Guy Who Explained How We "Ended The Great Recession" A Month Ago, Now Sees 1 In 3 Chance Of Double Dip, Calls For QE2

Arguably the one most definitive market top ticking activity of the past month, in addition of course to Tim Geithner's absolutely disastrous "Welcome to the Recovery Pamphlet" issued literally hours before the wave of economic downgrades of US GDP by Wall Street began in earnest, was Mark Zandi and Alan Blinder's even more laughable administrative job cover letter titled "How We Ended The Great Recession" (yes, gentlemen, we remember). Which is why we read with great fascination that not even a month after the paper was released, Alan Blinder told Bloomberg that "Things seem to be losing momentum. The lending part of the financial system doesn’t seem to be curing itself." Actually, Alan, if that is your justification for why the momentum is being lost, you are an idiot - the lending part, or the supply side, is perfectly cured: it is the demand aspect which proud Ph.D.-bearing economists such as yourself always ignore - yes, people, the medium and small businesses, and virtually everyone else, who makes the economy tick (not Wall Street), don't need the bank's steenking money - not at 20%, not at 0.002%, if they don't know whether they will have a job tomorrow, or if upon waking up their stocks and 401(k) won't be worth 50% what they were the night before. And not to be left alone, Mark Zandi, the other member of the permaclown duo, told Bloomberg TV that he now puts the chance of a double-dip recession at 1 in 3. "If you’d ask me 4-8 weeks ago, I would have said 1 in 4, 12 weeks ago, 1 in 5. So it is rising uncomfortably high." How about 15.8 weeks ago: was the chance 1 in 69? What is it with these economists who need to scientificate every bullshit concept of their worthless occupation? Why quantify the merely abstract? Do economists have such a great mathematician penis envy, that they have to cloak their infinite lack of understanding in irrelevant numbers? The fact that this man a month ago said things are all good, and never realized that America had never emerged from the recession, is all you need to know just how much credibility any and every person working for Moody's has. But we knew that already. And just because a Moody's economist sees the only hope left before the country as even more QE, it merely shows that when QE finally does strike (which it will) it will be the end game for America, and its currency. At least we now know that in the meantime Zandi has blown any chance he may have had getting a job with the administration.

More from Zandi's interview:

Zandi on his predictions re: double-dip recession:
“I put it that 1 in 3 right now. If you’d ask me 4-8 weeks ago, I would have said 1 in 4, 12 weeks ago, 1 and 5. So it is rising uncomfortably high. I am assuming that tax rates on upper income households will in fact occur on January 1st. If that doesn’t happen, it could reduce the odds back closer to 1 in 4. But 1 in 3, that is uncomfortably high. Particularly we’re at a 9.5% unemployment rate. If we go back into recession, it’s going to be very difficult to get out of it in any king graceful way.”

On QE:
“The economy will, at best, be very weak, so weak that unemployment will begin to rise again. I think that’ll be the signal for the Fed to resume quantitative easing.”

On whether the economy will backtrack into a recession:
“I do think that the Federal Reserve will restart quantitative easing over the next few months. I think the economy is going to be, at best, very weak, so weak that unemployment will begin to rise again and I think that will be a signal for the fed to resume quantitative easing.”

On whether he expects job growth in the current market:
“I do expect some job growth, yes, but not enough to forestall further increase in unemployment. Just to give you a number, we need approximately 150,000 jobs per month just for a stable rate of unemployment. Since the beginning of the year, we’ve been getting closer to 100K, subtracting the ups and downs of census hiring. Over the next few months, I would expect no more than 50K given the recent weakening in economic growth. And so that’s not enough to forestall further increases in unemployment.”

Zandi on expectations for Bernanke’s speech tomorrow at the Kansas City Fed:
 “The first thing he needs to do is put the string of economic data we’ve been getting into some context. How weak does he think the recovery really is? Then I think he needs to explain more clearly the FOMC’s actions a few weeks ago. Why hold the balance sheet constant? What was the logic behind that? It would be helpful if he could then give as benchmarks for understanding when they possibly could resume quantitative easing, start buying more treasuries, securities and growing the balance sheet.”

On news today that U.S. mortgages with overdue payments have risen in Q2:
“That is a bit disconcerting. It is clear the foreclosure crisis continues on, by my data, we have 4.3 million first mortgage loans are in default or 90 days delinquent and thus headed to default. That is a lot of loans to work through and many will go into foreclosure sale. One more reason to believe that house prices will decline. One encouraging thing was the decline in early stage delinquency. The recent bump up is a bit disconcerting. I do not think it is the beginning of a trend. I am hopeful, that in the next few quarters, we’ll see that come back down again given the tightening in the underwriting and the view that we’ll get some job growth.”

On whether Congress should raise the tax rate for the top 2% in 2011:

“I think if we raise those tax rates, in all likelihood the recovery will still remain intact but I think that is a gamble that would be unnecessary. I do think it would prudent given how fragile the recovery is not to raise any more taxes in 2011. Now in 2012, 13, 14 when the economy is up and running, raising those tax rates in upper income households, I don’t think we’ll have any meaningful impact on their spending and saving on the broader economy and would help with respect to fiscal problems. But I just wouldn’t do it at 2011. It is one more thing for the economy to overcome when the economy has a lot to overcome.”

On what he thinks will tip us towards a second recession:

“It could be, for example, if angst about the European debt situation were to flare up again and we’d see the equity market, stock prices fall another 5% or 10%. I think that would certainly qualify and that could push us back into recession.”

On the European debt situation:
“We’re watching very carefully. The coast isn’t clear. The European economy is holding up better than I would have thought to this point. But it has a lot of headwinds, the fiscal austerity, the financial constraints given the problems in their own banking system, so there is a lot more work to be done. I don’t think they will work to the problem quite yet.”

On tomorrow’s GDP figure and whether he agrees with the consensus is 1.4%:
“I think that is about right. That would be reduction of about a percentage point in estimated growth. Most of that because of a wider trade deficit, some of it related to less inventory. But it clearly highlights the economy lost momentum in the Q2.