Biderman On Malinvestment And Diminishing Returns From Intervention

Tyler Durden's picture

Instead of his usual rant, Charles Biderman of TrimTabs discusses the reality of the macro environment with Madeline Schnapp - though do not worry as the sense of sarcasm and disbelief at the government's actions and hopes is palpable. Noting that our economy is at best growing 'sluggishly' based off her real-time macro data,  Biderman's right hand goes on to explain to him that inflation is running hotter than the government would like us to believe. More importantly, she hits the nail on the head with regard to what Biderman notes is the wasted stimulus money, saying that the economy needs to clear the malinvestments, not sustain them through stimulus transmission mechanisms, in order for growth to once again re-appear. Historically QE2 did manage to create some inventory restocking and pick up in wages/salaries in Q1 2011 but Operation Twist appears to have little to no impact on the real economy (outside of government statistical modelers) - which as we have said before indicates the diminishing returns to government intervention. What is clear is that, as we have noted, that post the 1971 modified gold standard, over a long-period of time it has taken an 'unsustainably' increasing amount of government debt to create economic growth - with the post-2008 insanity that we need $2.50 to create $1 of economic growth. The two end with a discussion of the debt ceiling and deficit potential for a black swan event.



Chart: TrimTabs

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
slaughterer's picture

I guess Bidermann's call for the 2-3% post-FB IPO rally did not materialize, so he is using Madeline Schnapp to distract us.  For an insight into Biderman, look at TrimTabs ETF TTFS that he mentions from time to time.    

BalanceOrBust's picture

Gold isn't doing badly! 

I love that graphic.  It is so telling.  The economy is so bad that it is just sucking up dollars with no return.  All that spending is not even producing more goods and services.  How can that be?  Oh yeah, it is going into asset bubbles.

onelight's picture

Facebook falling back to 38 just recently, hey they cannot let it close there, can they? Time to trigger the Euro to the upside...hmmm...what would do that...whatever it is, that's what they're doing at the moment, it seems...else market looks to close down on the day

Alcoholic Native American's picture

"taken an 'unsustainably' increasing amount of government debt to  maintain the status quo."


There, fixed it. There never was a recovery in anything but stock prices, the malinvestment was and continues to be the status quo.


Cognitive Dissonance's picture

"Biderman's right hand goes on to explain to him that inflation is running hotter than the government would like us to believe."

No! Get out. Who would've thunk?

bigdumbnugly's picture

haha,  yeah.  if his left hand wasn't diddling his diddler he'd know that.


of course when it's left handed backhanded it feels like someone else so i guess he's excused this time.

PulpCutter's picture

Pundits have been saying "inflation's hot" and "an inflationary fire is going to burn the dollar down any minute now" for years.  When will they admit they were wrong?


Pretty Schnappi call there Bidermann. Hey, are you banging that hot stuff there ?  One investment word for ya, buddy. METALS. BTFD's, Bitchez.

FranSix's picture

Wait a minute.  Just hold the phone.  You  mean, after all is said and done, that JP Morgan bet AGAINST the U.S. of A?  They laid on a huge bet that bond prices would collapse, and that would be the end of the U.S. of A as we know it? And now wants a bailout?


Vince Clortho's picture

Are these the Terrorists Obama has been stalking?

q99x2's picture

I read that article she talked about. Good article. I don't drink but she's ok.

Not that I ever complain so I'll start with Bidderman has a great camera and audio system. Unfortunately I saw it. Did you see it? Yes. The gargantuan telephone pole that he sits in front of so that no one notices it. Ok that's all.

Great posting as usual.

BalanceOrBust's picture

I wonder what that telephone pole connects to?

Trimmed Hedge's picture

Blah blah blah... FB is now below $39 again!!

bdc63's picture

I predict $38.01 at the close ... maybe $38.009

Stackers's picture

The Purple Prognositcator Pontificating his Plethora of Phacts

FranSix's picture

The purple was punctiliously painful in a pecuniary fashion.

RobD's picture

FB heading down for another taste of failure? $38.54 baby

Jason T's picture

You have to considre TOTAL debt created from all including business, financial, personal, state and federal.  

The ponzi is one giant @#$%er.


l1b3rty's picture

Debt oblivion and drunken Banksters for all

sbenard's picture

Obama is the "malinvestment" that most needs to be "cleared". Bubbles Bernanke is a close 2nd!

Seer's picture

"in order for growth to once again re-appear."

Rack 'em back up!

Can some one please ask Bitter-man what a return to "growth" means to him?

"taken an 'unsustainably' increasing amount of government debt to create economic growth"

WTF IS sustainable?  When the very essence of our being -THE PHYSICAL WORLD- is limited NOTHING can be sustainable!  Might as well say "we have enough."  Enough for FOREVER?  Fess up, it's really about a window of time, a window in which you are looking to poke your hands under in order to get payouts before it closes.

I don't know what's worse, the fucking govt or the "private sector" pretending that perpetual growth is possible.  All roads lead to Rome...

Zero Govt's picture

We have been going through growth phases for over 2,000 years. At what point do you think we'll stop, what are we going to run out of?

You do understand progress don't you?

That as man industrialises he becomes more efficient and productive and every phase after becaomes even more so. So you find the most industrial and advanced economies like Germany have actually less footprint than poorer economies... yes???

Growth is nfinite because our growth depends on knowledge, not resources dumbass. Mans knowledge is unlimited, you need ever less resources to fuel that growth

Seer's picture

For the love of...

Does the term "slinky down the staircase" mean anything?  It's fucking RELATIVE!  Don't confuse high points as being a PERMANENT trajectory!

"Growth is nfinite because our growth depends on knowledge, not resources dumbass. Mans knowledge is unlimited, you need ever less resources to fuel that growth"

Yeah, just tell that to the cancer cell or the bacterium!  I'm sure that if their KNOWLEDGE permitted that they'd be just fine.

I'm quite certain that all civilizations that have perished to-date have believed that they'd continue forever.

"Germany have actually less footprint than poorer economies... yes???"

When you're dependent on a KEY >>>PHYSICAL<<< RESOURCE you are at the mercy of outside forces.  What, you think that the Greeks will give up any wealth that they have so that Germany can pay its gas bill?  Maybe they sell BMWs to Greece so they can pay that bill?  Oh, wait, they already tried that!  Ha ha...  OK, maybe sell to the US, er, well... China?... uh?...

You can now return back to your hopium crowd.

Seer's picture

"You do understand progress don't you?"

Obviously you don't believe I do, in which case perhaps you should 'educate' me?  (I'm wanting to hear what spin/version that you put on this term [that's the favorite of TPTB].)

NOTE: I'd hardly call running head-long toward the cliff, progress.  I'm sure that the heroin addict thinks that he/she is progressing when he/she feels the first rush...

I am a Man I am Forty's picture

The nasdaq shut down today because everyone was trying to dump their shares at once, market maker couldn't handle it

Zero Govt's picture


"Diminishing Returns From Intervention"

Paul Krugman has done the maths. Double-Up (double-dumb?) the intervention 

Brilliant Mr Krugman, brilliant

blunderdog's picture

So he's in Sausalito...where the hell is SHE at?

Looks like she's trapped in a computer monitor.

jmk's picture

She's up in the Napa/Sonoma hills. What I want to know if this Scissorbill Biderman has another shirt??

veyron's picture

How much did biderman lose on his trade?  4$/share?

ElvisDog's picture

Here's the problem with the "if bondholders refuse to buy U.S. debt the game will be over" thesis. The primary buyer of U.S. bonds these days is the Federal Reserve, the entity that can print an unlimited amount of money (if it wants to) to buy those bonds. So that thesis depends on the Federal Reserve being the one who will refuse to buy U.S. debt. Sorry, the probability of that happening is on the same level as Gisele Bunchen dropping Tom Brady for me.

Town Crier's picture

She said when the situation in Europe changes, then bond buyers will demand, and get, higher interest rates in US bonds.  What kind of change in Europe does she mean?