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David Rosenberg: "It's Time To Start Calling This For What It Is: A Modern Day Depression"

Tyler Durden's picture




 

By now only the cream of the naive, Kool-Aid intoxicated crop believes that the US is not in either a deep recession, or, realistically, depression. For anyone who may still be on the fence, here is David Rosenberg's latest letter which will seal any doubts for good. It will also make it clear what the fair value of the stock market is assuming QE3 fails, which it will, and the market reverts to trading to fair value as predicated by bond spreads. To wit: "If the Treasury market is correct in its implicit assumption of a renewed contraction in the economy, then we could well be talking about corporate earnings being closer to $75 in 2011 as opposed to the current consensus view of over $110. In other words, we may wake up to find out a year from now that whoever was buying the market today under an illusion of a forward multiple of 10x was actually buying the market with a 15x multiple." And since we are in the throes of a deep depression and a 10x multiple is more than generous, applying that to $75 in S&P earnings, means that the fair value of the S&P is... we'll leave that to our readers.

From Breakfast with Rosie, of Gluskin Sheff

We just came off the weakest recovery on record despite the massive amounts of stimulus that the U.S. government has delivered in so many ways. That the yield on the 10-year U.S. Treasury note is down to 2% already speaks volumes because the last time we were at these levels was back in December 2008 when the downturn was already 12 months old. A period like the one we have endured over the past six months when bank shares are down 30% and the 10- year note yield is down 130 basis points has never in the past foreshadowed anything very good coming down the pike. If market rates are at Japanese levels, or at 1930s levels, then it's time to start calling this for what it is: A modern day depression.

Look, that entire period from 1929-1941 saw several quarters of huge bungee-jump style GDP growth and countless tradable rallies in the stock market.

But that misses the point.

The point being that a depression, put simply, is a very long period of economic malaise and when the economy fails to respond in any meaningful or lasting way to government stimulus programs. A series of rolling recessions and modest recoveries over a multi-year period of general economic stagnation as the excesses from the prior asset and credit bubble are completely wrung out of the system. In baseball parlance, we are in the third inning of this current debt deleveraging ball game.

You know you're in a depression when interest rates go to zero and there is no revival in credit-sensitive spending.

The economy is in a depression when the banks are sitting on nearly $2 trillion of cash and yet there is no lending going onto the private sector. It's otherwise known as a 'liquidity trap'.

Depressions usually are caused by a bursting of an asset bubble and a contraction in credit, whereas plain-vanilla recessions are typically caused by inflation and excessive manufacturing inventories. You tell me which fits the bill today.

When almost half of the ranks of the unemployed have been looking for a job fruitlessly for at least six months, you know you are in something much deeper than a garden-variety recession. True, we can't see the soup lines; the soup lines are in the mail — 99 weeks of unemployment cheques for over 10 million jobless Americans. Don't be lulled into the view that we are into anything remotely close to a normal economic cycle.

Basically, in a depression, secular changes take place. Attitudes towards debt, discretionary spending and homeownership are altered for many years, or at least until the scars from the traumatic experience with defaults and delinquencies fade away. That is why we saw existing home sales slide to 15- year lows and new home sales to record lows despite the fact that mortgage rates have tumbled to their lowest levels in modern history. There is no economic model that would tell you that declining mortgage rates should lead to lower home sales.

More fundamentally, in a recession, the economy is revived by government stimulus. In depressions, the economy is sustained by government stimulus. There is a very big difference between these two states.

In a recession, everything would be back to a new high nearly three years after the initial contraction in the economy. This time around, everything from organic personal income to employment to real GDP to home prices to corporate earnings to outstanding bank credit are still all below, to varying degrees, the levels prevailing in December 2007.

Let's be clear: After all the monetary, fiscal and bailout stimulus, the economy should be roaring ahead, as would be the case if the economy were coming out of a normal garden-variety recession. The fact that there has been no sustained response to all these efforts by the government to turn things around is testament to the view that this is not actually a traditional recession at all, but something closely resembling a depression. That, my friends, is exactly what the bond market is signaling, with Treasury yields rapidly approaching Japanese levels. Just because the stock market embarked on a stimulus-led speculative two-year rally, which ended abruptly in April 2011— does not change that fact.

For all the chatter about whether the recession that started in December 2007 ended in mid-2009, here is what you should know about the historical record. The 1930s depression was not marked by declining quarterly GDP data every single quarter. In fact, the technical recessionary aspect to the initial period following the asset and credit shock goes from the third quarter of 1929 to the first quarter of 1933.

I can understand how emotional the debate can get over whether or not we have actually just stumbled along some post-recession recovery path or whether or not this is actually a depression in the sense of a downward trend in economic activity merely punctuated with noise that is influenced by recurring rounds of government intervention. The reality is that the Fed cut the funds rate to zero, as was the case in Japan, to little avail. Then the Fed tripled the size of its balance sheet— again with little sustained impetus to a broken financial system. Government deficits of nearly 10% relative to GDP, or double what FDR ever ran during the 1930s, have obviously fallen flat in terms of providing any lasting impact to the economy.

This is going to sound like a broken record but it took a decade of parabolic credit growth to get the U.S. economy into this deleveraging mess and there is clearly no painless "quick fix" towards bringing household debt into historical realignment with the level of assets and income to support the prevailing level of liabilities. We are talking about $5 trillion of excess debt that has to be extinguished either by paying it down or by walking away from it (or having it socialized). Look, we can understand the need to be optimistic, but it is essential that we recognize the type of market and economic backdrop we are in.

The markets are telling us something valuable when (after a period of unprecedented government bailouts, incursions and stimulus programs) the yield on the 5-year note is south of 1% and the 10-year is down to 2%. Instead of contemplating over how attractively priced equities must be in this environment, market strategists and commentators would bring a lot more to the table if they tried to decipher what the macro message is from this price action in the Treasury market. Conducting stock market valuation analysis based on unrealistic consensus earnings assumptions does nobody any good, especially when these estimates are in the process of being cut, and at a time when the Treasury market is telling us we are the precipice of another recession.

If the Treasury market is correct in its implicit assumption of a renewed contraction in the economy, then we could well be talking about corporate earnings being closer to $75 in 2011 as opposed to the current consensus view of over $110. In other words, we may wake up to find out a year from now that whoever was buying the market today under an illusion of a forward multiple of 10x was actually buying the market with a 15x multiple.

How's that for a reality check?

This augers for capital preservation, defensive orientation in the equity market and a focus on income-yielding securities; something we've been advocating for some time.

 

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Wed, 09/14/2011 - 12:11 | 1668838 GeneMarchbanks
GeneMarchbanks's picture

Rosy, The question isn't about what you call it but what to do about it. Here's a suggestion: BLOW UP THE ZOMBIES aka THE LIVING DEAD aka TBTF aka THE STATUS QUO.

Wed, 09/14/2011 - 12:24 | 1668912 MillionDollarBonus_
MillionDollarBonus_'s picture

US treasuries are a SAFE-HAVEN, and you better get used to it. America is in a win-win situation - either the world economy improves and our tax revenues increase, which makes our debt more attractive, or the world economy detteriorates and investors pile into our debt becasue of its hard-earned safe-haven status. And don't forget that China is TOTALLY dependent on our consumption of their exports, so they really have no choice but to keep buying US treasuries. If China stopped buying US treasuries, we can simply threaten to no longer consume their exports.

Wed, 09/14/2011 - 12:25 | 1668929 redpill
redpill's picture

Hamy!  How the hell are ya.

Wed, 09/14/2011 - 12:34 | 1668961 GeneMarchbanks
GeneMarchbanks's picture

Knock yourself out. USt's are all yours. I'll gladly go elsewhere for my safe- haven.

Wed, 09/14/2011 - 12:38 | 1668976 MillionDollarBonus_
MillionDollarBonus_'s picture

There is nowhere else to go. You better get your Treasuries while you can cos soon that yield is gonna be sub 0.1%. This will be the biggest wealth transfer in history, and its sad that you don't want to be part of it.

Wed, 09/14/2011 - 12:44 | 1669005 Long-John-Silver
Long-John-Silver's picture

There is nowhere else to go.

 

There called Gold and Silver Bitch.

Wed, 09/14/2011 - 14:00 | 1669438 Comay Mierda
Comay Mierda's picture

but but phd economists told me that this is a growth recession

Wed, 09/14/2011 - 14:23 | 1669584 Shocker
Shocker's picture

Correct

Wed, 09/14/2011 - 14:53 | 1669726 Pontificating B...
Pontificating Buffoon's picture

...and guns & bullets. Plenty of options out there.

Wed, 09/14/2011 - 18:22 | 1670691 BooMushroom
BooMushroom's picture

...and any other durable goods that you were going to consume anyway.  If fhe currency inflates (most likely, has been happening plenty) then your money has appreciated by the rate of inflation.  If there's a depression, then the goods you stockpile may not be available at any price, and then what you have is worth even more.

Wed, 09/14/2011 - 12:44 | 1669007 fonestar
fonestar's picture

US Treasuries are a Bulbuous Relic.  Gold and Silver are the only two true safe-havens.

Wed, 09/14/2011 - 14:21 | 1669569 A.W.E.S.O.M.-O 4000
A.W.E.S.O.M.-O 4000's picture

But Gold and Silver don't pay interest!

 

Nah, I'm just fucking with you.

Wed, 09/14/2011 - 12:45 | 1669012 Sudden Debt
Sudden Debt's picture

 

 

Nowhere else to go? :)

And how can it be a safe haven? LOOK AT THE FUCKING RETURNS ON THOSE BONDS!!! YOU MUST BE NUTS!!!

PM's, land, rare earths,.... plenty to invest in and to make some serious money. unless you trade your paper bonds for other paper crap.

Anything you can't touch is worthless.

 

Wed, 09/14/2011 - 13:00 | 1669082 Clorox Cowboy
Clorox Cowboy's picture

Ultimately you will be proven correct, but I think you're jumping the gun slightly (by years or perhaps only months?).  When Europe falls, Treasuries will catch a bid in a monstrous way.  The closer yields are pushed toward zero though, the more violent the eventual snap-back will be.

 

End-game: US is past it's peak and will never recover.  We're not quite there just yet, but getting closer all the time.

Wed, 09/14/2011 - 13:07 | 1669119 Sudden Debt
Sudden Debt's picture

Sure, I give it 3 to 5 years before the US realizes it's over. But if Europe goes down first, the US will follow a bit faster.

My money is in PM's. That means I don't care about the short run, protection of wealth so to speak but it's also a investment as our economies have no way out.

But I'd never put my money in bonds because you lock it down and once they go down it will go down pretty fast.

 

Wed, 09/14/2011 - 13:09 | 1669132 Clorox Cowboy
Clorox Cowboy's picture

Agreed, I have a significant % in PMs also.  No argument from me about the ultimate end for this farce.

Wed, 09/14/2011 - 14:01 | 1669442 Whalley World
Whalley World's picture

3 to 5 years!  By that time the USA will be broken into a series of regional pricipalities.  That's if the Mayan Calendar does'nt hit first.

This Empire is going down in Hyperspeed.

Wed, 09/14/2011 - 14:35 | 1669643 Strider52
Strider52's picture

I want to get me ahold of some Dark Matter. It's completely intangible, but it holds the galaxies together. That's gotta be worth something.

Wed, 09/14/2011 - 12:58 | 1669070 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

you're awsome! I'm going to use some of your material at dinner parties...the only problem is I think most people will actually take you seriously and take the advise!

Wed, 09/14/2011 - 13:01 | 1669088 GeneMarchbanks
GeneMarchbanks's picture

You, sir, have Stockholm Syndrome. Seek help.

Wed, 09/14/2011 - 13:15 | 1669190 bugfixx
bugfixx's picture

As Jim Grant said recently, US Treasurys offer "return-free risk."

Wed, 09/14/2011 - 13:22 | 1669231 SilverRhino
SilverRhino's picture

No other safe haven?  You're a fucking moron.  Enjoy your flammable safe haven. 

Rule #1: "Safe havens" are not flammable

Wed, 09/14/2011 - 14:12 | 1669519 Ruffcut
Ruffcut's picture

MillionDollarButtFart, being an attention whore is so important for you that you relish in embarassment.

Pity the fool.

Wed, 09/14/2011 - 16:59 | 1670313 Spirit Of Truth
Spirit Of Truth's picture

I know this is tongue-n-cheek million$, but what's amazing is that there are executives in fancy, well-insulated offices on Wall Street who seriously do think like this.  One might note how Dick Fuld had an elevator direct to his office and could come in in the morning and bypass everyone who worked at Lehman before it blew up.

Thu, 09/15/2011 - 00:10 | 1671884 bid the soldier...
bid the soldiers shoot's picture

"Nowhere else to go?"

What about room 101? The biggest transfer of flesh in your life. 

Wed, 09/14/2011 - 12:44 | 1669006 StrangerThanFiction
StrangerThanFiction's picture

+1

Wed, 09/14/2011 - 12:35 | 1668970 AldousHuxley
AldousHuxley's picture

TOTALLY = <30%

Rank Country/region Volume % change over 2009 1 United States 283.3 28.3 2 Hong Kong 218.3 31.3 3 Japan 121.1 23.7 4 South Korea 68.8 28.1 5 Germany 68.0 36.3 6 The Netherlands 49.7 35.5 7 India 40.9 38.0 8 United Kingdom 38.8 24.0 9 Singapore 32.3 7.6 10 Italy 31.1 53.8
Wed, 09/14/2011 - 12:55 | 1669059 Clorox Cowboy
Clorox Cowboy's picture

Yes, Treasuries are a safe haven...UNTIL the world figures out how to move AWAY from the dollar as its reserve currency.  Do you think China enjoys lending us money that it knows will likely never be fully repayed?  They're biding their time, attempting to build their own middle class consumers.  China is stumbling right now, but I believe they will prevail and the US will fade from this point forward...first slowly, then very very rapidly.

Wed, 09/14/2011 - 13:53 | 1669393 Abitdodgie
Abitdodgie's picture

China does not lend us money it lends us paper ,they know fiat money is meaningless, the only people who think it is worth somthing are the slaves

Wed, 09/14/2011 - 14:24 | 1669591 A.W.E.S.O.M.-O 4000
A.W.E.S.O.M.-O 4000's picture

Hello! We're right here and can here you talking!

(The Slaves)

Wed, 09/14/2011 - 13:05 | 1669107 PivotalTrades
PivotalTrades's picture

US Treasuries are only the penultimate stop on the way to total fiat distruction.

ove the tounge and cheeck sarcasin.

Wed, 09/14/2011 - 13:37 | 1669298 prains
prains's picture

SAFE HAVEN ALERT

Defcon 1: Totally Fucked

Defcon 2: Completely Fucked

Defcon 3: Super Fucked

Defcon $: Super Dooper Fucked

 

I was so much happier at Totally Fucked but the Chinese are playing for keeps,  Defcon $$$$$Alpha . They invented the Trojan Horse back when the Greeks were still wiping their ass with their toga's.

When the day comes for that big red button in the oval office to be pushed, the only thing that will happen is the sound of a coke can hitting the bottom of the machine out in the hallway.

There's a holy shit moment for ya.  

Oh, but  you're right they're SO dependent on nike runner sales. Dude, you have been completely Googed.

Wed, 09/14/2011 - 14:00 | 1669403 kahunabear
kahunabear's picture

we can simply threaten to no longer consume their exports

Well, that seems "simple" enough, ha.

Wed, 09/14/2011 - 14:03 | 1669451 RSloane
RSloane's picture

The American consumer has been leveraging cheap labor abroad for decades. Its a little late to be screaming "foul".

Wed, 09/14/2011 - 13:55 | 1669411 High Plains Drifter
High Plains Drifter's picture

wow !

Wed, 09/14/2011 - 13:55 | 1669412 roblondon
roblondon's picture

Boom. Just like that, first world nations around the world fail to support the banana republics of the world. Global depression ahead.

Wed, 09/14/2011 - 19:08 | 1670875 TheMerryPrankster
TheMerryPrankster's picture

Turns out the 1st world nations were just banana republics with nice paint jobs.

Wed, 09/14/2011 - 14:20 | 1669554 Big Ben
Big Ben's picture

You can keep your treasuries. I'll keep my TREASURE.

By the way, what happens when China decides it wants to "liberate" Taiwan? If they are wise, they will sell their US assets first, rather than have them taken over by the US gov. when war is declared.

Wed, 09/14/2011 - 14:23 | 1669590 TeresaE
TeresaE's picture

@MillionDollar...

Thank you for the largest laugh I've had all day.

China needs us!  Priceless!

UST are a safe haven!  Double Priceless!

At first yes, we may be a "safe haven" but whatcha' goin' do with all that paper promises when China & India (along with Brazil, Venezuela, Korea, Russia, etc) enact their new deals and start buying oil in something other than dollars?

Or do you think they have set up these plans for the hell of it? 

Yeah, that's it.  All those countries are just stupid, don't they realize how "secure" a country is that is so corrupted and broken that most people still think it is in first place?

Again, thanks for the laugh, I really needed it.

Wed, 09/14/2011 - 14:37 | 1669647 I Told YOU So
I Told YOU So's picture

at  million dollarbaby

you sir are full of shit, china has 6.3 billion people world wide (when you subtract the 300 million us) to sell to, the real fight is when (not if) the worlds financial center moves back to asia, as has happened before in history,

Wed, 09/14/2011 - 14:42 | 1669675 SumSUN
SumSUN's picture

I might feel a little better holding paper IOUs if the people controlling the system weren't idiots.  A bunch of fuckin' lying idiots.

Wed, 09/14/2011 - 12:25 | 1668923 scatterbrains
scatterbrains's picture

no way! If you did that Mall properties would get hurt.. I say keep the status quo and one day, sooner or later, everything will get all better.. the bankers know best!  Tow the line bitches.. and don't forget to pay your taxes.

 

Wed, 09/14/2011 - 13:56 | 1669418 Abitdodgie
Abitdodgie's picture

People bitch and moan and get upset with the Government ,BUT they always pay there taxes , why? They have no balls to stand up to them

Wed, 09/14/2011 - 14:18 | 1669559 Ruffcut
Ruffcut's picture

Don't pay your taxes? Go to jail, lose your house. Sorry you don't own anything worth a shit.

Even if half of ALL WE HAVE, was create thru too much debt and leverage and dogs and cats, living together, I still want to try and keep the other half, at least.

Wed, 09/14/2011 - 12:25 | 1668927 iDealMeat
iDealMeat's picture

It's really easy for TBTF and TPTB to BS the sheeple..  The last depression was in black and white, so it looked depressing..  This one is in color so it doesn't look depressing.. Therefore it must not be a depression.

 

Wed, 09/14/2011 - 19:12 | 1670908 TheMerryPrankster
TheMerryPrankster's picture

Plus people have nicer cars to sleep in and plastic food stamp cards that look like credit cards, instead of soup lines.

The first rule of management including politics, is managing perceptions. I'm sure the government has thousands of bloggers and blogger bots, that spam anyone who mentions our current malignant state as a depression.

Economic propaganda is king and the king is economic propaganda.

Wed, 09/14/2011 - 12:33 | 1668958 chunga
chunga's picture

Calling all lawyers. This is (supposedly) a nation of laws. Our economy is based on fraud. Sue the bastards and claw every ill-gotten penny from TBTF!

Rhode Island Foreclosure Amicus Brief

Wed, 09/14/2011 - 13:46 | 1669359 High Plains Drifter
High Plains Drifter's picture

when the fed building in washington is surrounded and burning , with many rats inside of it. so we send in rosey to negotiate?

Wed, 09/14/2011 - 12:10 | 1668840 Cognitive Dissonance
Cognitive Dissonance's picture

Oh Christ. Once again here comes the Rosenberg haters in the comment section. It must be because he's a little chubby and not because he has a sharp mind and big balls.

Wed, 09/14/2011 - 12:24 | 1668919 buzzsaw99
buzzsaw99's picture

Like I'm going to listen to a lying ass joo. :roll:

 

Hi Rosie! ;)

http://www.businessinsider.com/david-rosenberg-slams-ignorant-blog-comme...

Wed, 09/14/2011 - 14:25 | 1669599 Cliff Claven Cheers
Cliff Claven Cheers's picture


Jew Envy?

Wed, 09/14/2011 - 15:16 | 1669852 buzzsaw99
buzzsaw99's picture

go look for your foreskin up your mother's ass lube tube noob joob. lolololol

Wed, 09/14/2011 - 12:24 | 1668921 redpill
redpill's picture

He deserves some flak also.  Anyone who hasn't had their head up their ass has been calling this a depression for years and he's pretending it's some bold statement.

 

I PREDICT A RAIDER VICTORY TWO DAYS AGO!

 

Wed, 09/14/2011 - 12:29 | 1668942 Cognitive Dissonance
Cognitive Dissonance's picture

Either you don't read Rosenberg regulalry or you need to take another red pill.

Wed, 09/14/2011 - 13:25 | 1669243 Cliff Claven Cheers
Cliff Claven Cheers's picture

This is going to sound like a broken record but it took a decade of parabolic credit growth to get the U.S. economy into this deleveraging mess and there is clearly no painless "quick fix" towards bringing household debt into historical realignment with the level of assets and income to support the prevailing level of liabilities. We are talking about $5 trillion of excess debt that has to be extinguished either by paying it down or by walking away from it (or having it socialized). Look, we can understand the need to be optimistic, but it is essential that we recognize the type of market and economic backdrop we are in.

 

Steve Keen has been saying this for a couple of years now.

http://www.debtdeflation.com/blogs/

Wed, 09/14/2011 - 13:43 | 1669346 Ricky Bobby
Ricky Bobby's picture

I agree, he follows the trail from Schumpeter => Minksy =>

Wed, 09/14/2011 - 14:25 | 1669598 Eally Ucked
Eally Ucked's picture

Nobody needs to read him on regular basis. Anybody with some logic and brain can predict end results, those percentages, indexes are just shit supposed to make you believe in something which is not achievable. Changing your numbers every 6 months to pretend you're an expert and much closer to reality than other posers is not proof that you're brilliant. We know US economy is just services+financials+military expenditures (I count government into services). Services cannot exist without credit, state and citizens are are tapped out, if the citizens are tapped out financials are shit too unless they find some new pool of victims (unlikely). Military expeditures can last for some time thanks to printing, and it can keep US manufacturing at 12% of GDP (6% is for military purposes). How you cannot predict downturn in such a situation?

Wed, 09/14/2011 - 14:26 | 1669607 Ruffcut
Ruffcut's picture

Bergster, is just providing some more eyecandy for us bloggers. THs stocks that had the highest short interest had 2X better gains, lst little crisis, during mini rallys.

There are many of us that are still little shy to short anyone or anything down the rabbit hole. They need more players to maximize profits.

Bear market ralliys, creates few heroes.

Wed, 09/14/2011 - 12:34 | 1668963 SheepDog-One
SheepDog-One's picture

Yea that part is true as well, as once true believers now come out with 'bold statements' thats its all crap, when it always from a few years ago.

Wed, 09/14/2011 - 13:49 | 1669376 High Plains Drifter
High Plains Drifter's picture

isn't it true rosey has done his share of flip flopping..?

Wed, 09/14/2011 - 12:29 | 1668935 DoChenRollingBearing
DoChenRollingBearing's picture

@ CogDis, I like Rosie's comments.

+ green

Calling ZH-er "fuu", this article is categorized as "Economic Indicators", and is a "-1" in that it has a negative outlook for the subject discussed.  More fun coming to a blog near you soon...

Wed, 09/14/2011 - 13:18 | 1669208 The Limerick King
The Limerick King's picture

.

.

Rosie has got some big balls

This fact is confirmed by his calls

You can tell by his rants

(And the bulge in his pants)

They get bigger each day the Dow falls.

 

Wed, 09/14/2011 - 13:22 | 1669227 Cognitive Dissonance
Cognitive Dissonance's picture

Hi TLK

That article you collaborated with me on is burning a hole in my pocket. Just about time to release the hounds.

Wed, 09/14/2011 - 15:48 | 1670025 The Limerick King
The Limerick King's picture

As Waylon Smithers would say....."Yes Mr. Burns!"

Wed, 09/14/2011 - 13:47 | 1669358 buzzsaw99
buzzsaw99's picture

there once was a joo from nantucket

who sold rich clients from a shop bucket

he served koolaide in a bearish cup

but the market only went up

then he took his fee anyway and said fuckit

 

Wed, 09/14/2011 - 13:50 | 1669386 High Plains Drifter
High Plains Drifter's picture

you know buzz.  here lately you seem to be really getting a bad attitude , dude.....:)

Wed, 09/14/2011 - 14:14 | 1669532 Cliff Claven Cheers
Cliff Claven Cheers's picture

It's called Jew Envy.

Wed, 09/14/2011 - 15:07 | 1669801 bid the soldier...
bid the soldiers shoot's picture

Whenever I hear these rude anti-Semetic slurs I think of what Bejamin Disraeli said on the foor of the House of Commons to an Irish MP:

"Yes, I am a Jew, and when the ancestors of the Right Honourable Gentleman were brutal savages in an unknown island, mine were priests in the Temple of Solomon."

Rodney Dangerfield he wasn't.

Wed, 09/14/2011 - 12:10 | 1668843 wang (not verified)
wang's picture

There he goes again, trying to out do Roubini.

Wed, 09/14/2011 - 12:10 | 1668845 Long-John-Silver
Long-John-Silver's picture

It's about time everyone admits we are in a full blown economic depression.

Wed, 09/14/2011 - 12:13 | 1668860 SheepDog-One
SheepDog-One's picture

We're in a depression clearly, case closed. Now lets hear the haters come out of the woodwork denying the obvious in the article and hate upon Rosie.

Wed, 09/14/2011 - 12:25 | 1668924 X.inf.capt
X.inf.capt's picture

personally, i think it's damn good article.....

Wed, 09/14/2011 - 12:31 | 1668950 DoChenRollingBearing
DoChenRollingBearing's picture

Yeah, me too.  Nothing we have not seen before, but good.

Green to above in this sub-thread.

Oh, buy gold!

Wed, 09/14/2011 - 12:49 | 1669023 X.inf.capt
X.inf.capt's picture

back at ya, bearing...

p.s. Dont forget silver...

Wed, 09/14/2011 - 13:05 | 1669050 pelican
pelican's picture

My home, which I had to move out of because of the crash of the job market, is surrounded the three homes in some stage of foreclosure. (Did I mention the home dropped 120k in value in 1 year?) So I go into town, drive past huge amounts of empty commercial real estate, to the mall which is half empty.  No, it isn't a depression.

Wed, 09/14/2011 - 13:33 | 1669115 X.inf.capt
X.inf.capt's picture

most prevelent business sign here in no. nevada...

SPACE AVAILABLE...

p.s. sorry about the house,man, that sucks

Thu, 09/15/2011 - 05:01 | 1672289 StychoKiller
StychoKiller's picture

Space, the final frontier.  These are the bloggers of ZH, whose 3-year (so far!) mission is to change the course of the Titanic by screaming "LOOK OUT!" to anyone that will listen.  So far, it seems to be a lost cause...

Wed, 09/14/2011 - 14:01 | 1669443 Cliff Claven Cheers
Cliff Claven Cheers's picture

Sounds like you live in my neck of the woods.

Wed, 09/14/2011 - 14:25 | 1669597 pelican
pelican's picture

More parts of the woods and suburbs then those in DC and NY think.

Wed, 09/14/2011 - 13:28 | 1669268 Spanish Lizard
Spanish Lizard's picture

Probably won't hear any haters in these forums, we are some of the few that stopped drinking the cool aid and woke up...

Wed, 09/14/2011 - 13:04 | 1669104 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

If this is a depression let it roll!!! I made more than I've ever made over the last year on my bullion...! good times, good times!

Wed, 09/14/2011 - 13:25 | 1669250 pelican
pelican's picture

Did you make actual money or did you just preserve some wealth? Gold maintains intrinsic value, paper is paper. 

Wed, 09/14/2011 - 12:11 | 1668853 nobusiness
nobusiness's picture

But..butt..what about operation Twisted Sister???

 

Man, you can't get a good bailout now-a-days.

Wed, 09/14/2011 - 12:41 | 1668989 Osmium
Osmium's picture

Twisted Sister.  Now that's some funny sht

Wed, 09/14/2011 - 14:37 | 1669652 fyrebird
Wed, 09/14/2011 - 12:11 | 1668854 Corn1945
Corn1945's picture

And since we are in the throes of a deep depression and a 10x multiple is more than generous, applying that to $75 in S&P earnings, means that the fair value of the S&P is...

That's if you believe the stock market still has any real connection to the economy. I don't believe that anymore. It's just one big casino gambling parlor.

Wed, 09/14/2011 - 12:12 | 1668856 Gandalf6900
Gandalf6900's picture

so whats this bloody number

Wed, 09/14/2011 - 12:12 | 1668857 TradingJoe
TradingJoe's picture

More fundamentally, in a recession, the economy is revived by government stimulus. In depressions, the economy is sustained by government stimulus. There is a very big difference between these two states.

The Algos @ Work don't know this difference, some shill on the NYSE floor just said on BloomTard that "the market" is waiting so see what the MerKozy G Papi had to say and that nobody there believes Greece will default, hehehe, see Rosie all is good in lala land!

Wed, 09/14/2011 - 12:15 | 1668870 SheepDog-One
SheepDog-One's picture

Surely they can think up a new carrot and stick rumor to again 'save' the collapsed western economies! Just 1 more day is all we ask! 'Must.....close.....green'

Wed, 09/14/2011 - 12:16 | 1668876 NotApplicable
NotApplicable's picture

Well, the NYSE is a prime beneficiary of Hopium production, so it isn't surprising to see them hang on until the last millisecond.

Wed, 09/14/2011 - 12:23 | 1668905 blunderdog
blunderdog's picture

That quote caught my eye, too.

I'd say back in the olden dayz, we might occasionally have gotten out of a recession because new technology made infrastructure changes possible and the economic "landscape" shifted.

But I can see why he'd forget about that sort of thing.  We haven't done any infrastructure development for over a decade.

Wed, 09/14/2011 - 13:56 | 1669420 Ghostbusters
Ghostbusters's picture

 Rosie has been spot on throughout all the crises.  had it not been for massive fiscal and monetary juice on a global level his premonitions would have come to pass long ago.  people trash Rosie for making what have proven to be inaccurate market calls but they don't stop to think if it had anything to do with reality as they sit and cheer NFLX, LULU, or <insert shi%#y stock here>.

  Roise tells it like it is and if you don't like that then I'm sure you enjoy patriotic displays at every sporting event(obnoxious-we look more like fascists every day), being lied to day in and day out by everyone in the media, and the current state of the union or perhaps 911 tributes, Israel(read evil), or maybe killing peasants in third world countries but wait could it be starving peasants in third world countries via monetary policy that you like, or is it the 46 million americans living in poverty, or i'm sure you like believing that poor and impoverished Arabs are capable of highjacking 4 planes in one day to crash them all over the US when in Afghanistan they attack, from caves, with RPGs, old machine guns, maybe a mortar, and homemade suicide vests(sounds like people with expansive resources vs. tomahawk missles, aircraft carriers, nukes, drones, elite trained special forces, stealth jets, helicopters,.....). 

When will we say enough is enough?  It is ridiculous already.  I am not anti-American but I believe our once great nation is dead.  We have been overrun by an infestation of corruption at the policy making levels who in turn own the media and who are stakeholders in deals with corporations.  Bigger is not always better.  Consolidation kills individual liberties and geeeee, now how about a EuroBond!!!! because we didnt have enough debt already, let's print more paper to paper over the other paper holes so some day, like today, we are so confused with who owns what paper that we all own paper the we originally issued.  The Global Ponzi is reaching its limit and many more people will die because those in charge dont give a flying F.  There was a nice documentary on HHH on PBS(propaganda) last night and it gave me insight into how a moral man can be defeated by the globalists.  LBJ telling HHH to give a good report on Vietnam and then to shutup or face further political isonlation while LBJ reaped the benefits through various contractors, lobbies, and deals that killed Americans, destroyed Vietnam, and made a lot of people very weaithy.  It is the same trick again here today.  Politics is but a game and the real government lay within the creation and operation of $monetary system$ albeit fiat, this has helped their cause by controlling inflation/deflation, booms/busts, business cycles, trade wars/subsidies, and the like.  we have come to live in a time of polarization although we are all the same(humans), the media would have you believe otherwise.  We are still controlled by old money ocult sourthern radicals in bed with globalist jews, christians, and muslims who would rather consolidate through war, depression, and death than breathe life through peace, democracy, and human rights.  Religion teaches us morals although the media would have you believe the religion teaches Arabs how to kill Christians.  I have never seen any real sign of anti-semitism in this world and yet the Israelis are allowed open reign to use the phrase in order to protect themselves from 'muslim extremists' who are so extreme they want clean water, electricity, schools, jobs, and maybe a future opportunity or two.  Wouldnt you do the the same?  They(TPTB) are capable of absolute evil(9/11) and we as people, lovers of freedom, and protectors of inalienable human rights need to continue to spread the word and unite ourselves one person at a time for when our time comes.

I have never been afraid of any Arab.  The Arabs dont hate us, they hate our government.  True they may not like the complacency(ignorance) amongst the general population in believing our government is justified(there is no excuse for that when the information is available) in its continued crusades but you and I do not make foreign policy although we have to live with it.  There is no relation between these wars and religion but rather relgion is vilified in the media to prmote their agenda.  There is a simple concept that defines everything in the world today.  Should you like to find the sources of evil and corruption in this world all you need to do is follow the money.

Fed Reserve: Bailouts, Guarantees, Profits(?)-where do they go? 

Israel: US Foreign Aid

Defense Contractors:

TBTF Banks

Corporate Systems: Oil

Lobby System

etc.

I think our leaders are planning the transition to some more consolidated form of the west because otherwise it doesn't make any sense why they would pursue a path of mutual assured economic destruction unless there was a desirable endgame ie further global consolidation where people lose and the richest given even richer and gain further power.

 

Wed, 09/14/2011 - 14:43 | 1669676 Jason_1sandal
Jason_1sandal's picture

Nice Rant ! + 1

Wed, 09/14/2011 - 15:34 | 1669937 catacl1sm
catacl1sm's picture

I believe the end game here is to crash the world economy, let us die and kill each other until a 'sustainable' population level is reached (1 billion - 500 million), the come back out of their bunkers with a New World Order that will have one world government, "because the seperate governments created the mess", one religion, "because separate religions caused the mess", and one currency, "because separate currencies caused the mess". BLAM! Endgame, bitchez.

Wed, 09/14/2011 - 12:14 | 1668865 Bithead1
Bithead1's picture

but but but its only transitory...Turbo Timmah  will fix everything with the Turbotax wizard.  Just keep clicking next, next, next.

 

Wed, 09/14/2011 - 14:21 | 1669570 espirit
espirit's picture

Just what does Timmah need to fix? Markets are up on algo baited rumor breath, and the EuroZonie placated MoMo's are feeding the sheeple what they needed most - CONfidence.

What's not to like?

sarc on/off, I forget which - especially after some pixie dust and koolaid.

Wed, 09/14/2011 - 12:14 | 1668866 alien-IQ
alien-IQ's picture

it's hard, if not entirely impossible, to put a fair market value on a complete fraud.

Wed, 09/14/2011 - 12:17 | 1668880 NotApplicable
NotApplicable's picture

But is it worth it when the valuation is obviously negative?

Wed, 09/14/2011 - 12:14 | 1668867 FranSix
FranSix's picture

Bloomberg reports negative nominal rates on the 3-month treasury this morning:

http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/

Expect very stubborn gold prices here.

Wed, 09/14/2011 - 12:20 | 1668892 SheepDog-One
SheepDog-One's picture

I wonder who is left to pay $1800, $1900, $2000, for gold from here on out? Everyones bankrupt, and those with money are putting it into 0% bonds for just the 'gurantee' to get what they put in back out later? 

Very bad.

Wed, 09/14/2011 - 12:28 | 1668940 adr
adr's picture

My problem with gold is that at its current price so little can be bought by the average person. Say you do get to buy a couple ounces. It isn't going to last that long if you start using it as money. You won't have any power when billionares hold literal tons of the stuff.

On one hand willbe you with your ten ounces and on the other will be George Soros with his ten tons or so. Who d you think will be shaping policy.

Sure gold is worth 1800 paper $1 bills but what is it worth if the dollar is no longer the currency you can trade for items. If gold goes parabolic in dollar valuation losing a piece the size of a pea could cost you food for a couple months.

Wed, 09/14/2011 - 12:33 | 1668959 FranSix
FranSix's picture

Once the price of gold goes high enough, ppl. will gladly accept it as currency in trade for goods.  Think about that.

 

A few coins is all you need to buy some pretty essential items no questions asked.

Wed, 09/14/2011 - 12:35 | 1668969 SheepDog-One
SheepDog-One's picture

And when things get that bad, who sets what gold is worth? Do people call Soros and ask him?

Wed, 09/14/2011 - 12:55 | 1669062 FranSix
FranSix's picture

A few gold coins will buy you a Fiat 500.  And, they'll help you with the paperwork.  

Its fast and bulbous, got me?

http://www.cardriven.ca/2010/10/first-fiat-500-sold-in-canada-goes-for-85000/

 

Wed, 09/14/2011 - 13:02 | 1669094 SheepDog-One
SheepDog-One's picture

I saw a TV ad for that new 'Fiat', I thought it was some kind of JOKE like I was watching Mad TV or something!

Wed, 09/14/2011 - 12:59 | 1669078 DoChenRollingBearing
DoChenRollingBearing's picture

@ adr

The average person (= Middle Class who by definition have discretional income) CAN buy gold!  It is fairly easy to buy 1/10th oz gold coins for $200 or so.

I believe that it is HEALTHY for a society and wrold if gold ownership is widely distributed, that as many people as possible own gold.  It is healthier than if the just the central banks and the "Giants" own all of the gold.

EVERYONE should have some gold, even the showshine boy!

Wed, 09/14/2011 - 15:42 | 1669988 mt paul
mt paul's picture

many nice 1/10th oz gold coins

isle of man has a cat series

australia has an animal series

as does china..pandas too

africa has elephant and tiger series 

singapor has a new animal series.

the premiums are a bit high 10-20 % over spot

but what the heck ..it's just paper anyway ..

fractionals round out your bullion stash ..

Wed, 09/14/2011 - 13:08 | 1669129 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

The answer is two fold: 1 tiny denominations will be used - ie 2 grams of gold to buy a laptop

2: silver used at a lower ratio to gold

but basically no matter how high the price goes you can use gold as money - the free market sets the price. So for chewing gum you might pay 0.0000000000001 grams of gold or whatever. Other than that there's also barter or other commodity backed paper...!!!

Wed, 09/14/2011 - 14:19 | 1669562 WakeUpPeeeeeople
WakeUpPeeeeeople's picture

when it comes to bartering it sure is hard to beat copper/zinc and lead especially if the counterparty doesn't have any

Wed, 09/14/2011 - 13:33 | 1669287 economessed
economessed's picture

It's not that gold is getting more expensive.  It's not.  It's value remains unchanged.   But the dollar has declined in value/purchasing power....

Wed, 09/14/2011 - 12:34 | 1668966 DosZap
DosZap's picture

SheepDog-One,

LOTS of folks out there to buy it,they are hoping against hope that things will get back to Pre '08 semi normalcy,and therfore are sheeple w/ tons of cash.............waiting to be slaughtered.

There are trillions  sitting on the sidelines.

Worst part if the USD doesn't totally crash, they will lose it thru inflation, that train is headed this way and SOON.

Wed, 09/14/2011 - 13:25 | 1669249 americanspirit
americanspirit's picture

Hi Sheep Dog - that's a good question if you're just looking around your neighborhood, but "who is left to pay $1800 etc"? A couple of hundred million Asians each buying a gram or two at a time, that's who.

Wed, 09/14/2011 - 12:20 | 1668871 Bithead1
Bithead1's picture

what is this "fair market value" you speak of?  I thought we had to have a fair market based on what people are willing to pay VS what governments are willing to bail...

 

Wed, 09/14/2011 - 12:16 | 1668877 jmcadg
jmcadg's picture

Fuck, I could outdo Roubini, the loser.
Fag packet approx of fair value S&P <800

Wed, 09/14/2011 - 12:18 | 1668883 shazbotz
shazbotz's picture

2011 is the new 2008 bitchez

 

 

Wed, 09/14/2011 - 12:24 | 1668915 wang (not verified)
wang's picture

according to Rosie it's the new 1933

Wed, 09/14/2011 - 13:17 | 1669200 Jonas Parker
Jonas Parker's picture

And, unfortunately, Rosie's right!

Wed, 09/14/2011 - 12:20 | 1668887 DaveyJones
DaveyJones's picture

"the weakest recovery on record despite the massive amounts of stimulus"

what word doesn't belong here?

Wed, 09/14/2011 - 12:22 | 1668902 SheepDog-One
SheepDog-One's picture

Its like calling our 45 degree tobagan downhill a 'gradual uphill slope, neverminding of course the downhill appearance of it'.

Wed, 09/14/2011 - 12:29 | 1668943 DosZap
DosZap's picture

Davey,

Could it possibly be "recovery".

Wed, 09/14/2011 - 14:00 | 1669437 Mariposa de Oro
Mariposa de Oro's picture

I would put forth stimulus.   Wasn't all that newly created fiat pretty much pay offs to unions and big time campaign contributors?

Wed, 09/14/2011 - 14:23 | 1669586 DaveyJones
DaveyJones's picture

creating hyperinflation is indeed a strange form of "stimulus"  Sort of like...enlargement surgery

Wed, 09/14/2011 - 12:21 | 1668896 LawsofPhysics
LawsofPhysics's picture

"income yeilding securites" - Yeah I have a few of those.  visit once a month and collect rent from the tenants.  Time to decide who is the slave and who is the master. 

Wed, 09/14/2011 - 12:21 | 1668897 Cdad
Cdad's picture

NEWS FLASH...BlowHorn [CNBC]...Gary Kominski

"The junk markets are frozen."  Hmmmm?  When have we heard that before?

But...but...the banks are lending again and their earnings picture is improving...I thought.  "Bank equities will double."  Dick Bove

Wed, 09/14/2011 - 12:23 | 1668906 SheepDog-One
SheepDog-One's picture

Uh oh! Junk is frozen? Maybe we can borrow some flamethrowers from China! I bet theyve got some NICE ones!

Wed, 09/14/2011 - 13:02 | 1669089 Catch-22
Catch-22's picture

Listen, you got to go cold turkey on that CNBC stuff... I know, I know, you'll feel like your missing something, but you know your not. Go ahead turn it off... we're all here for ya!

Wed, 09/14/2011 - 12:21 | 1668898 adr
adr's picture

Greece won't pay its debt but it won't be called a default. They'll come up with a cool sounding name like, Strategic Monentary Replacement Program and the algobots will rocket the market 20% because a "default" was avoided.

I wonder how long it will take for Walmart to issues its own currency only usable at Walmart. I mean we're practicaly there anyway.

I'm sure China would be all-in on backing that one.

Wed, 09/14/2011 - 13:08 | 1669126 Larry Darrell
Larry Darrell's picture

"I wonder how long it will take for Walmart to issues its own currency only usable at Walmart."

 

Trading one oligarchy for another, while travelling back in time.

 

You load 16 tons, and whaddya get

another day older and deeper in debt

Saint Peter don'tcha call me 'cuz I can't go

I owe my soul to the company store

Wed, 09/14/2011 - 15:39 | 1669974 catacl1sm
catacl1sm's picture

adr, you think I could try that sell with my creditors? Pay them back with pictures of unicorns instead of dollaz?

Wed, 09/14/2011 - 15:39 | 1669975 catacl1sm
catacl1sm's picture

adr, you think I could try that sell with my creditors? Pay them back with pictures of unicorns instead of dollaz?

Wed, 09/14/2011 - 12:22 | 1668899 optionsoptions
optionsoptions's picture

It's tough to bet on a declining S&P500 based solely on a depression the US economy may or may not be going through.

 

For a lot of companies( in the S&P 500). The US economy can fall of a cliff and they can have their revenues cut 10% next year and still have their foreign operations go up 15-20% and increase their total revenues by 5%. Same for their bottom line. 

 

To sum it all up:

The players who are betting on a lower S&P500 because of the US economy might wake up next year with less capital.

Wed, 09/14/2011 - 12:25 | 1668926 SheepDog-One
SheepDog-One's picture

Or suddenly waking up 1 morning soon and finding all that 'market' jibber jabber is just BS and all those 'in the club' (clearly not you or me) positioned short and their rubbish worthless markets opened down -15%.

Wed, 09/14/2011 - 15:35 | 1669943 Miles Kendig
Miles Kendig's picture

Ya, and the tooth fairy may make QE3 5 trillion too

Wed, 09/14/2011 - 12:22 | 1668901 Bithead1
Bithead1's picture

Bohemian Bove

Wed, 09/14/2011 - 12:25 | 1668922 GiantWang
GiantWang's picture

Depression?  In the first depression, didn't some of the wealthiest people in the world lose all their wealth and, in some cases, even commit suicide?

Let's call this a depression when that starts happeneing in modern times.  For now, it's just the middle and lower classes getting pummeled, while the rich aren't yet getting squeezed it doesn't seem.

Wed, 09/14/2011 - 12:27 | 1668937 SheepDog-One
SheepDog-One's picture

Best showing retail right now? High end diamond brokers. Nah the elite arent feeling jack shit, I say we make em feel some pain! Of course everyones too busy in their cubicle lives to actually do anything though. Its a 1 man depression....1 by 1 everyones going down.

Wed, 09/14/2011 - 13:22 | 1669232 Lye
Lye's picture

Depression 2.0: Middle and lower income people throwing billionaires out highrise windows.  That just has a nice ring to it!

Wed, 09/14/2011 - 12:59 | 1669075 Yardstick of Ci...
Yardstick of Civilization's picture

Seriously, in the 30's very rich people lost all their money. That is definitely not happening now.  Things will be bad when billionaire bank accounts start going to zero and the formerly rich begin hurling themselves out highrise windows.

Wed, 09/14/2011 - 13:11 | 1669160 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

Did that really happen?? I'm not so sure...

No billionare is stupid enough to leave that much in cash in a bank - I don't think they were in the 30's either - although then billionares where multimillionares

They have companies, real estate, farm land, overseas interests. It seems the feds warn them off gold and silver, but that will eventually have to change

Wed, 09/14/2011 - 15:23 | 1669890 falun bong
falun bong's picture

You think the Saudis don't have one huge pile of gold bars underground somewhere? Think again...The super-rich will do fine, they always do. That's the whole point.

Wed, 09/14/2011 - 18:53 | 1669611 e-recep
e-recep's picture

When the rich start to lose money, war breaks. There was a nice chart somewhere clearly depicting this observation.

Wed, 09/14/2011 - 12:25 | 1668925 Josh Randall
Josh Randall's picture

A Modern Day Depression takes a A Modern Day Warrior

Wed, 09/14/2011 - 12:26 | 1668931 Al Huxley
Al Huxley's picture

The problem with applying fundamental analysis to estimate what the S&P should be trading at, is that it requires you to believe this market is somehow reflecting reality, and to ignore the fact that it's in actuality just a big, rigged carnival game designed to separate 'investors' from money they apparently don't need (otherwise why would they be putting it in the market?).

Wed, 09/14/2011 - 12:27 | 1668934 Sutton
Sutton's picture

And Ben won't let commodity prices fall.

 

Wed, 09/14/2011 - 13:02 | 1669092 Sambo
Sambo's picture

Putin needs to come out and say aomething (about Ben)...and abracadabra....you have QE3!

Wed, 09/14/2011 - 12:29 | 1668939 Zola
Zola's picture

Ah the days when the dollar was linked to gold and the market movement up and down actually meant something... Now it is all blatantly manipulated in every direction. The action in gold since the swiss basically shot their long earned safe haven status has been absurd. 

Wed, 09/14/2011 - 12:41 | 1668985 DosZap
DosZap's picture

Zola,

The action in gold since the swiss basically shot their long earned safe haven status has been absurd. 

The Swiss have done nothing except CTA, they will CUT lose from the Euro, at the first sign of a dive bomb attack(this is TRANSITORY).LOL

Wed, 09/14/2011 - 12:28 | 1668941 Quinvarius
Quinvarius's picture

The gold raid and this truth are doing nothing for the dollar this week.  Schiff is about to become a very popular guy.

Wed, 09/14/2011 - 12:30 | 1668947 ItsDanger
ItsDanger's picture

You know its a depression when you see long lineups for food, dead bodies on the streets, and war brewing somewhere.  We arent there yet.  This is more like a prolonged recession.  I see lots of full football stadiums.

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