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Guest Post: Field Of Economic Dreams

Tyler Durden's picture


Submitted by Tony Pallotta from

Field Of Economic Dreams

"If you build it he will come." - Field Of Dreams

"We built it and he did not show." - US economic reality

The consumer driven recession has begun. Keeping it very simple of the four GDP components (consumer, fixed investment, government and net trade) the consumer has simply rolled over. In Q1 2011 the consumer contributed 1.46% to the 0.4% total GDP. In other words if it was not for consumer growth or even if .5% of that growth was removed the economy contracted in Q1 2011.

Fast forward to Q2 where the consumer component is now 0.3%. In other words the trend of the consumer is deteriorating. Representing roughly 70% of total GDP the consumer is the economy. Confidence drives the consumer, the consumer drives demand and demand drives the economy.
Well judging by the epic fall in University Of Michigan Sentiment, now at multi year lows the economy is in serious trouble. To get a sense of the economic reality facing the US look at the historic correlation between sentiment and real GDP.

As confidence falls so do sales. Who is going to spend money when they are concerned about their job or their ability to provide for their family? Beyond non-discretionary items like food and energy they will cut back on discretionary purchases.

As demand falls in the economy so do inventory levels. Rather than invest in expanding inventory, retailers will simply focus on lowering inventory by depleting shelves. Why have twenty of item A when ten will suffice. The result, the inventory build cycle ends as it is currently.

Companies looking to expand, add capacity, maybe add more retail locations, open a new restaurant whatever will be more risk averse and shelve plans for expansion. The result fixed investment falls.

The negative feedback loop begins. Companies facing falling sales will lay off staff, which in affect further lowers their sales. Faced with higher unemployment the consumer budget is restrained further. They begin to look for lower prices causing imports from China for example to rise while globally demand is falling so are US exports. The trade deficit grows.

To an economist I realize such an oversimplification of a complex $14 trillion economy may seem inaccurate but perhaps the complexity of their analysis is why forecasts are always off. Perhaps one wanting a more complex analysis could answer a rather simple question. If the economy weakened since Q1 2011 how can Q2 GDP at 1% be greater than Q1 of .4%?

Making matters worse as if the economy needs another headwind is the reality of rising non-discretionary inflation. More of the consumer budget is spent on basics like food and energy leaving less available for discretionary items like iPads or dinner out with friends. Combined with rising unemployment and rising inflation the consumer budget is contracting fast and so is demand.

Price Deflator

The deflator is used to adjust nominal (non inflation adjusted) GDP to real (inflation adjusted) GDP. This is a very easy way for the BEA to "tweak" GDP by estimating the amount of inflation that contributed to growth versus actual increases in unit sales. Proof of such "tweaking" is shown below by the divergence between CPI or reported consumer inflation versus the BEA "estimate" of inflation. Why they would differ is beyond me.

This raises an important question discussed earlier Is The Price Index Inflating Real GDP. Regardless of the divergence the second revision of Q2 11 GDP shows rising inflation as measured by the price index which was revised from 2.4% to 2.5%. Clearly this trend is not going to aid the economic "recovery."


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Sun, 08/28/2011 - 14:26 | 1609603 Mauibrad
Mauibrad's picture

Excellent graphs on this.

Sun, 08/28/2011 - 14:27 | 1609608 DoChenRollingBearing
DoChenRollingBearing's picture

I have almost everything I need.  Why should I spend any money?  Money may become very tight soon, we may need it for necessities.

Similarly, why should I invest or become involved in building a real business here in the USA?  Too many leaches and regulations.  Too easy to get into trouble or fined.

Forget it.  Stop playing "their" game.  Buy gold.  Prepare.

Sun, 08/28/2011 - 14:36 | 1609619 yabyum
yabyum's picture

Dochen, If I'am going to buy anything it will be a piece of land with water and a place for chickens goats and apple trees. Another layer between me and the flailing beast.

Sun, 08/28/2011 - 14:46 | 1609638 beachbumsix
beachbumsix's picture

For sure....

Sun, 08/28/2011 - 15:04 | 1609677 spiral_eyes
spiral_eyes's picture

here's the good news, bitchez!

jersey shore not destroyed! snooki not dead! EVERYTHING'S GONNA BE ALRIGHT! 

Sun, 08/28/2011 - 16:25 | 1609856 JW n FL
JW n FL's picture

Vote with Bullets!!


Nothing will change until YOU! Change!!


Protests, Marches, Sit Ins and / or any other.. have NOT Worked for the Last 40 Fucking Years!!


When will people have enough of wastiing thier time and make a real commitment to a lasting change?


How many more beatings by Police do you need to see that the only Terrorists Operating in the Untied States are the POLICE?


When will enough people wake up to effect change in the Untied States?


and by "Change" I mean the Constitution of the Untied States being adhered too. Procedural Law is for Judges with little dicks and GIANT EGOS!


When will people starting using the same amount of FORCE to Protect thier Rights as is used to take thier Rights Away?


When is Enough? Enough??


When is Enough for You??


Never? just live thru and suffer?? let your kids deal with it? When or What does it take for YOU! to Stand Up! and Fight?

Sun, 08/28/2011 - 16:38 | 1609881 cossack55
cossack55's picture

I find the Articles of Confederation much more attractive.

Sun, 08/28/2011 - 17:30 | 1609990 JW n FL
JW n FL's picture

I am willing to open talks with all Fight Club Brethern on different articles that may be suitable for "We the People" to be Free again!

Sun, 08/28/2011 - 16:38 | 1609879 smlbizman
smlbizman's picture

i am betting that tptb will use the spending that took place these last couple of days on emergency items, to show the consumer is back. it will not be mentioned that it was weather related, that only counts when the numbers are bad. i am also betting that the return lines tommorrow will be just as long as the lines to purchase were days keep an eye out for the revised number...but can;t you here liesman screaming the good news that the recovery is in the fast lane and his father was right it was just transitory.....  

Sun, 08/28/2011 - 14:49 | 1609646 Ahmeexnal
Ahmeexnal's picture

If you do, then you'll be forced to feed the looters and moochers.

You'll be their beeyotch!

Sun, 08/28/2011 - 14:52 | 1609655 trav7777
trav7777's picture

I'm on the next leg of my "Economic Collapse Tour" - Iceland.  People here in the city seem to not be starving or rioting.  In fact, everything looks pretty ok.  I've noticed having been to 3 or 4 countries in a row now with a lot of zeroes on the banknotes that all of this apocalypse fantasizing people have with their bugout ranches is just mostly idiotic.

Sun, 08/28/2011 - 15:37 | 1609747 DCFusor
DCFusor's picture

Unless like I, you find that living in a world of friend helping friend beats living in a dog-eat-dog reality.  Even an alpha-dog who mostly does the eating can grow tired of the crap, you know?

Thinking of it as a bug-out might be missing the main point (and there are people on both sides of that who don't "get it"). I just call it "home".  A nice one, too.  I have feedoms most city dwellers can only dream of, every day here as well.  I can shoot in my backyard - no one to hear or care.  I have many miles of nice twisty mountain roads to drive my hot rods on -- no traffic, no cops, you just have to watch for the wildlife.

And I dont' worry about moochers or looters where I live.  It'll never come up -- the 25 or so neighbors I have in a few mile radius will pick a few off for me anyway.  Rotten roads and percieved low value of any targets here will keep most away anyway -- trav for instance might never think about this as a place to go stealing from, since he thinks the standard of living is so low (obviously, it isn't).  That worry is for surburbia, not truly rural.

Moochers (think, the homeless) just aren't here.  They collect in cities, not where there's no place to sit and mooch (no one much to mooch off), and no one tolerates it anyway.  This is a big country, your perceptions based on what you've seen in the few places you've been might be way the hell off -- most only go to places that attract the masses, after all.

I'd prefer there be no apocolypse myself, but frankly, I don't have to care very much.  That's the payoff of living on my "bug out" ranch.


Sun, 08/28/2011 - 16:05 | 1609805 delacroix
delacroix's picture

what kind of internet service do you have, if I might ask?

Sun, 08/28/2011 - 16:23 | 1609850 Caviar Emptor
Caviar Emptor's picture


Sun, 08/28/2011 - 17:13 | 1609956 Jason_1sandal
Jason_1sandal's picture

Same here mostly.... we do, or I should say did, have a family of rowdy drunken hillbillies close by, but they got "runned" off. The dad got blasted by a shotgun by someone that got tired of their BS (it was self defense). Then somebody burned their house down (wasn't me). Now it's nice and peaceful. Good land, year round creek, plenty of game, great community. We may see some "riff raff" since we are still 25 miles or so from a large town. As you can tell we will make short work of them and not even feel bad about it....

Sun, 08/28/2011 - 19:16 | 1610259 eureka
eureka's picture

What a shame we can't all go back country living all 300 million of us.

Mon, 08/29/2011 - 09:41 | 1611408 Are you kidding
Are you kidding's picture

Actually...all we need to do is put the women and niggers back in their place.  If we men had the balls again to do that...we could fix all the other problems too.

Oh...and kill all the lawyers...

Sun, 08/28/2011 - 16:15 | 1609833 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

thats because Iceland is a damn fine country

come to the ghettos of london, or go to spain and see if you can get a job as a dishwasher

Mon, 08/29/2011 - 09:42 | 1611411 Are you kidding
Are you kidding's picture

White people...Iceland is all white people.  Wake up son!

Sun, 08/28/2011 - 16:18 | 1609840 disabledvet
disabledvet's picture

the fool is the one who doesn't default. i agree. now let us laugh at all those who pay taxes, have jobs, serve their country and otherwise do useful things.

Mon, 08/29/2011 - 09:43 | 1611416 Are you kidding
Are you kidding's picture

The trouble is...they're working for the wrong boss!  Those tax dollars go to perpetuate the wrongs...

Sun, 08/28/2011 - 16:21 | 1609847 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Hi trav!  Iceland is not a good bellwhether.  They did not fall for the banksters bailout scheme and kicked them out.  I am not sure about the other countries but Iceland is atypical.  Good day.

Sun, 08/28/2011 - 16:45 | 1609896 Long-John-Silver
Long-John-Silver's picture

You can't hide land from the government and looters.

Sun, 08/28/2011 - 23:07 | 1610732 Creepy Lurker
Creepy Lurker's picture

While that's true, you still have to live somewhere. And I'd prefer something similar to Yabyum's "bug out ranch" than an apartment in New York.

Sun, 08/28/2011 - 16:55 | 1609922 kito
kito's picture

@yabyum---triple thumbs up

Sun, 08/28/2011 - 23:20 | 1610765 janus
janus's picture

wow, kito, i see what you mean...i was tryin to reply to yabyum as well and got kicked all the way down here.

but, seein your comment, my thoughts apply to you as well -- so i suppose gettin kicked all the way down here worked out just fine.

Sun, 08/28/2011 - 23:13 | 1610752 janus
janus's picture

funny, i've got all you listed (well, pear trees rather than apples...and no goats -- but i do have a few cocks and more hens than you can shake a stick at), and i'm makin plans to move to chicago or ny next year.  i want first stab at the beast...bruise his horned head and seize all his fineries (the devil has a taste for the rare and resplendent).  may leave the wife and kids here if it feels unsafe.

spring fed crick in the back; koi ponds; and something significant in bloom year round.  i'll miss it; but that's sort of the nature of war.

ps. don't forget a couple of savage dogs -- you're gonna need the dogs before you can add anything to that one night you'll lose all your chickens and half your goats -- here in alabama the woods are crawlin with every sort of predator that can't wait for a dog to let his guard down for one second.  i kid you not, i lost my dog last year, and in the short time it took to replace her (one week) i'd lost all but four hens and one cock (something like 80 dead birds).  no matter how carefully you lock that henhouse; no matter what measures you take, a fox will always out-fox you when it comes to gettin chicken. adutl goats should be fine (not pygmies).

alabama is a good place for you...just look at how the region's fresh water channels into our state.  the land is incredibly productive.  the land is impossibly cheap and the property taxes are absurdly low (mine was like 250 last year on 5.75 acres -- the whole year).  your neighbors will look out for you (as long as you're not some sort of hippie -- you can be one, just don't look like you are).  and your neighbors are all very well armed.  hell, when i read these comments about "preparing" i chuckle a bit.  we've been fuckin preparing since reconstruction, bitchez!  on this very road, there are four complete shops with cnc machines, every kind of metal working device you can imagine, in home gun mod shops, arsenals that would make saddam blush, food stores that fill basements, pyramids of bullets, seeds and canned beans lining shelf after shelf.  i think nothing of it -- i've been seein basements loaded down with paranoia since i was a very young child.  hell, even i know how to make gun poweder from scratch -- just get me to a cave with guano.  so, yeah, i'd love to see some governmental department try and put the clamps down on dixie. 

and you fucking retards have been sold a bill of goods: the second amendment to the constitution is the most progressive stand ever taken by any government on behalf of their people.  and yet, you yankees believe that it's in some way reactionary?  are you people daft?  who has so seduced you?

...outta my cold, dead hand, bitchez!

Sun, 08/28/2011 - 14:50 | 1609648 Prometheus418
Prometheus418's picture

Right there with ya, DoChen.

After basic necessities, the only things I spend currency on are physical silver and ammunition.  (I consider food hoarding part and parcel of "basic necessities.")  Going to call city hall on Monday to see if local ordinances will allow me to keep chickens in my backyard, too- a couple of other local towns have already allowed it, and I am in a town that is not big on regulation to begin with.

Sun, 08/28/2011 - 16:19 | 1609846 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Recent events have shown that being up front with these tyrants is not the path to success.  Stealth is always best against tyrants!

Sun, 08/28/2011 - 16:25 | 1609855 Snidley Whipsnae
Snidley Whipsnae's picture

Prom... We are encouraged by state/local govs to 'be prepared for hurricanes'... and that requires a vast amount of items to be held on hand.  

About 1/3 of the US should probably be prepared for a hurricane.

Preparedness is not hoarding.

Sun, 08/28/2011 - 19:01 | 1610224 11b40
11b40's picture

You MUST get with the program, DoChen.  Why should I buy, you ask?  Because there is supply, of course.  Where have you been?  We got that new "supply-side economics" thingy now.  As long as we have supply, all is good.  It's just when anti-god people like you turn off the water that things go bad.  You & your ilk are the cause of all these problems.

sarc/off ;-)


Sun, 08/28/2011 - 22:15 | 1610620 EINSILVERGUY

Lets all say this together

"Who is John Galt"

I am buying PM's and preparing for a different world. Business collectively has decided to withhold their talents and money and will wait out the economy until 2012

If the leechs and moochers aren't defeated, this country will be toast.

Its on life support now

Mon, 08/29/2011 - 15:50 | 1612705 Not For Reuse
Not For Reuse's picture

Why spend money? Maybe because it's fun to get out, travel, meet people, eat great food, drink great wine, etc..? Smoke em if you got em, there's no better time than now. If money does become very tight, the opportunity to do exotic shit certainly isn't going to get any cheaper, it will just get extremely exclusive and reprice itself to the point where only the wealthiest 0.01% can still afford the same sort of experiences that are available right now to a much much wider clientele

Sun, 08/28/2011 - 14:41 | 1609631 SumSUN
SumSUN's picture

Hunger strike, sex strike, or buying strike...

Money talks.

Sun, 08/28/2011 - 16:19 | 1609845 JW n FL
JW n FL's picture

Vote with Bullets!!


Nothing will change until YOU! Change!!


Protests, Marches, Sit Ins and / or any other.. have NOT Worked for the Last 40 Fucking Years!!


When will people have enough of wastiing thier time and make a real commitment to a lasting change?


How many more beatings by Police do you need to see that the only Terrorists Operating in the Untied States are the POLICE?


When will enough people wake up to effect change in the Untied States?


and by "Change" I mean the Constitution of the Untied States being adhered too. Procedural Law is for Judges with little dicks and GIANT EGOS!


When will people starting using the same amount of FORCE to Protect thier Rights as is used to take thier Rights Away?


When is Enough? Enough??


When is Enough for You??


Never? just live thru and suffer?? let your kids deal with it? When or What does it take for YOU! to Stand Up! and Fight?

Sun, 08/28/2011 - 19:08 | 1610241 11b40
11b40's picture

When enought people get hungry.....that used to be a pretty good metric for revolution.

In our current entitled society, it may happen if enough people discover they can't pay the smart phone bill.  Then things get ugly!

Sun, 08/28/2011 - 14:43 | 1609635 TradingJoe
TradingJoe's picture

Paying down debt has become a priority of late! The "need" vs the "want" has won, for now!

Happy Monday :)))! (sarc)

Sun, 08/28/2011 - 14:44 | 1609636 Eireann go Brach
Eireann go Brach's picture

Let's hope all these consumers who are not confident don't vote for hope and change next time around! Fool me once shame on you, fool me twice shame on me!

Sun, 08/28/2011 - 16:29 | 1609864 Snidley Whipsnae
Snidley Whipsnae's picture

If you still think that 'who you vote for' matters then you need to get up to speed. Do you really think that a vote for McCain, and his election to pres, would have made a difference?

Do you know that the scum bankers are calling the shots in America?

Do you know that almost all pols are bought and paid for by scum bankers?



Sun, 08/28/2011 - 17:46 | 1610031 DoChenRollingBearing
DoChenRollingBearing's picture

Got a great point there Snidley!  McCain would have been bad too.

Sun, 08/28/2011 - 19:55 | 1610351 Kayman
Kayman's picture

If you still think that 'who you vote for' matters then you need to get up to speed

Snid- you're a cynic, but you are right.

Even Mr. Change-ya-can-beleeb-in had his tiny little soul caught in Hank Paulson's tobacco can once the checks were written.

Sun, 08/28/2011 - 14:57 | 1609661 eureka
eureka's picture

Death to the consumer - long live the individual self-reliant independent creator.

Sun, 08/28/2011 - 15:19 | 1609710 Bobbyrib
Bobbyrib's picture

Death to multi-national corporations is more like it.

Sun, 08/28/2011 - 19:20 | 1610271 eureka
eureka's picture

Exact same thing - they're co-dependent entities.

Sun, 08/28/2011 - 16:17 | 1609838 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

You have just pronounced yourself as an "enemy of the state".  Welcome to the burgeoning club!

Sun, 08/28/2011 - 17:25 | 1609976 captain_menace
captain_menace's picture

Errr... not to nit-pick, but doesn't a self-reliant independent creator consume something during the course of creating something?  Are these mystical beings able to create something out of nothing?  Has the law of conservation of energy been proven incorrect?

I'm fairly positive that a few products and services were consumed just by you posting your comment.

I'm not convinced that consumption is a bad thing all by itself, and I'm definitely not ready to stop consuming what I want and/or need.  I was kind of under the impression that free markets were based on this basic premise.

Consumer -> "I do not think it means what you think it means"

Sun, 08/28/2011 - 17:54 | 1610044 toady
toady's picture

You are correct at the most basic level. Humans do consume calories, water, and a few other essentials that keep their bodies alive.

Its only when they develop a culture of mass consumption, way beyond sustainability, that cunsumption becomes a problem.

Todays society uses too much and does not renew. Its economic systems are based on continuous growth, not sustainability.

When something cannot continue, it won't.

And I hate being called a consumer!

Sun, 08/28/2011 - 20:17 | 1610403 StychoKiller
StychoKiller's picture

Until the following wordz are deleted from Marketing's vocabulary, we aren't there:

a. Disposable

b. Planned Obsolescence

c. Consumable

Sun, 08/28/2011 - 15:12 | 1609689 chistletoe
chistletoe's picture

I'm just an amateur and a little trader,

but basic common sense tells me

that the statisticians must adjust the raw GDP numbers to factor out inflation,

and no doubt the number they use for inflation is like the CPI, artificially manipulated

for the sake of understatement.

If this is true, then the GDP must benefit ffrom the same manipulation

and it must come out to be artificially high by whatever amount inflation has been understated.

Am I correct in this?


If so, the overall economy is really tanking.  Like you keep saying.


Sun, 08/28/2011 - 15:39 | 1609749 DCFusor
DCFusor's picture

That's my take.  Seems to me any realistic measure of production, and particularly a per capita one, must be fairly negative at the moment.  They even got the sign of the number wrong.

Sun, 08/28/2011 - 16:16 | 1609837 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

I agree with you chistletoe.  The U. S. economy has been contracting "in real terms" for a long time now.  Good thinking!

Sun, 08/28/2011 - 16:22 | 1609848 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

yes young skywalker, thats correct

Sun, 08/28/2011 - 16:25 | 1609857 Caviar Emptor
Caviar Emptor's picture

Ditto. Can see it wherever I go

Sun, 08/28/2011 - 16:36 | 1609876 Snidley Whipsnae
Snidley Whipsnae's picture

If you want to find the real GDP, CPI, unemployment, inflation, etc, look at Its a paid site. John Williams has been compiling the numbers for a long time.

To find the real GDP, turn over the next rock you see and dig down a bit... If you do this at sea level you might find the real GDP...

If there were any light at all in this tunnel the bobble heads on MSM would be screaming 'PENT UP CONSUMER DEMAND"


Sun, 08/28/2011 - 22:02 | 1610590 AndyR
AndyR's picture

About 17 video lessons in today's economy.  Starts off very basic then gets into very interesting information...

There is a whole section on the calculation/manipulation of the GDP/CPI calculations...


Sun, 08/28/2011 - 15:24 | 1609716 Bobbyrib
Bobbyrib's picture

"Fast forward to Q2 where the consumer component is now 0.3%. In other words the trend of the consumer is deteriorating. Representing roughly 70% of total GDP the consumer is the economy. Confidence drives the consumer, the consumer drives demand and demand drives the economy."


Whoa, Whoa, Whoa! What about trickle down economics?

Sun, 08/28/2011 - 16:28 | 1609863 Caviar Emptor
Caviar Emptor's picture

Whoa, Whoa, Whoa! What about trickle down economics?

Most of the country is waiting down here saying "Trickle Me!". That trickle must have slowed trickle! 

Sun, 08/28/2011 - 19:29 | 1610279 11b40
11b40's picture

Mr. Trickle Down is waiting for Mr. Supply Side to supply him with the wherwithall to start tirickling down on everyone. Surely thing's will be better soon.  After all, just look at all the supply.

Sun, 08/28/2011 - 15:27 | 1609724 ivars
ivars's picture

The gold bubble is happening nicely almost exactly in a way I predicted in the chart on May 4th, 2011, here:


Correction time is October 2011.

Sun, 08/28/2011 - 16:14 | 1609830 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

We just had our gold correction and it lasted about 48 hours.  Precious metals tend to bottom in late August and advance during the fourth quarter.  You may be right, but I would not bet that way.  Good luck!

Sun, 08/28/2011 - 16:24 | 1609854 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

if greece actually defaults/leaves the euro...look out above! Gold will go to $2400 within the month

Sun, 08/28/2011 - 16:47 | 1609906 Long-John-Silver
Long-John-Silver's picture

you mean overnight don't you?

Sun, 08/28/2011 - 17:05 | 1609939 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

yes i actually do

Sun, 08/28/2011 - 15:29 | 1609731 Jovil
Jovil's picture

John Exter’s inverted pyramid of assets

We should move Government Bonds to a less secure classification closer to credit default swaps. The idea is that things high on the pyramid are derivatives of asset classes further down the pyramid.

Sun, 08/28/2011 - 15:42 | 1609755 mtthw2
mtthw2's picture

Things do not buy happiness. I have been living in a small house and driving a small car for years. Even though I could buy all the big things, I will not and do not support the consumer plastic pumpkin driven economy. My only large purchase recently, is an abode in Belize.--to get the hell out of here when the time is right. Even though my friends thought I was crazy to live a frugal life, more and more are starting to do the same. The consumer is dying--get rid of your crap while the getting is good.

Sun, 08/28/2011 - 15:44 | 1609760 sgt_doom
sgt_doom's picture

"The consumer driven recession has begun."

Oh....kiss my barbously hard buttocks, what a complete load of crapola.

You're reframing everything, just like they do on the American propaganda system, the myth-media, when in order to spread culpability --- all their own, of course --- they use the "we" form, but when they wish to shift their guilt onto the masses, they then switch to the "you" format.

BS, scumbag!

It will take at least 20 years of serfdom for their debt-deleveraging to end -- and that is why they are called ...

debt-financed billionaire crooks!
Sun, 08/28/2011 - 16:26 | 1609860 sapo
sapo's picture

Yessir! We've seen it coming since the 80's, but the "billionaire crooks" are the ones paying for the media and the politics that allows for this crap.

Sun, 08/28/2011 - 16:47 | 1609907 CrashisOptimistic
CrashisOptimistic's picture

There isn't 20 years of 85 mbpd oil flow left.

Sun, 08/28/2011 - 16:03 | 1609802 cossack55
cossack55's picture

"but perhaps the complexity of their analysis is why their forecasts are always off"

No shit. Complexity theory, anyone. Buehler, Buehler?


Sun, 08/28/2011 - 17:06 | 1609885 Justaman
Justaman's picture

I am not sure that the no debt route is the way to go.  Recently financing a "cheap/higher mpg" car at 1.9% for 60 months doesn't sound imprudent to me right now knowing that cost of goods is going to keep going up while we dig deeper into the credit crisis.  This leads me to believe that (some) debt and purchase of capital goods may seem reasonable.  I am a believer that debt is evil overall but this purchase is a need for me and instead of using my resources, I use others at a very low cost.   

Sun, 08/28/2011 - 17:15 | 1609961 bardian
bardian's picture

Absolutely, in an inflationary environment the debtors win.  Borrow as much as you can and buy gold and silver.  Those idiots struggling to pay off their debt are reacting to instinct and not thinking.  They're gonna get killed.  Just make the minimum payments and divest in PM's with the savings.

Sun, 08/28/2011 - 20:03 | 1610373 Kayman
Kayman's picture


The financing is contained in the overall margin. You could be paying 12%.

Sun, 08/28/2011 - 16:41 | 1609890 Big Ben
Big Ben's picture

Neat trick! Underestimate inflation and it automatically causes GDP to be overestimated.

Sun, 08/28/2011 - 16:42 | 1609892 Snidley Whipsnae
Snidley Whipsnae's picture

Obfuscation is the stock in trade of Ivy League economists...

Occams Razor is not in the vocabulary.

" Perhaps one wanting a more complex analysis could answer a rather simple question. If the economy weakened since Q1 2011 how can Q2 GDP at 1% be greater than Q1 of .4%?"

This sums it up nicely.

Sun, 08/28/2011 - 16:49 | 1609908 Caviar Emptor
Caviar Emptor's picture

Back in 09 they were worried what if (omg!) the consumer was "learning new frugal ways". That sent chills down their spines and made their hair stand up. But what they've lost since then is the whole ballgame. The whole foundation of the globalist economic system. The perpetual motion machine of endless money printing and debt. The offshoring of all US production in return for a fully import-dependent economy.

The average American Joe and Jane no longer believes they'll become billionaires next month thanks to an internet porn IPO. Nor are they even interested or trying to anymore. Those days are over. We can offcially sound the death knell of the wanna-be, the schmuck of schmucks, the patsy of all patsies who got conned out of all his past and future savings through debt so he could make believe he was the next Donald Trump.

But that means that millions and millions of tons of crap that formerly made the world go round has no place to go anymore: Dark Italian suits (of average quality) and tasseled loafers, wanna-be-mobiles with fancy front grills (but constructed of the same cheap crap as all other mobiles), the cardboard McMansion built with cheap Chinese materials that ended up being too toxic to live in, fancy jams costing 5 times as much as the other stuff. The whole United States of Arugula! All gone with the wind. The curtain has rung down on the 'aspirational consumerist society' aka a society of dreamer wannabes, willing to believe that you could get something for nothing. That lots of debt was good. That financialization was good. And that trading America's productive economy in return for a society of shoppers was sane. 

Sun, 08/28/2011 - 18:58 | 1610212 eureka
eureka's picture

Well Said. I concur. And to hell with all those phoney aspirations and aspiration mongers.

Sun, 08/28/2011 - 16:55 | 1609924 gwar5
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70% of the US economy is consumerism. We're broke. Obama and Bernanke are programmed to try to make up the difference by spending and printing, and it just ain't happening. They're making it worse.  




Sun, 08/28/2011 - 17:10 | 1609946 Caviar Emptor
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Ben put his last trillion into the old reliable pinball machine. It used to give him enough plays to last 5 years. This time it just gave him a "Tilt, Game Over" after just 3 quarters. Even he's getting disgusted

Sun, 08/28/2011 - 20:08 | 1610384 Kayman
Kayman's picture

Can you be confused and disgusted ?

Sun, 08/28/2011 - 17:42 | 1610020 sasebo
sasebo's picture

Let's see if I've got this straight -

You're expecting the obnoxious, pompous asshole leader of the fractional reserve banking system that took trillions of OPM & lost it gambling on inflated housing loans which they broke up & sold to investors for a fee, to fix the real economy? When the intended purpose of the fractional reserve banking system is to mediate loans between savers & producers to grow the real economy.

This same asshole who printed out of thin air & loaned trillions to these fractional reserve banks at 0% & paid them interest to keep the loans at the fed to repair their balance sheets & keep the trillions from the real economy. And we all know the asshole keeps monetizing the debt.

You're expecting this stupid asshole to fix the real economy? Give me a break.

Sun, 08/28/2011 - 17:43 | 1610023 jmc8888
jmc8888's picture

It's not about building 'more stuff'.  It's about building stuff that matters. 

More inventory of useless chinese built trinkets does not equate recovery.  Which is one feather in the keynesian cap that is wrong. (even then they are applying it wrong)

It's building the stuff and the means to provide the stuff that people NEED that helps a recovery.

So should we manufacture more iPads in China, or a road to nowhere to helpe spur 'growth'?

Hell no.

Should we build a space program, mag-lev here and over a new bering strait land bridge so we can ship by mag-lev rail (and/or some kind of rail) from London to Pantagonia?

Build NAWAPA to increase the ability to divert water through our waterways, so that as the years progress the seasonal patterns that affect how much rain drops where doesn't affect the amount of water available to much of a degree over our entire country? You know rainy around corn belt, drought in cow belt, and instead of fucking both sections over with excess and scarcity, you even it out! Because you can control the water and channel it WHERE IT NEEDS TO BE!

So should we build iPads?  Or actual wealth creating projects?

It's not like there aren't milliions of people willing to do this, as long as you aren't paying slave wages.

Hmmm...that's why economists never get FDR right.

Yes he spent money, but WHAT did he spend it on.  Actual things of value that were needed. Not everything, but much of it was, and it paid off, and continued to pay off for many decades.  So along with some of the stuff that didn't provide much long term benefit, most of it did.

Not iPads or other useless chinese trinkets.  Which of course funny enough, most of this production these idiots expect to spur our recovery, isn't even made HERE.  Way to get even your bogus Keynesian policy wrong.  Forget about realizing your whole premise is wrong when you can't even get your own dogma ideology right by its own standards.  Let alone an actual recovery.

Talk about not being attached to reality.

It's not about spending, it's about creating value/wealth.  Which merely takes spending some money, it's not the actual money spent that is the stimulus, it's everything you get back from it on a continual basis going forward that creates the wealth and the value of doing the project...and hey you gave people jobs to feed their family at the same time.

Imagine that!  Money is not wealth.  It's jus an approximation of it.  One that is always fluctuating by amounts held by wealthy people would make ordinary people bankrupt on a daily basis.  Money is inherently worthless.  The wealth of a nation is not about how much money it has, or it's credit.  Those are just tools that can be fucked with, and we have fucked with them.  Put constraints on what shouldn't be, and too loose where we shouldn't of been, all for private bankster profit.  When credit flows are undeterred by this influence, then money and credit has little to no bearing on an economy.  When we fuck with it, money and credit can have extreme influence.  Especially by a world obsessed with 'money' being considered as 'wealth'.  It isn't.  They are just units of account of something they represent.  It's the charlatans that are debasing it to make sure they get their units of account.  Because units of account of less worth, is worth more to them than no units of account.


Sun, 08/28/2011 - 18:42 | 1610160 Lya
Lya's picture

It's kind of 'funny' that 2008 fall in confidence followed GDP while it's now leading it.

(1st post on ZH btw, amazing job done here guys, keep it up !)

Sun, 08/28/2011 - 20:12 | 1610389 Kayman
Kayman's picture
Lya Welcome to Fight club.
Sun, 08/28/2011 - 19:28 | 1610294 rosiescenario
rosiescenario's picture

If your 'Main Street' is Rodeo Drive, then you are doing just problems as far as the eye can see...


Nordstroms, Tiffany, Coach, etc all doing just fine......Walmart, Target, etc. not so fine.


This is not going to last and neither will it have a happy ending.

Sun, 08/28/2011 - 20:36 | 1610444 Justaman
Justaman's picture

We can't grow sustainably until the savers spend what they have saved.  The only savers remaining in the GDP  equation are the corporations.  Corporations have no certainty in their business, i.e., customer continuity, taxes, insurance, regulation,  currencies, credit, material costs, and margins just to name a few.  

Also, we have not been a net exporter since mid-70's, which was conveniently subsidized by leaving the gold standard.  Good luck with this one. 

Sun, 08/28/2011 - 20:45 | 1610459 mikmid
mikmid's picture

Potus will use the non-event hurricane to add stimulus to the economy in the name of repairs. Watch them throw billions at this and any other problem so they don't have to run a real stimulus through congress. Obummer and the Bernak said we needed more stimulus so here we go. That will also let the Bernak off the hook for QE3 which will let Bernak stimulate through the repo market and Op Twist 2.

Sun, 08/28/2011 - 21:01 | 1610489 banksterhater
banksterhater's picture

U/E benefits ran out, Squatters are finally being forced out. The bEA used 1.7% deflater to arrive at 2.7% GDP, they are corrupt clearly it's 3+% meaning GDP contraction for at least 2 Qs.

Sun, 08/28/2011 - 21:24 | 1610521 PulauHantu29
PulauHantu29's picture

Consumers should save more, spend less. The key to recovery is capital investment, not government entitlements and not consumer spending. The trade deficit is also crucial to correct.

Unless we boost trade via more competitve actions and increase cpa spending, we will keep sinking deeper into the Bog of Depression. Encouraging consumers to spend instead of save is part of the same Boondoggle plan Greenspan did which got us here. Cap investment rests on the shoulders of savers....not debtors.

Sun, 08/28/2011 - 21:45 | 1610554 Ungaro
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Dupe removed

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