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Art Cashin Mocks The "Muddle Through" Myth
One of the most idiotic concepts we have heard to come out of the current depression has been the completely meaningless "muddle through" which we took to the toolshed back in September (together with presenting BCG's proposal for a global financial tax - a concept which we believe will see far more play in 2012). Today we were delighted to hear the chairman of the fermentation committee also agree with us, by quoting none other than the ECRI's Achutan who said on 'muddling through' - "I would point out that that’s never happened. We never muddle through." Correct: the current economic situation merely continues to be the eye of the hurricane which has been made artificially and untenably larger only courtesy of the world's central banks. And in the battle of central planning against the laws of nature, we know who our money is on.
From UBS' Art Cashin:
That’s My Story And I’m Sticking To It - Amid folks seeking, and occasionally finding, Christmas cheer in U.S. economic numbers, Lakshman Achuthan of ECRI finds himself playing the part of the Grinch. Here, courtesy of Rafael Diamond are some comments he made last week:
Forward looking data since two months ago has remained weak, it’s getting weaker, it’s not turning up. So, to my fellow forecasters out there, I’d say they’re roughly in two camps. There are those who say that the economy is firming and will continue to firm into next year. We reject that. There’s nothing there that suggests that at all. I think there’s a larger camp that says we’re going to muddle through; we’re going to get this kind of slow growth, ‘I’m not terribly optimistic, but we’re going to muddle through.’ I would point out that that’s never happened. We never muddle through. A market economy does not want to have a static state. It either accelerates or it decelerates, and these forward looking indicators say decelerate. Lakshman Achuthan, ECRI, Dec 9
We were struck by the fact that Lakshman was adamant enough to purposely push away the convenient “muddle through” middle ground. As the team of Graham and Dodd used to contend, an analyst should have courage concurrent with his competence. We like a gusty stand.
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'A gusty stand'...may be more correct for the Fermentation Chairman than we know. Whew....someone light a match!
But theres no doubt this idea we just hobble along from here is ridiculous...we either go up or down, markets do not flatline, and I think theyre about all out of 'up'.
Deceleration airbags bitchez
But what about 1975 - 1980? Seems like that period was a "muddle".
Good point. I think the basic impulse in a free market is to grow. That impulse sort of counterbalances the government impulse to control and manipulate which destroys a market. Regulation, taxation and government rules are always negative. A muddle period, I think is where the two forces go back and forth...sort of the immovable object and irresistable force meeting. Until one or the other wins out there is no clear direction. It is just a series of back and forths like we've seen for the last few months...occasional exhuberance followed by dismal expectations. This is where politicians and governments play their biggest parts. They must give the clear signals on their actions and directions and markets will follow. Otherwise...we muddle and drift.
You have a very good point. 1975-1980 also marked the time of Ford and Carter. The Ford administration can be viewed as the extension of the Nixon era. And Carter was ushered in office with the promise to "change." This is very similar to the climate we are in now both economically and politically.
Too bad we can't smoke cigarettes at our desks now, though.
I wonder what "laws of nature" Cashin is referring to, but he is right in mocking the idea of "muddling through." This phrase is most often used by Brits who have the habit of appointing fools to high level posts only because they went to the right school, so they can do lots of muddling on the job.
Not falling for the "if you're a realist, then you're unpatriotic" b.s. TPTB love to frame things that way. Good on Lakshman and the ZH crowd!
If you don't BELIEVE...then theres something wrong with you...probably a 'terrorist'. Yea right.
These people think they can force people into their program like its the 1940's, just not going to work.
Muddle through? But these pigs love rolling the in the mud...
But this is the African Velde, out here, animals dont last long just 'muddling around'....youre either swift and running, or dinner.
Is it just me or has the SPY and the S&P index come uncoupled? I am showing the SPY just off the lows of yesterday and the index above yesterdays' highs. WTF.
Time and dividend premium?
Yes, of course, silly me. Still, it's behaving a little erratically today, probably a sign of imminent flash crash. Extreme Caution to be used such as hitting the pub early. Thanks for the reminder.
I have noticed that too...and other apparent divergences. This does not bode well.
Let me trasnlate this for some of you butt pirates:
One o' th' most idiotic idees we be havin' heard t' come ou' o' th' current depression be th' completely meaningless "muddle through" which we tookst t' th' toolshed aft in Septembree (together wi' presentin' BCG`s proposal fer a global financial tax - an idee which we b'lieve will be seein' far more play in 2012). Today we be delighted t' hear th' chairman o' th' fermentation committee also agree wi' us, by quotin' none other than th' ECRI`s Achutan who spake on `muddlin' through` - "I would point ou' that that’s nerehappened. We neremuddle through." Correct: th' current economic situation merely continues t' be th' eye o' th' hurricane which be made artificially an' untenably larger only courtesy o' th' world`s central banks. An' in th' battle o' central plannin' against th' laws o' nature, we know who our treasure be on.
Fore lookin' data since two moons ago has remained weak, 't’s gettin' weaker, 't’s nay turnin' up. So, t' me swabbie forecasters ou' thar, I’d say they’re roughly in two camps. Thar be them who say that th' economy be firmin' an' will continue t' firm into next voyage. We reject that. Thar’s nothin' thar that suggests that at all. I think thar’s a larger camp that says we’re goin' t' muddle through; we’re goin' t' get this kind o' slow growth, ‘I’m nay terribly optimistic, but we’re goin' t' muddle through.’ I would point ou' that that’s nerehappened. We neremuddle through. A market economy dasn't want t' be havin' a static state. 't either accelerates or 't decelerates, an' these fore lookin' indicators say decelerate. Lakshman Achuthan, ECRI, Dec 9
We be struck by th' fact that Lakshman be adamant enough t' purposely push away th' convenient “muddle through” middle poop deck. As th' team o' Graham an' Dodd used t' contend, an analyst ortin' ta be havin' courage concurrent wi' his competence. We like a gusty stand
Its 'firmin', yea whatever, shit firms too.
My god that's painful trying to read your post. Gave up on the second sentence.
A wall of bold text, only thing worse would be all upper case bold italic text.
if you want to communicate, you have to condense your ideas to their essence and format it into easily read bits.
And use some white space, make those bits dangly.
One day closer to Global Hyperinflationary Depression.
Wages have been stagnant or going down. Sorry, skittle pooping unicorns don't exist.
Taxes and fees have been increasing to cover public pensions and union promises in many states.
Recent Lakshman Achuthan:
http://www.youtube.com/watch?v=0vut98_ATcU&feature=related
And will continue to increase until we break the incestuous relationship between public unions, politicians and our wallets. All I hear about is how "government" needs more at every single level. I haven't heard one single article or politician talk about how taxpayers need more. That tells you clearly where their priorities lie.
Isn't it amazing how you elect your friends and neighbors to government and they immediately abandon you and become a government animal. The first thing they do is put up a red light camera next to your house for revenue. Amazing isn't it?
TLT, TIP, MUB still at multi-decade highs
The thirst for government paper has never been higher
CRB still in a full blown crash, just like 2008
Where is the hyperinflation?
Oh Hell, the lizard is back from under his FSLR, LULU, and other crap rock !!!!!!
Robo has to wait until things are green to pop up in here, although at a pathetic DOW 11,800, WELL below his last call for a Santa Rally at 12,300 or so.
http://www.youtube.com/watch?v=slrRDPoIx04&feature=related
Where is the hyperinflation?
Be careful there, fella.
Patience Little Robot, patience. Man (or woman) who always cry and whine, never see the light. Poor Robot. Hyperinflation a ways off yet. No rush, it will be here.
CRB probably very close to a bottom, Gold over 1,600 next week, and then off to the races, maybe?
Buying treasuries does not always mean selling gold. I do think our time is soon. Been a bit tough this Christmas for many of us here.
And the one eyed blind man, the dollar, leading the blind. Done soon.
"The thirst for government paper has never been higher."
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Not entirely correct. A recent article here on ZH pointed out that Russia and China are both buying less Treasury paper over the past 12 months.
If you live in your parents basement and they pay for your food and clothes you don't see the inflation . If Robos allowance hasn't been increased = no inflation.
The Lemming opines:
And RobotRetard's thirst for Bernanke's printed spunk has never been higher.
Fuck you and fuck off, RobotRetard.
I'm sick of even trying to respond to your shallow, blinkered bullshit with humor anymore.
A term about as useful as Roubini's 'V' or 'U' shaped recovery!
"Green shoots."
Is the car out of the ditch yet?
Just a little more QE and everything will be fine.
Can't muddle through. Bottom line: the debts (incurred at higher interest rates) can't be repaid without growth. That applies across the board from consumers, corporates and even the Treasury (although they can use printing to slow-default). Can't have population growth and new household formation without growth unless you "grow" a huge underclass of non-productive people. Only bank CEOs are in favor of "muddle-through" because the Fed has guaranteed their incomes regardless of performance. And to pay the bills for defense down to garbage collection at higher costs you need growth. Can't cover 3% annualized CPI with 1% growth on declining incomes and net worth
Muddle through isn't an option unless one looks at Japan for the past 20 years and believes what has happened there is a 'muddle through'... but, it isn't.
When comparing Japan's total private/public debt of 20 years ago to the situation today we see that public sector debt has grown significantly, and we see accompanying declines in RE, wages, etc.
When Japan's population is in decline and Japan faces worse conditions now than 20 years ago, how can the situation be characterized as 'muddle through'?
I think a better description of whats happened in Japan is FUBAR.
Japan society infinitely more tolerant and stable than US would be under same scenario
+1... Absolutely without a doubt.
While I think that a gusty stand may be interesting, a gutsy stand might be more appropo!
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The third option would be a contraction, as opposed to slow growth or of a "firming and will continue to firm into next year".
From http://www.zerohedge.com/news/observations-engineer :
Economic discussion often makes reference to "slowing growth" or "soft patches" as either a symptom or part of the problem in national and world economics. But the Hubbert like Curves for oil and other resources may eventually be structurally enforcing contraction (and not growth), year after year after year. "Slowing growth" is a phrase that we may be collectively deceiving ourselves with. Many changes that might slow down or contract various sectors of the world economy can be expected when a comprehensive forward looking economic analysis and risk assessment is done under the constraints of declining inputs. Contraction and austerity affects might be forced by declining inputs or even be forced by an anticipation of soon declining inputs and the affects of contraction would likely be felt across all social classes.
Just now 10am ABC News (radio) reported there's no terrorist threats outstanding for the nation this Christmas season unlike years past. Forecast: Sunny
It doesn't matter they are clueless. Trust not the propaganda relentlessly spewing from the machine.
It's always sunny somewhere.
You have to be amused to see the federal reserve's actions with the ever-increasing Washington deficits and spending party.
We are getting close to the 50 million people collecting food stamps. There are loads of baby-boomers in line to retire. Current estimated rates are 10,000 per day.
I was pissed at John Mauldin for calling it the Muddle Through economy way back in 2005. Wrote him then that it was disingenuous tripe that was a disservice to his readers and that the kind of debt bubble that even he was writing about back then would not just quietly dissipate. They either keep pumping the baloon with gas or the whole thing blows. Neither of those options qualify as muddle through.
Agreed. Mauldin's arm must be sore from reaching around to pat himself on the back for the brilliant Muddle Through label. Regardless of whether the economy goes up, down or sideways, he's there to congratulate himself on another prescient call. Jackass.
I think an important point is that from a Data standpoint we will "muddle through", there can be no question of that, thats what the Masters need, and the best they can generally hope for..... As it is they are consistantly throwing out data that is 3 and 4 sigma outside of forecast, and the market has and will continue to lap it up.
The market reacts to the "muddle through" data, not the real economy. This can continue far longer than the logical investor can remain solvent.
As far as the "Real Economy" there has yet to be any mainstream media outlet challenge to the made up data. Rather most media outlet take their commands from the ""Masters"" and endorse and pump the false data......
"The market reacts to the "muddle through" data, not the real economy."
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Who comprises the market today?
We, the 99%, are in a theatre of the absurd watching an extravaganza produced by the 1%.
Snap cards and gov transfer payments are the bread, the Extravagant Show is the Circus.
I used to expect a Mad-Max style collapse of the whole edifice-- aka the great slums of the U.S. Megalopolises emptying out as desperate people of a diverse cast pour into the suburbs, looking for food and whatever else they could grab from hopeless middle-class nobodies like me, possibly with violence for the fun of it-- this once far-fetched scenario seemed to loom into view as one wheel after another fell off--
-- and then I read the first post by a Brit with the handle "gojam" under the "Guest Post: The Truth Hurts - And Heals" from yesterday noontime. Read the comment carefully. "gojam" uses the phrase "Hinge of Fate", which was the title of a middle volume of Churchill's WWII history, BTW. The tone reminded me of Churchill's writing. "gojam" cogently argues in favor of a global Bretton Woods II, but, unlike Bretton Woods I, it will be a fiat regime of either fixed/semi-fixed exchange rates or a single world reserve currency (hard to tell precisely). "gojam" likes the idea of a global currency authority/agreement/what have you, coupled with managed sovereign debt forgiveness, and he points to it as the ultimate step in this drama. I am giving this position serious credence. It fits in with the "global governance" program that we have heard so much about. The big boys are not going to just wet the bed and let it all go to hell (which, given the recent chaos/confusion, what what I was steeling myself for). In a time of atomic weapons, WWIII between the big powers is not on the menu-- nuclear winters tend to put a crimp on festivities on the French Riviera and Gstaad. They will ratchet up the world government project with a conference like that referred to by "gojam". There will be little or no real political opposition to this, if it fits in with what the big boys in different spheres want, and there will be many contingencies in place for those that don't get on with the program, as we've seen in recent days. So, sit back, relax, and enjoy the movie. The only question is, who will they put on the currency (if it's a single currency)-- Kissinger, or Rompuy?? For a small peasant like me, it don't sound so bad. Better than being shanked by an "urban youth" for a can of cream corn.... (semi/sarc)
One might even suspect that the whole thing has been a setup all along, designed to drive sovereign nations into the arms of a global currency with global governance and in all probability marks on hands or foreheads required in order to buy or sell goods and services.
The tentacles of our hidden masters have spread into everything.
Can anyone honestly explain why David Rockefeller may openly admit that he has been working against the interests of the United States in cooperation with foreigners and remain a figure venerated in Washington and New York; while a heartland American with an understanding of the Constitution and a devotion to it as the supreme law of the land is the kind of person our "Justice" department suggests is a terrorist?
Ron Paul is truly our last hope. God forbid we get moon-mirror Gingrich.
While a 'Mad Max' scenario is possible here (reference Argentina, Bosnia, etc), I think that won't come before a global monetary shift as you point out.
All currencies appear to be destroying themselves simultaneously, and average Joes like me can see it's all a massive Ponzi scheme.
TPTB will hold onto their power as long as possible and have a long-term plan to maintain their moat vs. the peasants via the financial system.
We're rolling towards a massive crisis, largely of TPTB's manufacture and design, with the solution of a new global monetary union and/or currency, to which gold will play a big part.
This will be the political solution for all the sovereign unpayable, dead debt and utter lack of confidence in the private sector.
To get everyone on board, there may be a few sacrificial countries to convince the rest of the world to go along with the NWO.
In my opinion, there is no guarantee the US is not one of those who will be sacrificed. That would be an extremely powerful object lesson to all other countries...
I don't know if gold will necessarily be the lynchpin of this-- hard money would tend to cramp their style. I do know that steady erosion of U.S. sovereignty is inevitable. That is an iron-clad fact, and I am at "acceptance" stage these days. This week's political developments in Congress are a clear, 100-foot billboard that pieces of paper signed by men in 1789 don't quite mean the same thing anymore. Res ipsa loquitur. Everybody in this country will go along, sooner or later, one way or another, by their own volition, or not. And in Europe? Those moonbats wanted this to happen 25 years ago. A few beer-hall/soccer rowdies don't make any difference. Ron Paul will never be elected because he's anti-Social Security. The only political figure in the West that might make some difference is Marine Le Pen in France, and even she's okay with E.U. subsidies propping up Breton dairy farmers these days. It will be interesting to see things in 2050.... the optimist in me hopes for Star Trek world, but something tells me the Prime Directive won't be in play....
This sucks.muddy waters where are you...
We might "Muddle Through" until January....another couple weeks ...then the wheels start falling off the bus.
The "muddle through" meme perfectly matches the new "American Dream," which is "just getting by."
Individuals will muddle through, unless there is war in which case some will experience great hardship and dislocation while others will die.
Nuclear winter, however, is overblown crap and everyone knows it. If you want a nuclear winter you need an Indonesian volcano, not a nuclear exchange. If there is war, someone will use a nuclear bomb, and they will be quite surprised when the other side does not immediately capitulate--either because they are dug in (like N. Korea), heedless (like any number of middle eastern regimes) or their leadership is decapitated.
Institutions are inevitably about to experience a wave of creative destruction whether there is war or not.
Always watch for a real deus ex machina--we've had 'em before in the forms of industrialization and leapfrogging technologies. The next may be Rossi's E-Cat.
with Central Planning, muddling thru (soon) becomes the optimum performance level
omg! i feel a theorem coming on!
the obvious negative consequences of shitforbrained ideas + the unintended consequences of same + balck swans = muddling thru
in the life sciences, we have "ontogeny recapitiulates phylogeny"
in slewie-nomics: muddling thru begets D00M, BiCheZ!
ONCOSFBI + UCOS + BS(squared) = MT
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I think the Black Swans deserve more weight... added squared to theorem.
Stored for future reference...or, fuck it, let's just use the short version... DOOM
We muddled thru the seventies.
Even a wave of nationalizations and decrease of ten percent of gdp with mild growth resuming in 2016 I would count as a muddle thru, compared to the teotwawki fiat repudiation scenes believed by some
"We muddled thru the seventies."
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This ain't your granddad's recession and it ain't the seventies anymore...Even though our moronic government is still spending like it's the seventies. Hey, we actually made and sold stuff in the seventies...and our economy didn't rely on the FIRE sector for (fake) GDP.
That we are not headed up is a given. Here on the ground in the industrial rust zone of the North, the signs are all around. This time of year I should be seeing package deliveries up and down the street. They are less than the non holidays times during prosperous years. At the supermarket, higher end items like spiral cut hams and fancy cheeses are not selling at the asking price and are reduced to about half just before the expiration dates. Then there are the nearly non existent ads for help wanted. We are in pretty fragile shape as a people and not prepared for another battering.
i eat pork from time to time...
the butcher sees me eyeing a discounted ham, he takes a break, stat
or wishes he had!
"hi! say, i'd like this ham cut into one-inch steaks and freezer-wrapped? you can leave about 4-5" on the small end for a soup bone, ok?"
big $10 whoop!
happy holidaZe, BiCheZ!
Fermentation either accelerates or decelerates!
I have listened to Art since the 80's! Good Man!
He looked just the same.
The Very Best to the Chairman and all my Zero Buds!
Merry Christmas & Happy Holidays!
The rust belt was the first experiment on de-evolution of the economy. Could the powers that be get away with gutting an economic area and just walking away?
Yes they could, they did it so well the rest of the country didn't notice or didn't care.
Step2 was to expand it nationwide with NAFTA, and WTC for china, once manufacturing was decoupled from geography, deregulation of finance decoupled capital from geography.
A little more legal magic and finance was decoupled from reality through extreme leverage and synthetic instruments including deriviative fantasies.
We've shattered the system that was our economy and now we think it will remain standing and just muddle through, except we forgot about gravity and entropy,
Velocity and momementum are always decaying without an alternate force exterting pressure (inflating) - the natural tendency is towards a lower level.
Muddling through is magical thinking, a dream is a wish without a plan. That pretty much describes our current economic thinking.
"Muddling through?" Sounds more like whistling past the graveyard to me. And it's getting louder and louder.