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What Needs To Happen Before We See A Big Recovery?

Tyler Durden's picture




 

Submitted by F.F.Wiley of Cyniconomics blog,

In a Bloomberg article last May, Caroline Baum summed up the economy nicely in a single question:

Four-and-a-half years of an overnight rate near zero and aggressive securities purchases by the Fed have succeeded in raising asset prices. The question is whether higher asset prices will deliver jobs and economic growth before they become destabilizing.

In other words, will the real economy mend before excessive financial risk-taking kills the patient?

Baum called it a “horse race.”

With 2013′s economic data mostly complete, let’s have a look at where the race stands.

We’ll start by asking what needs to happen before we get the robust recovery that many economists have predicted for the past four years. Our answer is that one or both of two things need to occur:

  1. Households need to borrow at the pace we normally see in economic expansions.
  2. Household income needs to grow strongly.

Of these choices, the best result would be number 2 with as little as possible of number 1. The worst would be another credit-fueled expansion (more 1 than 2) that feels good for awhile but ends badly further down the road.

But isn’t capital spending the key ingredient?

You may argue we’re missing a third possibility – a capital spending boom. Many claim this is the best way to get things going again. We would say it puts the cart before the horse, at least as far as what’s prudent and realistic.

In America’s consumer-led economy, businesses have no reason to ramp up capital spending unless they expect strong gains in consumption. That seems unlikely. We’ll discuss capital spending in more detail in the future; for now, we’ll point to the economy’s ample unused capacity, tepid overseas growth, growing financial risks and President Obama’s bumbling incursions into private markets. Is this really the best environment for entrepreneurs to launch a capital spending spree? We doubt it.

Okay then, how about credit growth and household income?

We can’t rule out the possibility that the Fed gets the credit boom it’s looking for. But we don’t expect it in the near term for the same reasons that capital spending won’t take off, nor is it predicted by survey data.

Which leaves household income. According to the personal income report released Monday, annual growth in real disposable income jumped to 2.8% in January. Based on this alone, you might conclude that households are flush with cash. However, it’s not unusual for this indicator to bounce around between the end of one year and the beginning of the next due to tax law distortions. We screen out the noise by averaging all December figures with the subsequent January figures and using the average for both months:

what needs to happen 1

As indicated on the chart, real disposable income has been slowing for three years and currently shows no growth at all. We’ll see at least a small bounce next month, since the latest figures are held down somewhat by the 2013 increase in Social Security withholding and small increase in tax rates. There’s also a small effect from the expiration of extended unemployment benefits in January. But these considerations don’t fully explain the downwards trend.

A more important factor is that new jobs are paying poorly compared to the average existing job. Employers are picking up part-timers and low-paid service workers and creating very few “breadwinner jobs.” Therefore, disposable income is much weaker than you would think if you just focus on employment growth.

And not only does the personal income report give us another perspective on the quality of newly created jobs, but it seems to explain the overall economy pretty well. We see the same declining three-year trend in consumption:

what needs to happen 2

And in capital spending:

what needs to happen 3

The remaining components of private domestic demand – housing and commercial construction – are related to supply factors and credit growth as much as household income. Nonetheless, total residential and nonresidential (structures) investment shows a similar pattern to the other charts:

what needs to happen 4

What’s more, demand would be even weaker if households hadn’t compensated for poor income growth by reducing savings:

what needs to happen 5

Conclusions

For all the chest-thumping from policymakers about the declining unemployment rate and increase in GDP growth in the second half of last year, these statistics are easily misread. More telling indicators, such as private domestic demand, haven’t picked up at all. Nor would you expect a robust recovery as long as employers create mostly lousy jobs.

Getting back to Baum’s horse race between the real economy and the risk of financial instability, the real economy seems to be falling behind. Financial risks are growing steadily, as we discussed in “Tracking ‘Bubble Finance’ Risks in a Single Chart.” The real economy, on the other hand, is held back by weak income growth.

Looking forward, it’s worth keeping an eye on the personal income reports and other indicators of employee compensation. We’ll surely see some improvement as temporary effects wash out. But as long as the declining trend remains intact, don’t expect the big recovery that policymakers continue to predict.

Bonus link

For more on why employment growth isn’t as simple as Keynesian economists touting full employment targets would like you to believe, we refer readers once again to Arnold Kling’s PSST theory. Kling builds out an up-to-date variation of Joseph Schumpeter’s theory of creative destruction. He explains why creating sustainable jobs after a bust can be a very slow process.

 

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Wed, 03/05/2014 - 10:02 | 4511256 GetZeeGold
GetZeeGold's picture

 

 

 

I'll take kill Obamacare for a $1000 Alex.

Wed, 03/05/2014 - 10:11 | 4511297 icanhasbailout
icanhasbailout's picture

This problem predates Obamacare.

Wed, 03/05/2014 - 10:13 | 4511308 LawsofPhysics
LawsofPhysics's picture

Yes, it really took off in 1971.

Wed, 03/05/2014 - 10:22 | 4511338 HardAssets
HardAssets's picture

Now is a 'recovery' defined as another bubble inflated . . .

or are we talking a real, steady, long term economic upswing which means average middle class Americans standard of living increasing in real terms each year ?

Wed, 03/05/2014 - 10:27 | 4511358 NoDebt
NoDebt's picture

At this point, you take the bubble and like it.

The current clowns in charge wouldn't know how to build or improve anything in the real world.  They only know how to tax and redistribute.  Name one thing they've touched that's gotten better or cheaper.  One.  

Wed, 03/05/2014 - 10:40 | 4511418 Harry Dong
Harry Dong's picture

The tax burden on the elites?

Oooh #2- corporate profits?

This is getting easy

3- the afford ability of Lamborghini s

Wed, 03/05/2014 - 10:55 | 4511484 icanhasbailout
icanhasbailout's picture

you misspelled 1913

Wed, 03/05/2014 - 10:14 | 4511310 negative rates
negative rates's picture

Any ending before a mending.

Wed, 03/05/2014 - 10:15 | 4511316 TeamDepends
TeamDepends's picture

The return of Jesus?

Wed, 03/05/2014 - 10:16 | 4511317 krispkritter
krispkritter's picture

I'll take 'The Big Crash' for $238 Trillion Alex.

Wed, 03/05/2014 - 10:32 | 4511380 doctor10
doctor10's picture

Untiil the three letter alphabet agencies are back behind the Fourth amendment-capital is worthless in the USA

Wed, 03/05/2014 - 09:59 | 4511260 Gringo Viejo
Gringo Viejo's picture

More cowbell................

Wed, 03/05/2014 - 10:07 | 4511283 buzzsaw99
buzzsaw99's picture

moar cowbell. get with the program gringo.

Wed, 03/05/2014 - 09:59 | 4511262 ZeroPoint
ZeroPoint's picture

It will not happen in a consumer driven, debt culture. The majority have no assets.

Wed, 03/05/2014 - 10:02 | 4511269 Tsar Pointless
Tsar Pointless's picture

I get your point. (Pun intended.) You are correct, because the rich won the class war. You know - the one they and their paid shills denied was taking place when indeed, it was taking place. And they won because they convinced enough of "the majority" that it wasn't taking place, and that any of us in "the majority" who dared claim there was a class war going on, was trying to incite a class war.

Americans: A special kind of stoopid.

Wed, 03/05/2014 - 10:12 | 4511296 The_Ungrateful_Yid
The_Ungrateful_Yid's picture

After years and years of being de-programmed and alot of it is (white-guilt) from reality and what made america strong (belief n God, hard work ethics, strong family), it was bound to happen. It just sucks that none of our leaders (yeah those motherfuckers) today give a damn except ron paul and a few other stragglers.

Wed, 03/05/2014 - 10:14 | 4511311 Tsar Pointless
Tsar Pointless's picture

Spoken like a true fascist.

Wed, 03/05/2014 - 10:18 | 4511315 The_Ungrateful_Yid
The_Ungrateful_Yid's picture

How is it fascist? Fucking idiot.

Wed, 03/05/2014 - 10:56 | 4511497 RevRex
RevRex's picture

Spoken like a true homosexual democrat cocksucker!

Wed, 03/05/2014 - 10:47 | 4511442 Bonapartist
Bonapartist's picture

"white guilt"? WTF?

Wed, 03/05/2014 - 12:42 | 4512125 malek
malek's picture

You just sticking your nose into the rabbit hole for the first time?

Wed, 03/05/2014 - 15:07 | 4512856 donsluck
donsluck's picture

Dear Ungrateful, I assume you have the missing qualities you lament. Look on the bright side, it gives you an edge, except maybe that god thingy, which won't help you at all.

Wed, 03/05/2014 - 10:21 | 4511334 Oldwood
Oldwood's picture

For people's incomes to rise their productivity relative to the rest of the world must rise. We have been told for the last fifty years at least that WE ARE AMERICANS! As such we don't need to try harder, thats what the Mexicans and Chinese are for. If we need shit we will just borrow the money at a super low interest and favorable payment terms. If we are lucky enough to live in states like MA, we don't even have to worry about losing our homes for a couple of years after failing to make payments. Our fucked up populist politicians will tell us anything to retain their power and by the time most realize what has happened, what they have allowed us to do to ourselves by concealment and enabling, it will be far too late for solutions.

Wed, 03/05/2014 - 11:07 | 4511581 elwind45
elwind45's picture

The politician would shoot for the rapid. The central bank not at all. The politician wants the next election the central bank wants a little inflation as a visual substitute for growth. You did see last year when the central bank dumped credit and still had something called growth to report about? The last thing the fed wants is mercurial growth and that to them is any growth? The last thing the fed wants DC to do is turn up the pressure cooler because it knows there is way to much water in it. UNTIL WE RAISE RATES WHILE DOING QE OR VACATE OUR INVESTMNTS OVERSEAS we stew in the Feds HAPPY FUNK foreva

Wed, 03/05/2014 - 11:37 | 4511671 HardAssets
HardAssets's picture

I see your point, but there's more to it than 'work harder, you lazy Amuricans!'

Productivity is determined by investment in capital.

At the heart of the problem is the phony fiat money system snuck through congress during the Christmas holiday season of 1913. We are forced to use 'money' which is nothing but debt instruments created out of thin air. For the system as a whole, in order to pay the required interest payments, even more money must be created. This increases the interest and the cycle continues.  The system is inherently inflationary over the long term. This is evident by the fact that over 97% of the value of the dollar - which means peoples earnings and savings - have been inflated away. That is, - taken from their pockets and put in the banksters pockets, over the last century.

People are being robbed, but don't realize it. Some of that which is stolen is 'given' back to them in various programs instituted by paid-off politicians. It is a way to quiet the population and is a means of control. No, all the 'social programs' aren't because they love you folks !  And 'government' isn't really your Mommy & Daddy. They want to take down the national character & have people feeling powerless and dependent. They want them fighting among themselves (Divide & Conquer). Every aspect of the economy/society which they control is aimed at maintaining their game of theft & control. Remember 'women's liberation' and the move toward two earners in the family ?  Less obvious how much was stolen through inflation. Open up China as a manufacturer producing low priced slave labor goods ?  Less noticeable the price inflation over the years. Blow up various asset bubbles ?  Make people think they are prosperous - - - at least for awhile when it crashes & they are periodically fleeced.   If people understood how they were being ripped off and felt it fully - - - - well, you can imagine. Henry Ford said "It is well enough that people of the nation do not understand our banking and monetary system. For if they did, I believe there would be a revolution before tomorrow morning."

Like the British empire before it, the banksters are sucking away the lifeblood of America. Theyve been doing this for a century.  In addition, they transformed the national character by taking over and mandating public 'schools'. Americans don't even know what they had before & what they lost.  If what the banksters had stolen had been invested in physical capital and real education . . . . America would have been a far different place peopled by far different citizens.

This is my opinion, anyway.

Wed, 03/05/2014 - 19:26 | 4514080 Oldwood
Oldwood's picture

Yes we are being robbed, but people have been robbed since the beginning of time. The issue is when the theft is so great and the idea that work is futile, pointless or even unfair, then it is game over. And we are largely bing robbed voluntarily by participating in the corruption around us. The people continuing to buy stocks and bonds are a primary player. Doing what they believe to be in their own best interest is enabling the "policy makers" to drive us off the cliff. If we refused to invest in these sham markets they would end or reform. Instead we watch everyone engaging in a market that they KNOW is corrupt, fully in the belief they can beat the system.

Wed, 03/05/2014 - 13:46 | 4512463 RaceToTheBottom
RaceToTheBottom's picture

The pull yourself up by your own bootstraps story becomes progressively harder to sell to the FSA when all the Banksters got bailed out, don't you think?

Wed, 03/05/2014 - 19:21 | 4514061 Oldwood
Oldwood's picture

impossible sell. The center of the problem. People "believe" they don't need to work, or work very hard. We are entitled. Which is what ultimately will suffocate us. Surival requires productivity, even if it is in your own garden. People don't think they should have to mow their own yard, much less grow their own food.

Wed, 03/05/2014 - 10:58 | 4511516 HardAssets
HardAssets's picture

"A special kind of stoopid."

Well, I don't know about that - the populace of empires are often taught to believe all sorts of b.s.

One thing Americans were taught is the definition of 'the rich'.  They think that's the guy making a 6 figure income or the small business guy with a couple or three mil in assets living in what they consider a 'nice home' and driving 'nice cars'.

Class envy is stirred up and directed at these often productive people while the real controllers & blood suckers pull the strings. Divide & Conquer is so useful for them.

Wed, 03/05/2014 - 15:11 | 4512881 donsluck
donsluck's picture

So, you are arguing there is no class warfare? I think there is, and it is enabled injustice, where the rich and connected are not prosecuted. This is felt by all and leads to a decay in our social fabric. The problem is multi-faceted and too complex to go into here.

Wed, 03/05/2014 - 10:00 | 4511264 Tsar Pointless
Tsar Pointless's picture

Sell-side brigade hijacked the economic releases for the day, it appears.

http://mam.econoday.com/byshoweventfull.asp?fid=463608&cust=mam&year=201...

53.3 actual vs. 56.7 prior.

Wed, 03/05/2014 - 10:00 | 4511265 buzzsaw99
buzzsaw99's picture

the maggots only want moar so moar we shall have. jobs got nothing to do with it.

Wed, 03/05/2014 - 10:03 | 4511273 Sudden Debt
Sudden Debt's picture

We're clearly just dreaming this depression. What would doctor freud say...

Wed, 03/05/2014 - 10:05 | 4511277 GetZeeGold
GetZeeGold's picture

 

 

Don't know.....I'm not allowed to see him anymore.

Wed, 03/05/2014 - 10:23 | 4511340 krispkritter
krispkritter's picture

?? You must have let something slip...

Wed, 03/05/2014 - 10:03 | 4511274 snr-moment
snr-moment's picture

2016 elections.

Wed, 03/05/2014 - 10:10 | 4511295 d edwards
d edwards's picture

A recession is when your neighbor loses his job.

A depression is when you lose your job.

A recovery is when 0bozo and his regime lose THEIR jobs.

 

Just think of the ripple effect-hell a tsunami of jobs and productivity if the US quit sending 100's of billions of $$ per year to the ME for oil. If we started producing and using our own oil and nat. gas the money would be turned over and over and over in the US economy. You'd see a national boom just like N Dakota and TX.

Wed, 03/05/2014 - 10:18 | 4511323 negative rates
negative rates's picture

You must not have gotten the hyperinflation memo some years back. The foriegners have more dollars than do the Americans, so now the Americans sell their stuff to the foriegners for more money, leaving prices high here, and the quailty goods over there. Hyperinflation, get used to it.

Wed, 03/05/2014 - 10:20 | 4511329 corporatewhore
corporatewhore's picture

give it up on obama.  his absence isn't the solution that will fix it all.  Nor was Clinton's , Bush's or Bush II's.

there is no answer.  accept it and live accordingly

Wed, 03/05/2014 - 10:49 | 4511454 Bonapartist
Bonapartist's picture

"Those jobs are gone"- Steve Jobs to BroncO Bama.

Wed, 03/05/2014 - 14:45 | 4512764 snr-moment
snr-moment's picture

So as you look around your little corner of the world, you can't see ANYTHING that needs to be done, that could be done, that might improve the  standard of living of ALL  americans.

You'd rather we just have people sit on their asses and collect food stamps?

 

Shit, you could build a dozen dams and pay people to ferry the fish past them.

Wed, 03/05/2014 - 14:51 | 4512787 snr-moment
snr-moment's picture

Example.  Do you have ANY idea how much down, but not decayed, cedar is still sitting on the floor of Yellowstone.  And how much electricity could you generate from it.  That's some serious low hanging fruit there.

Except the environuts would kill you.

Wed, 03/05/2014 - 10:04 | 4511275 Acidtest Dummy
Acidtest Dummy's picture

Recovery? Go home Tyler you're drunk. (Can't blame the weather and hit rock bottom at the same time.)

Wed, 03/05/2014 - 10:50 | 4511458 Bonapartist
Bonapartist's picture

don't shoot the messenger

Wed, 03/05/2014 - 10:06 | 4511280 Dollarmedes
Dollarmedes's picture

Kill Obamacare, regulatory reform, downsize government, tax reform, end wall street cronyism, stop defecit spending in Washington D.C., stop Fed printing.

This country is screwed.

Wed, 03/05/2014 - 10:08 | 4511289 Tsar Pointless
Tsar Pointless's picture

It was screwed from inception. That's the whole irony of the situation.

Wed, 03/05/2014 - 10:08 | 4511285 RaiZH
RaiZH's picture

A more sustainable and prudent recovery? 

We've over shot by miles on that one... I can't see that happening without the system imploding first. 

Wed, 03/05/2014 - 10:23 | 4511341 Oldwood
Oldwood's picture

In order to change to occur, peoples perceptions must change, and that ain't going to happen until they are forced to change. Free Shit Forever!

Wed, 03/05/2014 - 10:08 | 4511288 Kina
Kina's picture

Another decade of delveraging before the 'consumer' becomes a force for growth. All are borrowed upto their neck....and the reality of increasing unemployment, or jobs below the poverty line...means the means for consumer growth are diminishing, not growing.

 

The transition to an entirely part time work force...where it takes two or more jobs to make ends meet means a stagnant economy...especially when it is already over borrowed.

 

 

 

Wed, 03/05/2014 - 10:29 | 4511368 Oldwood
Oldwood's picture

Sure, like the whole world is trying to deleverage. Interest rates at all time lows, credit consumption at all time highs, personal income falling...sure, everyone is racing out to pay off their credit cards....NOT! If anything, many are gaming the system, knowing its broke and unsustainable, so they are out borrowing what they can under the assumption that they will never have to pay it back. Default and reset. Just like so many buying gold in hopes of seeing a dollar crash that makes them rich overnight. The other side of the coin is buying stocks like mad assuming we will see inflation to the moon and still be able to cash out before it goes boom. Everyone is gaming the system, when the original system was never supposed to be a game. It was supposed to be about working and saving, an honst days work for an honest day's pay. Now, its about how to get rich on a bet. Fucked to the core.....

Wed, 03/05/2014 - 10:11 | 4511290 ejmoosa
ejmoosa's picture

What needs to happen?  A REAL recession.  And fewer rules and regulations.

Eliminate the minimum wage.

Eliminate Obamacare.

Rewrite the Interstate Commerce Clause to eliminate activitites that it has been expanded to cover by the Supreme Court.

Wed, 03/05/2014 - 10:12 | 4511300 Mad Mohel
Mad Mohel's picture

Trials and life sentences?

Wed, 03/05/2014 - 10:12 | 4511303 medium giraffe
medium giraffe's picture

...and the small matter of even bothering to look like you're trying to pay down an outstanding $17.4T I.O.U.

Wed, 03/05/2014 - 10:22 | 4511339 NoDebt
NoDebt's picture

Before there can be any discussion of paying it down there has to be the discussion of not making it any bigger.  In other words, you and I will both be dead and gone before that happens.

Wed, 03/05/2014 - 10:12 | 4511304 Save_America1st
Save_America1st's picture

it all has to crash first, because nobody is going to do anything to effectively turn this around or stop it before it totally crashes.

Once that happens, then the good guys need to prevail in restoring the Republic and free market based on sound money and the original Constitution...backed vigilantly and unwaveringly by our weapons and our desire to stay free from any further globalist bankster criminal tyranny.

or it all crashes, Cloward and Piven-style, as the globalists want, and if the bad guys win then we lose everything, and the world will most likely fall back into a century long tyrannical new Dark Ages.

 

Wed, 03/05/2014 - 14:14 | 4512604 Shizzmoney
Shizzmoney's picture

RE

it all has to crash first, because nobody is going to do anything to effectively turn this around or stop it before it totally crashes.

So this.

People in the West are reactionary, not proactionary.  

Wed, 03/05/2014 - 10:12 | 4511305 LawsofPhysics
LawsofPhysics's picture

We now return you to your normally schedule fraud and corruption...

"beating expectations" all the way down...

Wed, 03/05/2014 - 10:13 | 4511309 NMFP
NMFP's picture

Increase the minimum wage /sarc

Wed, 03/05/2014 - 10:20 | 4511328 Last of the Mid...
Last of the Middle Class's picture

This is the end result of merging government with big business. All goverments are corrupt by definition. That is why you limit their size and their funding as much as possible. When a politician shakes your hand and listens to your complaint he immediately goes to the next person and does the same. The result is the one who gives him the most money gets his problems addressed, thus corruption. When it gets so large the government becomes disconnected, then bread and circus politics begin. Throw free bread for the starving masses to eat and circus to distract them from their hunger. A perfect illustration of this is Obama's handling of the Ukraine crisis. He was so concentrated on which group within the US he needed to appease next the Russian invasion wasn't even on his radar and he was completely clueless as to it's inportance to us as a nation. A community organizer at his finest hour. If we hadn't had TBTF GM and all of it's cronies including the unions that drove them there would have been flushed down the toilet and the beginnings of a more efficient company would be rising from their ashes about now. Ultimately its about tyranny, when your goverhment has the arrogance that you didn't build what you own it's time for them to go. The Dems and RINOs were right. It's time for a reset all right. All this pandering to each little group for votes must stop and the bigger question of what's best for our country and our economy must be addressed and it eventually will. How this happens is still not clear but it's not looking good for TPTB just changing their minds

Wed, 03/05/2014 - 10:20 | 4511331 Buggy
Buggy's picture

Didn't they change the way GDP gets measured a year or two ago?  What would the GDP for 2013 be under the old measurement?

Wed, 03/05/2014 - 10:25 | 4511349 krispkritter
krispkritter's picture

It changes more often than I change my shorts: http://www.shadowstats.com/alternate_data/inflation-charts

Wed, 03/05/2014 - 10:24 | 4511344 KickIce
KickIce's picture

We need to prosecute Wall Street bankers.

We need a gold standard.

We need to eliminate the Federal Reserve.

Clean out DC

Reduce our tax system to a single percentage.

Outlaw compound interest

Revoke corporate citizenship.

Completely overhaul a corrupt judicial system.

Our legal code that has been written for lawyers and by lawyers has to be stripped clean of all loopholes.

New legislation needs to be limited to a single subject with each bill labeled as military, education, healthcare, etc.

All pork spending must be labeled as such and in a separate bill.

Our schools need to be revamped with focus on sound money and the principles this country was founded on.

People need actually understand and care what is done in DC.

Senators need to have term limits and in reality should be a part time rather than full time job.

 

So yeah, I see a recovery right around the corner.

Wed, 03/05/2014 - 10:30 | 4511369 TheABaum
TheABaum's picture

"Outlaw compound interest".

 

That is the dumbest thing I've read here ever, especially as the the FED has been following a ZIRP to fuel the bubble.

Wed, 03/05/2014 - 10:27 | 4511357 crunchyfrog
crunchyfrog's picture

But, but, this can't be. All the true believers here know, presumably by divine inspiration, that Americans who lose a good job should feel honored to work at McDonalds, and that the only reason anyone has hired a part time worker since 1982 is because of Obamacare.

 

How can you post this Tyler?

Wed, 03/05/2014 - 10:28 | 4511360 My Days Are Get...
My Days Are Getting Fewer's picture

Zero interest and magic money is poisoning the economic well.  It is like drinking distilled water to survive.  Devoid of mineral content, that water fails to nourish and promotes slow death.

Wed, 03/05/2014 - 10:28 | 4511361 adr
adr's picture

Anyone trying to make the case that there was supposed to be an economic recovery for the masses is dead wrong. That is never going to happen and will never happen as long as the bankster tribe is in charge.

The only way to end corporate facism is to kill the minority in charge. Killing as few as one hundred people would be enough to bring the real economy back after a short period of confusion. Zuckerberg needs to go. That would be enough to reset this ridiculous social media crap, popping that bubble. Zuckerberg didn't create anything, he doesn't program the site or design the apps. In the grand scheme of things Facebook is worthless. The valuation of the business model is based on a scam, one that has been proven over and over. Musk needs to go, Tesla would survive but it would lose its insane bubble valuation. In the same vein as Zuckerberg, Musk isn't an engineer or a designer. The guy probably can't put together a plastic model of a Tesla. He used leverage to buy others ideas and designs then flipped them for handsom profit. The media claimed he is a genious and Wall Street made him into a reincarnated Howard Hughes. Reality is the man is a fraud and his company's valuation is based on an impossibility. Blankfein and Dimon need to go. That warning shot would put so much fear into the banking sector that it would dissolve almost overnight.

Essentially we must rid the world of the entire class of worthless people that have somehow convinced the world that we need them. The parasites that live off our hard work. They claim a symbiotic relationship, but the people must realize this is just a ruse to allow more parasites to attach killing the host body faster.

We are supposed to believe that Wall Street is Mount Olympus and those that reside there are gods that tower over men. That figures like Musk and Zuckerberg are like Hercules and Perseus. Demigods performing miracles before they take their place at the top of Olympus.

Reality is that in a true free economy these people probably don't have the skills required to clean toilets.

Wed, 03/05/2014 - 10:40 | 4511415 oleander garch
oleander garch's picture

My recovery has been real and sustainable; and that is the point, really.  In 2008, I was going down the tubes; my financial assets crashing, nobody solvent to pay off my derivative risk management assets, my clients and dumb money holding back and strangling my chance to sip from the flow, the threat of prosecution, asset seizure and jail for all my many frauds, no cash for strippers, cocaine or legal representation.  It looked really bad for a while.  But then the bozos decided to sacrifice their millions of individual futures to guarantee my own.  Thanks, America.

Wed, 03/05/2014 - 10:34 | 4511385 Element
Element's picture

No overall aggregate demand chart?

Wages growth = 0 ... in a five year structural down-trend.

The 1% took the wages ... add in US buget cuts ... and a looooooog overdue plunge.

At some point this thing is going to tank completely and another timmay and paulson muppet show is not going to suffice.

Wed, 03/05/2014 - 13:53 | 4512501 RaceToTheBottom
RaceToTheBottom's picture

"Wages growth = 0 ... in a five year structural down-trend."

Even worse, wage growth = 0 since the early 80s when figured after inflation. 

And EVERYTHING has to be figured after inflation since inflation is their goal...

Wed, 03/05/2014 - 10:37 | 4511391 overmedicatedun...
overmedicatedundersexed's picture

look as more and more true americans, those that are here long enough for several generations, come to understand the corrupt nature of the economy and the FED system, the corrupt nature of our colossus in washington, they wake up, but the otherside (reptile nwo international elite) has an answer, open borders and mass immigration of third worlders with no understanding of a republic or our nations founding, to defuse/delute the impact of millions of what are true americans who wake up to the theft of our liberty and wealth.

Wed, 03/05/2014 - 11:00 | 4511402 RevRex
RevRex's picture

A real recovery will only come when energy prices drop.

 

Gasoline was $1.78 a gallon when Obama stepped in,,,,instead of allowing cheap energy to be the engine of economic recovery, the FED artificially caused it to skyrocket by printing trillions.......no bust, no boom.....it's NOT  surprising how many stupid people do not understand this.....I mean how stupid must one be to vote for a serial lying, racist community organizer born in Kenya?

 

 

Oh, and I knew Homosexual Obama voters would down arrow me, yet refute nothing!

Wed, 03/05/2014 - 10:49 | 4511453 eddiebe
eddiebe's picture

Can any data really be trusted anymore? No, I don't think so, it's all bullshit.

Wed, 03/05/2014 - 10:54 | 4511481 strangewalk
strangewalk's picture

The only way a real recovery can take place in the US/Europe is for real, wealth producing manufacturing jobs that pay a living wage return. 

Wed, 03/05/2014 - 10:59 | 4511522 RevRex
RevRex's picture

Socialist democrat unions have made sure that will never happen.

Wed, 03/05/2014 - 11:09 | 4511592 Shed Boy
Shed Boy's picture

Exactly! No manufacturing = no recovery. And the real clincher: The thing that needs to change before ANYTHING is....attitude. Forget living wage, charts and all the other blah...blah...blah. Until people WANT to make stuff again NONE of it will happen. Young people have NO INTEREST in becoming a machinist, welder, design engineer, carpenter, furniture maker or Maytag man. Do you think Henry Ford reinvented the assembly line strictly for profit. Yeah, I'm sure the money was in his mind, but I suspect it had more to do with getting his product out there faster and easier. Or how about all the great inventors weve had, do you think they were worried about a living wage? Nahhh...they just wanted to see if they could do it and hoped it might make them some money.

It's like this: The horse goes in front of the cart. You work hard, design something great or build something amazing...THEN you make money. Not the other way around, and thats the attitude that has to change.

We have grown to be lazy, stupid, bottom feeding consumers. We dont want to actually have to get dirty and make stuff. Instant gratification rules.

Wed, 03/05/2014 - 11:26 | 4511684 Comte d'herblay
Comte d'herblay's picture

I used to think that too, coming from a city devastated by losses in manufacturing employment over the last 20 years or more.  But it's a fallacy. 

Full employment at market bearing labor prices is impossible in a world of 7 billion people.

So the real problem is unbridled reproduction in third world countries; 7X reproduction in the non-white population in the U.S and we have the Brennan court to thank for that with Roe vs Wade, wherein the white middle classes set their women to work because women had more fun working than raising white kids, abortion terminated the 2.3 children per family "replacement cost" and we now find the white population in decline. 

So an influx of tens of millions of 'making stuff' jobs---- having acted as the economic spark plug after WWII----is no longer even a fantasy. 

There are billions more outside the US who will do it cheaper.  Even China, our low cost producer, now 'exports' it's dollar a day jobs to other poor countries peoples who will do it for half a dollar a day. 

With no manufacturing jobs, and brain intensive jobs being outsourced to other countries as well, whose people are hungry, results in a reversing economy, wherein the best educated in this country have the most opportunity, provided they are in a narrow tranche of jobs available.

The only possible solution was discovered by Kurt Vonnegut 40 years ago. For a treatise and primer on what this country is headed towards, then you need to read his trilogy starring Kilgore Trout and Mr. Rosewater.

It ain't pretty.

 

Wed, 03/05/2014 - 11:41 | 4511771 elwind45
elwind45's picture

Destroy the credit market and you have billions of slaves to herd around MORE WINE

Wed, 03/05/2014 - 11:46 | 4511809 elwind45
elwind45's picture

Out there looking for the rest of the 45's

Wed, 03/05/2014 - 11:54 | 4511856 Shed Boy
Shed Boy's picture

Your assuming all that cheap foreign labor will be around forever. Kind of like how those 3 houses you bought would only go up in value to infinity. Our foreign policies are all but guaranteeing us isolation (or worse) at some point. China trade embargo?

It's really interesting to read the comments. Amazing how many people base EVERYTHING on money. The absolute bottom line has nothing to do with money and everything to do with attitude and desire.

You can whip, beat or flog a dead horse...yes, even throw money at it. But a dead horse is a dead horse. Until the paradigm changes from "how much will you pay me" to "I want to make stuff" there will be no recovery in the USA.

Wed, 03/05/2014 - 11:27 | 4511687 elwind45
elwind45's picture

The fed is lounging in the corner and uneasy? Its been 5 years of this dog and pony show. Where's the none inflation real growth? If I show replied the chairman I will have to raise rates or trust me its growing TRUST ME. Taking money out of the economy and parking it until production catchs up to the oversea assets from far afoot saves the day. On a brighter note step one is complete unlimit debt creation for the year to mask the process and step two removing the feds balance sheet from the public vernacular. And old step three convincing John q. To focus on being more productive? You cant run a slave ship without a popular drummer cadence

Wed, 03/05/2014 - 11:48 | 4511823 elwind45
elwind45's picture

As I get older I find I don't look over my shoulder enough

Wed, 03/05/2014 - 11:50 | 4511837 Shizzmoney
Shizzmoney's picture

A) Incomes must increase by 5% YOD for the next 5 years, if not higher, for lower-to-mid income folks (Under $40k/year).  

B) Minimum wage must be set at $11 because of the Fed Reserve's QE4EVA policies, which has ramped up inflation on consumer households for stuff that the CPI *doesn't* cover (rent, food, energy, interest payments on debt like student loans, etc).  This will increase tax revenue because shitty household incomes = shitty tax revenue.

C) Tax cuts are also needed for the under $40k/year crowd.  Payroll tax cut, ETIC, sales tax cuts for items MADE IN AMERICA (to induce in-house manufacturing and goods to be made in the US to bring jobs back).

D) Interest rates must be raised to a) increase savings to boost wealth for retirees (which will make its way back into the economy from retired Boomers) as well as b) to flush out the bad debt and the bad institutions (like HSBC).  

F) Campaign finance reform so that big corporations can't "buy" tax breaks and politicians. 

You can all cue your laughter now because none of this will ever happen.

Wed, 03/05/2014 - 11:57 | 4511874 moneybots
moneybots's picture

" ...sales tax cuts for items MADE IN AMERICA (to induce in-house manufacturing and goods to be made in the US to bring jobs back)."

 

More and more, those goods will be made by robots.

Wed, 03/05/2014 - 12:04 | 4511933 I Write Code
I Write Code's picture

More and more, those goods will be made by robots.

That's fine, just so they're American robots!

If need be, we'll set up more robots to be consumers and balance it all out ...

 

Wed, 03/05/2014 - 12:01 | 4511908 I Write Code
I Write Code's picture

Big yes on incomes, but raise your limit to almost everyone on salary, up to $250k.  What it is is gains in GDP have to make it down to the average working citizen.

Big no on minimum wage, well maybe it needs raising on general principles but it's not really relevant to the overall recovery.

There are no federal income taxes on most below $40k, or they are tiny.  But we could merge SSN and income taxes and reduce the combination on incomes below $60k.

Interesting idea to give a tax break to goods made in America, but the way that happens is to tax imports - which suggestion sets a lot of noses quivering.

BIG YES on raising interest rates back to normal levels, 4-5% on cash, 7-8% or more on bonds.  No more ZIRP.

Campaign reform yes, but the best campaign reform is to repeal all existing campaign laws, replace them with honest reporting - take any money, just report it openly.

Nice list!

Some of this will happen one of these days. 

And could happen under Democrats or Republicans or New Whigs or whatever.

Just not under Obumble who don't know his ass from last Tuesday.

Wed, 03/05/2014 - 14:23 | 4512643 Shizzmoney
Shizzmoney's picture

RE

Big yes on incomes, but raise your limit to almost everyone on salary, up to $250k.  What it is is gains in GDP have to make it down to the average working citizen.

I was going more on demographics (half of the US makes $26/yr on avg, and household incomes are around $54/yr avg) of the total of incomes, but you on principle are right: it would probably be best to include under $250k/year crowd as it represent the overwhelming majority of the country, not just the majority of income makers.

Big no on minimum wage, well maybe it needs raising on general principles but it's not really relevant to the overall recovery.

I understand folks machinations against raising the min wage, but the Fed really fucked over the average worker (never reported on MSM) with their endless printing.  I don't see how else you raise these folks morale (as well as being able to keep ahead of the life vig) without raising the hourly wage.  The US Dollar's value is so skewed at this point and anyone who argues on its merits of value (including myself) is so in the dark thanks to constant FOREX manipulation by TBTF and CBs (at the behest of global corporations).

Wed, 03/05/2014 - 11:50 | 4511839 I Write Code
I Write Code's picture

Need some new politics.

Need some leaders who want American citizens to work and prosper. 

Need the jobs for them to work at instead of outsourcing everything to China.

Need to kill and eat a couple of hundred banksters - or at least restore Glass-Steagall.

If we get into a war we need to kill the enemy until the last survivors surrender, instead of mincing around and letting American troops get killed for no purpose. 

Going to have to fix the MSM, they are a part of the problem now.

Have to restore the idea of freedom, not food stamps, as the purpose of government.

Wed, 03/05/2014 - 12:00 | 4511902 moneybots
moneybots's picture

"Have to restore the idea of freedom, not food stamps, as the purpose of government."

 

Start using the term our republic, instead of our democracy.

Wed, 03/05/2014 - 13:57 | 4512523 RaceToTheBottom
RaceToTheBottom's picture

"Need to kill and eat a couple of hundred banksters - or at least restore Glass-Steagall."

This is one time where BOTH is in order.

Wed, 03/05/2014 - 11:53 | 4511854 moneybots
moneybots's picture

"In America’s consumer-led economy, businesses have no reason to ramp up capital spending unless they expect strong gains in consumption. That seems unlikely."

 

ZIRP has taken over a trillion dollars out of the hands of consumers.

Wed, 03/05/2014 - 12:09 | 4511969 moneybots
moneybots's picture

"Arnold Kling’s PSST theory. Kling builds out an up-to-date variation of Joseph Schumpeter’s theory of creative destruction. He explains why creating sustainable jobs after a bust can be a very slow process."

 

We haven't had after the bust, yet.  Over 56 trillion in debt and still rising.

Wed, 03/05/2014 - 13:38 | 4512422 RaceToTheBottom
RaceToTheBottom's picture

If a recovery of the consumer led economy was their goal, they would have helicoptered the money into John Q Public's hands.

 

That was not and is not, their goal.  Their goal was to save the banks.

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