWINNERS

The precarious foundation of the Bernanke Bubble is starkly evident in the internal composition of the jobs numbers. At the time the US economy peaked in December 2007, there were 71.8 million “breadwinner” jobs in construction, manufacturing, white-collar professions, government, and full-time private services. These jobs accounted for more than half of the nation’s 138 million total payroll and on average paid about $50,000 per year—just enough to support a family.

Breadwinner jobs also generated more than 65 percent of earned wage and salary income and are thus the foundation of the Main Street economy. Yet after a brutal 5.6 million loss of breadwinner jobs during the Great Recession, a startling fact stands out: less than 4 percent of that loss had been recovered after 40 months of so-called recovery.

The 3 million jobs recovered since the recession ended in June 2009, in fact, have been entirely concentrated in the two far more marginal categories that comprise the balance of the national payroll. More than half of the recovery (1.6 million jobs) occurred in what is essentially the “part-time economy.” It presently includes 36.4 million jobs in retail, hotels, restaurants, shoe-shine stands, and temporary help agencies where average annualized compensation was only $19,000. This vast swath of the jobs economy—27 percent of the total—is thus comprised of entry level, second earner, and episodic jobs that enable their holders to barely scrape by.

The balance of the pick-up (1.1 million jobs) was in the HES Complex, which consists of 30.7 million jobs in health, education, and social services. Average compensation is slightly better at about $35,000 annually and this category has grown steadily for years. Its increasingly salient disability, however, is that it is almost entirely dependent on government spending and tax subsidies, and thus faces the headwind of the nation’s growing fiscal insolvency.

When viewed in this three category framework, the nation’s job picture reveals a lopsided aspect that thoroughly belies the headline claims of recovery. A healthy Main Street economy self-evidently depends upon growth in breadwinner jobs, but there has been none, even during the bubble years before the financial crisis. The Bureau of Labor Statistics (BLS) reported 71.8 million breadwinner jobs in January 2000, yet seven years later in December 2007—after the huge boom in housing, real estate, household consumption, and the stock market—the number was still exactly 71.8 million.

The faux prosperity of the Fed’s bubble finance is thus starkly evident. This is the single most important metric of Main Street economic health, and not only had there been zero new breadwinner jobs on a peak-to-peak basis, but that alarming fact had been completely ignored by the smugly confident monetary politburo.

Alas, the latter was blithely tracking a feedback loop of its own making. Flooding Wall Street with easy money, it saw the stock averages soar and pronounced itself pleased with the resulting “wealth effects.” Turning the nation’s homes into debt-dispensing ATMs, it witnessed a household consumption spree and marveled that the “incoming” macroeconomic data was better than expected. That these deformations were mistaken for prosperity and sustainable economic growth gives witness to the everlasting folly of the monetary doctrines now in vogue in the Eccles Building.

To be sure, nominal GDP did grow by 40 percent, or about $4 trillion, between 2000 and 2007. Yet there should be no mystery as to how it happened. As has been noted, total debt outstanding grew by $20 trillion during that same period. The American economy was thus being pushed forward by a bow wave of debt, not pulled higher by rising productivity and earned income.

Indeed, the modest gain of 7.5 million jobs during those seven years reflected exactly this debt-driven dynamic and explains why none of these job gains were in the breadwinner categories. Instead, about 2.5 million were accounted for by the part-time economy jobs described above. On an income-equivalent basis these were actually “40 percent jobs” because they represented an average of twenty-five hours per week and paid $14 per hour, compared to a standard forty-hour work week and a national average wage rate of $22 per hour. Thus, spending their trillions of MEW windfalls at malls, bars, restaurants, vacation spots, and athletic clubs, homeowners and the prosperous classes, in effect, temporarily hired the renters and the increasing legions of marginal workers left behind.

Likewise, another 5 million jobs were generated in the HES (health, education, and social services) complex. Here the job count grew by 20 percent, but it was mainly due to the fact that the sector’s paymasters - government budgets and tax-preferred employer health plans - were temporarily flush.

As discussed in part 2 of this series, however, these, too, were “debt-push” jobs that paid modest wages. While the steady 2.6 percent annual growth of HES jobs during the second Greenspan Bubble did flatter the monthly employment “print,” it was possible only so long as government and health plans could keep spending at rates far higher than the growth rate of the national economy.

 

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Mon, 06/17/2013 - 21:09 | 3666446 StarTedStackin'
StarTedStackin''s picture

Obama lied, the "Recovery" died.....

 

 

 

Unless this really IS "Recovery Summer IV"....... I don't believe Tyler ever gave credit where credit was due.........anyone seen the "Flush the Obowel Movement T-Shirts"?????? CLASSIC artwork......you can almost smell him.

Mon, 06/17/2013 - 21:33 | 3666616 RaceToTheBottom
RaceToTheBottom's picture

Have you even read Stockmans book???

Have you even read Stockmans chapter???

Have you even read this article about Stockmans chapter????

 

Yep, I thought so....

Mon, 06/17/2013 - 20:21 | 3666450 lotsoffun
lotsoffun's picture

don't confuse us with the facts that we can see, if we open our eyes.  i like hope and change more and more.

Mon, 06/17/2013 - 20:38 | 3666460 StarTedStackin'
StarTedStackin''s picture

"Hoax and CHAINS", HOAX and chains............

 

 

Seriously, other than escalating the Afghan war, leading to record troop deaths, What HASN'T Obama lied about?

 

 

 I for one am sure many a coward will down arrow this post, yet few will have the courage (or the stupidity) to attempt to answer the question!

Mon, 06/17/2013 - 20:39 | 3666491 lunaticfringe
lunaticfringe's picture

That's a fair question. This dude makes Nixon look like the pope.

Mon, 06/17/2013 - 20:43 | 3666497 StarTedStackin'
StarTedStackin''s picture

Thank You, for your astute observations......

 

 

 

the crowd here is fond of answering "both parties are the same"......stupes

 

 

Lunatic Fringe......We all know you're out there.......

Mon, 06/17/2013 - 20:54 | 3666532 PKF
PKF's picture

Both parties are the same....the same corporations pay party members so they can stay in office and uphold the corporate masters' wishes. 

What is the difference between them?  Having consumers/citizens fight over the paradigm of Left vs. Right is simply falling into the corporation's little game of 'divide & conquer.'  

I prefer addressing my anger toward the Corporate Banksters and not some silly party member. 

Mon, 06/17/2013 - 21:11 | 3666566 StarTedStackin'
StarTedStackin''s picture

How many QEs did Bush do, retard?

 

 

 

How does affirmative action judge knee grows on the content of their character?

 

 

 

Is 600 Billion the same as 1.8 TRILLION?

 

 

Stop Posting "Full Retard"

Mon, 06/17/2013 - 21:19 | 3666582 Bay of Pigs
Bay of Pigs's picture

No, your Red Team just gave us 9/11, the Patriot Act, Iraq and Afghanistan Wars, the TSA, among other gems.

Come on Ted, let's try to stay on point.

Tue, 06/18/2013 - 01:19 | 3667147 Chuck Walla
Chuck Walla's picture

No, your Red Team just gave us 9/11, the Patriot Act, Iraq and Afghanistan Wars, the TSA, among other gems.

BoP, the Progressives gave us all that. Bush is a Progressive. The difference between red and blue progressive's is like Sunni and Shi'ia. They fight alot, but in the end the goal is control, their mutual interests dovetail.

As the world progresses to its newest Age of Darkness....

FORWARD SOVIET!

Tue, 06/18/2013 - 11:03 | 3668113 roadhazard
roadhazard's picture

I always laff at how quick a repubican can turn into a RINO before my very eyes.  A repubican is only a repubican until he fucks up, then it's all about, "WE did'n do nothin'." wingers crack me up.

 

Mon, 06/17/2013 - 21:23 | 3666593 Jack Burton
Jack Burton's picture

Clearly cause and effect escape your grasp. Do you remember where the US economy stood when Mr. Bush left office? What was the last deficit that Mr. Bush handed off on leaving office. Do you remember this quote "This sucker is going down"?

Does the word Iraq invasion and a trillion dollar cost mean anything.

How about a conquered Afghanistan a free Ossam and another trillion dollar cost?

No, where was the stock market when Mr. Bush walked away. How was his job growth record after 8 years of his tax cuts?

No, none of this rings a bell?

Noboby buys into the Republican versus Democrat hoax anymore. This is a one party state. The Republican Party is a show for you guys, to get you all excited about your great candidates. The Democrats have the liar and warmonger Hope and Change version of Bush. Obama "The Black Bush".

FOX news weakens the mind, it destorys rational thought, critical thinking and independent thought. Give it up, FOX will not set you free. Why believe the giant hoax machine that the media is feeding you?

"Stop Posting, Full Retard". If you called ME a retard, I would consider  it as a badge of honor!

 

Mon, 06/17/2013 - 21:52 | 3666660 kito
kito's picture

@startedstackin...........clearly your short time here on zh has been for naught.........................

Tue, 06/18/2013 - 10:57 | 3668082 roadhazard
roadhazard's picture

Persidents in this corporate run society are there to take the heat off of those raping the system. BushCo and Obama are not smart enough individuals to keep up let along be responsible for much besides signing their names to legislation that benefit the rich.

Mon, 06/17/2013 - 21:09 | 3666562 NoDebt
NoDebt's picture

"What HASN'T Obama lied about?"

'Fundamentally transforming' the nation.  He sure as shit didn't lie about that.  WHAT we would transform into he didn't say at the time.  Now you know.  Don't like it?  Put a comment in the suggestion box.  Somebody from the IRS, FBI or NSA will get back to you shortly.

You get an up arrow, mostly because of the Red Rider reference.  Tom Cochrane put the song 'Lunatic Fringe' to tape the day John Lennon was killed.  Plus it was on Miami Vice and who the hell in their right mind doesn't love Miami Vice?

Mon, 06/17/2013 - 21:14 | 3666572 StarTedStackin'
StarTedStackin''s picture

Ummmmmmmm.............FAIL....

 

 

he said "Fundamentally transforming the nation" would be for the better.........

 

 

 

P.S. I remeber the day Lennon was whacked.....I had a big party (not for that) and played "Working Class Hero" in his honor.

Mon, 06/17/2013 - 22:08 | 3666688 NoDebt
NoDebt's picture

From his perspective, it IS for the better.

Your mileage may vary, however.

No up arrow this time.  You have shown the makings of a solid 2nd class troll here on ZH, judging by your postings both above and below.  I figured I'd extend a hand, try to relate.... you apparently want none of it.  Best of luck to you.

Mon, 06/17/2013 - 22:10 | 3666710 ISEEIT
ISEEIT's picture

Who are you freak and what is your solution?

 

 

 

 

 

 

 

 

 

 

 

Mon, 06/17/2013 - 20:48 | 3666517 Things that go bump
Things that go bump's picture

Like you've never been lied to by a politician before. The last time I believed a guy who said "trust me," I got a permanent reminder of my naivete. She is 37 now. 

Mon, 06/17/2013 - 21:15 | 3666576 StarTedStackin'
StarTedStackin''s picture

LOL, there's that "they are all the same" bullshit that the lying socialist media trots out in defense of Democrat scumbuckets that get caught.

 

 

 

Pathetic......., really.

Mon, 06/17/2013 - 22:41 | 3666792 Herd Redirectio...
Herd Redirection Committee's picture

Ted, you really really haven't been paying attention.

People aren't making excuses for the Dems when they say "both parties are essentially the same" (working for the same paymasters).  They are telling you how it is.  When people say "Divide and conquer" they aren't making excuses for the Dems.  They are telling you how society has been divvied up.

Some people swear the Dems are looking out for them, some people swear the Repubs are looking out for them.  Both groups are mistaken.  The parties have been compromised at the very highest level.

As you were.

Mon, 06/17/2013 - 20:26 | 3666463 ebworthen
ebworthen's picture

"The Eclipse of Breadwinners"

David Stockman is on point, and firing on all cylinders.

Mon, 06/17/2013 - 21:20 | 3666494 StarTedStackin'
StarTedStackin''s picture

"makers vs. takers"    google it!

 

 

Once again, down arrowing COWARDS down arrow, yet lack the mental ability to refute my statements.

 

 

 

Quite pathetic, actually.....

 

 

 

Mr. Durden, could we get a tally of up and downs, i.e who's doing it?

 

 

 

Many thanks for allowing my diverse viewpoints to post on your site!

Mon, 06/17/2013 - 22:17 | 3666716 NoDebt
NoDebt's picture

Well, I know one person who down-arrowed you.

Put your own damned words on the screen.  Stop telling people to do google searches.  This is 'Fight Club' not 'Fight Club by Proxy and Reference.'

Tue, 06/18/2013 - 09:56 | 3667728 El Diablo Rojo
El Diablo Rojo's picture

@ started - I logged on just to down arrow all your comments in this thread.  Hitting return 18 times between incomplete sentences doesn't make a point other than you are stupid.

Tue, 06/18/2013 - 11:40 | 3668274 nofluer
nofluer's picture

Red Devil - I logged on, but haven't down-arrowed anyone yet.... yet. I just come to the movie for the free popcorn.

Mon, 06/17/2013 - 21:27 | 3666603 The Shootist
The Shootist's picture

I need this book.

Mon, 06/17/2013 - 20:26 | 3666464 RaceToTheBottom
RaceToTheBottom's picture

This mess has been programed for a long time, at least from Reagan and more likely since Nixon.

Mon, 06/17/2013 - 20:46 | 3666509 TrustWho
TrustWho's picture

People do not understand the huge impact the Civil War had on changing this nations course from the founding fathers' vision. The essence of the war was State's Rights. The South, who claimed the right of a state to secede from the union, lost. The United States of America was changed from a democratic Republic to a democracy. 1913 was huge year in the transformation. The founding fathers never believed a democracy would work and their reason has been proven correct.  

Mon, 06/17/2013 - 21:11 | 3666567 HowardBeale
HowardBeale's picture

Morris Berman discusses the impact and actual cause of the Civil War (it wasn't slavery) in his book, Why America Failed; of course it is a controversial claim, as most--if not all--Americans have been sold the "freedom for the slaves" story. I, myself, just accepted the story without ever considering that there were less noble causes. The result, as Berman describes it, is that those aspects of the South that were culturally significant and worthwhile were sacrificed to what was then the Wall Street "ethic" of individualism, as in, if you can fuck your neighbor out of anything and everything he owns, so much the better; this, in contrast to a more republican (as orginally used: everything for the good of the community) ethic that, despite the slave situation, was the predominant characteristic of socioeconomic organziation. Of course it is difficult to accept anything good about the South in the face of slavery, but there you have it. 

The book is really a worthy read. IMO.

Mon, 06/17/2013 - 20:46 | 3666510 ISEEIT
ISEEIT's picture

It went into full effect under HWB who essentially resigned the Presidency making way for Bill 'slick willy' Clinton. The batton was next passed to GWB, the 'financial crisis' was engineered to insure that B.O. assumed his role.

Next up is Rand Paul.

Right/Left/Right/Left...

Won't be long though before the game ends.

That isn't going to be good. Not at all.

Mon, 06/17/2013 - 21:23 | 3666592 StarTedStackin'
StarTedStackin''s picture

Yes, it certainly couldn't have been since Hoover, which is apropos......since you SUCK!

Mon, 06/17/2013 - 21:31 | 3666614 WmMcK
WmMcK's picture

I vote for Wilson (Woodrow, not Ronald).

Tue, 06/18/2013 - 01:25 | 3667157 Chuck Walla
Chuck Walla's picture

I vote for Wilson (Woodrow, not Ronald).

WW was the first really destructive Progressive. TR was just a rich boy wannabe.

FORWARD SOVIET!

Mon, 06/17/2013 - 22:15 | 3666724 RaceToTheBottom
RaceToTheBottom's picture

Stop being such a dickhead.  It was a trick question, it was since 1913, you dickless wonder wanker.

Mon, 06/17/2013 - 22:21 | 3666740 ISEEIT
ISEEIT's picture

Pick a place jackass. The game from HWB to BO has been unambiguous. This country has been f'ed for a long time punk. But the play these last 25 years has been relentless and crystal clear.

Give up the not so sly attempt to play ideology. Not buying your heroes and sure as hell not buying your religion either.

ITS ALL WRONG.

Tue, 06/18/2013 - 00:51 | 3667114 buyingsterling
buyingsterling's picture

If you actually want some feedback on your comments, or even just want people to continue to read them, try civility and some degree of perspective. You won't find many Obama fans here, most believe he's a repulsive demagogue. Nor will you find many GOP fans here; they can often talk a good game about freedom, but it's mostly (less effective) demagoguery.

What you will find here are people who are awake. They understand that standard politics is essentially masturbatory - it can feel good, but nothing important ever gets accomplished. The root problems which have driven the world to the brink of dissolution/total tyranny are the topics of discussion here. And outside of a literal handful of people in 'politics', those issues are never addressed head-on in the 'polite company' of contemporary politics. If getting to the nub of things and exploring the (likely futile) ways of averting catastrophe/enslavement interests you, or you're keen on protecting yourself and your loved ones from what is coming that cannot be stopped, this is the place for you. Try reading more than you write for a while, and see what sinks in.

Tue, 06/18/2013 - 02:31 | 3667226 Spanky
Spanky's picture

+1

Well said.

Tue, 06/18/2013 - 05:17 | 3667292 Offthebeach
Offthebeach's picture

Try since Hamilton.

Tue, 06/18/2013 - 12:01 | 3668346 nofluer
nofluer's picture

Race - actually the founding father's construction was murdered by the "supreme" court at the battle of Marbury vs Madison.

If the founding fathers had intended for the courts to have the power of judicial review, a few words in the Constitution would have easily given them that power. Since those words are absent, it can only be presumed that those who wrote the Constitution did NOT intend the courts to be anything but a subsidiary to the Executive and the Legislative branches.

Marbury vs Madison gave the Supreme court veto power over both the executive and the legislative branches, thus it is the Supreme Court that rules the land without restraint or counter-balance.

With the current set-up, you can end up with the courts dictating to the legislative and executive - and it does happen. (In the situation of the KC school system, the court took over the administration of the municipal school system. When the legislature/supervisors refused to vote funds for the grandiose orders of the judge in the case, the judge threatened to have them arrested for contempt of court and held until they voted the funds. The court got its funds, and now there is what was sometimes called Taj Mahal High School in the center of KC - with marble columns and a huge swimming pool & etc... the idea being to attract students from the suburbs to the center city in the name of "integration." Last I heard, which was some time ago, very few "students" actually went there. I believe the judge who ordered it all is no longer among the living. - ie he has escaped the tax burden he imposed on the rest of the State.)

 

Mon, 06/17/2013 - 20:40 | 3666486 ShrNfr
ShrNfr's picture

Spending on medical care is an overhead expense. Obviously necessary if you want to continue to live, but perhaps not in the quantity we currently have. I have never known a company to increase its earnings by increasing its overhead rate. I doubt it is different as a country. The balance of the government spending is also in the "overhead" category. Trying to grow the ultimate economy with the amount of "overhead" we have is like trying to do the 200 meter butterfly. You sure are not going to come in in first place in the heat that is for sure.

Mon, 06/17/2013 - 20:40 | 3666496 Hedgetard55
Hedgetard55's picture

He got all his stuff from Zero Hedge commentors, who were 4 years ahead of him.

Mon, 06/17/2013 - 21:06 | 3666557 caimen garou
caimen garou's picture

+ a billion, good artical but old news. good to get a refesher on the subject I guess.

Mon, 06/17/2013 - 20:54 | 3666534 scrappy
scrappy's picture

I have to chime in on this one.

Mr. Stockton presided over neo-economics implimentation for Reagan.

This "Chicage School" policy has led to it's logical conclusion.

Success if you are in the top %.

Epic Fail For Most Of Us.

Now he get's "religion".

Hmmn.

His book is 6 yrs too late.

The Final Crash: Addictive Debt and the Deformation of the World Economy [Hardcover]
Hugo Bouleau (Author)

http://www.amazon.com/The-Final-Crash-Addictive-Deformation/dp/095552170...

I also detest this other example of similarity of book titles from a different author..

Aftershock: The Next Economy and America's Future by Robert B. Reich (Apr 5, 2011)

http://www.amazon.com/Aftershock-Next-Economy-Americas-Future/dp/0307476...

Aftershock: Protect Yourself and Profit in the Next Global Financial Meltdown by David Wiedemer, Robert Wiedemer and Cindy Spitzer (Nov 9, 2009)

http://www.amazon.com/Aftershock-Protect-Yourself-Financial-Meltdown/dp/...

It's plain misdirection, "Confusion in the Marketplace"

TM Law.

PS, "The Final Crash" is excellent.

 

 

 

 

 

 

 

Tue, 06/18/2013 - 00:11 | 3667032 The Paucity of Hope
The Paucity of Hope's picture

David Stockman recognized the failure of Reaganomics in the 1980s and said as much. Then the comment was that Ron took him out behind the woodshed. His plan was to reduce government spending and that never happened. You can see the decline (in hindsight) even into the 1960s (1950s if you consider Eisenhower's warning about the Military-Industrial Complex).

Tue, 06/18/2013 - 02:34 | 3667229 Spanky
Spanky's picture

+1

For the Ike reference.

Wed, 06/19/2013 - 20:53 | 3673754 Promethus
Promethus's picture

On page xviii of his book Stockman list the heros and villains of the book. I notice he doesn't include Reagan as one of his heros.

Policy  heros: Carter Glass,  Professor H. Parker Willis, Calvin Coolidge, Herbert Hoover, Lewis Douglas, James Warburg, Truman, Eisenhower, George Humphrey, William McChesney Martin , Douglas Dillon, Bill Simon, Paul Volcker, Howard Baker, Pete Domenici, Bill Clinton, Paul O'Neill, Ron Paul, Richard Shelby and Sheila Blair

Policy villans: FDR, Richard Nixon, Arthur Burns, Walter Heller, Milton Friedman, John Connally, George Schulz, Cap Weinberger, Alan Greenspan, Newt Gingrich, Bob Rubin, George W. Bush, Hank Paulson,  Tim Geithner, Jeff Immelt, John Mack, Paul Krugman, Larry Summers, Barack Obama and most especially Ben Bernanke.


 

Tue, 06/18/2013 - 05:20 | 3667294 Offthebeach
Offthebeach's picture

Stockman wrote and warned of this in 1986, The Triumph of Politics.

Mon, 06/17/2013 - 20:56 | 3666536 Yen Cross
Yen Cross's picture

     I need to read that book.

Mon, 06/17/2013 - 21:09 | 3666555 scrappy
scrappy's picture

I suggest this one as well friend.

It shows the how our INTERNAL problems came to be, and the "INTERESTS" that caused this over time.

It also provides part of the solution IMHO.

http://www.amazon.com/The-Corruption-Economics-Georgist-Paradigm/dp/0856...

Here's the basic idea of the geoeconomic solution we might consider.

http://www.henrygeorge.org/isms.htm

 

 

 

Mon, 06/17/2013 - 21:06 | 3666558 starman
starman's picture
Its really no rocket science to realize that 07 killed many of the very wealthy. the middle class, retirees 401K's and the average Jo. I've known many of each, some loosing 80mill overnight with AIG some loosing they business lots of friends of mines! My business is down 20-30% since 07 and been making the same $$$ ever since. Not counting that the "new president" is making me cough up more TX's on my profits. Of course we never recovered and I doubt if ever will! 
Mon, 06/17/2013 - 21:18 | 3666578 StarTedStackin'
StarTedStackin''s picture

that crash will make the Obowel Movement Butt Bubble Pop look like child's play.....the only difference, is that The Obowel Movement has designed the bubble to pop, save the magnitude.

Mon, 06/17/2013 - 21:15 | 3666565 yogibear
yogibear's picture

"The Fed is a 12 members of the Politburo, who are basically running the country"

Have to love stockman's description of the current fed. The Fed is setting up a historic fail. It may take a while. In the mean time food stamp usage keeps hitting record highs.

As stockman stated, watch out when they loose control, especially in a global economy that moves money aound in a fraction of a second.

Mon, 06/17/2013 - 21:12 | 3666571 Yen Cross
Yen Cross's picture

  Thanks, Starman and scrappy. I took a screenshot. I look at your links after the Selloff.

Mon, 06/17/2013 - 21:23 | 3666594 Nue
Nue's picture

James Rickards made an interesting point that when Economics was embracing rigid mathmatical formulas. Physics was moving into quantum mechanics where things did not always move in strict mathematical fashion. I say all that to say this. In Math  if A+B=C then I can prove that statement by saying C-B=A. What the FED has tried to do is start with Stocks C and make the rest of the formula work backwards to growth, employment positve wage growth ect. To say the least it has failed.  

Mon, 06/17/2013 - 21:38 | 3666632 Yes_Questions
Yes_Questions's picture

 

 

How much longer are we, as a nation, going to keep playing this game  of the dollar mongers.  They do not care about our health and happiness but we still buy-in to the concept of wealth their money creates the illusion of.

 

There was  a critial mass reached where once 16% of the consumers of HFCS stopped buying cereals and beverages with this product, "Real Sugar" started popping up everywhere and it is now very easy to find products using sugar again.

 

What % of us need to halt use of dollars (where possible I know) before the mongers take notice?

 

Shit, does it even matter anyway?  There's probably a continuity plan for it.

 

Mon, 06/17/2013 - 22:54 | 3666847 Herd Redirectio...
Herd Redirection Committee's picture

Gresham says you have to keep using dollars while they are the de facto reserve currency. You don't have to use them for storing value/savings, though, only for immediate use.  This is the stage a currency finds itself in pre-hyperfinflation.  People get paid, 30 minutes later LITERALLY the cheque has been cashed and spent.

It means saving your wealth in precious metals, or simply spending your dollars as soon as you receive them.

Mon, 06/17/2013 - 22:56 | 3666855 WTFUD
WTFUD's picture

Long and short there is no longer Any need to have a Senate or Congress, they are IMPOTENT. Cut Defence spending (official&unofficial ) by 75/80% ( pure waste with spooks & leaches, drugrunners and internet geeks). Clean out SEC&CFTC&IRS ( pure waste who couldn't find their socks in a spin dryer; leaches; cockroaches).
WindUp BofAml &Citi & JPM.

Start again with the Forces & Skilled labour building the Infastructure; Investing in Clean energy and concentrating inwards in growing the economy.

END FED; JAIL EVERY DIRECTOR OF EVERY TOOO BTF FOR LIFE.
IMPEACH OBALLSUP.

Probably missed off a few points and it's just a basic structure which you can play around with BUT it's SOLUTIONS NOT WHAT THE FUCK WENT WRONG YOU ARE NOW LOOKING FOR.

Tue, 06/18/2013 - 02:08 | 3667208 enloe creek
enloe creek's picture

i wants to get me some free money be fun y and love aa honey

Tue, 06/18/2013 - 02:24 | 3667221 q99x2
q99x2's picture

Would it be possible to fill in Washington with truckloads of shit, manure and rotten vegetables? Maybe the truckers in Detroit could be hired to run the operation.

Tue, 06/18/2013 - 05:18 | 3667287 IamtheREALmario
IamtheREALmario's picture

I have a very hard time understanding what is wrong with deflation if the Fed is going to bail out the banks anyway. The typical problem with deflation in a PRODUCING economy is that the consumers and manufacturing businesses have less money to pay back the banks, bank loans default and the banks go under. Berstinie-poo won't let his owner banks or goobermint go under and so under the deflation scenario there will be a mismatch of wages and prices (prices will go lower while wages lag or remain higher ... in a consuming economy this is ideal)

Of course, we will have to toss the growth model out the window, but it will not matter. Retirees will be able to afford things because they are cheaper and youngsters will just have to accept getting jobs in non-value adding areas, such as: banking, legal, retail, police/government and Wall Street. What has changed from where we are now?

So, how does the Fed go about creating deflation within a consumer economy? Lol ... if we do no mind the governments going infintely higher in debt, then raise rates, just keep printing money, make the Fed the lender of last resort to ALL levels of government (and not regular banks or consumers) and have as many people as possible work for the government. An unfotunate problem we have is that the Federal government wants all power consolidated under itself and wants the state and local governments to not have access to infinite money so that they fail and the Feds can take them over.

We would most likely be well on the way there now if it was not for the fact that the state and local governments are going bankrupt and cannot draw infinite money from the Fed and if not for he fact that there has been massive and unnecessary (for deflation) wage inflation within the governments.

Growth is not a given unless there is population growth to go along with it. It is ONLY a false paradigm... but try telling that to people who have listened to sell-siders their entire life.

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