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Charting The Global Perfect Storm And SocGen's Economic "Stall Speed" Matrix
Zero Hedge first mentioned the phrase "stall speed" while discussing the Q1 US GDP, which we predicted would translate into a disappointing print for Q2, eventually leading to a negative number in Q4. This was about 4 months ago. Since then our GDP prediction has been validated, but we had yet had to see "stalling" make the vernacular. That has now changed, following the release of a brand news report by SocGen which focuses on the phenomenon of... global stall speed and how specifically this is affecting the key investment verticals around the world as well as what the possible policy responses are. But perhaps more interesting is SocGen's succinct explanation of how the world now finds itself in a global perfect storm, and whose ending will likely be very much comparable to that of the eponymous movie starring George Clooney.
Below is the latest stall speed matrix from Michala Marcussen:
But perhaps more interesting is this summary chart which shows just how the US and Europe found themsleves in a perfect, self-sustaining storm, from which there increasingly appears to be no way out.
SocGen's comment:
A perfect storm hit this summer and, as a result, the US and Europe are growing at near-stall speed. Outright recession, however, needs a trigger, which we believe will remain absent. But, taming burgeoning public debts on both sides of the Atlantic will take time and we forecast a prolonged period of slow growth for both the US and Europe, particularly as the dynamic emerging economies slow to more sustainable growth rates. Most critical to our outlook is the assumption that the euro area will move quickly to ratify the new powers of the EFSF and deliver additional measures to underpin confidence in the EMU. In the US, we assume that the expiry of the payroll tax cuts and extended benefits will both be postponed to end-2012. Finally, we expect G4 central banks to deliver an extended period of low rates. We see the first rate hike from the BoE only in early 2013, followed by the ECB in late 2013, the Fed in early 2015 and the BoJ only in 2016.
SocGen is right about one thing: the recession trigger is absent because the depressionary trigger is going gangbusters. When can we stop pretending the Fed-inspired bear market rally, which translated in a small blip in global GDP was nothing but a small hump in the depression started back in 2007 and likely to continue for many more years?
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As I see those spinning arrows I think of helicopter Ben and his chumps.
Stall speed from 9/24/2007
"Suddenly a Good Bear Is Hard to Find as Stocks Rise"
Starring George Clooney
http://www.youtube.com/watch?v=rwdOsHnAdYI
Looks down.
Looks up.
"We're fucked."
An equity investor, a guy on a high wire act, and third getting orally serviced by a 90-year-old hooker are all thinking the same thing: Don't look down.
sometimes looking up can be tricky too. http://www.youtube.com/movie?v=FOhoF3WgsBs (page down and click on big wave scene).
yes, we're still waiting on a "trigger" before heading back into recession. what were the unemployment rate, underemployment rate, gdp, national average house prices, national debt, etc., when the last one ended again? fools.
Yeah, I love these "accepted wisdom" comments "Recession needs a trigger." SAYS WHO? BASED UPON WHAT?
Despair not for the teleprompter is werking feverishly on a non partisan plan to rescue the ponzi. Farcism must prevail!
what the f is wrong with silver!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! not moving up!!!!!!!!!!!!!!!!!!!
no complaints here. i'm still kicking myself for not loading up on thursday and will be happy to be given another opportunity.
Eric Sprott is calling for $80. Janzsen of itulip is thinking $25 by year end. Both smart guys, pick your poison. Go read the most recent itulip (need to subscribe to read the PM part though)
Split the difference...$52.5
The central banks are buying up every supply of WD-40 in the world to oil their presses BECAUSE THEY'LL NEED IT!
WD-40 IS NOT A LUBRICANT! IDIOTS!
From the WD-40 web site - "WD-40, everyone's favorite multi-purpose problem solver for over 50 years, cleans, lubricates and protects against corrosion." [Emphasis supplied.]
Sorry.
See http://www.wd40.com/uses-tips/
No, sorry fucknut. I live in a real world where things actually have to get applied. It might work on a doorknob, but go ahead and replace even a light grease with WD-40 in your next application. Let us all know how that turns out for you. WD-40 is indeed a much better solvent. Don't believe everything you read. Another shining example of the difference between knowledge and wisdom.
Dude, get technical if you like, but lose the arrogance and the insults.
What is the point of insulting people? To prove your superiority?
Get over it while you still can.
There seem to be a lot of people who for some fucked up reason, believe everything they are told, and perhaps everything they read. Maybe they were told how special they were as children, and how their opinion mattered. Then again, maybe their father's didn't give them enough hugs. It is almost like people think think this is the "New Myspace".
You don't get out much, do ya?
WD 40 is a lubricant like KY jelly.......it helps you get your nuts off ! Monedas 2011 has just enough PMs to float his marvelous, uniquely American personality !
But it's a great solvent.
I'm long on KY jelly, most people don't like to be dry humped.....
Old School Blue Collar Recommendations:
Lubricant: http://www.kpg-industrial.com/products/711_the_protector_lubricant/
Fuel Preservation and enhancement: http://www.priproducts.com/
MAN I wish this site's righthand column didn't always try to stand on top of all the charts when viewed on an iPad. FIX THAT.
it's not just ipads. it happens on any screen too small to handle everything at once.
My screen is 1920 by 1080 in size, and it still has what is an HMTL layout problem!
AMEN!
lol
throw that iPoop away !
Clicking on PRINTER-FRIENDLY VERSION, (just below the article) seems to provide some satisfaction for most when they encounter this issue.
FIX THAT.
You might try a "please" once in a while. Tyler doesn't owe you Jack Squat.
Hows that ipad taste? I heard they taste just like chicken?
Sprinkle some gold dust on it for a new taste sensation! :>D
I use Adblock with element hiding helper in Firefox, that let me get rid of the entire right hand column for just this reason.
Oblahma should move his "jobs speech" to tonight... oh wait, that would mean having to reschedule his 2 p.m. tee time, nevermind
Business Insider just got shut off...
Hmmm..New version of 'Rule 48' ??
It's getting messy...
Ok, It's back..
2015?!?! WTF. I thought greenspan was a dumbass..... Geezzz
Half the people on soc sec will starve and die by then
No problems at all. Tomorrow another day of rising markets, after some "less bad than expected" news. Wednesday Germany constitutional court rules - no rocking the boat. End of Sept: Merkel gets enough support for a new "rescue" package for Greece. Her cabinet will survive: no one has interest in elections. So. Forget the Fall. Up to Christmas. Boring world we live in.
Good to see you yawning on ZH.
Btw : bankers never starve. They are the first class passengers on the Titanic.
They have a lifeline hanging around their body, no matter how long is deemed necessary.
the good news is that price of "the dying of money" has come back down.. of course it was always free on pdf..
http://www.hartgeld-forum.de/forum/files/dyingofmoney.pdf
from the forward: "It was up to every citizen to learn for himself what was happening and to look out for himself if anyone was going to, because no one else was looking out for him. The government certainly was not. The government was compelled by its other duties not to protect him, but the opposite, to continue to steal from him by the inflation as long as it could."
"the recession trigger is absent because the depressionary trigger is going gangbusters. When can we stop pretending the Fed-inspired bear market rally, which translated in a small blip in global GDP was nothing but a small hump in the depression started back in 2007 and likely to continue for many more years?"
Spot on!
I will only add the following: the answer to your (rhetorical) question is that the true, likely outcomes of all this are "Too Big To Face".
This is what TBTF should actually stand for.
The only eponymous George Clooney movie that comes to my mind is Homer's Odyssey set in the deep South, "O, Brother Where Art Thou?".
Everett: "Tight spot! We're in a tight spot boys! Boys, this is a right spot!"
The Descendants
Good Night and Good Luck
The Thin Red Line
Gravity
How many think that Germany is going to eat PIIGS losses? Green--yes, red--no
Brown. (red plus green)
And whatever they have to eat looks that color to the Germans.
Better question, if I may.
How many think Germany is going to eat the PIIGS?
V
Schnitzel Wiener Art.. Nom Nom Nom
i like how these sinking, stinking banks pass judgement on the markets. Generally speaking, why would one pay any heed to a failing institution?
Oh, right, they pay a lot of money to people for coming up with pretty charts and graphs.
Merde! All of it. Beau Merde!
V
http://aadivaahan.wordpress.com/2011/03/09/axis-of-evil-doing/
Once again, stating the obvious (and ONLY conclusion)...
Growth is DEAD. What the hell do people think is going to happen when this realization sets in?
The great unwind of economies of scale (economies of scale in reverse) is going to be REALLY painful.
http://dieoff.org/page125.htm refer to Figure 1.
Do not worry!! The Chinese will soon be demanding a 35' flat screen TV in each room, a new car they can't afford, and buying houses without income consideration. We will be saved!
Ah yes, George Clooney...the road to hell...
But he quickly learned the dangers of just dropping in on a humanitarian crisis: as a way of giving back to a refugee village where he and his father stayed, he donated money to build a well, huts, and a community center. “A year later, the next-door villagers—who wanted water and needed shelter—ended up killing some of the people to get to that well and to get to that shelter,” Clooney says, his voice trailing off. “It’s devastating. Your response is … to continue to try to help, but we have to be very careful—and sometimes helping is not throwing money at a problem.”
http://www.thedailybeast.com/newsweek/2011/02/20/a-21st-century-statesma...
I was listening to the Tavis Smiley show late night on NPR. I fucking hate that show. Anyway, the radio was out of reach and thought I would fall asleep soon enough. The show was about the plight of "people of color", in particular, how black people have been treated badly. All I could think of was how really badly the native Americans have REALLY REALLY been treated badly. Most live in abject poverty. The United States made treaty after treaty with them, and broke the treaties. The United States even declared war against the native Americans. If George Clooney wants to go to Sudan and help out poor people of color, good for him. There are lots and lots of people in need all over the place.
Fish Gone Bad
If we're on the 13 year schedule, only 9 more to go!
It's going to keep on keepin on... Slinky down the staircase: economies of scale in reverse will keep dragging things down until we're more in sync with nature's "bounty."
eat a pound of butter and drink a 12 pack,, then at least something productive will go on tomorrow
Speaking of lubricants - nothing beats this:
http://www.nuruslide.com/
Clooney is a slut......his mom was a hose monster ! Monedas 2011 She could sing while gargling dick ! Mongolian throat singers got nothin' on her !
Wouldn't it be ironic if the trigger that pushes us into a deep recession would be the failure of SocGen themselves. Oh that would be one for the history books.
http://www.astroglide.com/FreeSample.asp
It isn't just about SocGen, it is about every major money center commercial and investment bank in Europe and the US going down. Two terrible mistakes of Credit Analysis on both sides of the pond. Sovereign debt in Europe, MBS' in the US. Where did all of the nonperforming debt end up? In the banks. Is there enough government borrowing capacity left to reflate the banks? No.
We are looking at a once and complete failure of the banking system. No one, not even the most politically connected banking institutions will remain standing. Our hedge fund has been short banks and brokers internationally since the end of 2007 with a considerable leveraging up in early June and we expect we'll never cover the positions but let them expire along the lines of Unicredit and the dreg banks of Greece. Also, as a hedge against central bankers, half of the fund remains in gold. We continue to add to both our short and long positions.
The depressionary effects are buried deep in the Repo markets as asset values continue to fall, this is ultimately what takes out the banking system itself.
http://www.thebeareconomy.com
Is it contradictory to believe in deflation and to own gold, as the shiny stuff is an inflation hedge?
Depends on when you bought the gold.
Gold is a hedge against inflation and deflation. Since it will be deflation in the future. The shiny stuff will help.
It isn't just about SocGen, it is about every major money center commercial and investment bank in Europe and the US going down. Two terrible mistakes of Credit Analysis on both sides of the pond. Sovereign debt in Europe, MBS' in the US. Where did all of the nonperforming debt end up? In the banks. Is there enough government borrowing capacity left to reflate the banks? No.
We are looking at a once and complete failure of the banking system. No one, not even the most politically connected banking institutions will remain standing. Our hedge fund has been short banks and brokers internationally since the end of 2007 with a considerable leveraging up in early June and we expect we'll never cover the positions but let them expire along the lines of Unicredit and the dreg banks of Greece. Also, as a hedge against central bankers, half of the fund remains in gold. We continue to add to both our short and long positions.
The depressionary effects are buried deep in the Repo markets as asset values continue to fall, this is ultimately what takes out the banking system itself.
http://www.thebeareconomy.com
I've got to agree with Jon Stewart here: these aren't perfect storms, these are ordinary storms, we're just on a shitty boat.
http://how-to-trade-armageddon.com/2011/09/04/playing-greek-chicken/
I should add, it's funny to see the term "safe haven curse" applied to Japan and Switzerland. The dollar's safe haven status hasn't deflated all that much even after all our mad scientist money printing. We've been living with the safe haven curse for decades.
The most catastrophic event on a still whole airplane ( in otherwords something important hasn't fallen off)is a Stall and it can kill you , so when my little LSA engine locked up about 300 ft above ground level, the most important thing for my survival was keeping the plane ABOVE Stall speed till i touched down , so i nosed over to keep a good enough airspeed to keep the plane flying and headed for the pastures below. If i had Benny the Banker with me and he had tried to grab the stick and keep it flying which of course is impossible i would have had top sock him in his fuzzy little jaw and maintain control of the plane and it's descent. Few planes are built to ride the thermals and no matter how many bonfires of money Benny was burning below i was still headed down but atleast i had control. throwing money out the back of a plane and burning it to create thrust would only work for Mcgyver and Benny ain't no Mcgyver .. We must have a woeful education system to think some ditch digging jobs by the Government will keep us afloat...
i have noticed the term "stall speed" showing up in presentations at my office in the past few days.... and at the highest level also....
SoGen is going down, no doubt about it. But as I've said over the years, we went into a depression back in late 2007 and will be in one for at least another 15 years. The definition of a depression is a very bad recession, you can't get any more badder than what we have been in.