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Q4 GDP Misses Estimates, Inventory Stockpiling Accounts For 1.9% Of 2.8% Q4 US Economic Growth

Tyler Durden's picture




 

The US economy grew at a 2.8% annualized pace in the supposedly blistering fourth quarter, yet the number was a disappointment not only in that it missed estimates of 3.0% (and far higher whisper numbers) but when one looks at the components, where a whopping 1.94% of the upside was attributable to a rise in inventories as restocking took place. And as everyone knows in this day and age a spike in inventories only leads to sub-cost dumping a few months later. In other words, the economy grew at a 0.8% pace ex inventories. Yet for all intents and purposes, this is considered "growth." Personal consumption was also weaker than expected coming in at 2.0% on estimates of 2.4%. Perhaps the only silver lining was Core PCE which came at 1.1% on expectations of 0.9%, however as discussed extensively before, this was driven by an unsustainable surge in credit-binge spending, primarily for iStore trinkets, and is hardly sustainable especially as the US Savings Rate fell to 3.7% in the fourth quarter, the lowest since Q4 2007. In other words Joe Sixpack is living large, especially since Joe Sixpack no longer has to pay his mortgage. Unfortunately this is a collision course with every economic principle and the next taxpayer funded bank bailout is only a matter of time. Bottom line: the artificial economic pick up is over and Q1 will see inventories actually detract from GDP: as a reminder Q1 2011 GDP subtracted 1.8% points from the final 0.4% GDP, and that was following only a 0.9% inventory rise in the preceding quarter, Q4 2010. And that is not even mentioning the tight fiscal situation no longer being a benefit to growth. Oh yes, and gas is no longer falling. And not to even mention that the GDP deflator mysteriously imploded from 2.6% to 0.4%: that's odd - not even edible ipads seem to be coming down in price. Which means that using a reslitic deflator would have resulted in virtually no GDP growth. To paraphrase Lester Burnham, "It's all downhill from here."

Finally a chart of the GDP Price Index. It just printed the third lowest since 1963.

 

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Fri, 01/27/2012 - 09:49 | 2102171 Irish66
Irish66's picture

stick the inventory on the ships, put them out to sea and count them as sold.   easy button

Fri, 01/27/2012 - 10:03 | 2102229 LiquidityandLunacy
LiquidityandLunacy's picture

that button is getting sticky from overuse...

 

-R

Fri, 01/27/2012 - 10:12 | 2102262 CPL
CPL's picture

The growth doesn't even match inflation @ 2.96%

 

This is going to get ugly.

Fri, 01/27/2012 - 10:16 | 2102278 SMG
SMG's picture

Nah... like reality matters.

This isn't just bullish, it SUPER BULLISH!!!!

 

Fri, 01/27/2012 - 10:26 | 2102309 X. Kurt OSis
X. Kurt OSis's picture

The breaking news from CNN said something like US economy grew at nearly 3% which economists say is a level where firms start hiring again.

So I guess CNN agrees.

Or maybe CNN/Obama's Prosperity Mouthpeice only scanned the wiki article on Okun's Rule, saw "3%" written somewhere in there, and couldn't comprehend the rest due to the mathiness...

Fri, 01/27/2012 - 10:30 | 2102326 LetThemEatRand
LetThemEatRand's picture

CNBC on its website actually has a headline with the words "GDP", "grows" and "clip" all in one line.   A cursory review would suggest good news.  Gotta love big brother.

Fri, 01/27/2012 - 10:35 | 2102340 LetThemEatRand
LetThemEatRand's picture

FoxBusiness has on the front page:  "The jump [of 2.8%] was the biggest since the second quarter of 2010"

Fri, 01/27/2012 - 10:43 | 2102364 SheepDog-One
SheepDog-One's picture

'Please! Rush to buy all these bubble equities!'

Thanks, your Overlords.

Fri, 01/27/2012 - 11:07 | 2102445 kridkrid
kridkrid's picture

That was the exact soundbite on NPR this morning as well.  It said, "a slight miss on expectations of 3%, but a huge improvement over this time last year and the biggest since the second quarter of 2010". 

Fri, 01/27/2012 - 10:36 | 2102343 LetThemEatRand
LetThemEatRand's picture

WSJ online:  "U.S Economy Gathers Pace:  The U.S. economy grew at its fastest pace in more than a year and a half in the final three months of 2011, rising at an annual rate of 2.8%"

Fri, 01/27/2012 - 10:35 | 2102341 Snidley Whipsnae
Snidley Whipsnae's picture

"The growth doesn't even match inflation @ 2.96%"

...................................

Nor does it match the 2.5% GDP growth required to meet employment requirements.

More job cuts coming = more bad news for housing = more bad news for tax collections at all levels = oh hell... one big fucking mess.

PRINT BEN, PRINT!!! Nominal dollars to zero purchasing power... Got PMs?

Fri, 01/27/2012 - 11:21 | 2102491 _ConanTheLibert...
_ConanTheLibertarian_'s picture

Got PMs? :-D

Fri, 01/27/2012 - 11:28 | 2102518 Hugh_Jorgan
Hugh_Jorgan's picture

~~"The growth doesn't even match inflation @ 2.96%"

Worse, our 3% inflation number doesn't count luxury items. What are these luxury items? Oh, only really unnecessary items like food and fuel. The depth and breadth of current establishment deception never ceases to amaze me.

 

But, I'm crazy for stocking some extra food and having a firearm to protect it...

Fri, 01/27/2012 - 12:01 | 2102621 Kali
Kali's picture

But, I'm crazy for stocking some extra food and having a firearm to protect it...

 

No, not crazy, but according to the .gov, you are a terrorist.

Fri, 01/27/2012 - 11:22 | 2102499 _ConanTheLibert...
_ConanTheLibertarian_'s picture

2008 low (666) will probably be taken out next week. Nice.

Fri, 01/27/2012 - 11:28 | 2102525 ucsbcanuck
ucsbcanuck's picture

"Instead, he said he was surprised by how long the Baltic Dry took to fall. The NewContex index – an indicator of prices for transporting products in container ships – started falling in April last year.

Bullman said: “When we saw that happening in April, we realised that risks had returned to pre-2008 levels. We thought the Baltic Dry would start falling too, but it was actually relatively resilient.”

“What this is signalling is that the world economy is slowing down much more quickly than people have been thinking.”

Wow - and how is this good for the economy again?

Fri, 01/27/2012 - 10:05 | 2102240 HD
HD's picture

Actually, I think that's their plan for poor people...

Fri, 01/27/2012 - 10:26 | 2102306 LetThemEatRand
LetThemEatRand's picture

That, and Soylent Green.  Only it will be called Soylent Mac with Cheese.

Fri, 01/27/2012 - 10:29 | 2102330 Ancona
Ancona's picture

No problem here! I already have a good campsite picked out and my blue tarp for a tent. I will simply camp out behind the Safeway store so I have first dibs on all the yummy delicious food they throw away!

I love it when a plan comes together.

Fri, 01/27/2012 - 11:24 | 2102504 Randall Cabot
Randall Cabot's picture

It's going to be gettng crowded back there.

Fri, 01/27/2012 - 12:03 | 2102626 ucsbcanuck
ucsbcanuck's picture

You mean Soylent Mac with bacon and cheese?

Fri, 01/27/2012 - 10:07 | 2102244 VanillAnalyst
VanillAnalyst's picture

Why pick up the selling expense?

Insure em, route them around the Italian coast, buzz the tower, and presto, money money money.

Short insurance.

Fri, 01/27/2012 - 10:29 | 2102314 cdude
cdude's picture

"stick the inventory on the ships, put them out to sea and count them as sold."

 

Great idea! Will help boost the BDI as well, which has fallen off a cliff over the past 2 months. 

No need to bother with automobile inventory because it's already counted as sold once it reaches the dealers.

 

Figures often beguile me, particularly when I have the arranging of them myself; in which case the remark attributed to Disraeli would often apply with justice and force: "There are three kinds of lies: lies, damned lies and statistics."
Mark Twain'

Fri, 01/27/2012 - 09:49 | 2102172 Steverino
Steverino's picture

Bernanke's "Oh Shit" moment..

Fri, 01/27/2012 - 09:52 | 2102186 DavidC
DavidC's picture

Or maybe he was aware of it the other day when he said he would keep ZIRP for an extra year...

But, yes, you're right.

DavidC

Fri, 01/27/2012 - 09:56 | 2102203 LawsofPhysics
LawsofPhysics's picture

Precisely.  Interesting how GDP was booming during that inflationary period back in the 70's < snark >

There is a very real cost for creating capital without added any real value, Same as it ever was.

Fri, 01/27/2012 - 10:03 | 2102230 tabasco71
tabasco71's picture

Glad to note your comment re creating capital without adding any real value... I believe this is a contributing factor to the EZ's debt issues which is only catching up with them now... apparently Spain and Greece (and probably the rest of EZ) did not adjust for PPP before changing into the Eur€ - they just changed the signs and banked the overnight increase in sales profits.  However in the intervening years, they have not invested and now have this additional pressure upon them.

Fri, 01/27/2012 - 10:28 | 2102323 francis_sawyer
francis_sawyer's picture

Presently, I'm "stockpiling" ammo... My personal GDP is therefore booming...

Fri, 01/27/2012 - 09:59 | 2102216 fonzannoon
fonzannoon's picture

David C you are spot on. Anyone who thinks Bernak did not know this number was not coming is insane. Anyone who was surprised by his "bleak economic assessment in the face of improving data" needs mental help. He knew. Now everyone will say how smart he is for his outlook and give it more credibility. It would be funny if it did not make you nuts.

Fri, 01/27/2012 - 10:07 | 2102246 WonderDawg
WonderDawg's picture

Makes you wonder what the real GDP will be after the revisions. Funny how GDP is always revised downward, after the fact, while the initial claims data is always adjusted upwards, after the fact. But surely there is no manipulation going on.

Fri, 01/27/2012 - 11:40 | 2102556 Hugh_Jorgan
Hugh_Jorgan's picture

The problem with that is the massive inflation that we have only gotten a small taste of.

Ask your wife how much have the staple items in the grociery store risen in the past 2 years. Have they risen by the 2x3% that we have been told the have? Hell, no. Some item are up 30%, 50%, or even 100% like gasoline. The ZIRP effect is not a linear function. Continued input into the system has a lagging but multiplicative effect. Prices are about to "necessarily skyrocket", we had all better be preparing for a BIG storm ahead.

Fri, 01/27/2012 - 11:33 | 2102539 Hugh_Jorgan
Hugh_Jorgan's picture

Yes, it does appear the flux strength of the feces that is colliding with the occillating air turbulence inducer is indeed rising in intensity, doesn't it?

Fri, 01/27/2012 - 09:50 | 2102174 Dr. Engali
Dr. Engali's picture

Gas was 3.15 yesterday morning when I pulled into work. When I went to lunch it was 3.49.

Fri, 01/27/2012 - 10:01 | 2102224 SheepDog-One
SheepDog-One's picture

Nice .45 cent overnite swing in gas prices here too....this is all fucked.

Fri, 01/27/2012 - 10:26 | 2102307 kridkrid
kridkrid's picture

How does someone down-vote that post?  Weird.

Fri, 01/27/2012 - 10:31 | 2102332 Dr. Engali
Dr. Engali's picture

I think Sheep dog has a  stalker that just votes down any post.

Fri, 01/27/2012 - 10:39 | 2102354 kridkrid
kridkrid's picture

A badge of honor.  I want one of those.

Fri, 01/27/2012 - 10:46 | 2102377 Sockeye
Sockeye's picture

Ask and you shall receive!

Fri, 01/27/2012 - 10:52 | 2102401 kridkrid
kridkrid's picture

I would like to win some state sponsored lotter (i.e. tax on dumb people who don't understand math), take the lump sum payout and convert it into farmland.

Fri, 01/27/2012 - 12:31 | 2102706 francis_sawyer
francis_sawyer's picture

they'd just raise the taxes on your farm until you couldn't pay it anymore... Then confiscate the farm...

You're back to square one...

Fri, 01/27/2012 - 13:06 | 2102800 kridkrid
kridkrid's picture

Ha!  thanks for your support.

Fri, 01/27/2012 - 12:05 | 2102634 ucsbcanuck
ucsbcanuck's picture

Can't afford to have pesky negative facts getting in the way of regular hopium high...

Fri, 01/27/2012 - 12:57 | 2102758 Non Passaran
Non Passaran's picture

Because the math is wrong?

Fri, 01/27/2012 - 10:13 | 2102266 Cunning Lingers
Cunning Lingers's picture

They raise prices for absolute necessities and devalue the dollar to reduce purchasing power.

Double whammy.

 

Food and fuel are not components of the Core Inflation Index so they pump up these prices and have the cheek to announce there is no inflation.

WHAT THE FORK?

Fri, 01/27/2012 - 10:25 | 2102303 kridkrid
kridkrid's picture

One needs to look no further than your statement to understand just how absurd our reality is.  Food and fuel are not components of the Core Inflation Index.  Of course it's explained away in very rational sounding explanations... I like the word rationalize... rational sounding LIES. 

This is just the start... and we are still a long ways to go before people take to the streets.  The % of our incomes that go towards food is still relatively low... that will change.  And it doesn't really matter if they choose deflationary collapse or a hyper-inflationary "collapse"... The cost of our food as a % of our income is going to climb.

 

Fri, 01/27/2012 - 10:29 | 2102329 Dr. Engali
Dr. Engali's picture

You are right. When food becomes 80% of their income 70 to 80% of their income, then things will get ugly.

Fri, 01/27/2012 - 10:37 | 2102347 kridkrid
kridkrid's picture

It's not even that high.  Everyone wants to come up with reasons for the Arab Spring, and to be sure, I'm one who likes to entertain good conspiracy theories.  And while I'm sure their are masters pulling strings somewhere in the mix, the rise in food prices relative to incomes is what really drove discontent.  Get ready... because it's coming.

Fri, 01/27/2012 - 11:32 | 2102538 Are you kidding
Are you kidding's picture

Won't they just add more people to SNAP?

Fri, 01/27/2012 - 19:08 | 2104192 scatterbrains
scatterbrains's picture

only those that vote the right way

Fri, 01/27/2012 - 11:37 | 2102543 Agent P
Agent P's picture

Story out this morning that the average price for prime farm land in Illinois went from $8,000/acre in 2010 to $10,500/acre in 2011 (31%+ increase), with some individual transactions pushing $12,000/acre.  I can count back on one hand the number of years where the average price per acre was half of what it is today.  It's my understanding this is not unique to Illinois, and that similar increases have occurred for prime farm land throughout the Midwest.

Also heard an interesting story on NPR last week, I believe on Market Place (and yes, I listen to NPR, but no, I'm not a commie) about the projected explosive growth in world population in the coming decades coming almost exclusively from the poorest regions of the globe, and how there won't be enough staples (mainly rice) to feed them all.

Food inflation leading to food insecurity will continue to be the match that lights the fuse of unrest...scary stuff IMO.

Fri, 01/27/2012 - 12:36 | 2102713 grid-b-gone
grid-b-gone's picture

Land in the Utica shale area of OH could be had for about $1K in 2007. Now is going for at least $2,500/ac. 

There is plenty of fertilizer buffer in the U.S. if we just get out of the golf course lawn mentality.

Every household with any yard should attempt to grow at least two bushels of food per year. It's fun, eliminates 100% of transportation cost, saves money, and tabilizes total U.S. food production a little more.

If we are at peak oil, we are at peak affortable fertilizer.

Sadly, for much of the world, food may become even more unaffordable.

Fri, 01/27/2012 - 14:00 | 2103063 Shizzmoney
Shizzmoney's picture

70-80%?  Hell, make it 40%.  Many experts like Keiser and economists like Rogoff have always stated that 40% of income for food is a big barometer for revolutions.

Granted, it was 70% in 1790's France, but Americans aren't as patient.  Least I don't think they are.

BTW, gotta love the constant lying from government.  Under Bush, it was just him and Paulson deflecting at the podium.  Under Obmama, they just hope that thanks to the shitty education system, they are banking that people can't just do simple math.

Fri, 01/27/2012 - 14:03 | 2103097 Shizzmoney
Shizzmoney's picture

Maybe if I got a raise on my wage to meet the money supply rather than the BS CPI number.

Hell, I don't even get a raise of 5%!  Or a bonus.  Maybe i can go get a new job......oh wait, 4-to-1 ratio for job applicants, and an average 41 week wait.These are the type of numbers that develop healthy drinking problems.

Fri, 01/27/2012 - 09:51 | 2102177 PaperBear
PaperBear's picture

Gold prices to average $1450, silver $26 in 2012: Natixis

http://www.commodityonline.com/news/gold-prices-to-average-$1450-silver-$26-in-2012-natixis-45548-3-1.html

I had a good chuckle at this forecast.

Fri, 01/27/2012 - 09:52 | 2102185 youngman
youngman's picture

Paper gold and silver or real gold and silver

Fri, 01/27/2012 - 10:23 | 2102295 CPL
CPL's picture

Who cares anymore.  The paper trade is as crooked as the FIAT trades now.

 

Anyone wants to do business internationally now needs to use both paper and physical.  Of course the physical gold will be more painful to separate with versus the paper.

Fri, 01/27/2012 - 09:55 | 2102193 Dr. Engali
Dr. Engali's picture

They need new forecasters.

Fri, 01/27/2012 - 10:00 | 2102220 fonzannoon
fonzannoon's picture

They will probably right. The deflationary fight is not over yet. Not by a longshot.

Fri, 01/27/2012 - 10:03 | 2102231 SheepDog-One
SheepDog-One's picture

Theyre not really 'battling' anything here at all I dont think, just marching in place keeping the music going till they pull the rug out.

Fri, 01/27/2012 - 10:29 | 2102328 kridkrid
kridkrid's picture

That's right.  That's all the number says, right?  The forecast assume a deflationary spiral which absent QE infinity is what you would eventually get, no?  Though my money is on QE infinity.

Fri, 01/27/2012 - 10:44 | 2102372 Snidley Whipsnae
Snidley Whipsnae's picture

QE infinity is correct and it means they will destroy what is left of the fiat dollar given time.

At what price point will fuel prices bring the world economy to a complete standstill?

...and, I am taking into account the stairstep movement of fuel prices; ie, higher price causes demand to drop = drop causes increase in useage = higher useage caused demand to drop...etc. But, the stairs are going up in a long term trend. At some point fuel priced in fiat will bring economies to a standstill.

Then the mid east action will get really interesting.

Fri, 01/27/2012 - 10:07 | 2102248 The trend is yo...
The trend is your friend's picture

i hope they are right, i still need to buy quite a bit of physical

Fri, 01/27/2012 - 10:13 | 2102267 Smiddywesson
Smiddywesson's picture

Chuckle or not, it's possible we will touch those prices, but we won't average them for the year.  Not possible.

The current prices of gold and silver are heavily manipulated, and the system depends upon this manipulation, so a dramatic climb in prices would utterly destroy the system.  If that happens, gold and silver will ramp to the moon.  (thereby destroying any low yearly average from a spike down)

If one believes the old system won't make it through the year, there's only three alternatives that I see:  collapse; hyperinflation; or TPTB step in and devalue buy tying their fiat to the SDR and tying the SDR to gold, then ramping gold to the sky by not only halting their price suppression but also by engaging in gold purchases, and then they print like crazy (This is the FDR alternative identified by Bernanke in his 11/21/2002 speech).  I think we may see a bit of all three, but I can't see us getting out of 2012 without at least one of these things happening.

So the question of what gold prices we see depends upon which of these three things happens.  Collapse would yield an instant ramp in gold and silver to unimaginable levels.  But hyperinflation or a devaluation would eventually lead to the same result.

Therefore, the only way I see us even momentarily touching such low gold and silver prices is if TPTB use up their remaining margin hikes and MAKE prices drop that far.  Of course, this would decouple the paper price suppression game and bring about the end of the system as we know it, so that's why they haven't done so already.  However, if they know the system is about to collapse anyway, or hyperinflation is about to kick into high gear, or a devaluation is coming, then the old system is about to die anyway and there's nothing to stay their hands from dropping prices and shaking out the weak hands so they can pick up cheap shares and physical. 

You must prepare mentally for this event.  TPTB ALWAYS create panic at the end of the trend so they can pick up bargains.  Collapse may or may not come without warning, but hyperinflation or a devaluation cannot come without news of it reaching those who manipulate markets.

The fourth possibility, that we stumble through 2012 as we did through 2011 doesn't seem very likely to me with all of the indicators that this thing is coming to a head.  However, if I am wrong, (I'm not) we can expect another 20% rise in prices, not a year long correction.  Notice that the last correction broke the trend of the last three in NOT being of ever increasing duration and intensity?  We are printing at increasing rates, global derivatives are increasing at more than 30% year over year, and our major trading partners are dumping treasuries and cutting out the dollar as a reserve currency.  2012 is going to be the year.

Fri, 01/27/2012 - 10:19 | 2102286 Sean7k
Sean7k's picture

How do you get paid to do that quality of forecasting? There was zero analysis, no reference to QE or counterparty risk on sovereign debt instruments. No reference to why CB's might not buy in 2012. No reference to why a slowdown in asian purchases might occur. It is pure, unadulterated crap. 

Might as well as said 1000$ gold and 10$ silver. 

Fri, 01/27/2012 - 09:51 | 2102181 Cassandra Syndrome
Cassandra Syndrome's picture

The GDP Deflator has been cut to 0.4%, the cheating SOBs!! Real Inflation is running at over 10%. So real GDP is down 7%.

Fri, 01/27/2012 - 10:26 | 2102308 grid-b-gone
grid-b-gone's picture

Real inflation at 10% plus real unemployment at 11% puts the Misery Index at 21%.

The Misery Index averaged 16.26% under Carter, the worst until now, since Truman.

Fri, 01/27/2012 - 09:52 | 2102183 RazorForex
RazorForex's picture

Looks like the market is setting up to head lower. The setup from yesterday is still valid. Now it looks like a head and shoulders technical pattern forming.

http://www.youtube.com/watch?v=ukgoNRBgMbg

Fri, 01/27/2012 - 09:53 | 2102188 kralizec
kralizec's picture

Typical 4th quarter BS.  If history is a guide the next couple quarters will come in lower, gosh, what will the PTB's do then?!

 

Fri, 01/27/2012 - 09:53 | 2102189 GeneMarchbanks
GeneMarchbanks's picture

Plus this continues:

Rans:'Baltic Dry index falls 3.6% to 726 point'

Relentless. We'll take out the lows by next week if this continues...
Fri, 01/27/2012 - 10:02 | 2102228 fonzannoon
fonzannoon's picture

They will need to change the way they measure the data to ensure it's accuracy pretty soon. Shipping, food, energy, air and gravity are too volatile to try to measure in short periods of time. Obviously.

Fri, 01/27/2012 - 10:23 | 2102297 Cunning Lingers
Cunning Lingers's picture

China is having their new year holidays. The biggest consumer of commodities account for a large part of baltic dry index where the decline is partly attributed to being seasonal. China ports are closed durign this period so there wont be much cargo in sea transit prior to this event.

Excessive vessel supply is another contributor where DEAD WEIGHT TONNES of vessels enter the market this year.

Too many vessels and too little cargo to carry. The europeans who financed these vessels are in for a big time screwing. Vessels tend to depreciate at 10% or so per year. Shipping lines and freight forwarders are having a tough time making money amid low volume and high operating costs. 3rd party ship owners (who are usually excessively leveraged) who dont operate the vessels will have a good time finding charterers.

Fri, 01/27/2012 - 09:54 | 2102192 CreativeDestructor
CreativeDestructor's picture

Yeiii America

Fri, 01/27/2012 - 09:54 | 2102196 Al Huxley
Al Huxley's picture

Well, at least it's all downhill from here. I mean, it's easier to go down a hill than up, so that must be good news, right?

Fri, 01/27/2012 - 09:55 | 2102199 PaperBear
PaperBear's picture

When the stockpiling ramps down as it must do then watch out below.

Fri, 01/27/2012 - 09:57 | 2102206 Irish66
Irish66's picture

many , many people will be let go

Fri, 01/27/2012 - 09:56 | 2102201 CreativeDestructor
CreativeDestructor's picture

but wait bad news is good news right? Ben Bernanke is doing the "pianist palm warmup"before he hits that Ctrl+P ans performs the sweet symphony

Fri, 01/27/2012 - 09:57 | 2102208 mantischris
mantischris's picture

Why is gold falling and dollar getting stronger on this dismal data?!?

Fri, 01/27/2012 - 10:00 | 2102219 LawsofPhysics
LawsofPhysics's picture

Fortification.  Everyone going to cash positions.  Hell, even I don't pay the gardener with gold or silver bars.

Fri, 01/27/2012 - 10:09 | 2102251 scatterbrains
scatterbrains's picture

BB said rates will stay at zero for however long, they've been at zero for however long already with not much effect. He didn't announce QE3.1 so should we assume wall street will force pain upon the masses until BB prints again ?  If so then gold is about to test mid 1200ish and SPoo gonna drop like a turd too.. no ?

Fri, 01/27/2012 - 10:35 | 2102336 LawsofPhysics
LawsofPhysics's picture

That is what I was thinking, short term.  I know quite a few mid-grade and large-grade (100 million or more in assets) investors going to cash.  Everyone hoping to "buy the dip".  The wild-cards are the bond auctions and debt that must be rolled over in the western world.  If history is any guide, the more people tight fist their money, the harder the kleptocrats will push their government trolls to come after it.  Soon it will be illegal to have a savings account, PMs, or sell any stocks or financial products of any kind.

The entire monetary system is a fucking fraud, everyone knows it, but no-one wants to let it die.  Interesting times indeed.

Fri, 01/27/2012 - 10:09 | 2102254 CrashisOptimistic
CrashisOptimistic's picture

Because Bernanke has failed to prevent deflation.  This is deflationary data.

Gold is not a deflation hedge.

Fri, 01/27/2012 - 10:28 | 2102322 Smiddywesson
Smiddywesson's picture

Because Bernanke has failed to prevent deflation.  This is deflationary data.

Gold is not a deflation hedge.

Rubbish.  Maybe gold is not a deflation hedge, but the printing press sure is.  The printer magically defeats deflation at the low cost of destroying the life savings of anyone ignorant enough to trust the government.  Ben and company have spent a lifetime writing about this, bet their professional careers on this concept, and have been carrying it out for four years, bankrupting all the nations of the West in the process.  They will print the dollar into oblivion if they have to, and now they are cornered and have to. 

Have you not noticed gold climing over the last ten years?  Haven't you not noticed we are in deflation and gold keeps climbing in price?

Your adherence to theory over reality is what blinds you.  They have a printer and they will continue to use it.  Sure, the deflationist position that defaulting debt makes the dollar stronger is true, but that's not the only force in the universe, it doesn't erase the trillions being printed to muddle along.  Once the debt to GDP becomes too great, collapse is inevitable.  There's nothing magic about deflation.  If all else fails, TPTB will just devalue. 

Fri, 01/27/2012 - 10:39 | 2102349 LawsofPhysics
LawsofPhysics's picture

Gold has never been a deflationary hedge idiot.  Gold is simply a life preserver in a sea of fiat.  Gold is honest money and has always been part of any truly diversivied portfolio.  gold's "price" in fiat will vary with the purchasing power of the fiat, period.  But at the end of the day, gold always has purchasing power and always buy more paper in the long run.

Fri, 01/27/2012 - 10:20 | 2102288 Sean7k
Sean7k's picture

Options expiration. 

Fri, 01/27/2012 - 10:27 | 2102312 fonzannoon
fonzannoon's picture

For the same reason it happened after the debt ceiling issue. When stupid people get scared they run toward the burning house.

Fri, 01/27/2012 - 09:58 | 2102213 Dr. Engali
Dr. Engali's picture

I took my son to Walmart a couple days ago, there was a toy he wanted to get. Half of the toy shelves were empty. It was the strangest thing, I've never seen it like that before. I wonder how long before the food shelves are like that?

Fri, 01/27/2012 - 10:02 | 2102226 LawsofPhysics
LawsofPhysics's picture

right after the price controls are put in place.  So long as the foods prices can go up, the shelves will have food.  When the farmers and food processors can not get the prices they want, then you can sweat.

Fri, 01/27/2012 - 10:08 | 2102250 Dr. Engali
Dr. Engali's picture

Personaly I'm not gonna sweat it, other than the social unrest that is coming, I keep a well stocked pantry.

Fri, 01/27/2012 - 10:11 | 2102260 LawsofPhysics
LawsofPhysics's picture

Likewise, plus we have considerable livestock.

Fri, 01/27/2012 - 10:18 | 2102283 WonderDawg
WonderDawg's picture

Just be prepared to defend it. I've seen enough of your posts to conclude that you are, but the psychological aspect of this is something that may take us all by surprise.

Fri, 01/27/2012 - 10:24 | 2102299 Dr. Engali
Dr. Engali's picture

 

"but thepsychological aspect of this is something that may take us all by surprise."

That is the key there. A lot of us are well armed and stocked, but that statement leads to  the big question. How many are prepaired for that?

Fri, 01/27/2012 - 10:28 | 2102320 WonderDawg
WonderDawg's picture

That is the big question. I hope it never comes down to having to physically defend our assets, but I don't think you can rule out any scenario at this point.

Fri, 01/27/2012 - 10:44 | 2102371 LawsofPhysics
LawsofPhysics's picture

People who have served and understand sacafice are well prepared.  If the elite's/bankers plan was to kill off sheeple in pointless wars, then they have failed by letting too many survive the first Iraq adventure, the second, as well as the 30 or so years we have been in Afghanistan.

Fri, 01/27/2012 - 10:40 | 2102357 LawsofPhysics
LawsofPhysics's picture

Several thousand well-armed folks in my co-op dawg.  Many of us have served and have spouses still on active duty.  Not really worried dawg.

Fri, 01/27/2012 - 11:02 | 2102430 WonderDawg
WonderDawg's picture

Glad to hear it. I wish I was in a similar situation. I'm surrounded by people who want to argue about Newt and Mitt.

Fri, 01/27/2012 - 11:48 | 2102583 Dr. Engali
Dr. Engali's picture

I'm in the same boat. I just shake my head and walk away.

Fri, 01/27/2012 - 13:04 | 2102788 Non Passaran
Non Passaran's picture

True that.
I was "reminded" of my crazy pro-RP stance by a friend yesterday, although I didn't even mention RP (I merely mentioned how Mitt and Newt are a joke).

Fri, 01/27/2012 - 10:11 | 2102259 CrashisOptimistic
CrashisOptimistic's picture

Food disappears from shelves when truckers can't bring it to them, because they can't get fuel (or can't pay for it).

Food scarcity is an oil thing, not a GDP thing.

Fri, 01/27/2012 - 10:12 | 2102264 LawsofPhysics
LawsofPhysics's picture

Yep, the world has essentially been eating oil for quite some time now.

Fri, 01/27/2012 - 10:46 | 2102383 kridkrid
kridkrid's picture

It's more than just the transport... I've watched a handful of "collapse"-like documentaries, so I'm not certain which one talked about food production measured in fuel consumption, but that's really what it is.  We like to think good things about ourselves with respect to the increased food production that has allowed our population to grow from approximately a billion people (a fairly steady number throughout much of human history) to our current 7 billion.  But quite literally, almost all of that is little more than a function of abundant cheap energy.

Both production and transport will hit a wall.

Fri, 01/27/2012 - 09:59 | 2102217 dwdollar
dwdollar's picture

Surprise... surprise...

Fri, 01/27/2012 - 10:06 | 2102233 Jlmadyson
Jlmadyson's picture

Ok so 2011 GDP was a grand 1.575%. Wow. Yea we are doing a whole lot better than Euroland. Take out the inventories on Q4 and we are talking barely holding water above 1. Inventories for Q1 2012 will drop us into the R word.

Yes very nasty.

Oh yea but miracles on the employment side right?

What a farce.

And again where were the analysts on WS that estimated 2011 GDP at 1.5?

Yea curtain calls.

Fri, 01/27/2012 - 10:17 | 2102281 lizzy36
lizzy36's picture

It is a good thing that Geithner welcomed us to the recovery in the summer of 2010, otherwise we might have missed it.

Funny thing is this time last year Goldman was looking for 2011 GDP to be around 4%. They were only off by 60%. I wonder what kind of bonus one gets by being 60% wrong? Reality is you propbably get promoted to the FOMC prediction (throwing darts at a board) committee.

Fri, 01/27/2012 - 10:28 | 2102319 Jlmadyson
Jlmadyson's picture

4%? Bwhahahahaha. Boy oh boy did the smartest guys in the room get it wrong.

Fri, 01/27/2012 - 10:05 | 2102238 papaswamp
papaswamp's picture

Q4 Debt increased $447 Billion….Q4 GDP grew $118 Billion. 

Q4 GDP growth was $45 Billion LESS than Q3 ($163 Bil) growth.

Fri, 01/27/2012 - 10:46 | 2102378 LawsofPhysics
LawsofPhysics's picture

People fail to understand exponential equations and what that means relative to finite stocks of energy-dense fossil fuels.

Fri, 01/27/2012 - 10:59 | 2102421 kridkrid
kridkrid's picture

Exponential equations have an even more immediate impact our credit/debt based monetary system... especially as consumers, corporations and now sovereign nations are pretty much tapped out.  A shit storm is brewing.  I'm long Mayan prophecies.

Fri, 01/27/2012 - 11:38 | 2102552 _ConanTheLibert...
_ConanTheLibertarian_'s picture

this proves that the US is past the point of no return. Click.

Fri, 01/27/2012 - 11:53 | 2102596 kridkrid
kridkrid's picture

Peak Debt + Peak Oil = Peak Civilization.

Fri, 01/27/2012 - 10:05 | 2102241 rsnoble
rsnoble's picture

Just how much plastic fucking garbage from China can the US absorb?

I need to start spending more time getting my foundry put together.  At one time it was a hobby now im not so sure if I won't have to rely on it someday. Of course now that China has all our scrap and all we have is plastic not sure how that will work. LOL.

What a fucking joke. I want to get this shit over with but instead envision a new oregon trail leading straight to tent city for the duration of the US existence.

I'm gona go melt down a briggs and stratton engine and make muffins.  That's code for ingots. My wife has no muffin pans now. Maybe cast some arrowheads. Faster and easier than knapping.

 

Fri, 01/27/2012 - 10:08 | 2102242 CrashisOptimistic
CrashisOptimistic's picture

In Q1 2011 we had a brand new $260 Billion payroll tax cut, which was stimulus.  We also had full on QE2 underway.  And we had $85 WTI.

In Q1 2012, we have the payroll tax expiring Feb 29, and extension will likely have to be "paid for" with some countering cut.  This will be an EXTRACTION of $260B from the economy, meaning "paying for it" is not presently being done.  If it is, it's destimulus.

We have no QE2 underway, and Operation Twist QE3 has done nothing.

And we have $100 WTI.

Q1 2011 had 0.4% GDP.

BTW this Q4 first look will revise.

 

 

Fri, 01/27/2012 - 10:11 | 2102261 SheepDog-One
SheepDog-One's picture

Notice the central banksters are just buying everything for themselves, sopping up US Treasuries faster than bisquits and sausage gravy at a truckstop, while the real U.S. is going right down the hole. Its all theyve been doing since the start, put rates at 0% and buy everything in sight, for free. Yea, this is scary as hell.

Fri, 01/27/2012 - 10:24 | 2102300 fonzannoon
fonzannoon's picture

Funny if you took ", this is scary as hell." out of your post you could have been Robotraded.

Fri, 01/27/2012 - 10:07 | 2102245 rsnoble
rsnoble's picture

BTW I continue to hold the belief that an economy based on gadgets and google clicks is never going to make it.

Fri, 01/27/2012 - 10:14 | 2102270 LawsofPhysics
LawsofPhysics's picture

not unless you can eat those gadgets.

Fri, 01/27/2012 - 10:08 | 2102249 new game
new game's picture

sadly, there can be only one outcome...

Fri, 01/27/2012 - 10:09 | 2102253 Dr. Engali
Dr. Engali's picture

Space aliens can bail us out?

Fri, 01/27/2012 - 10:15 | 2102275 SheepDog-One
SheepDog-One's picture

Right, there can only be 1 outcome, and theyve known what that outcome is all along. No ones under the hood trying to 'fix' anything at all here, it was all planned for the total takedown for this 1 world bank, 1 currency, 1 world govt BS which now I think they see is impossible. So we're all in some real deep shit here now.

Fri, 01/27/2012 - 10:21 | 2102291 Dr. Engali
Dr. Engali's picture

I don't think they see it as impossible. I think now it calls for plan B...... a lot less people to make it possible.

Fri, 01/27/2012 - 10:27 | 2102310 new game
new game's picture

please allow me to restate one as two (options); face the music now with worse than depression outcome or push the outcome to even more devastation - but sadly we end with one outcome with many far reaching consequnces...

Fri, 01/27/2012 - 10:09 | 2102252 Savonarola
Savonarola's picture

Lookouts below!

Clear the bridge!

Prepare to dive!

Fri, 01/27/2012 - 10:11 | 2102258 oulous
oulous's picture

What happens if you don't fight deflation? I mean you just get out of the way and let it steamroll through all the bad credit that was created?

 

I am guessing you get a faster recovery instead of a prolonged semi recession that leads to a collapse. Asset holders suffer in deflation and

the people who hold the most valuable assets make all the political decisions. Which route do you think they will choose.

 

Was the depression of the 19th century really an example of true deflation? Is there any real historical example of a true deflation?

Fri, 01/27/2012 - 10:13 | 2102265 rsnoble
rsnoble's picture

Wait a minute, since we only grew at .8% does that mean we can divide 2% by an optimistic assumption of .8% growth going forward which means we've already built everything we can sell for the next 2.5 years?

We're slashing prices! Everything must go!

Fri, 01/27/2012 - 10:15 | 2102274 Lazane
Lazane's picture

you know what they say about too many cooks in the kitchen...

Fri, 01/27/2012 - 10:18 | 2102284 Dr. Engali
Dr. Engali's picture

....Makes for a lot of butt grinding.

Fri, 01/27/2012 - 10:25 | 2102302 falak pema
falak pema's picture

One cook and many maidschen is perfect team; he works from behind like quarterback. The broth and the froth. He handles both. Hail Mary to closure.

Fri, 01/27/2012 - 10:16 | 2102277 Fastback
Fastback's picture

Swing and a Miss.

Fri, 01/27/2012 - 10:21 | 2102292 Jlmadyson
Jlmadyson's picture

Bussiness insider as linked to Drudge says 1.7% for the year, but my math says 1.575%.

Q1 .4
Q2 1.3
Q3 1.8
Q4 2.8

6.3/4=1.575 or where is the difference?

Fri, 01/27/2012 - 10:41 | 2102360 JawsMusic
JawsMusic's picture

Percent growth does not add and average... its exponetial....

So

1*((1.014^(1/4))*(1.013^(1/4))*(1.018^(1/4))*(1.028^(1/4))=1.018233 on my calculator

or 1.82% annual growth.

 

 

Fri, 01/27/2012 - 11:22 | 2102494 ucsbcanuck
ucsbcanuck's picture

Thx dude. Q1 was 0.4 not 1.4. Otherwise mathematically you're correct!

Fri, 01/27/2012 - 11:29 | 2102527 LawsofPhysics
LawsofPhysics's picture

Right, and with real inflation, GDP= -7 to -8 %,  winning!

Fri, 01/27/2012 - 10:44 | 2102370 Janice
Janice's picture

communication majors media math

Fri, 01/27/2012 - 10:22 | 2102296 The Axe
The Axe's picture

Firewall coming....all is good....Timmy is on the job......lol

Fri, 01/27/2012 - 10:26 | 2102305 Spastica Rex
Spastica Rex's picture

When it rains...

Sing it, Billie!

Fri, 01/27/2012 - 10:28 | 2102315 virgilcaine
virgilcaine's picture

The ECRI B box sees all, Achuthan said recession was unavoidable 4 months ago!

Fri, 01/27/2012 - 10:34 | 2102337 AU5K
AU5K's picture

Would love to see the year/year change in national debt posted right along side the year/year change in GDP.

 

Fri, 01/27/2012 - 10:34 | 2102338 new game
new game's picture

ot: silver (physical) up 20.5 percent YTD. annualiized 2.4 bagger-lol.

Fri, 01/27/2012 - 10:37 | 2102345 Dr. Engali
Dr. Engali's picture

       Check out this headline from Yahoo:

 

Economy likely ended 2011 with strong growth
Fri, 01/27/2012 - 10:43 | 2102365 Spastica Rex
Spastica Rex's picture

Their Newspeak is strong.

Fri, 01/27/2012 - 10:37 | 2102346 yogibear
yogibear's picture

Local taxes, fees and tolls have been rising. The government just shifted taxes again. Add in increases grocery, fod and energy you have the other 80% being tapped out. 

Fri, 01/27/2012 - 11:14 | 2102465 MachoMan
MachoMan's picture

It's going to be a pretty interesting interchange moving forward as to how central, non-localized sources extract taxes.  States and local governments can wratchet up taxes on a captive audience (e.g. real property isn't going anywhere), but the federal government isn't afforded the same luxury (despite attempting otherwise).  You can see how this will play out, at least in the short term, by looking at how traffic citations are handled. 

For example, in my locale, the city police often give "city ordinance violations" rather than speeding tickets or the like so that the citation doesn't go on the driver's record and, more importantly, the city gets the revenue from the citation and beams less of it back to the state than had it issued a ticket proper.  The state's response?  Charge all municipalities a fixed fee for any of these city ordinance violations...  The city's reply?  It added the $50 state fee to the existing price of the tickets...  going from $90 to $140 overnight.

I strongly suspect significant friction between the states and the federal government as there becomes increased wrestling over a dwindling tax base (note: one is inherently better suited to tax collection by virtue of the design of our system of government). 

Fri, 01/27/2012 - 12:27 | 2102695 Kali
Kali's picture

States receive a large portion of their budgets from Federal dollars.  I disagree.  The States will join up with the Feds, they wont bite the hand that feeds.  What I am observing is the local/county governments are the ones that are buckling, there is already big friction there.  The local/counties are in death match fights with States/Fed already.

It is fascinating watching how the States/Fed are strong arming the counties now.  I was bashed for googling it aweek or two ago. (I didn't, I was working in that County at the time), but the dissolution of Curry County in OR is still on track.  This is a very depressed county, has been for years.  They are bankrupt.  The answer from everyone is to "raise property taxes".  NO ONE HAS ANY MONEY.  I laugh, if the residents could afford higher taxes, they would be paying it (voluntarily or not).  The answer is always rob/spend OPM so the govs can survive.  Since the time I posted the link, 4 more rural counties are on the verge of collapse in OR (most further pressured from loss of Fed timber payments soon).  All the unfunded State/Federal mandates are coming home to roost.  More roads are gonna revert to gravel.  The Feds/States want the counties to provide services they can't afford, people want the services the govs provide, but nobody wants to pay for it.  What a frickin mess.

Fri, 01/27/2012 - 14:53 | 2103337 MachoMan
MachoMan's picture

Well, there are some states that are entirely dependent on the government teet, others not so much.  This is going to be another interesting friction point...  I think you're going to see more state banks (why give juice to some multinational?).  The other thing working against the centralization theory is that states are under the belief deleveraging is to occur, given state firings and belt tightening...  In other words, I think the central payments to states will decrease over time, thus exacerbating the trend.  States are going to have a whole lot less need for external infusions when they can get discharged of the pension/retirement monkey through default...  you're going to see that too (albeit in portions or nit picky ways at first).

The states have already joined up with the feds...  I disagree as to the trend moving forward (you can't join any more) and I surmise the mechanisms that will push decentralization will prevail.  It is a shrinking pie of power, but locales will gain when viewed relatively. 

Fri, 01/27/2012 - 10:39 | 2102355 Mr_Wonderful
Mr_Wonderful's picture

Very, very limp.

Stocks and commodities better start correcting.

Fri, 01/27/2012 - 10:40 | 2102356 Calmyourself
Calmyourself's picture

http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100014380/china%E2%80%99s-very-mysterious-data/

Chin's cooked numbers: rail tonnage and electricity down but growth up 8.9%..  I trust their numbers about as much as Geithners tax return..

Fri, 01/27/2012 - 10:45 | 2102379 JawsMusic
JawsMusic's picture

The Sheeple are going to be hurting this year.

Its an election year and TPTB can't have the sheeple hurting in an election year.

Gold and Silver are up after this report.

Yet this is a deflationary GDP report.

Conclusion TPTB are loosing control.

 

Fri, 01/27/2012 - 10:59 | 2102424 Spastica Rex
Spastica Rex's picture

What loss of control might look like:

http://www.youtube.com/watch?v=pKOYObwBZLc

Do NOT follow this link or you will be banned from the site!