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

Tyler Durden's picture


While the key market moving event from last Friday may have been Bernanke's Jackson Hole speech which merely left the door open to future QE episodes, the most important event from an economic standpoint was the first GDP revision Q2, which dropped from preliminary 1.3% to a sub stall speed, in real terms, 1.0%. What is just as important is that as the following chart from Bloomberg demonstrates, the YoY change in real GDP, which is now at 1.5%, is a slam dunk indicator of recession: "Since 1948, every time the four-quarter change has fallen below 2 percent, the economy has entered a recession. It’s hard to argue against an indicator with such a long history of accuracy." Bernanke agreed that "growth has for the most part been at rates insufficient to achieve sustained reductions in unemployment." And while Bernanke is shifting dangerously into Greenspan territory with the open-ended interpretation of his statement, another thing that is more actionable is the observation that virtually every time real YoY GDP has dropped below 1.5%, this has led to a negative nonfarm payroll number. Granted, the result may not be as shocking as what the Philly Fed implied vis-a-vis this Friday's NFP, but we believe a subzero print in the August labor report will convince the three Fed holdouts that the time for yet another monetary intervention is here (Arab Spring part deux consequences be damned).

Real GDP YoY:

And Real GDP YoY vs NFP:

Also, below is a complete compendium of all the mecroeconomic charts that matter this week:

And lastly, sealing the deal for the "recession" argument is the following data from John Lohman which finds that the collapse in real-time economic data over the past three months is the sharpest in history.

To wit:

Another day, another disappointing real-time indicator declines AND is below consensus estimates.  In fact, every manufacturing index for the month of August has missed expectations and signaled further weakness.  As Bernanke, the IMF, and most Wall St. economists cling to the notion of a second-half acceleration, the rest of us are witnessing a deterioration in global growth which is unprecedented.
Few pictures sum up this collapse in output better than the chart below which plots the three month change in the “Global Surprise Model” (GSM).  I created the GSM in the late 1990’s as a means of tracking how the most important (as measured by timeliness and market response) economic statistics were being reported relative to estimates.  Although Goldman, and later Citigroup, created comparable models in the early 2000’s, it remains a very useful tool for tracking the change in economic growth (2nd derivative) relative to consensus forecasts.
As shown, the current three month change is the largest in the history of the model.  In other words, the collapse in real-time economic data (such as ISM, German IFO, etc.) over the past three months is the sharpest of the last two decades for which data is available.


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Mon, 08/29/2011 - 20:03 | 1613467 lolmao500
lolmao500's picture

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
Hugh G Rection's picture

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
Long-John-Silver's picture

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
max2205's picture

Buy the news

Mon, 08/29/2011 - 20:40 | 1613551 Libertarian777
Libertarian777's picture

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
chubbar's picture

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
LawsofPhysics's picture

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
tmosley's picture

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
TruthInSunshine's picture


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
GetZeeGold's picture




Mon, 08/29/2011 - 20:59 | 1613599 spiral_eyes
spiral_eyes's picture

the real issue nobody will talk about is oil, food prices, and population growth 

Mon, 08/29/2011 - 21:18 | 1613648 LawsofPhysics
LawsofPhysics's picture

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
Troll Magnet's picture

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
CrashisOptimistic's picture

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
LawsofPhysics's picture

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
chinaguy's picture

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
Dick Darlington's picture

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
RockyRacoon's picture

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
Ausperity's picture

This monkey's gone to heaven...

Mon, 08/29/2011 - 21:41 | 1613686 Long-John-Silver
Long-John-Silver's picture

I'm hedged in each and every way. I'm bring Marshmallows and Graham Crackers. 

Mon, 08/29/2011 - 20:12 | 1613481 lolmao500
lolmao500's picture

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
Joy on Maui's picture

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
RockyRacoon's picture

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
topcallingtroll's picture

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
LawsofPhysics's picture

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
buzzsaw99's picture

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.

Mon, 08/29/2011 - 20:51 | 1613580 buzzsaw99
buzzsaw99's picture

yes, f'cked, and not in a good way.

Thu, 09/01/2011 - 20:54 | 1624461 SheHunter
SheHunter's picture

If Perry makes it into the white house our seniors will not even be able to afford the salt they use to try and camouflage the taste of their Wally-World dog food.

Mon, 08/29/2011 - 20:17 | 1613501 bigdumbnugly
bigdumbnugly's picture

"And lastly, sealing the deal for the "recession" argument is the following data from John Lohman which finds that the collapse in real-time economic data over the past three months is the sharpest in history."

well, it's not as if the first lady hasn't been doing her part  to stave it off.

Mon, 08/29/2011 - 20:21 | 1613510 lolmao500
lolmao500's picture

``In history`` doesn't mean 20 years Tyler... which this graph qualifies as ``history``...

Mon, 08/29/2011 - 20:58 | 1613597 Raynja
Raynja's picture

learn to read dipshit


As shown, the current three month change is the largest in the history of the model.  In other words, the collapse in real-time economic data (such as ISM, German IFO, etc.) over the past three months is the sharpest of the last two decades for which data is available.

Mon, 08/29/2011 - 21:01 | 1613604 lolmao500
lolmao500's picture

In ``history of the model`` still isn't ``history``.

Mon, 08/29/2011 - 21:18 | 1613649 Raynja
Raynja's picture

his story is whatever he says it is, i'm not sure what you're trying to get at. 


Mon, 08/29/2011 - 21:13 | 1613621 FOC 1183
FOC 1183's picture

Exactly. Consensus estimates are only available to 1990. And as for the Bloomberg study, quarterly GDP via BEA is only from 1948. So, to go further back in history we'd need to call Al Gore and the UK Met for the 'official record'

Mon, 08/29/2011 - 20:19 | 1613505 Seasmoke
Seasmoke's picture

Obama has the answer.........just be patient , he will get to it sometime in September

Mon, 08/29/2011 - 20:42 | 1613559 nmewn
nmewn's picture


It'll be...Krugman's little green aliens ate my homework!!! wasn't my fault!!!!...there was an earthquake!!!...a terrible flood!!!...wrath of God type stuff!!!...they didn't serve peas!!!...then he'll give everyone those eyes...ROTFL!!!

Mon, 08/29/2011 - 21:17 | 1613646 knukles
knukles's picture

Don't forget BUSH'S FAULT

Mon, 08/29/2011 - 21:51 | 1613704 nmewn
nmewn's picture

Ooohhh, now you've done it, and those damned teabagging racists too!!! They're behind it all!!!

He's surrounded himself with the most complete incompetents he could possibly think just can't be his fault!!!

Mon, 08/29/2011 - 20:21 | 1613507 IMA5U
IMA5U's picture

And that's why Old Country Buffet wanted a short squeeze.  It's a smoke screen to cover up reality going into Obama's "Jobs" Plan, which is really just another attempt to buy votes and expand the government's power.

Mon, 08/29/2011 - 20:22 | 1613512 disabledvet
disabledvet's picture

Obama's Presidency is on the line. That's my bullish take plain and simple. The Republicans have no interest in standing in the way of a flailing Administration vis a vis it's economic agenda. The irony that this Administration has one of the best national security teams in decades should be lost on no one. In other words "it makes the economic team look as bad as it actually is." Is that reason to be bullish? Absolutely not. Wall Street is behaving even worse. Having said that "the self correcter" known as Warren Buffet has spoken: "i'm the richest guy in the world and i'm gettin' richer." if GLD starts unloading it's physical and the "barbaric relic" get's "rationalized" then we all really will see how a guy who likes bubble baths really does get it better than the rest. This is gonna sound strange but i wish Wall Street would jettison the rule of law for a few quarters as well. Whatever happened to the Predator's Ball ethos in this town? And I ain't talking the 80's either--I'm talking turn of the Century Rockefeller, Morgan, etc...

Mon, 08/29/2011 - 21:45 | 1613693 PaperBugsBurn
PaperBugsBurn's picture

The irony that this Administration has one of the best national security teams in decades should be lost on no one.


are you nuts???

Mon, 08/29/2011 - 22:38 | 1613817 sun tzu
sun tzu's picture

Obama "got" OBL hahaha

Mon, 08/29/2011 - 22:07 | 1613747 Long-John-Silver
Long-John-Silver's picture

Book smart and Work smart are two totally different things.

Book smart people should never be allowed in a Work area.

We now have Book smart people that have fired the Workers and made a total mess of the Work.

Mon, 08/29/2011 - 20:22 | 1613513 Missiondweller
Missiondweller's picture

Did we need any confirmation we are actually in a depression?

The SHTF this fall, maybe next month.

Good for my gold. Not so good for my job prospects.

Mon, 08/29/2011 - 22:15 | 1613765 Long-John-Silver
Long-John-Silver's picture

My job prospects are looking good. When no one can afford to buy new stuff they are forced to repair what they have.

I weld, precision machine metal, certified electrician, Gas Turbine, Gasoline and Diesel mechanic, electronics tech, hydraulics, pneumatics, and can program PLC controllers. 


Mon, 08/29/2011 - 20:23 | 1613514 kito
kito's picture


Mon, 08/29/2011 - 20:23 | 1613516 NorthenSoul
NorthenSoul's picture

No confidence, no accountability, no debt restructuration, destruction of the Consitution, immense and futile efforts wasted at keeping the status quo.

Gee! And a recession should come as a surprise?


Mon, 08/29/2011 - 20:25 | 1613518 The Deleuzian
The Deleuzian's picture

Haven't we been in a recession since late 08' early 09'??  All of these economic indicators/charts/graphs tell us the same thing...

We never left the recession camp!! welcome to the permanent recession!

Mon, 08/29/2011 - 21:30 | 1613665 LawsofPhysics
LawsofPhysics's picture

Inflation adjusted, we have been in a recession since 1980.  Do you think we can get credit for at least ONE lost decade already?  Sort of like a "time served" kind of thing?

Mon, 08/29/2011 - 20:26 | 1613522 NorthenSoul
NorthenSoul's picture

Can't wait to witness Phase 359 of the food fight between the Reichpubliscums and Brother Obysmal about jobs.

It'll be quite the freak show; Don't forget the popcorn!

Mon, 08/29/2011 - 20:28 | 1613526 Manthong
Manthong's picture

<<--- Economy quietly entered a recession

<<--- Economy never left a recession

Mon, 08/29/2011 - 21:58 | 1613723 DoChenRollingBearing
DoChenRollingBearing's picture

29 was mine.  I think it is pretty clear that in real terms, we never did leave the recession.

An interesting question, raised by Thomas Donlan of Barron's last weekend, was have we already started a stealthy QE3 ALREADY?

Mon, 08/29/2011 - 22:24 | 1613787 Aguadulce
Aguadulce's picture

Or did QE2 never really end...

Mon, 08/29/2011 - 20:29 | 1613528 The Deleuzian
The Deleuzian's picture

Middleton's charts (@ above column ZH) on our "connect the dots" comparison to Japan is really scary business.  Are we turning Japanese/or are we "the Argentinian"

Mon, 08/29/2011 - 20:43 | 1613563 Bring the Gold
Bring the Gold's picture

That's the 1.4 Quadrillion dollar (notional otc derivatives) question isn't it?


Don't worry though the banksters have been planning this all for a long time and if people don't like it...well they've planned for that too:

Tue, 08/30/2011 - 05:15 | 1614121 TruthInSunshine
TruthInSunshine's picture
We're Turning Japanese

I REALLY think so.

Mon, 08/29/2011 - 20:30 | 1613531 Gibu The Great
Gibu The Great's picture

What irks me is that we have these data points that tell us "Whenever this data point yielded X result, it accurately predicted a recession 100% of the time" that all these people we have on CNBS have the audacity to say "no, there's no way we are entering a recession.  This is just a soft patch.  This time is different, really."  I guess I just haven't been in the industry long enough to get used to this, because I know back in 2007/2008 the same people were saying the same damn things.  

Mon, 08/29/2011 - 20:34 | 1613537 Yes_Questions
Yes_Questions's picture



And they shill have their jobs.


Oh Freudian me.

Mon, 08/29/2011 - 20:37 | 1613546 Gibu The Great
Gibu The Great's picture

The funny thing is since I don't work on Wall Street, if I am flat wrong like many of these guys are and screw clients over, I would definitely lose my job!  

Mon, 08/29/2011 - 20:55 | 1613590 Yes_Questions
Yes_Questions's picture



Somehow, I can see time spent on Wall Street as a negative factor on a resume soon enough.  Consider yourself lucky for not having the pedigree. 

Mon, 08/29/2011 - 20:32 | 1613535 dumpster
dumpster's picture

to wit...


Mon, 08/29/2011 - 20:33 | 1613536 Caviar Emptor
Caviar Emptor's picture

The distortions from all the ongoing Fed and fiscal programs make the numbers less reliable. 

We're in a depression. So this won;t be a 'double dip' or a new recession. It's the next leg down with a bounce in between. Like a rubber ball bouncing down the stairs. Some day everyone will realize it. 

Mon, 08/29/2011 - 20:48 | 1613576 tomeuchre
tomeuchre's picture

take away government spending excsss in GDP and you have a depression. Period.

Mon, 08/29/2011 - 21:13 | 1613636 Row Well Number 41
Row Well Number 41's picture

The Bungee Economy has a 600 trillion pound gorilla at the end of it.



Mon, 08/29/2011 - 20:34 | 1613538 John Law Lives
John Law Lives's picture

"Bernanke may never have to announced QE3 - he just has to keep dangling the carrot before the market that one day, soon, he just may follow through on his promise/threat."

Gee, we are lucky to have Chairsatan looking after our best interests...


Mon, 08/29/2011 - 22:43 | 1613828 SokPOTUS
SokPOTUS's picture

that's going to be one shriveled carrot.

Mon, 08/29/2011 - 20:35 | 1613539 quasimodo
quasimodo's picture

Martial law....riots......people on tee vee beating each other up over a stale dohnutt. Untill I start to see this happening, this is just another stupid farking story about blah blah blah. I am sick to farking death of everyone and thier "shtf is five, four, three...."

Is it really that bad out there?

Mon, 08/29/2011 - 20:42 | 1613552 Karl Tashjian
Karl Tashjian's picture

Not yet Quasi, but pressure is building. What do you think the sheeple will do when they lose their part time jobs, the tea party takes their welfare away or their dollar menus become 5 dollar menus thanks to the Bernank?

In fact, it's already starting.

Mon, 08/29/2011 - 20:41 | 1613555 kito
kito's picture

do you mean the educational system, particularly with respect to grammar? apparently so, based on your post....

Mon, 08/29/2011 - 20:43 | 1613564 Shell Game
Shell Game's picture

The illusion is a thing of national security, they've played it well.  Food stamps on plastic 'credit cards' so you look just like everyone else.  Mortgage $ going to pay more pressing bills....or consumption desires.  Foreclosures up, mult-family dwellings up,  Gold revealing the dollar desicration by the spend-happy .Gov and Federal Reserve fiat conjuring.  Nations divesting from US holdings in leau of more tangible assets, some making deals to buy oil in non-Dollar denominations.  We're knocking on the door of losing reserve currency status. You can't imagine the hell that will bring.  So, yes, it's kinda bad out there..

Mon, 08/29/2011 - 22:08 | 1613750 DoChenRollingBearing
DoChenRollingBearing's picture

Only a tiny minority of people I have spoken to lately says that things are going "well" for them vs, say, 2008.

Disclosure: most of the people I talk to are typically middle to upper class, yet they feel the pinch.   I can only imagine what it is like to have no money, no job...

NOTHING .gov is doing so far will bring us back from the brink.  The only way is to ENCOURAGE capital formation and deployment in this country.  How?  By lessening regulatory uncertainty, lowering taxes and paperwork burdens, etc.  Will that happen?  Not likely anytime soon.  Lowering .gov spending would be a great relief as well, becuase so much is mis-spent.

Rich, middle class or poor, you better have some gold for the rough times ahead.  Yes, I know it is MUCH harder for the poor to buy gold, but they may need it the most...

Mon, 08/29/2011 - 23:22 | 1613876 tip e. canoe
tip e. canoe's picture

"Yes, I know it is MUCH harder for the poor to buy gold, but they may need it the most..."

yeah, maybe they can find the nearest river bed:

Gold For Bread - Zimbabwe

"You need 0.3 grams of gold a day to survive."

Tue, 08/30/2011 - 03:05 | 1614064 janus
janus's picture

hey buddy,

like the new avatar -- serpent in the hermetic shadow? as it is above; so shall the serpent slither below.

thanks for bringing attention to zimbabwe: zimbabwians are some of the most gentle, peace-loving and naturally joyful people on earth.   in 1981 mugabe came to power -- the result of a successful revolt againts brit. colonialists.  it soon became evident that mugabe's happiness was contingent on his fellow citizens's misery; and things were from there only exacerbated: he destroyed commerical ag in the region's breadbasket, decimated his currency, fostered a poverty stricken and helpless ethos.   just a steaming pile of shit, that mugabe. 

it's also one of the most beautiful countries in the world.  I'd love to someday own a small tobbacco farm out that way. 

the people of zimbabwe deserve better; and i'm sure you can guess my feelings on mugabe's just desserts.

sic semper tyrranis,


Mon, 08/29/2011 - 20:44 | 1613568 Bring the Gold
Bring the Gold's picture

It is for people who make less thank 300k a year, which is most people. The US looks like well...the US compared to most countries. I don't expect that to last long and neither do the Banksters:

Mon, 08/29/2011 - 20:35 | 1613541 The Deleuzian
The Deleuzian's picture

Tyler! Never have I asked you to dig (I'm digging as we speak) out data and the people's opinion about Recession/Depression between the years 1929-1933.  This, atleast to me would speak volumes to where we are today!!

Mon, 08/29/2011 - 20:42 | 1613558 Yes_Questions
Yes_Questions's picture



Its not the vintage you are looking for, but majority of Americans aren't buying the hype:

Mon, 08/29/2011 - 20:40 | 1613549 Caviar Emptor
Caviar Emptor's picture

Signs we're entering a new Dark Age: 


Palm Beach County in the dark, thanks to I-95 wire clippers

Thieves have cast 33 miles of Interstate 95 into darkness in Palm Beach County by yanking out the underground copper wire needed to power the overhead lighting.

The wire can be sold to metal recycling companies for as much as $3 a pound. State officials say it will cost $200,000 to replace




Mon, 08/29/2011 - 20:44 | 1613569 Yes_Questions
Yes_Questions's picture



Palm Beach, Fl is already in one.

Mon, 08/29/2011 - 22:17 | 1613769 JW n FL
JW n FL's picture

you cant afford affordable housing in West Palm Beach.. $250k for the ghetto.. it was close to $400k for the ghetto at one point..

enjoy where ever you are.. and please, stay there. We are full!

Mon, 08/29/2011 - 20:46 | 1613570 Bring the Gold
Bring the Gold's picture

Infrastructure is a canary in the coal mine for the empire. This sort of thing is happening across the country. This is epic scale, but it's hardly the anomaly, more like the norm.

Mon, 08/29/2011 - 20:49 | 1613578 Caviar Emptor
Caviar Emptor's picture

Too bad they're finally talking infrastructure just in time for raw materials at or near peak. Gonna make that railroad bill awful high. It almost doesn't matter what material they use. 

Mon, 08/29/2011 - 22:52 | 1613839 SokPOTUS
SokPOTUS's picture

I suggest Rearden Metal for all of Obama's High-Speed Fail Projects.

Mon, 08/29/2011 - 20:46 | 1613571 Mitzibitzi
Mitzibitzi's picture

Happening increasingly in the UK, too. A mate who works on the railways was telling me the other day that they're spending so much time and money replacing stolen cable that safety-critical work is starting to suffer.

Mon, 08/29/2011 - 20:53 | 1613585 Caviar Emptor
Caviar Emptor's picture

Last time this happened in the US was 1982-85 during the homeless epidemic and crack epidemic in NYC. All signs of economic and social desperation. 

Mon, 08/29/2011 - 22:24 | 1613786 tip e. canoe
tip e. canoe's picture

like Father, like Son

Mon, 08/29/2011 - 20:41 | 1613556 midtowng
midtowng's picture

Where's the link to the Bloomberg article? I'd like to pass that along.

Mon, 08/29/2011 - 20:44 | 1613566 The Deleuzian
The Deleuzian's picture

Quasimodo, even if there were riots.  You would never know about them until either:

A) It was coming to a town near you 


B) It was coming to a town near someone you personally communicate with on a daily/weekly basis

The riots will not be televised.  If they were, Martial law would most cetainly be next. Multitudes of difference between urban Philly and rural Iowa......

Mon, 08/29/2011 - 20:46 | 1613573 Bring the Gold
Bring the Gold's picture

The De-evolution will not be televised.

Mon, 08/29/2011 - 23:14 | 1613870 tip e. canoe
tip e. canoe's picture

while the evolution hides in plain sight.

Mon, 08/29/2011 - 21:02 | 1613605 darkstar7646
darkstar7646's picture

That may be true, but they may have no choice but to televise them, because it might be about all that's left.

I personally think your comment is basically irrelevant, as, when TEOTWAWKI becomes TSHTF (and we've seen early splatters of fecal matter), one of those two conditions will be fairly immediate for anyone not in someplace like the rural Mid-west (probably have to add: west of Illinois).

Mon, 08/29/2011 - 20:56 | 1613592 gwar5
gwar5's picture

Kumo Break, Bitchezz!

Mon, 08/29/2011 - 20:56 | 1613593 Hansel
Hansel's picture

THIS TIME IS DIFFERENT.  Boom, now this is a bullish data point.

Mon, 08/29/2011 - 20:59 | 1613600 bugs_
bugs_'s picture

That philly fed was killer.  Beware.

Mon, 08/29/2011 - 20:59 | 1613601 gwar5
gwar5's picture

Kumo Break, Bitchezz!

Mon, 08/29/2011 - 21:01 | 1613602 Caviar Emptor
Caviar Emptor's picture

Many of the world’s largest hedge funds have been left nursing billions of dollars in losses following the industry’s most brutal month since the collapse of Lehman Brothers.

According to provisional estimates from consultancy Hedge Fund Research, the average hedge fund has lost 4.1 percent during August – making the month the industry’s fourth worst ever.

Mon, 08/29/2011 - 22:02 | 1613728 knukles
knukles's picture

So fucking what...  The Hedgies ain't goin' belly.  They borrow from the prime brokers who keep their records, maintain the custody arrangements.... and all the prime brokers are TBTF banks.

Wake the Fuck up, everybody.
The TBTF banks are officially under regulations actually designated as systemic risks and thus, too big to fail.

Can you say on the Taxpayer Dime, Moral Hazard, bitches?

Oh, I knew you could.

Mon, 08/29/2011 - 23:42 | 1613899 Ms. Erable
Ms. Erable's picture

Being a banker means

never having to say

'Not Guilty, your Honor'.

Mon, 08/29/2011 - 21:06 | 1613616 Caviar Emptor
Caviar Emptor's picture

Tyler: It's not Vesuvius but....


Another beautiful eruption of Mt Etna (Italy) on August 29 2011 + videos


Mon, 08/29/2011 - 21:07 | 1613618 tomreagan
tomreagan's picture

Buy Side says it can't get worse because we have already had too many layoffs. Buy Side says this is not 2008. Buy Side says TBTB know better than to let a bank  fail (although we are several elections removed from that decision). Buy Side says that QE3 is coming. Buy Side says that QE3 doesn't matter. Buy Side says that P/E is cheap. Treasuries down on no QE3, stocks up on QE3. Buy Side says that Equities are right, Credit is wrong. Buy Side says that if only we had this one government intervention. Buy Side says that regulation is the reason why we can't advance GDP. Buy Side checked FT, Bloomberg, WSJ, and <insert blog here> and says 'I see things differently'. Sell Side scalps it....or have the lines been reversed? Either way, future story tellers, philosophers, and kings will agree...We Saw It Coming

Mon, 08/29/2011 - 21:16 | 1613643 Caviar Emptor
Caviar Emptor's picture

It's called talkin' your book. All the way. 

As I remember it, at the all-time NAZ peak in March 2000, stocks had never been cheaper. And this time was different because we were in a "new paradigm". And the economy was Goldilocks, and the Fed finally got it right. 

Mon, 08/29/2011 - 22:05 | 1613739 knukles
knukles's picture

Same shit as the old interest rate convergence in Europe amongst different soverign issuers because of the commonality of currency.

How'd that one work out for their clients?

Mon, 08/29/2011 - 21:08 | 1613623 zorba THE GREEK
zorba THE GREEK's picture

I don't think we are headed for a recession. Obama and Bernanke will throw caution to the wind

to keep us out of a recession. What we are headed for is what happens after all efforts fail to 

keep the house of cards, Ponzi, kick the can recovery going any longer. It's when the world

starts dumping dollars at panic pace. It's when runs on banks cause extended bank holidays.

What we are headed for is chaos. And if Obama is still president, God help us.

Mon, 08/29/2011 - 21:18 | 1613650 Withdrawn Sanction
Withdrawn Sanction's picture

I don't think we are headed for a recession. Obama and Bernanke will throw caution to the wind

to keep us out of a recession


Your faith in their power and abilities is charming....naive, but charming.  

Mon, 08/29/2011 - 22:07 | 1613748 knukles
knukles's picture

Logic Flaw...
They already threw all caution to the wind and it's done more damage than had the system been left to natural cycle of events.

Tue, 08/30/2011 - 03:14 | 1614068 Temporalist
Temporalist's picture

You misinterpreted that comment.


They "will throw caution to the wind" and ATTEMPT to keep the U.S. out of recession.  I don't think the comment meant it will work, just that will be the reasoning behind their attempts.


Clearly the commentator thinks it will not be a recovery but a major collapse.

Mon, 08/29/2011 - 21:34 | 1613674 Cursive
Cursive's picture

@zorba THE GREEK

What we are headed for is chaos.

When our society exists on the logic of water running uphill, that is a rational conclusion.

Mon, 08/29/2011 - 22:55 | 1613772 tip e. canoe
tip e. canoe's picture

from your friends at comcast cable:

Transformation 2011: “Positive Chaos” Means New Opportunities

"With all those bells and whistles, we love our TVs now more than ever: one of the statistics shared during the conference was that Americans spend an average of almost four-and-a-half hours a day consuming television. It remains the most powerful medium for reaching a mass audience, even as we become more adept at multitasking and using multiple "screens" at once (underscoring the importance of a well-rounded, multi platform media mix)."

""Baby Boomers" have a remarkable similarity to teens when it comes to media consumption. For instance, when it comes to mobile phone usage and consuming entertainment online, the two groups are nearly the same. "

they're already working on making a mold around her zorba, but how much can they contain once she's unleashed?

Naphtha ( or ) normally refers to a number of different flammable liquid mixtures of hydrocarbons, i.e. a component of natural gas condensate or a distillation product from petroleum or coal tar boiling in a certain range and containing certain hydrocarbons.

"potential energy precedes kinetic energy, right?"

Mon, 08/29/2011 - 21:09 | 1613627 HCP
HCP's picture

Conduct disorder Bitchez! Hey Zero, are you a money maker or a blogger? Is it hyperinflation or great depression? Will you ever be specifically right rather than generally right? When your wrong will you ever take responsibillity or just blame it on iStupidGovernmentNonexistentQELowvolumeNewworldordermaaaaaaaaaaaaan!...?

Mon, 08/29/2011 - 21:11 | 1613631 tomreagan
tomreagan's picture

define right

Mon, 08/29/2011 - 21:19 | 1613638 HCP
HCP's picture

BAC worthless, S&P @ 400, Gold worth multiple thousands. Your here, you should know what the hype is and the difference between reality. Day after day, Month after month, Year after year... Interesting but wrong. I'm guessing thats why these guys blog because they can't get hired... That and a little front running and insider trading :/


T-shirts, donations & google ads > Wallstreet... Cuz we so smart Bitchez!

Mon, 08/29/2011 - 21:23 | 1613658 tomreagan
tomreagan's picture

Perhaps. But it is all a horizon and last I checked gold is up, treasuries are down and stocks are a general trendline sense of the word...will you come back and post if it turns out to be true? Or will you not be able to afford your internet connection? Nothing wrong with a little Capitalism now is there?

Mon, 08/29/2011 - 21:42 | 1613689 HCP
HCP's picture

Oh don't you remember??!?! Treasurys are a ponzi scheme maaaan! Buy TBT! How silly of you to break from the pack. Just like you should buy Gold over equitys because S&P will go to 400 and gold will go to 7012.00 with or without inflation.

Mon, 08/29/2011 - 21:50 | 1613703 tomreagan
tomreagan's picture

depends on your position

Mon, 08/29/2011 - 21:23 | 1613656 Ned Zeppelin
Ned Zeppelin's picture

Not so sure about all this collapse is imminent stuff. Seems much more likely that endless and eternal iterations of QE are our fate. Buy gold and equities, and enjoy the ride. 

Mon, 08/29/2011 - 21:24 | 1613661 mynhair
mynhair's picture

Need 2 months to make a recession, but the window breaking property of Irene will squelch that.

Be nice if a candidate would bring up firing the entire bureaucracy.

Mon, 08/29/2011 - 22:10 | 1613755 knukles
knukles's picture

Don't forget the "transitory"
Last 4 years have been "transitory"

Mon, 08/29/2011 - 21:29 | 1613664 Ned Zeppelin
Ned Zeppelin's picture

Obama: proudly brought to you by the good folks at Goldman Sachs

Mon, 08/29/2011 - 21:37 | 1613680 HCP
HCP's picture

I LOVE zero, gives me a good defensive mindset with hedging. But... For example. It feels like Zero has been talking for years about JPM crashing due to silver prices. With all the fancy charts, can we finally get like... a time frame of when this is supposed to happen? You can't just repeatedly say X will happen eventually and maintain your credabillity.


Any Zerohedge writers, excluding faggy Mark Keiser are invited to my Nebraska house to enjoy fresh air, a stress free rural enviroment and enjoyable women. Maybe if you had that you could be less troll and more like your lord, master and technical idol Warren Buffet.

Mon, 08/29/2011 - 21:58 | 1613721 slewie the pi-rat
slewie the pi-rat's picture

welcome to zH, HCP

i see where you joined right about "ceiling day" almost 4 weeks ago

and now, you are writing stuff and posting it on zH! 

cornhuskers are generally not as retarded as you, asswipe

Mon, 08/29/2011 - 22:30 | 1613802 tomreagan
tomreagan's picture

awesome... so you you have been short gold, long financials, pro-cyclical, and wrote a bunch of European CDS for how long now?. Classic Hedge moron. Go Back to Yahoo Finance

Mon, 08/29/2011 - 23:04 | 1613861 Lndmvr
Lndmvr's picture

Take you up on that but they still haven't opened any bridges south of Plattsmouth. ( in SW Iowa) And for what it's worth, the west iowa storm last week ruined thousands of acres of corn and some soybeans. Prices should be up.

Tue, 08/30/2011 - 00:36 | 1613954 chump666
chump666's picture

and a bankrupt US market rallies, yet Asia (creditor) barely moves. that is a f*cked up picture right there.  Nutjob Bernanke will have to wait till major market slaughter ala oil price under 80 before QE3 or he unleashes a wave of inflation to Asia, and if China goes, Japan sinks...that's the doomsday trade. And we are getting very close.

Anyway major bull trap set, selling/volatility till Sept 20th

Tue, 08/30/2011 - 01:11 | 1613991 RockyRacoon
RockyRacoon's picture

Ain't Fight Club a hoot?  I still have 2 black eyes after more than 2 years.

Mon, 08/29/2011 - 21:45 | 1613694 AlmostEven
AlmostEven's picture

I entered a recession on Friday, too! Coinky-dink! Oh, wait...wrong website.

Mon, 08/29/2011 - 23:26 | 1613880 Insiderman
Insiderman's picture

Looks like a contraction (deviation under trend) rather than recession (negative growth) based on your first chart.

Tue, 08/30/2011 - 00:07 | 1613923 zerosumtimes
zerosumtimes's picture

Consider referring to event of Fed announced indecision not as Bernanke's
"Jackson Hole" speech but as the "sump" speech or "hole" speech like in lowest hydraulic sucking elevation or astronomical gravitational sump.  The seventh President, AJ, put the Second National Bank out of business in the 1800s and would likely not want to associate with the 2011 banking imbroglio.

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