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The Legend Of The Almighty American Consumer
Submitted by Thad Beversdorf via FirstRebuttal.com,
According to an article today from Bloomberg,
Now quite clearly the claim and the chart are both ridiculous but that said, this brings up a good topic. The Almighty American Consumer.
We recently saw a tongue and cheek piece by WSJ’s, Hilsenrath, which seemed to fail to amuse but the point was that the world is effectively dead in the water until the American Consumer can find its legs and starts spending, spending, spending. However, is it fair to put so much pressure on the American Consumer? I mean, haven’t they done their fair share for the past 50 years? Can you imagine where the global ‘economy’ would be without the past 50 years of American Consumer madness??
It is nearly impossible to comprehend the amount of shit that has been purchased, consumed and discarded only to be purchased again by Americans over the past 50 years. But, what we know is that no other creature demographic in history has consumed anywhere near the amount as that of the Almighty American Consumer. But can a level of consumption stretching so far beyond their means continue indefinitely? Well isn’t that just the $64K question, eh??
Given we are using all the same models and benchmarks as before it would seem that the assumption is the American Consumer will simply shake off the brutal right hook and knock down blow of 2008. The problem is, and anyone who’s done a bit of boxing knows, things can look very different after taking one to the back of the jaw. You might want to get back in the fight and even have every intention to stand up swinging, but sometimes it just doesn’t feel the same. Your balance is off, you’re a bit dizzy and your legs seem to have turned into spaghetti. This all starts to affect your psyche. You begin questioning if you can win this one, hell if you even want this one. And once that creeps into your psyche it’s over.
Well think about the American Consumer. 90% of us still have 40% less net worth than we did before that right hook and those still working are generating 10% less income. Demographics are pushing the baby boomers into ‘retirement’, which today just means working for no benefits and minimum wage in order to undercut the labour wages of a younger worker who is not yet on medicare. Then we have the middle class struggling to stay ahead of the hyper-inflating healthcare, education, rent and food bills. Move on to the millennials and recognize this generation was just getting started when the American Consumer ate that knock down blow. They watched families and friends being evicted from their homes during the very life stage their value systems were being developed. They understand that the chaos was a result of being overextended with credit facilitated by false assumptions that ‘things’ always move in the right direction. Finally, we have the 50% of American Consumers now reliant on government stipends for some or all of their consumption.
And so we must ask, are we to assume that the Almighty American Consumer is the same fighter they were before eating the, still recent, economic haymaker? Time will tell, it always does, but can we see any signs of wavering? Well let’s go right at it, what do honest consumption figures tell us? By honest, I mean let’s look at personal consumption growth but let’s filter out growth in auto loans, student loans and increases in government welfare to consumers.
What we find is that despite the ‘incredible improvement’ to unemployment statistics, earned rather than borrowed or government sponsored personal consumption expenditure has been trending down for 5 years and has now gone negative. And this doesn’t filter out revolving credit or it would be even uglier. Now when was the last time we saw this go negative? You got it Pontiac! 2008.
Well surely that’s just an odd coincidence, right?? Ok but maybe it’s just my funny math playing tricks with debt and welfare. What do things look like upstream? For instance, what are we seeing in factory orders, which side steps the whole debt and welfare funniness?
Hmmm now this is getting a little disconcerting, no? Last time new factory orders turned negative was……. 2008! Might be on to something here but is there anyway to really be sure?
Well the entire monetary system is set up to inflate. In fact, we’ve been told now for 100 fabulously devaluing years that if we are to get any kind of growth it is essential that we see inflation. And if there’s one thing nobody can fault the Fed for is not doing one helluva job printing the sh!t out of USD over the past 6 years ($13T). So, we should see ‘official’ inflation just humming along like a song. Let’s have a look.
D’oh! So official YoY CPI has been trending downward since 2010 despite the ridiculous increases to M2 money stock and it actually just went negative. And don’t look now but yes, the last time it went negative was in 2008. Now sure we all know there are games played with CPI but the fact that it just crossed into negative territory is definitely a signal that discretionary demand is dead.
So then what do we take away from all of this about the American Consumer? Are these signs that we should expect the American Consumer has picked themselves up off the canvas and is ready to throw themselves right back into the match? Or are these signals that the beloved American Consumer has not and very likely will not recover from the awful blow that landed in 2008, unable to be that wild and fearless fighter that always proved a sure bet? And if that is the case, what does it mean to the existing economic and market models?
Thing is we’ve been treating the economy as though the American Consumer just needs a little time to get back to its old self. I mean listen to the pundits. From talk of an American capex renaissance over at BMO to guys like Erik Ristuben, chief strategist at Russell Investments who stated today on CNBC that “he believes the economic data will continue to improve”. Continue to improve??? What f**k’n economy are you looking at man? How can you even say that with a straight face?!
It just blows my mind, that in the face of almost every indicator having collapsed over the first 6 months of this year, market ‘pros’ just act as though it isn’t happening! It’s bloody impressive to watch the insanity, the denial, the delusion, that has become the basis of the steady state market. It’s like we are hiding behind our index finger, assuming because we refuse to see around it that there is nothing beyond.
What IS continuing is us extending ourselves again on the very assumption that the American Consumer will rebound to its peak strength. But what if, god forbid, we happened to be relying once again on a false assumption? Where does that leave us?? Well I expect there are more than a few millennials that have memories seared in their psyche of being thrown out of their homes, acutely aware of the fear their parents were trying so hard to conceal, who can remind us exactly where this all leads. But because there are those few all powerful economic cannibals that profit on policy rather than economics, we will continue down this flawed path until the legend of the Almighty American Consumer succumbs to the reality of one that is wearing its lumps. And that day my friends will be an ugly one for the record books. Keep your assets on a very short leash these days.
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The almighty american consumer is a retarded bankster programmed schmuckster who will go into debt to buy hair weave extensions.
Every day there are more potential consumers being incubated by the powerful psychologically researched subliminal media messages.
Anytime someone writes an 'analysis' that uses the word "investors" I immediately stop reading.
The Wachowskis' message in Jupiter Ascending
As above, so below.
I wouldn't even begin because it is from Bloomberg. Yellen may as well be the author ..
The American consumer had Gold and Silver saved up over 200 years. That wealth was stolen completely. Now Americans are just like every other 3 world pit. No wealth, no land and no freedom.
If you want a consumer your going to need 200 more years of commodity savings to build up. Good luck.
In your focus on gold and silver you completely miss the point. The key insight is that consumption requires production.
If you want real consumption (at least reaonable consumption), that is going to take on the order of job training and skill reboot/refreshment for about 100 million (people). Then we need products worth buying, not made in China. Yeah, going to take at least a generation or two, or three ..
Do we have a plan? Well, we actually do. All we need is at least 10% of the populace to demand it:
http://www.veteranstoday.com/?s=wanta+high+speed+rail (Dr. James is more recently seriously ill with kidney failure)
http://wantarevelations.com/2014/01/wanta-plan-macro-financial-economic-...
Latest update: http://www.veteranstoday.com/2015/05/27/lee-wanta-biography-intro/
How we actually got into this mess: http://www.veteranstoday.com/2012/11/06/roadmap-to-redressing-economic-t...
** ALERT **
Watch out ZeroHedge commenters. The DOJ could be coming for you.
http://motherboard.vice.com/read/the-government-wants-names-of-online-co...
the more you consume, the more you crap
and piss people off as well
"The problem is, and anyone who’s done a bit of boxing knows, things can look very different after taking one to the back of the jaw. You might want to get back in the fight and even have every intention to stand up swinging, but sometimes it just doesn’t feel the same. Your balance is off, you’re a bit dizzy and your legs seem to have turned into spaghetti. This all starts to affect your psyche. You begin questioning if you can win this one, hell if you even want this one. And once that creeps into your psyche it’s over."
Translation: "Everyone has a plan until they get punched in the mouth." - Mike Tyson
or raped.
http://thefunnyday.com/wp-content/uploads/2013/12/120.jpg
Nostalgia
do you spend based on net worth? or do you spend based on income and expenses?
My net worth may have recovered from 8 years ago, but my income in relation to expenses has been seriously hit... stagnant incomes, soaring expenses.
Sorry wall st. I'm not spending on what I don't need. you can go f yourselves.
I am convinced that this is the driving force behind the push for relaxed immigration laws in the US. Corporations want more consumers in the US, and corporations effectively own both parties. You can bet that the candidate nominated by the Democrats and the candidate nominated by the GOP for the POTUS election next year will both publicly support relaxed immigration laws.
Imagine what an easy time the ZWO usury machine would have if 50% of the deadbeat population didn't even know what the US constitution was.
This is the idea behind flooding America with some other countries crooks and criminals who can't even speak english.
You had me at ZWO, therein lies the core problem.
They also need youth. And they need workers willing to live for lower standards and lower pay than the typical American.
There is no doubt that absent something really unexpected happening, immigration is going to be let loose one way or another. I wager TPP is another conduit (among other things).
The end process of globilization is the lowest common demoninator for the masses (which continues to drop as population continues to grow).
Hunger Games world, coming right up. What district are you in?
"and corporations effectively own both parties."
That would be one Sheldon Adelson: http://en.wikipedia.org/wiki/Sheldon_Adelson
https://youtu.be/jE2_qmlKFVU
Precisely. And disposable income has been sapped by Obamacare premiums and increased rent, utilities, food, other insurance premiums - everything going up in cost - with wages stagnant.
Give them plastic and they will spend.
The dumb ones, anyway. I watch my bank account grow smaller and smaller while my pay stays the same and, while I do have loads of "credit" available, I'm learning to do the oil changes and brake jobs by myself and Aldi food isn't bad at all. My computer hasn't seen an upgrade in nigh on three years. Getting reloading kits for $28 a pop has helped me save a lot of cash, too. And I stopped buying GM cars in favor of nice, boring, reliable, foreign vehicles.
Consumers = debtors (they way they really want it)
But ... but ... "the more you buy, the more you save" ... right?
According to my girlfriend that is true, she is saving all the time....
Just wait till all aspects of Obamacare kick in! "Free healthcare" is going to consume nearly all of many family's discretionary spending. Those rising deductables(annual of $6000+) will gobble up whatever you thought you were frugally saving.
admit it, y'all are hoarding that 2500 you save every year since Obamacare. And the reduction in medical costs brought about by shifting 30 million emergency room participants over to 30 million medicaid participants is just astounding.
America quit hoarding those savings and get to spending. NOW.
Mickey and Minnie need to be fed
It seems there are fewer and fewer patriots willing to spend enough to support the government and union pensions.
They must be commies.
What keeps it going is the suspension of consequences. Nothing really bad happens to counter bad behavior as it used to.
But, this suspension costs. It effectively redistributes money (effort) from the responsible to the irresponsible. This is what is crushing the middle class.
And, hopefully as ZHers know, redistribution is the final leg in the process of avoiding inevitable collapse. It has never worked in the past because it is fraud.
Mostly, how to deal with irresponsible behavior is something that has to be dealt with on a local level. Raising to any higher level just enables centralization. Centralization, as we all can see, only leads to abuses and corruption. There is nothing "human" that can be removed from the local conscience and managed bureaucractically afar. Social security is a good example. Centralization of retirement - abdication of responsonsiblity for the eldery from local to Federal level. Housing, education, etc. the same - if it is FUBAR, chances are the root cause is the same.
more evidence these guys on CNBC are dead fucking wrong on inflation. if there were "no inflation anywhere" then people would be spending more, period. for the "recovery that is taking shape & more jobs" they pitch, all things being equal, spending would be much, much higher. its not & why? because the middle class has gotten buried thru keynesian economics. just lay a chart of the USD over oil. tells u all u need to know. obama & kuroda talk the dollar down (yen up), oil up. also, rates are up today & stocks are up? how can that be? dollar have a flame-thrower taken to it. so keep up the currency wars (since its worked out so fucking well for those who need help the most). idiots.
It's amazing what we've all learned since 2008, I never realised(we spell this word with an S in Australia) for example that gold & oil prices were not reflective of supply & demand fundamentals but determined in the futures market.
But one of the biggest shocks I got was learning that Americans consume something like 25 perecent of the world's output. For a nation(albeit the planet's most powerful one) which is less than 5 percent of the global population this is an extraordinary feat, dare I say one that is unsustainable. With emerging economies, for want of a better word, awakening, surely this rampant consumption cannot continue. Imagine if Americans only consumed their fair share, let's say 5 perecent, the American economy would be gutted.
Simple maths would suggest to me that this formula cannot continue & Americans may one day be forced to change their consumption habits radically.
"Imagine if Americans only consumed their fair share, let's say 5 perecent, the American economy would be gutted."
umm, China's economy would be gutted. We don't make anything in Merica no more.
All economies would be gutted. Even the Aussies. China buys tons of raw materials from Australia as a means of producing the goods which are consumed by America who processes the $'s which are the effective fuel for the machine.
it's good to be the reserve currency. you dig, china labors, we print.
The percentage of the world's output that Americans consume is irrelevant. What is relevant is the total quantity of the world's output that is produced by Americans. Sadly, 100 million Americans aren't producing anything.
Boy they sure whittled down the comments to the Hilsenrath letter to almost make it look like pats on the back for a job well done.
I don't give a damn what these "experts" say. It is a fact that since 2008 we've had quite a bit of price inflation. Everything has gone up, from food to taxes--and by the way, gasoline is going up despite the price of crude. I have no money left after trying to pay basic bills. If you think I'm going to spend money on cheap Chinese crap that falls apart or breaks down, think again. And gekko, I don't believe we're still consuming 25% when one third of Americans don't have a job.
ya but People need that new kitchen tool - it slices, it dices bla bla - like some people will ever cook again. Mass die off coming.
Hey Tylers,
OT. But, there was an article yesterday I think about how Corinthian College attendees are going to be given student loan forgiveness.
Of course, those are Federal Loans. Precident?
Also, the DOJ is clearly indicating fraud as a reason for allowing forgiveness. So, where are the perp walks for Corinthian ownership and management?
Guess the old advice I was given long ago is true. White collar crime is where it is at. And if you are going to do it, go big. Real big. Silly big, with lobbyists and lawyers on the ready.
"Now sure we all know there are games played with CPI but the fact that it just crossed into negative territory is definitely a signal that discretionary demand is dead."
Wait until next years next years medical insurance premium increases. Discretionary demand will be even deader.
But isn't that what they want, anyway? TPP.
"...market ‘pros’ just act as though it isn’t happening! "
If you've been a 'pro' in the market for the last cycle I'm certain you either hedged or cashed in (inc. assets) sufficiently for SHTF scenarios, so what's exactly the problem, from an individual and selfish perspective?
I, on the other hand, just recently woke up and still trying to find some vaseline to minimize the pain of whatever is coming.. The Chinese piece on the farmer turning to the market for value, as opposed to the land, that was the drop for me.. convinced me there's some plan that I'm not in the loop and seriously need to. more than 6th sense, this is survival instinct and has never failed me before.
I just wish the articles (and comments) which are already great, were discussed in a way that facilitates brainstorming and present some ideas on how to best handle the situation instead of just describing the clouds and derivatising up/down votes.
The king is naked..we get it.. b.boomers fked it up for the descendents.. we get it.. economy is rigged (duh..)
But what's the plan, exactly? how do we unite and do something about it?
hopefully this notion of talk/cooperation is not too european for ya?
Welcome to the rabbit hole. It goes down a LONG way, and there are lots of branches. When a friend asked me once about an article he'd seen on inflation being low, but failing to see how that was true, I started to explain what is happening, then realized I needed to give him some background on the Fed, then realized I needed to give some further background on fiat money, etc. ad nauseum. He chose not to step off the ledge. I almost wish I could go back to that point in my life.
You bring up questions that we've all been trying to answer for years. The problem is that they've rigged the system so much that cooperation is seen as conspiracy.
You almost have to go about getting your house in order yourself, and just keep a list of people you know are doing the same thing. When the system actually does go south, be ready to provide assistance to the like-thinking people you know.
The end may come quickly, with a trigger event sending the system down the drain, or it may linger in some Japan-esque suspended animation, but either way, the best thing is to get out of debt, learn a compound-valuable skill that will get you through the gates, and get to the point that you can support yourself and your family for a decent amount of time with no help from anyone else.
Such a fun time to be alive!
Oh, one other thing. Don't rely on most of the comments here on ZH... they're mostly stuff like you mentioned. People grousing and finger pointing, but not providing very many answers. You'll find that there are a handful of commentors that have their stuff together, and the rest are lurkers that like to hear themselves talk.
indeed, interesting times! One day you're watching sci-fi, the next day you're living it.
cheers for the reception.
Yes. TPTB have been fucking us around for decades (or centuries). Many, myself included, have only recently realized that this is the case. The articles and comments here at ZH have helped me to see things exactly as they are, and recalibrate/mature my bullshit detector.
The good news, IMO, is that TPTB are not likely to wreck the entire system overnight which gives those who have awakened to the bullshit some time to prepare. Remember that they have been at it for a long time and that the system got to be this fucked up over a long time. No need for rash actions on our part. We need to be on solid ground mentally/physically/spiritually when the SHTF (or a slower decay).
Have some patience. Make sure you really do understand the situation we're actually in. Not sure I'm completely there yet...
NM
feeling the same.. like the freakin matrix tube was unplugged.
worst question is: why is it unfolding in such obvious manner.. surely the internet effect is well known by now.. why are we, the sheeple, being given so many previews before release.
makes me think the manipulation is far worse.. or I'm just overthinking and the answer is as simple as always...incompetence.
Hard to say for sure, but I think the manipulation is deeper than most realize.
Pick your most rational and clear thinking friend, who is not yet "awake", and try and point out any of this shit to them. It will probably fall on deaf ears. Now, pick someone from the great unwashed masses and do the same, and it will probably get you branded as a conspiracy theorist.
On the brighter side, I do believe the Internet effect is underestimated.
It's different this time, Limo's...
BTFD
It is not insanity or delusion...it is lies...they are lying to prevent a greater slowdown and try to induce confidence...
There is no way this economy can recover with Obamacare on its back. And it will be getting worse.
Uncle Sam wearing made in China garb and holding a cold pack from Vietnam, spot on. That ain't a headache, its a tumor.
The Fed and the government at the state and federal level are basically payrolling the spending these days. Most of us that work and earn more then the government poverty level are being strangled by price increases and healthcare premiums. Economists can spout whatever they like but what is disposable income anymore? I guess you may have some if you get all the handouts or make six figures a year. I only buy what I need and nothing else, but I am debt free and will not play the debt game ever again!
Zion's plunder ops. are in trouble until the American people become convinced to go deeper into hock to their grifting banksters to buy more self enslavement junk while tyranny rises deeper around their legs like chains.
Liberty is a demand. Tyranny is submission.
Undutchable73
Good questions.
There is no general solution. WE can do nothing toegehter that will make a difference. The solutions are going to be local. They are going to depend upon the personalities of the individuals involved, and upon the particularities of the landscape. We are going to have to learn once again how to get along with people in family and in the neibhborhood who are difficult. Patience and hard work and courage and prudence -- the old virtues -- are going to come into play.
It's pretty simple, really.
I for one am going to miss the big discussions about what went wrong and why.
Capitalism distributes money to labor in the form of wages. Wage earners make goods and services, which then become prices. Prices in turn attract money from money supply.
Money supply is currently banker credit, and those that create the credit attract their interest/usury from money supply by the very act of ownership. To loan is to own.
Those who own physical capital, meaning the means of production (not including money as capital), include wear of tools and other losses, especially interest on loans, in their prices. They must re-capture these losses, or they go out of business. Therefore labor cannot buy their output, which is called the gap, and is a structural failure of Capitalism.
This structural flaw of Capitalism has been attempted to be overcome by Fascism, Socialism, and Communism. All of the “attempts” are political in nature, where force is used to re-distribute. Communism especially, is a vertical pyramid where money power and political power concentrate into a pyramid. Finance Capitalism is now doing the same.
http://distributist.blogspot.com/2008/02/history-of-distributism.html
An excerpt:
“Belloc indeed was here repeating the warning given by Pius XI in his sequel to Leo XIII's famous encyclical Rerum Novarum:
In the first place it is patent that in our days not wealth alone is accumulated but immense power and despotic economic domination are concentrated in the hands of a few...This domination is most powerfully exercised by those who, because they hold and control money, also govern credit and determine its allotment...so that no one can breathe against their will.”
The great thinkers of the past have repeatedly told us, over and over, that whoever controls the money controls society.
Only one thinker, Douglas has come up with a solution in his Social Credit Theory. With Social Credit, new money is injected into the price system to then overcome the gap.
Personally, I would update Social Credit Theory and inject into married households rather than prices, to thus favor the cornerstone of society, male/female pair-bonds. I would also discourage dysgenics by paying the retards and lame, not to breed.
The unearned income of production is only increasing as robots and automation improve productivity, and hence no longer distribute money as wage increase. In finance capitalism, this unearned increment is going to Oligarchy, the owners of finance “credit” capital.
Distributism is the POLICY of a PHILOSOPHY.
The isms all are philosophies that are based on centralizing pyramid power.
Federalism as a system is many small local pyramids of power, where small groups of people would rule themselves (States and Counties). Pius, Leo and others, have told us the Federalism is IMPOSSIBLE with the money supply being owned by privateers.
FKN Newz | Freedom Act - G7 Strap On - Tony Blair
NSFW, enjoy…
Is fearmongering a US State policy or something? It's everywhere, everyday and in every way in the USA.
By crying wolf every second day over decades, what you achieve is numbing people so when the things really get going, nobody will have seen it coming.
Part of the challenge might be the cocoon-like mindset all the post WWII consumers have - including myself. We've lived in the lap of luxury like fish live in water.
To us it has always been there. What do you mean "No water!"
Much or maybe most of the world has 1% rich and 90+% poor. We are headed there and it's going to be a shock. Yes, we might see it coming, but until we live it it's just not real enough for us to fully comprehend.
Imagine living for a month in the downtrodden portion of Detroit. Just a few seconds of that image...