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The Punch Line: The Complete Macroeconomic Summary And All The Chart To Go With It

Tyler Durden's picture




 

From Abe Gulkowitz' The Punch Line

Meager Growth but the Market Roars…

An interim deal on Iran’s nuclear program pushed oil prices lower and sent global equities higher as investors’ risk appetite rose on an easing of some Middle East tensions. As we close in to year-end and the start of a new year, one finds little evidence of serious inflationary concerns. Indeed, the opposite is feared.

Major economies face debilitating deflation pressures. In Europe, for example, the latest annual inflation statistics fell in twenty-three Member States, remained stable in one and rose in only four. The HSBC/Markit Flash China PMI came in at 50.4 in November, marking a two-month low and missing expectations. The survey still indicated that the Chinese economy is expanding but it also raised fears that growth may be tailing off in the fourth quarter. China will be lucky if it manages to hit its official target of 7.5% growth in 2013, a far cry from the double-digit rates that the country had come to expect in the 2000s.

Growth in India (around 5%), Brazil and Russia (around 2.5%) is barely half what it was at the height of the boom. In Europe, the Markit Flash Eurozone PMI fell from 51.9 to 51.5, the lowest reading for three months. The French index was particularly weak – the PMI was at its lowest level since June. Germany continued to improve but the rest of the eurozone seems to be languishing. Questions abound whether the EU risks following the path carved by the sluggish Japan in the 1990s. Yet financial assets point to a worrisome asset inflation environment. Many have written off the likelihood that the Federal Reserve would begin QE tapering this year.

As stocks hit new records and small investors—finally—return to the market, some analysts are getting worried. Risk assets have rallied to previous bubble conditions. Powered by unprecedented refinancing and recap activity, 2013 is now the most productive year ever for new-issue leveraged loans, for example. This has been great for corporations as financing and refinancing has put them on a stronger footing. Where M&A activity still lags the highs of the last boom, issuers have jumped into the opportunistic pool with both feet. And why not? Secondary prices are high and new-issue clearing yields remain low. Yet very inadequate movement has been evidenced on the hiring front.

And after all the improvement in ebitda, where do we go from here? Forward guidance will clearly be harder. One might argue that we are back in a Goldilocks fantasy world, where the economy is not so strong (as to cause inflation and trigger serious monetary tightening) or so weak (as to cause recession and a collapse in profits) but "just right". Yet, it seems unlikely that issuers with weaker credit quality could find it so easy to sell debt without the excess liquidity created by the Fed and other central banks.

Weaning everyone off the “liquidity fix” may be tough!

The full Punchline including 17 pages of off the charts that's fit to print below (pdf)

 

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Tue, 11/26/2013 - 22:34 | 4192638 kicksroute66
kicksroute66's picture

Doobiedoobiedoo

Tue, 11/26/2013 - 22:42 | 4192661 Derf Scratch
Derf Scratch's picture

Seem to recall alot of bullish Goldilocks talk from Krudlow about mid 2007, right before everything collapsed... but he's still on the tube every night somehow...?

Wed, 11/27/2013 - 00:04 | 4192667 OneTinSoldier66
OneTinSoldier66's picture

"Major economies face debilitating deflation pressures."

 

Excuse me? Define deflation please Abe.

As far as I know Central Banks are still increasing the money supply well over and above the increase in population. Last I heard they are not decreasing the money supply! Perhaps your definition of deflation is different from mine and most Austrian Economists Abe.

 

"Inflation is the root cause of the devaluation of money, whereas price increases are just the result of inflation." -- Ronald-Peter Stoferle

 

If there is not an increase in the supply of money, there can be an increase in the price of some goods and services in the economy. But there is a prerequisite for this when there is no increase in the money supply. Which is, there will be a decrease in the price of other goods and services elsewhere in the economy. Perhaps the price of nearly everything should be coming down right now. But there's no way to know in an phoney, artificially propped up economy.

 

Abe, I get the idea that you seem to fear deflation and/or think it's a bad thing. I could be wrong. Anyway, if you are afraid of deflation I'd like to know why. I think, that if there's been an artifcial inflation of the money supply, then there will be consequences. And that deflation and a clearing of the "market(s)" is what is needed to correct the unlawful and immoral inflation of the money supply.

 

"...the latest annual inflation statistics..."

 

Who's coming up with these statistics? I'll bet it's not the same people that used to buy penny candy back in the day. Okay, that would have been a lot of days back. But I hope you get the idea Abe.

 

And yeah, I'll bet Abe doesn't come on here so he probably won't be reading my post, but you never know!

Wed, 11/27/2013 - 00:32 | 4192894 Imminent Crucible
Imminent Crucible's picture

"if you are afraid of deflation I'd like to know why"

The reason Gulkowitz is afraid of deflation is very simple. He's aware that we are living with a credit-based economy and a debt-backed currency.

If we are seeing deflation in various sectors despite the Fed's increasing base money by a factor of 400% over the last five years, then we have a problem that can't be fixed by adding liquidity to the system--in any form.  It means that existing debt is going bad at a faster rate than credit is growing in the system.  Less credit equals less money in circulation. It's that simple, because debt is money and money is debt.  Less money in circulation means less economic activity.

The Fed and Treasury are colluding to borrow and spend more new money into existence to paper over the fact that the real private sector economy is actually contracting. If we won't spend money, then they'll borrow and spend it in our name, and leave our children the bills to pay.

In this environment, no prudent person wants to go deeper into debt. That's why you're seeing borrowing increasing only among the stupid people who use a shotgun as a down payment on a truck they're going to lose within a year, and corporations who can restructure their debt at will and still pay their officers a bigger bonus than last year.

There certainly has been an artificial increase in the money supply. To deflate the money supply means charging off bad debt. There are only two ways to deal with the massive overhang of bad debt in the system: Either write it off, collapsing all the SIFI's and toppling the government in the process, or apply a slow bleed to taxpayers and consumers, allowing them to absorb the losses gradually over the next thirty years or so--without bungling the process such that producers stop producing and taxpayers stop paying taxes.

I think you can guess which option they'll try first.

 

Wed, 11/27/2013 - 00:54 | 4192945 Seer
Seer's picture

BRAVO!  I believe that this is the BEST description/definition I've seen to-date!  You quite succinctly managed to wrap it ALL up in a very small package.

Wed, 11/27/2013 - 01:13 | 4192979 willwork4food
willwork4food's picture

To deflate the money supply means charging off bad debt.

What? If I rack up a $1250 bill on my Capitol Dick Head One Credit Card, then tell them to pound sand, and they write it off, I get to KEEP all that money + interest that is available and will be spent in my community. Right?

 How can that be deflationary?

Wed, 11/27/2013 - 01:26 | 4192994 Seer
Seer's picture

Ever hear of fractional reserve banking (the part about how money gets created; and then the converse)?

"Interest" never really exists (hasn't since the Phonecians had it pegged as a benefit from shipping cattle [calves born during shipment was "interest"]).  Since then we've used the perpetual growth meme to pretend that we're having lots of calves being born... when folks start to get hungry they'll be asking for those calves.

Wed, 11/27/2013 - 15:00 | 4194300 Imminent Crucible
Imminent Crucible's picture

willwork4food: "How can that be deflationary?"

That's a good question, and has a very simple explanation.  Let's say you use one of those nice Capital None convenience checks (yes, I get them too) and you write yourself a check for $1250 and deposit it in your Bank of Lynch America Countrywide checking account.  You just turned $0 into assets worth $2500. First, your bank account statement shows you have a $1250 balance. At the same time, Capital None has a new asset on their books: a $1250 loan to your CC account. Capital None did not loan you $1250 from someone's savings account; they simply issued new credit against their existing asset base.

That's the fractional reserve effect that Seer was talking about. Money for nothing and checks for free.

So, let's say you default on your Capital None CC account and leave town.  Capital None writes off the bad debt.  $2500 in assets instantly deflates to just $1250; but you had the bad judgment to loan the $1250 to your brother in law to fix his furnace. Instead, he put new wheels on his 1966 GTO and also left town. You know you'll never see that $1250 again, so you write it off to experience.

At that point, the $2500 has now deflated back to zero.  But at least your brother in law has nice shiny Cragar mags on his old heap.

Wed, 11/27/2013 - 01:24 | 4192992 OneTinSoldier66
OneTinSoldier66's picture

I agree with Seer. You put it with pen to paper very well.

 

And yeah, not too hard to guess which one they have already been trying these last several years, because it's not a guess in my eyes. They are trying to bleed taxpayers and consumers. It's what QE is all about!

 

The Central Bankers and thier minions come in and pull the wool over people's eyes and pulls a couple of government controlled economic levers, and then the MSM claims "they saved the world!" No, they saved their world. They can't imagine a world in which they cannot skim off of the actual producers.

 

It's not Central Bankers and their ilk that "save the world" on occasion. What saves the world every single day is the free market. That's what saves the world!

Wed, 11/27/2013 - 01:32 | 4192999 Seer
Seer's picture

You're missing THE point.  Al lthese players know what's on the board (the planet) and they KNOW they the entire economic structure is a bust.  One can tout "free market" all one wants, but that's just "talk."  There's 7+ billion humans on a severely depleted planet (for human support).  The point at which any "free market" might have made any course change has long past.

Again, all these folks aren't looking to screw "us."  We've ALL had it good (when compared to the bulk of humanity, and over the course of humanity).  Anyone who believes that they are stupid or that they are just looking to mix things up doesn't get it that the power comes FROM the "status quo," and the "status quo" doesn't promote any meaningful change w/o disrupting its essence.  LOGIC!

Nature utilizes deception.  Humans are OF nature.  Lean times are upon us.  Learn the ways of the buzzard...

Wed, 11/27/2013 - 06:51 | 4193208 disabledvet
disabledvet's picture

"there's still meat on that bone." in a word...Detroit. the market is still booming...this thing is debt defaulting reflation machine with only QE standing in the way. "For now." Prices did fall dramatically during the Industrial Revolution...in the USA we had no gold standard for much of this time as well. the South hyperinflated during the Civil War...not the North though. the jury is still out on actual deflation ala 1830-1910...but silver prices still haven't moved all that much for twenty plus years now. that would be in nominal terms. at some point that "hard money" will have a real world impact...and if it shows up in your "three dimensional printer" ...talk about the ultimate form factor. this is what Al Gore called a "carbon bubble." in the 19th Century it was high carbon content steel. this time around it could be the the micro-architecture of the carbon atoms themselves.

Wed, 11/27/2013 - 08:16 | 4193256 BrerRabbit
BrerRabbit's picture

Then my next question is:

What comes next,

1. Economic collapse?

2. World War III (or IV depending on how you rate the Cold War)?

3. Both?

Wed, 11/27/2013 - 08:38 | 4193284 LawsofPhysics
LawsofPhysics's picture

"Money" is largely irrelevant now, as you correctly point out, it is no longer backed by anything real and is simply a means to maintain power and control.  There are 7+ billion people all competing for a better quality of life, so plenty of demand for essential commodities and the consumable energy the make a better quality of life possible. 

You decide how much power the money changers have by the deciding what you will accept in exchange for your labor.

Choose wisely as that which cannot be sustained, won't be.

Wed, 11/27/2013 - 05:26 | 4193157 CHX
CHX's picture

True that. Any deflationary pressure (read : real economic contration) will be met with equal CB imflationary response (read : money printing a la QE or other credit-creation-out-of-thin-air-scheme to allow arbitrage of the system for the  <.1% ). We'll only know after the fact when the last kick of the can was; it's getting close though IMHO. 

Tue, 11/26/2013 - 22:54 | 4192680 starman
starman's picture

I spend an hour on average every nite reading and researching macro US and worldwide economic data.
From what I see is that the US and Europe is in serious deep shit!
I don't care if the Dow goes to 90.000 it will make no difference in the fact that we are done plane done. No jobs no savings only mountains of debt! This is truly the beginning of the end of the developed country's. Hedge accordingly!

Tue, 11/26/2013 - 22:57 | 4192690 Uber Vandal
Uber Vandal's picture

What good are savings in a ZIRP/NIRP environment?

In a ZIRP environment, you are already defacto NIRP.

Wed, 11/27/2013 - 09:13 | 4193334 kralizec
kralizec's picture

Yeah, the real punchline is a punch to everyones face!  "So long, suckers!" they chortle...

See how they chortle from a streetlight!

Tue, 11/26/2013 - 23:00 | 4192696 Seer
Seer's picture

Um... it's not isolated to just the US and Europe.  There's a recent ZH article (from today?) about China's money-printing- it makes Ben's look like child's play.  The US has physical resources, which includes OIL (of course, this is subject to draw-down rates, but better to have some than none).

BTW - The "macro" ALWAYS was based on the impossible premise of perpetual growth on a finite planet.  Never required any advanced "study" to figure out how all this was going to end...

Tue, 11/26/2013 - 23:26 | 4192757 OneTinSoldier66
OneTinSoldier66's picture

Governments always want economic growth on their tax farms, even if it means going into debt to get it. And even if it means taxing the golden goose through inflation, perhaps to the point of death. That's how greedy they are. How long before The Fed has everything in the universe on it's balance sheet? I dunno, but they sure seem to be working on it.

Wed, 11/27/2013 - 00:38 | 4192905 Seer
Seer's picture

"THEY" didn't create the game.  This has been with us from the very beginning: go forth and multiply.

There are very few businesses that operate under the premise of non-growth.

Greed is a human trait.  I very much doubt that you're going to get very far trying to eliminate it.

The Fed is sucking up a bunch of shit that'll be of little use to most folks in the future: think about post-collapse, not on what things are like NOW (or were in the past).  I've never heard it said that banks liked hanging on to real estate, and it's real estate that's the biggest source of "wealth." (yes, they use it to base loans off of, something that used to be a fairly low-risk thing, but it was always about collecting fees and NOT possessing the real estate*)

* The evolution of "savvy" is in controlling markets rather than inhabiting them.  It's like today's savvy empire, the US, in that it doesn't care to claim ownership of another country; what it wants is just to be able to exploit it- less sticky...

Tue, 11/26/2013 - 23:32 | 4192773 starfcker
starfcker's picture

we're in deep shit by choice. not our choice, mind you. globalization has been an all in proposition, almost dogmatic. it is inevitable, it is irreversible, and it's going to be great. we will have to give up a little, but so many will benefit it will be worth it. well we are getting to the nitty gritty now. the mask is off, and barring a major policy shift, it ain't working for us. problem for them is, it ain't working for anyone else either. the golden goose, the american middle class, is tapped out and pissed off. but we are still the tax donkeys that are absolutely needed to pay for this. QE has been huge in relieving the tax burden, but it can't go on forever. management of public perception is at a critical point as well. it's a bad dream, but the house of representatives is still the key to change. vote carefully, scrutinize who gets your vote, on every level.

Wed, 11/27/2013 - 00:47 | 4192929 Seer
Seer's picture

Poor us...

I live with a constant reminder of what most of humanity has lived as/with.  My wife grew up in the Philippines.

MOST of the world has so little that there is NOTHING to give up.  There's something like 1.5 billion people who don't have toilets or access to them.  Ever hear of the term "a pot to piss in?"

The "Middle Class" is an Edward Bernays creation.  The "Middle Class" exists/existed on excess growth.

"vote carefully, scrutinize who gets your vote, on every level."

What the fuck are you going to vote for?  No vote is going to magically conjure up more physical resources (except through war/theft).  If YOU want MOAR then YOU go fucking get it- of course, you'll have to resort to clubbing old people and such, but there you go.  There is no WAY "back" because there is no "back" to go back to- the bridge was burned.

Wed, 11/27/2013 - 01:22 | 4192989 starfcker
starfcker's picture

seer, i disagree the bridge is burned. the poor us thing, i agree completely. we don't know what poverty is here in the states. my point is that crushing the middle class ( and i'm not talking about overpaid cops or lawyers, but rather the productive, innovative, by the bootstraps people that made america great) is a huge mistake. for things to improve, someone needs to pull the plow. we are shooting our plowhorses. think middle class prior to clinton, not daytraders or house flippers, but people who employed other people, and paid a lot of taxes, and spent a lot of money running a business. actual production. it's real. it just got moved overseas. we still have the only market that matters. vote for the most nationalist guy you can. if he turns out to be a fraud, vote him out and try again. it's slow, but it's the answer.

Wed, 11/27/2013 - 01:42 | 4193003 Seer
Seer's picture

"and i'm not talking about overpaid cops or lawyers, but rather the productive, innovative, by the bootstraps people that made america great"

What does "productive" mean?

What does "innovative" mean?

What is the measure of "great?"

I'm not trying to sound rhetorical here.

I'd wager that all that you're (attempting to) implying has to do with the massive bounty that existed IN the land.  "White" men landed on the shores NOT because they were looking to be "productive," or "innovative."  They landed on the shores because they were paid to look for new treasures to plunder. (yes, many after the the real structuralists appeared did have idealistic notions about better societies, but most were not from the lower classes [except, of course, slaves])

You can have all the great intentions and minds that you want, but without PHYSICAL RESOURCES you get nothing out of it other than stary eyes and great stories.

Wed, 11/27/2013 - 01:54 | 4193010 Clowns on Acid
Clowns on Acid's picture

You have fallen off of the deep end Seer. You are reading bad books about the evil White man. It was all plundera nd conquest dipshit. The "White man" actually created a Republic. That is why, dipshit again, that all other peoples for a century have flocked to America.

Indeed it has changed to a Ted Kennedy inspired "immigration for only 2nd / 3rd world peoples for the last 30 years. We are currently seeing the fruits of that policy change.   

Wed, 11/27/2013 - 02:36 | 4193048 Seer
Seer's picture

And you, you're just some clown on acid...

Folks "flocked" to America because there was EXCESS (which was predicated on theft and slavery).

Fucking clown... You'd FAIL proper accounting practices.

Wed, 11/27/2013 - 02:04 | 4193023 starfcker
starfcker's picture

ok look, we can't argue about centuries past. but let me get right to your what's. by productive i mean people willing to work hard to grow, build or mine things that other people need. by innovative i mean people who see a way to make something better and act on it. by great i mean someone who made the world a better place to live in, less cruel, less harsh (jonas salk, thomas edison, louis pastuer) i get the feeling your a little younger than me. we had some pretty horrible economic times in the 70's, and reagan turned it around in 18 months. it can happen. i'm not nearly as rich as i used to be, but i still get up every day and try to adapt to the realities of right now and figure out how to improve things for myself and the people i care about. i'm pissed off, sure. but i'm also very grateful. a bad day for me isn't that bad. no bombers overhead. air conditioning. good resturants

 

Wed, 11/27/2013 - 02:43 | 4193054 Seer
Seer's picture

"ok look, we can't argue about centuries past."

BULLSHIT!

Pretending that what has gone on before has no bearing on what is now IS NO WAY to solve a fucking problem that is ROOTED in the past.

"by innovative i mean people who see a way to make something better and act on it"

By what measure?

The Green Revolution was believed to be a BIG step forward, yet, in the end, it'll prove to have been perhaps one of the greatest disasters ever created by mankind.

Nuclear power?

And all our great medical "advances?" (ever hear of "super bugs?")

Measured on a small enough time scale ANYTHING can be made to look good (and especially if you chop off all the unfortunate externalities like slaves and whatnot).

You're a walking salesman for HUMAN HUBRIS.

"Reagan turned it around in 18 months."

Turned WHAT aorund?  His administration started the bull-run on deficits.  It unleashed the financial genie.

"but i still get up every day and try to adapt to the realities of right now and figure out how to improve things for myself and the people i care about"

What, like you're unique?

And what about those that you don't care about? (are drones buzzing them so you have cheaper oil?)

"i get the feeling your a little younger than me."

My dear boy, it's about wisdom... (plenty of old fools running around)

Wed, 11/27/2013 - 03:25 | 4193082 starfcker
starfcker's picture

i'm not old, and i'm no fool. feeling guilty because we won the wars in centurys past not on my to do list. beats losing. innovation by what measure? howz about refrigeration. wanna try to live without that one? how about the flush toilet? i'm a fan, hubris or not. reagan turned around an economy mired in stagflation, no growth and super high interest rates.the rates on mortgages were 18-19 per cent.it's fashionable to bash him nowadays, but he did a good job. his economic policies were very unpopular for the first 2 years, but things got so much better so fast in1984 he won 49 states, and the term reagan democrats came to be. i'm no fan of the last 3 presidents. clinton was the guy who unleashed the banks and sold out labor. bush was owned by the MIC. and obama is just a moron with no ethics or compass

Wed, 11/27/2013 - 07:22 | 4193224 artless
artless's picture

It takes you an hour every night to come to that conclusion?

Wow, it took me about then minutes, one evening, and I can confirm it al will in about three seconds anytime I want.

Dpes the number $17 trillion mean anything to you? How about that $17 trillion being well over 100% of GDP.

We've been in deep shit for quite a while. No one needs macroeconomicbullshit to see that.

And please it's countries, not country's.

Tue, 11/26/2013 - 22:55 | 4192685 JR
JR's picture

Some small investors may soon be smaller…

David Stockman: Bubble Inflating All Around Us! Video
by Greg Hunter’s USAWatchdog.com   (Early Sunday (Nov 25) Release)
Former White House Budget Director David Stockman says, “Much of the mainstream media is caught up inside the bubble . . . They have an extreme case of ‘recency bias.’  They can’t remember the events of a few years ago.”  Stockman, whose latest book is called “The Great Deformation,” goes on to say, “Look at this bubble inflating all around us. . . . The Russell 2000 is trading at 75 times reported earnings.  People seem to forget that’s exactly where we were in 2007 and 2008.”
-
Stockman has a grim assessment of the current economy.  Stockman contends, “You are in a crony capitalism bankrupting mess.  That is very disconcerting news to people inside the bubble.”  On China, Stockman says, “They are sitting on this massive hoard of paper that they’re never going to be able to do anything with.  They have huge distortions inside of their economy . . . as bad as anything we have.”  Stockman goes on to say, “This is a symptom that this huge central bank game is nearing its end stage.”  Stockman warns, “When the Fed finally stops printing $85 billion a month . . . we’ll have falling bond prices and rising yields, a crisis at the heart of the financial system, the $12 trillion Treasury note and bond market.  That’s when the day of reckoning will finally begin to unfold, and everybody will be caught up in it.”  Stockman warns, “This is not a viable system.  It’s a house of cards . . . I think it will be a deflationary event . . . financial asset prices will collapse. ”   How does gold do in this calamity?  Stockman says, “As they see those assets go up in smoke, I think there will be a flight to a monetary asset that people will have some confidence in, and gold will be that asset.”  Join Greg Hunter as he goes One-on-One with author David Stockman. 

Tue, 11/26/2013 - 23:05 | 4192707 Seer
Seer's picture

And it'll be MUCH worse than Stockman paints it.  We operated via BIG, and BIG is going to do the Golliath fall as their supporitng structure of "economies of scale" go in to reverse; and when this hits the commodities sector is when it will start really getting interesting... (when starvation starts ramping up)

Be prepared for full-on collapse, not just some "downsizing."

Tue, 11/26/2013 - 23:05 | 4192711 Son of Captain Nemo
Son of Captain Nemo's picture

"An interim deal on Iran’s nuclear program pushed oil prices lower and sent global equities higher as investors’ risk appetite rose on an easing of some Middle East tensions."...

Throwing this one in for good measure.  To 'starman's' point.

We're truly fucked without any 'KY relief', and the only thing you need to keep focusing on is that their won't be any change to it until we start putting the politicans and there "puppet masters" who control the damn thing behind bars for good.

http://xrepublic.tv/node/6385

Wed, 11/27/2013 - 00:28 | 4192885 Seer
Seer's picture

Can't count how many times a given headline was used one day as an UP barometer only to be used as a DOWN barometer the very next day!

Tue, 11/26/2013 - 23:55 | 4192828 starman
starman's picture

JR Stockman and many other "experts" do warn that governments and their CB's are trapped. With no economic growth the only way out or down is the cliff! Be prepared it'll come sooner than people expect.

Wed, 11/27/2013 - 00:30 | 4192887 Seer
Seer's picture

It really is as simple as that!

And, it happened slowly... then ALL AT ONCE! (I'm in no way looking forward to the shockwaves.)

Wed, 11/27/2013 - 00:46 | 4192919 Son of Captain Nemo
Son of Captain Nemo's picture

Yep.

But it didn't have to end this way -even though it will and in the worst way imaginable. 

What do you do when you buried the last genuine leader this Country had 50 years ago and not avenge his death? Or for that matter avenge those 9/11 first responders, Gulf War veterans, Iraqi, Afghan. Libyan and Syrian civilians?  This Country has to have the worst most selfish cowards in the business of life anywhere to be found!

 

We've been watching this slow motion wreck getting progressively worse now for the better part of 3 decades and had every opportunity in that window to change our course but made the unfortunate choice(s) down the line (can't even call them mistakes) not to interfere.

 

 

 

Wed, 11/27/2013 - 01:02 | 4192959 Seer
Seer's picture

As bad as it all looks to us it's been worse in the past.  The only difference is that today we're ALL up against the wall.

We were never promised a way out (well, there's the religious fans who believe so).  AND when you consider that we fundamentally predicated our existence on perpetual growth, well...

You see, it's not any person.  It's not even any system.  The "problem" lies in the "idea."  We bought into the WRONG idea.

Wed, 11/27/2013 - 00:52 | 4192937 Fishhawk
Fishhawk's picture

@OTS66:  The problem with deflation is that the banksters are operating a huge ponzi scheme based on credit (debt), which is collateralized with crap.  As with all ponzi's, when the flow of new money decelerates (it doesn't have to fall, just quit rising at the same enlarged rate), the debtors start getting collateral margin calls, and then the dominoes start to fall.  Note that when a debtor pukes up a loan, the bank gets the collateral, but the 'money' that the loan represented on the bank balance sheet disappears.  When a lot of said loans, like a trillion in student loans (now 12% in default, fixing to go large), or a trillion in 70 and 80 month car loans to unemployed persons, or $300b in commercial loans default, the banks take writedowns greater than their total equity.  Being broke is ok, but not being able to service the debt is called bankruptcy, and all the major banks are teetering on the edge thereof.  So all the Fed counterfeiting is going to the big banks to cover their cash flow.  If you assume that all this stimulus will never have to be paid back, then the banks are in good shape.  But most of the banks' usual profit centers are collapsed, so they have been extending/pretending on their quarterly earnings reports by freeing up loss reserves, because they can apparently see that a recovery is 'right around the corner' and all their crap loans will turn out to be money good once the borrowers begin to participate in said recovery.       

Fishhawk  (some of the above might be /s)

Wed, 11/27/2013 - 01:42 | 4193004 starfcker
starfcker's picture

fishhawk, forget the recovery (the ponzi) that's just buying time. our productive economy is on loan to the third world on the theory that we can stripmine the stored wealth of the western world in the meantime, long enough to build a worldwide economy from scratch. then when that gets going, there will so much demand we will all be better off. hasn't worked that way. only way we will ever recover is to take back our productive industries (farming, manufacturing, resource extraction) or re-implement bigtime tarriffs on all imports that compete with us. the people running this show are both true believers (if we just had some more time, and a bunch more money) and greedy sociopaths (it ain't working like we hoped, but a giant bonus will make me feel better). more people become aware every day.

 

Wed, 11/27/2013 - 02:34 | 4193044 Seer
Seer's picture

"our productive economy is on loan to the third world on the theory that we can stripmine the stored wealth of the western world"

Huh?

Where do you think that the "western world" got it's wealth?  Are you NOT familiar with history?

Further, who is "we?"

TPTB roam around freely while they make us believe that we have to operate within our "cages" (countries).  TPTB problem, which, I think, you are refering to by "we," is that they command excessive power.  While this is clearly a problem it is a problem that will resolve itself: when all has been sufficiently exploited TPTB then have no way of keeping the masses stable (with all their various schemes, such as "The American Dream").

We can all magically become "aware," but again, what do we do about the PHYSICAL problem?  Yeah, just imagine the "awareness" when folks realize that food and water is limited...

Wed, 11/27/2013 - 02:54 | 4193060 starfcker
starfcker's picture

seer, you've got to be young because a certain amount of your arguement is straight out of modern liberal schoolbooks. the wealth of the west came from from superior weaponry, transportation, agriculture and the ability to organize. every single primitive culture you've been taught to revere was in the killing and robbing business. we (gringos) just happened to kick their ass. that's the way it was done way back then. let go of white guilt, it don't mean nothing. we leveled germany and japan and then what did we do? we rebuilt them on our dime, and pre china they were the second and third largest economies in the world

 

Wed, 11/27/2013 - 07:39 | 4193232 artless
artless's picture

starfucker & seer

Each in your own way are correct but here's the thing

Seer: the US produces enough food (based on calorie/joules) to feed the world with ease. And water is not a problem-it's clean water that is lacking. and yes those distinctions matter. There are countless millions in need. Pretty sure there's a way to make some real cash there. Unfortunately it's not in the interest of TPTB to elevate humaity because they are of the mindset that they will not be able to control the masses.

starfucker: you are correct in pointing out the superiority of the west. Up to the point that you seem to endorse the killing part. Or more properly stated the EMPIRE part. I think we can all agree Rome fuct up with that formula. Really think the geniuses running the show here won't do/done the same? See above about "comtrolling the masses"

What the "west" had (and that really only applies to The US and we no longer have it) was economic liberty. That was the driving force of the properity of the US. We've been running on these fumes for decades. It's strong fuel. Problem is without vigilant opposition to the forces that seek to diminish that liberty for their own power and profit it slowly goes away. That's where we are now.

Wed, 11/27/2013 - 14:53 | 4194262 Son of Captain Nemo
Son of Captain Nemo's picture

Yeah "rebuilt them" on our dime as a loan for our complete and total control.

And this is how we did it-

https://archive.org/details/GruesomeHarvest

 

Wed, 11/27/2013 - 17:07 | 4194845 starfcker
starfcker's picture

remember, we won the war. the aussies are way ahead of us in figuring out the jewish fear of the anglo -saxon monster that almost exterminated them, they don't really fear muslims in the same way. that's why multi-culturalism is only important in white countries, to dilute that hegemony. thanks for the tip, i'll try to find the book.

Wed, 11/27/2013 - 09:10 | 4193329 bugs_
bugs_'s picture

"harmfully low inflation"

say it!  saaaaay it!!!

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