How The Economy Quietly Entered A Recession On Friday, And Why The GDP Predicts A Sub-Zero Nonfarm Payroll Number

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Mon, 08/29/2011 - 20:03 | 1613467 lolmao500
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Bernanke should man up and raise the rates to 15%. That should create some fun.

Mon, 08/29/2011 - 20:05 | 1613472 Shocker
Shocker's picture

15% would throw us right into a recovery, you know that.

Mon, 08/29/2011 - 20:26 | 1613523 Hugh G Rection
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Friday numbers won't matter.  JP monkees will let Ag spike a bit, then it's hammer time... Go back to sleep CFTC.

Mon, 08/29/2011 - 21:37 | 1613681 Long-John-Silver
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If they can raise margins multiple times they can raise interest rates that exceed the rate of inflation. It's time our seniors eat something other than dog food.

Tue, 08/30/2011 - 01:39 | 1614011 Michael
Michael's picture

Here is one of the main reasons why we have entered a double dip;

Alt-A Mortgage Disaster in 2010-2011

Mon, 08/29/2011 - 23:24 | 1613879 foofoojin
foofoojin's picture

Right into recovery, no.

Price discovery, YES.

and price discovery would lead to long term contracts existing again.

long term contracts would lead to confidence and proper fiscal planning.

and then recovery.


Mon, 08/29/2011 - 20:36 | 1613542 max2205
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Buy the news

Mon, 08/29/2011 - 20:40 | 1613551 Libertarian777
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you mean seniors would be able to live off the interest on their savings and not even worry about social security?

aah but the truth is that the government dare not give that power to seniors, it relies on them needing the teat of government so they can garner the baby boomer votes.

Mon, 08/29/2011 - 21:04 | 1613609 chubbar
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Someone check my numbers here but 14 trillion in debt X 1% = 140 Billion X 15(%) = 2.1 Trillion in annual debt payments. Annual Tax receipts are a bit less than 2 Trillion IIRC. Game over. I don't think it has anything to do with seniors collecting interest payments. This is the box the FED/Gov't is in.

Mon, 08/29/2011 - 21:12 | 1613632 Thomas
Thomas's picture

Assuming 100 million taxpayers, each owes about $140K. Ouch. If one accepts Larry Kotlikoff's recent numbers on unfunded liabilities of $200 trillion, the taxpayers are each on the hook for $2 million. I'm gonna need a HELOC for that one. 

Mon, 08/29/2011 - 21:17 | 1613645 LawsofPhysics
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Come on guys, use your < sarc > flags, you are confusing chubbar.

Mon, 08/29/2011 - 21:17 | 1613647 zen0
zen0's picture

If seniors actually made some interest income, they would pay more tax, so the game would not be over at all.

Mon, 08/29/2011 - 21:34 | 1613675 tmosley
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That's why you default on the national debt first.

But the big banks wouldn't like that.  No sir.

Tue, 08/30/2011 - 05:07 | 1614117 TruthInSunshine
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This gentleman just wrote an incredible piece on precisely how the 'not called a default,' but a 'default not called a default' is going down, and in a way that will attempt to save Wall Street/Banks/MIC, but devastate just about everyone else.

Fortunately, we all know how (non)great the government and Federal Reserve is at carrying out anything close to a plan with any degree of success.


Dear Ben, Please Print Us More Money

by Wolf Richter

Dear Ben,

Please print us more money. We want you to prop up the stock market. Everybody knows it's a Ponzi scheme that will collapse without your support. You don't want us to end up like Bernie Madoff's clients. No, Ben, we love Ponzi schemes. We get in early and get out before they collapse. That's why we're rich. The bad thing is that they sometimes collapse before we can get out. But you already bailed us out twice in the last couple of years through printing trillions of dollars. Why not a third time?


That will also keep the bond-market bubble inflated. We have to admit that you've done an excellent job there, hands down. Negative real yields all the way up the yield curve! Awesome. Now if you could just print a few trillions and buy up the sovereigns from the PIIGS. Euro crisis over. End of story. And we'd get richer because we'd sell them to you at face value though we bought them at fifty cents on the dollar.


And why not forever? Just keep printing. Because as soon as you stop, stock markets will crash again, and credit markets will seize, and then we're back on this awful ride to hell.


Of course, it'll cause inflation, which is good. You yourself said that. You stated many times that you want inflation. In fact, you said that one of the goals of the Fed, after propping up the markets, is to create inflation. So stick to it, Ben. Don't slack off suddenly just because some cowboy threatened you.


Inflation, in conjunction with your near-zero yields, has all sorts of benefits. For example, it will eat up the Social Security trust fund, whose $2 trillion balance is invested in treasuries. Fixed-income investors, retirees, and everybody who has any savings will also be demolished. And homeowners. But don't worry. They won't figure it out. They don't get a statement every month that shows how much inflation cost them. It's a quiet way of stealing from them, and it'll impoverish them over time, but it'll make us, the recipients of the money you print, richer.

You see, Ben, we can charge higher prices for our goods and services. And even if we have to pay more for raw materials, we look good. Our inventories increase in value, and we can claim sales jumped 10% because we raised prices by 10%. Analysts dig that.


Recently, Ben, you've done a decent job on inflation. In July, we were running at an annual rate of 6%. Not bad. But you need to preempt any cooling off. So keep printing.


Now, we're not talking about wage inflation. Oh no. We have to keep wages down. We need cheap labor, or else we'd have to send these jobs to China—which we're doing anyway. And not just to assemble iPhones...

Read the rest:

Link: Dear Ben, Please Print Us More Money

Thu, 09/01/2011 - 20:42 | 1624425 SheHunter
SheHunter's picture

Great read.  thnx

Mon, 08/29/2011 - 20:05 | 1613468 GetZeeGold
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Mon, 08/29/2011 - 20:59 | 1613599 spiral_eyes
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the real issue nobody will talk about is oil, food prices, and population growth 

Mon, 08/29/2011 - 21:18 | 1613648 LawsofPhysics
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Why talk about it when these things take care of themselves?

Mon, 08/29/2011 - 20:04 | 1613470 Shocker
Shocker's picture

Oh we been entering a recession way before friday :)

Also payroll, who knows what the number is they are going to report. Most already know the numbers are not good


Mon, 08/29/2011 - 22:17 | 1613773 Troll Magnet
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WHAT?  We're in a recession?  Could've fooled me!  I thought we were in a depression!

Shit!  This is BULLISH news!

Mon, 08/29/2011 - 20:05 | 1613471 Lady Heather...UNCLE
Lady Heather...UNCLE's picture

...bullish for stocks...right?

Mon, 08/29/2011 - 20:11 | 1613486 Id fight Gandhi
Id fight Gandhi's picture

Yup. Bad news is good for some reason. Oh the qe3 coming... But that wasnt even hinted at. It was a clear pass to Obama and his shovel shit ready jobs program.

Mon, 08/29/2011 - 21:09 | 1613620 CrashisOptimistic
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No, Rufus.  It's smell the coffee time.

There is no market.  There is no array of guys sitting and assimilating economic data and deciding what it will do to earnings.

There was.  There was just a few weeks ago.  They tuned their algorithms to the Euro, because multinational sales in Europe looked better dollar-wise when the Euro rose.

But not now.  Not the past week.  Now it's about an array of guys with their algorithms looking at each other and knowing that their cubicles will go empty if the market drops sharply going into end of month 401K reviews.  

You see, those guys aren't paid for guessing right.  They are paid for having money under management.  Guessing right might help attract money, or even keep it, but it's not critical.  You can sell ice cream to eskimos if you're good enough at it.  It's all about holding onto money under management, because the only way that number has been growing is via portfolio advance.  No One Is Sending New Money In.

At all costs they must not have present money depart.  That direction points at the unemployment line.  And so end of month goosing is the unspoken imperative this week.

Mon, 08/29/2011 - 21:20 | 1613653 LawsofPhysics
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Well that explains the four fucking weeks it has taken fidelity to move some funds to Valic for one of my employees.


Fuck all these paper pushing fucknuts. 

Mon, 08/29/2011 - 21:51 | 1613705 Surly Bear
Surly Bear's picture

paper pushing fucknuts

I salute you.





Thu, 09/01/2011 - 20:45 | 1624439 SheHunter
SheHunter's picture

paper pushing fucknuts

I double that salute.

Mon, 08/29/2011 - 23:01 | 1613857 chinaguy
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But not now.  Not the past week.  Now it's about an array of guys with their algorithms looking at each other and knowing that their cubicles will go empty if the market drops sharply going into end of month 401K reviews.

I am friends with three of these guys - HY, HR - hundreds of billions under management - They have nice kids & nice wives...we party, get drunk, and discuss local zoning code nonsense. et al.

Group think, Yes, absolutely especially in the face of overwhelming contrary evidence, Jerk off the clients yes, Jerk off the clients more than the next guys...critical to survive yes...

These guys are NO smarter than the guys in "Boiler Room"...bunch of paid monkeys IMO...and maybe the monkey's are smarter....

Mon, 08/29/2011 - 20:35 | 1613540 chump666
chump666's picture

No.  What you got to do is look at Asia, when US stocks go on a fantasy meltup via that madman Bernanke.  Asia freaks on inflation, more so China.  US stocks up, USD down, inflation hits China, China raises the RRR bank % and sweats on oil inflation, China stocks go down.  Tasty.  Bernanke/Obama keep this up and China inflation crash time line gets shorter.

They (China) crash and QE won't mean sh*t for anything.

Tue, 08/30/2011 - 01:33 | 1614004 Dick Darlington
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Russell 2000, the wealth creator, was up 4.75% yday so yes, recessions are bullish for stocks.

Mon, 08/29/2011 - 20:06 | 1613474 cgbspender
cgbspender's picture

Everything is gonna burn, we'll all take turns. I'll get mine too.

Mon, 08/29/2011 - 21:14 | 1613639 Thomas
Thomas's picture

Nowhere to hide. Gotta use the dumbell strategy--cash and inflation hedges. Pray one works. Diversifying now means you diversify your holdings in different and different types of financial institutions (including a little midnight banking in the garden).

Tue, 08/30/2011 - 00:11 | 1613925 RockyRacoon
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I use a dumbbell strategy!  Gold on one end and silver on the other.   Working out every day.

Mon, 08/29/2011 - 21:35 | 1613676 Ausperity
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This monkey's gone to heaven...

Mon, 08/29/2011 - 21:41 | 1613686 Long-John-Silver
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I'm hedged in each and every way. I'm bring Marshmallows and Graham Crackers. 

Mon, 08/29/2011 - 20:12 | 1613481 lolmao500
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I think Bernanke will do QE3... and that it will lead to war.

Probably between Taiwan and China in January-February 2012 due to the nationalist party winning the elections in January 2012. And the US will do nothing about it. China will ``win``... and then the US will say :``we must arm our allies so it doesn't happen again``... leading to creating jobs, selling arms to China's neighboors, scaring the people... focusing them on China instead of the bankers...

Cutting the deficit will no longer be an issue ``in face of the chinese threat``....

Win again for the military industrial complex. And because of that, Ron Paul will NOT be elected with his isolationist policy.

Just you watch.

They'll never cut the deficit... cutting the deficit means cutting the GDP... who has enough balls to do that? No one, that's who.


Mon, 08/29/2011 - 21:09 | 1613624 chubbar
chubbar's picture

Can anyone explain to me why someone who extolls pulling out of undeclared foreign wars is somehow an  "isolationist"? Ron Paul is not against free trade, just against nation building vis a vie foreign wars. How is this considered "isolationist"? I mean really? This is just the latest talking point that MSM detractors are spewing enmass in an effort to redirect the conversation. Unfrickin real.

Mon, 08/29/2011 - 22:40 | 1613822 lolmao500
lolmao500's picture

I was just saying... using what the MSM will use to portray him.

Ron Paul is indeed right... and the US should mind it's own business.

Tue, 08/30/2011 - 02:48 | 1614056 Joy on Maui
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In a manner of speaking, yes.  That is, if we are ASKED to mind someone else's business (South Korea comes to mind), THEY should be made to carry the cost, not the US taxpayer.


Tue, 08/30/2011 - 01:56 | 1614026 FreedomGuy
FreedomGuy's picture

Ron Paul is also not automatically against all war, either. He believes that Congress ought to actually declare war before we begin wholesale hostilities. I think there's something in that useless old document, the Constitution of the United States that says something about it.

Mon, 08/29/2011 - 21:13 | 1613637 CrashisOptimistic
CrashisOptimistic's picture

You do realize Apple's production comes from Taiwan?

Mon, 08/29/2011 - 22:38 | 1613813 lolmao500
lolmao500's picture

And? The more foreign jobs lost, the better. Those jobs will move to elsewhere... Vietnam, Philipines, Japan... maybe even the US.

I have never seen an ``Apple lobbyist``... but I have seen thousands of ``defense`` contractors lobbyists.

Tue, 08/30/2011 - 00:14 | 1613929 RockyRacoon
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Restoring American Competitiveness” (Harvard Business Review, July-August 2009)

The U.S. has lost or is on the verge of losing its ability to develop and manufacture a slew of high-tech products and components. Amazon’s Kindle 2 couldn’t be made in the U.S., even if Amazon wanted to:

  • The flex circuit connectors are made in China because the US supplier base migrated to Asia.
  • The electrophoretic display is made in Taiwan because the expertise developed from producting flat-panel LCDs migrated to Asia with semiconductor manufacturing.
  • The highly polished injection-molded case is made in China because the U.S. supplier base eroded as the manufacture of toys, consumer electronics and computers migrated to China.
  • The wireless card is made in South Korea because that country became a center for making mobile phone components and handsets.
  • The controller board is made in China because U.S. companies long ago transferred manufacture of printed circuit boards to Asia.
  • The Lithium polymer battery is made in China because battery development and manufacturing migrated to China along with the development and manufacture of consumer electronics and notebook computers.
Tue, 08/30/2011 - 05:12 | 1614119 TruthInSunshine
TruthInSunshine's picture

Rocky, you are speaking Truth.

When the time comes, we're going to have to get together with others from ZH and other places, steeped in Truth, to re-form a more perfect union.

Mon, 08/29/2011 - 20:11 | 1613483 topcallingtroll
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I hope you are right.  I pulled a Leo and sold my last stock fund EWZ at 60 and some change a couple of days ago.  The damn thing better pull back!

Mon, 08/29/2011 - 20:14 | 1613493 Taku
Taku's picture

Second half acceleration?
Wasn't Timmay talking green shoots back in 09?
Fear not, as long as the recovery is 'just round the corner' they'll get it right eventually.

Mon, 08/29/2011 - 21:01 | 1613603 booboo
booboo's picture

The problem with "just around the corner is that on a round planet you always end back up where you are, no I mean where you are. Watch, see, you just slouched past yourself. (say's hi, gets strange look from self)) Living in a alternative universe is a bitch.

Mon, 08/29/2011 - 21:24 | 1613660 LawsofPhysics
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Yep, everyone is going to have to deal with everyone else, whether they like it or not.  The question is whether of not this will be a "team building" excercise or not.

Mon, 08/29/2011 - 20:17 | 1613499 buzzsaw99
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Genocidal Ben will vanquish the balance sheet recession with more bankster bonuses bitchez!

Mon, 08/29/2011 - 20:47 | 1613572 dwdollar
dwdollar's picture

And Obama will 'fix' the jobs issue with another prIvy League numbskull.

And it gets better.  We have Perry to look forward to in 2012-2016!

God we are so f'cked.  I mean we are completely and totally f'cked beyond any conceivable hope.

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