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Record Gap Between US Inventories And Sales Screams Recession
The Wholesale Inventories-to-Sales ratio has now been stuck deep in recession territory since January as the malinvestment boom-driven deflation-beckoning dream of "if we build it they will come" inventory surges smashes into the ugly reality of peak-debt-based lack of consumption worldwide. Inventories dropped 0.1% in July (notably lower than the 0.3% rise expected and the biggest drop since May 2013), but worse still Wholesale Sales tumbled 0.3% (missing expectations of a 0.1% rise). So inventories dropped (bad for Q3 GDP) and sales dropped more (even worse) leaving July's 1.30x inventories-to-sales ratio remains a flashing red beacon of over-capacity and looming production cuts (especially in Automakers).
Recession looms...
The absolute dollar size of the gap between Inventories and Sales has never been bigger and is the biggest flashing red light that an economic recession is now inevitable as part of the massive destocking, likely at deflationary dumping prices, that has to take place.
Led by Automakers over-building:
And sending ominous signals for Q3 GDP...
In short, the Fed's timing for a rate hike couldn't be better.
Charts: Bloomberg
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Depression
Recovery
A lot if broken windows
https://www.youtube.com/watch?v=uFWHma2qaDg
We're holding a candlelight ceremony for our local mall. If you're not doing anything.....and you're probably not, come and join us.
Recession looms?
Depression IS!
Abject societal breakdown is what looms...
Our culture is fucked and our society is doomed. This is what we get for worshipping politicians as saviors.
It's true the world over SG.
Modern Religions have fostered a messiah will deliver us all mentality....
People are stuck...
My culture works just fine. FSA culture is what is fucked. That can be reversed. The nuts who came over on the Mayflower sailed under a manifesto that they would all share. They starved and died off until and when they caved to the cold hard fact that humans will work for their own betterment, and care little about working for others. So they adopted private property and markets. The first Thanksgiving party followed a summer of bumper crops. This is centuries before Marx or Smith.
But Jeb Bush said he was going to cut my taxes?
And Trump said something that made some chick's hoo-hah bleed.
You mean to tell me that they aren't going to make a positive difference?
pods
Here's the deal. Whatever Jeb says.....don't listen to him.
Donald......ehh.
one just has to laugh....U.S. and china set for recession and oil trying to rally twice this morning
High inventory-to-sales ratio is NOT a problem. In fact, it's a great opportunity. Just send that inventory to the recycler and you get ANOTHER boost to GDP. Once from making the car, another when it's melted down again.
Of course, the auto makers would be losing money by selling those cars for scrap. So we just have the government step in and pay the difference between sales price and recycle value to make them whole again.
That leaves the government in the hole for the money so we just raise taxes and do a shit-ton of government borrowing. That borrowning creates a vast batch of new USTs, so the Fed can then launch QE4 and buy then up without fear of running liquidity too thin. Interest rates fall and economy is further stimulated. A virtuous cycle is thus established.
Can I cook or can I cook?
- Paul "come worship at the altar of aggregate demand with me" Krugman
I have to admit it that you do whip up a tasty dish.
Did you come up with the "take oil and make fuel to use for planting food to make ethanol to make it back into fuel" too?
pods
No, sadly, I can't take credit for that one. Whoever came up with that is smarter than I am.
I did come up with a solution to running out of oil storage capacity in Cushing, though. I started an oil storage company- we store the oil underground by pumping it back down the same wells it was pumped out of in the first place. Makes all kinds of sense to do this since the infrastructure is already in place.
Lol... you're on fire today. No seriously dude....your ass, it's on fire.
No problem doc. He can hire halliburton at $18,000 dollars an hour for each employee to put those pesky hole fires out. They are the best, and sometimes only group that can do it, so cost is irrelevant to market conditions, household budgets and such. Probably need a team of 100, not for size of the hole fire, but logistics and such.
So Krugman has been advising kuroda in Japan and his perspective is that The US/Japan/Europe have NOT engaged in enough QE? Even Japan, which now has a Debt/GDP ratio of about 250%. So, Paul, how far should this go? 500%, 1000%, 3000%? And at that point,if nothing improves, would you admit you were wrong? I doubt it frankly.
Actually, Keynes is getting unfair treatment here becuase what he actually said was that Governments should run DEFECITS during down cycles and SURPLUSES during up cycles.'
That is perfectly logical BUT the Politicians forgot the second part, about running SURPLUSES during the UP part of the business cycle because , well Politicions only know how to SPEND??
Apologies, Very FAT finger..
NoDebt makes a funny point but in reality this is the same scheme the US has been using for years to keep the military sectors ever growing.
Gov't dumps money to private firms to develop new and exciting things that can be destroyed so that more can be produced... wash, rinse, repeat.
Great for the Beltway Bandits, not so great for the poor saps that this stuff gets used on.
No different than China - build fake cities and knock them down
No different than the USA - build war machines and make them obsolete; build bombs and blow them up
They don't have to knock 'em down. The way they are constructed they fall down all by themselves. Planned obsolescence you might say, on a short time horizon.
Good analysis NoDebt. The only thing you left out is the Printing Press. That little fact, along with defacto control of Bond Markets via the nexus bewteen Govt and Central Banks really changes this from a "virtuous cycle" to a "Perpetual Ponzi".
All that pesky Winter weather and this is merely Pre-Winter.......
Thier is no resession/depression. The Fed said so..so it is. Raise Interest rates we're in a mild recovery....green shoots...transitory...muddle through....jobless recovery....
I wonder what the next catch phrase will be?
I'm not sure what the phrase is going to be, but I think a lot of brown people are going to die because of it.
pods
that's http://metaracist.com man ...
I heard it the other day. The new catch phrase is "we are in a Recovery Slowdown" so dont worry this is just a Recovery Slowdown everything is fine.
if you can't sell it, blow it up
So WTF would The Fed want to raise interest rates into a Depression? My guess is that EITHER they want, belatedly, to try to "Cover their traces" OR they deliberately want to crash the economy to obfuscate all of the deliberate harm caused over the last three Governors stints? Probably a combination of both.Why on earth does anyone give so much credence to a bunch of unelected, unaccountable, PhD academic who don't live in the real world?and have never been seriously responsible for anything?
But what do you expect when you have a Central Bank whicg is owned by the Wall Street Banks and "Regulated" by the same? Isn't that the very definition of "Moral Hazard"? Or perhaps I am just an old-fashioned idealist?
The US was mired in recession heading into the Presidential election in '92 and they raised rates to make sure the economy was bad. They wanted a democrat then, maybe they want a Republican now?
Or they don't raise rates and the dollar hyperinflates. They're fucked either way.
Given what should be obvious now to all, do you really think it makes any difference whether the "Reds" or The "Blues" win? It's just a facade of "Democracy" to obfuscate the fascist Deep State?
When it comes to government, at all levels, they are structured so that there is no chain of command. They operate in a web of command where if the project is a success they all put their names on the list of being part of it. If the project is a failure no single person can be put to blame over the misery they created. Pathetic POS people they are. Universities are the worst for it/best at it and teach the other branches how to do it.
Well, i DO Live in Michigan.. but, this is the WORST "Recovery" i've Ever seen..
A recession would be welcome at this point, considering we've been in a full-blown depression since - oh, I don't know - 1929?
Definitely 1933 onwards.
Each major war and USSA's CONTINUOUS wars are all that have stood between dustbowl XXXXXI and this fake, MIC/Finacialization built reality...
Thus this current great war building....
Of all people to respond to my comment, I'm glad to see it's you. I've always been intrigued by your comments, ORI. Please, accept an "up arrow" vote from me.
When I made that comment, I was thinking along the lines of what our "US dollar" has done since 1913. I think you're probably correct with 1933 as the year our long depression began.
http://www.whatamimissinghere.com/archives/26993/value-of-a-federal-rese...
FRN flatline since 1981. Hmm. That year saw a revolution in America. Oh, how glorious it was! Saint Ronnie, we bow to thee!
Here we go again.
Please edit any reference to recession with xxxx and replace with "depression", papered over with EBT and other nonsense.
Steady now. That type of thinking, especially stating it publicly, might get you a knock on your door.
Yellen raising rates will demonstrate the strength of the freest, fairest economy in this world with only $210 trillion in debt - only over $1,720,000 per taxpayer.
The problem is that $210 trill isn't enough debt. I keep telling them that they need to take on moar if they want to fix this pig.
I'm Paul the bearded potato Krugman, and I approved this message.
A.K.A. The Krugthug and his evil kitty.
thats it 1.7million per taxpayor
"ill gladly pay you tuesday for another loan today"
When they do this, why exactly do we still pay taxes? What a joke our reality has become.
Recovery is just around the corner...., corner...., corner........
The "Recovery Summer" is HERE MAN!
https://www.youtube.com/watch?v=VlVmdGiAH2A
What is it now, Recovery Summer 6.0 or 7.0? I've lost track.
And according to the Farmers' Almanac, it's going to snow again this winter!
I call it a bubble when i see it, and the way i see it this so called recovery has been an even more bigger bubble. bubble in student loans, car loans its sub prime all over again + a whole host of other stuff... doesnt matter what the mainstream media calls it.. a bubble then, a bubble now nothing has changed
Once agin, proof that the American consumer is double tapped out.
94 million of our working age adults are not even working, and those who are, are aware of that, with variable levels of denial and consciousness of the state we are in. Many not be tapped out so much as they are bracing themselves for harsher times. The bright side: this will be hell on Paul Krugman.
a known fact..all those bartenders,and wait staff currently in the US workforce can't really afford much more than gas fare between their secord(or third) jobs and travel back to homebase.
They can also afford a bucket ... from which they can eat the poop that they save there.
They could, if they are a productive lot, use that poop on a garden and call it organic, and sell it. Poop would then skyrocket in value, giving the FED something else of similar value to suppress the price of Gold with.
Driving a 15 yr old Merc Mounatineer with 160K runs super well. Was thinking about getting F-250 diesel, but think the resale for nearly new trucks from the oil patch or the overstuffed dealers' new car lots makes more sense to just wait - the prices may drop significantly in 6 months.
Or until or if I ever I get over my buyer's remorse dread.
Anyway, why pay insurance companies and govt more money for taxes and insurance on new vehicle?
If you're getting a Ford diesel, stay the fuck away from the 6.0L. They're fucking boat anchors. I know the 6.4 had some issues, but I'm not sure what years to worry about.
the 95 7.3 powerstroke was a beast. got 17 mpg in my e350 super cargo van. even pulling my boat. or even when i had it so overloaded with metal that it grossed out 23,900 lbs and looked like tweetsie railroad going up the hills, or empty. 17 mpg
Ebay is full of those 6.0's. No car dealer would want to sell one to a local customer if at all possible.
Absolutely bullish of course ^^
Why in the fuck aren't prices of shitty US made cars dropping like a rock then, this IS a free market and thats how things work. Be right back, Chili's is calling for an interview.
There are a lot of government regulations on cars that make them more expensive.
Most likely the loan incentives is on new cars even though used car prices are continuing to go down.
"Timing" has nothing to do with Rate Hike. Fed has realized that ZIRP is messing up the economy/markets and is using bogus Unemployment Rate as a cover to Normalize rates.
Back to school student loans will get things moving.
Weeeee!!! BTFD. It's ALL bullish!!! FUBAR
"Record bullshit since 2008 screams VIGOROUSLY SUPRESSED DEPRESSION."
Where would the economy be without QE, EBT, corporate welfare, warfare, hookers and blow?
The car sales have suprised me...I think its subprime loans to dumb people who sign up for a 7 year loan for a new car....no down payment...off the lot ...until they quit paying on it....then its back as a used car...
They gave me a zero interest rate loan on a new CAMRY a year ago. All I needed was a job-offer letter.
(drove away in 2 hours)
(this is bullish on cars)
https://www.youtube.com/watch?v=PPcormivj2A
Once Americans learn to eat their own poo and drink their own urine ... it will all be ok ...
(but I'm gonna miss the cocaine and the hookers)
https://www.youtube.com/watch?v=G5cEUtj35Po
Clearly then... sell gold, buy stawks.
Do it for Johnny!
https://www.youtube.com/watch?v=rpXBptw8ZGQ
I'm really optimistic.
https://www.youtube.com/watch?v=5e6km_1IAwo
What should we conclude from stuff sales down, employment up? That consumption isn't "stuff" driven. It's sevices driven.