Greater Depression for U.S. Rebuts 'Recovery' Talk 31 comments
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It has gone from irritating to nauseating listening to media market-pumpers talking about an “U.S. economic recovery” which has supposedly already begun. Indeed, the hype has gone from a debate about whether the “recession” is over, to an inane debate about whether the U.S. is experiencing a “V-shaped recovery” or may suffer a “double-dip recession” or W-shaped “recovery”.
In the real world, however, all that has occurred is that an U.S. economic collapse, which was in a near-vertical drop, has eased to a more moderate rate of decline. The “double-dip” talked about by some semi-realistic analysts is in fact nothing more than the ongoing collapse regaining downward momentum. There is no “debate” here. It is a matter of simple arithmetic that the U.S. economy cannot recover.
First of all, in the “big picture”, the U.S.'s $11-trillion economy (all that remains once statistical “padding” is removed) is much too small to service the more than $57 trillion in existing public and private debt. Even if we pretend the U.S. still has a $14 trillion economy (despite the government's own numbers that this economy has shrunk by more than 10%), it is still much too small to service its debts. Meanwhile, lurking in the near future are roughly $70 trillion in additional “unfunded liabilities”.
As I have pointed out on a number of occasions, the U.S. can never afford to raise interest rates again (at least not until after the inevitable national default on its massive debts). Every 1% rise in U.S. interest rates drains over $500 billion per year from the U.S. economy, equivalent to roughly a 5% drop in GDP for every 1% rise in interest rates. It is also inevitable that the bond market will impose much higher interest rates on the U.S. economy – as deficits get more out-of-control (and myopic U.S. creditors finally see the total insolvency of the U.S. economy). Thus, the U.S. is guaranteed to go bankrupt – the only issue is when.
The Obama stimulus package is far too small to stop the current collapse in the U.S. economy. Keep in mind that the same propagandists who claim that Obama's stimulus package would “save” the U.S. economy were saying the same things about the much smaller Bush “stimulus package” - little more than a year ago.
The fact is that the U.S. consumer economy has lost somewhere in the neighbourhood of $2 trillion per year in spending power. At the peak of the U.S. housing bubble, home-equity financings injected $840 billion into the economy in one year. Not only has such cash-flow into the U.S. economy completely evaporated, but now the debtors have to pay back the trillions in debt which they squandered.
Contrary to the absurd jobs propaganda, the U.S. economy has already lost somewhere in excess of 15 million jobs already – subtracting at least $1 trillion per year in spending from the economy once the “multiplier effect” is factored in. This disconnect from the real world reached its peak this summer, symbolized by a Reuters article that actually stated that while U.S. unemployment was “improving at the national level” it was getting worse on a state-by-state basis (see “BLS jobs numbers contradict BLS jobs numbers”).
Obviously the U.S. economy is represented by the collective economic performance of its 50 states. Yet in the fantasy-world of U.S. economic propaganda, we are supposed to believe that nationally the U.S. economy can be improving, while state-by-state the economy continues plummeting downward. The only difference between the U.S.'s “national economy” and the “state-by-state economy” is that the federal government has incorporated far more statistical contrivances to distort the numbers.
If the real condition of the U.S. economy is not already evident to people from the information above, certainly the following graphs and data on state tax revenues make things crystal-clear. The Rockefeller Institute (.pdf) recently went back as far as data was available (nearly 50 years) and discovered that the current collapse in state revenues is unprecedented – evidenced by the sickening plunge in these charts.
Again, it is a matter of elementary arithmetic that with U.S. states suffering the worst collapse in revenues on record (and with most states already maximizing their annual borrowing) that only two things can happen. Either U.S. states will have to engage in the most-punishing combination of tax-increases and spending cuts (i.e. lay-offs) on record or the Obama regime will have to dramatically increase federal hand-outs to the individual states.
Currently, in the most-recent fiscal year (ending in June of this year), declines in U.S. state revenues were more than double the amount of “stimulus” they received from the Obama regime. What makes this situation worse, most of this so-called “stimulus” involved either increasing the duration of unemployment insurance in the most-devastated regions and/or providing funds to states whose unemployment benefits were completely spent. There was virtually no money spent on creating jobs (contrary to the promises and claims of the Obama regime).
Given that shortfalls in unemployment insurance funding will be much worse in the current fiscal year, the Obama regime could double “stimulus” hand-outs to the states and still create zero jobs – doing nothing but keeping unemployment insurance payments flowing to the jobless.
This still leaves U.S. states with somewhere around $100 billion in increased deficits which will need to be covered in the current fiscal year (above and beyond their pre-existing structural deficits). Keep in mind that the entire amount of “stimulus” reaching the economy from the Obama “stimulus package” was only about $250 billion this year (using the government's own numbers). Overall, this replaces little more than 10% of the lost spending power from this economy.
The numbers are unequivocal. There is no “economic recovery” taking place in the U.S. This year is much worse than last year – and 2010 will be much worse still. The only thing currently preventing the debt-implosion of the U.S. economy is the Bernanke printing press, and continued, excessive “monetization” of debt is a guarantee of hyperinflation. All claims to the contrary represent wishful thinking or deliberate deceit.
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This article has 31 comments:
2. A majority of Americans, so far or so it seems, have outsourced not only economic decision making but even economic reasoning to the Regime. If the Regime tells them that expanding bonuses on Wall St and privileges in Wash DC and increasing Big company profits based entirely on cost (especially payroll) cutting is "recovery", they will believe it as long as the welfare and transfer payments and "cash for soul" programs keep proliferating.
If the Regime tells them that
unemployment/underempl... the credit suffocation of new and small businesses and record foreclosures are the very stuff of a "V" shaped recovery, why so it must be.
When digital addictions , lust for entitlements and taking without giving become , for a season, the derelict norms of a society, then a compression is indeed an expansion and a depression is a boom and disgrace is honor.
However, unreality and non-being prevail for only a while and can never corrupt all people in all places.
There is a remnant in American civil society that refuses to be seduced or soiled. From that remnant will come a rebirth......but first, there will a painful death of false assumptions, entitlements and appetites. There is every reason to be fearful but no reason to despair.
Everybody lets all go Jeff Nielsen's website "bullion bulls cananda" and by some Gold. Maybe this will stop these US bashing Articles.
Also to the casual reader Jeff Nielsen has publicly stated a conspiracy theory in essence blaming the USA government of planning the 9-11 attacks on it's people and killing thousands of people.. He has also stated that eh US Government is a worse enemy to the American people than Al Qaeda is.
His quote"
> "I have stated to my American friends (privately) on many occasions that the U.S. government is a much worse “enemy” of the American people than Al Qaeda would (or could) ever be."
He is a hate mongering soul.
Take what you read here with a grain of salt and also a minute infinitesimal grain of reality!
GreatWhite
Gotta find a higher ledge....................
Anyone who has been self-employed or in small business is well aware that government is a monstrous expense and impediment to accomplishment. It is a simple truism that they tax virtue and reward sloth and greed, thereby influencing the outcomes towards the negative.
How long can this go on? The lies stand there like the emperor's new clothes. Blame the messenger, believe the wildly impossible because it comes from the "authorities" who have brought us here. Believe them if, as is too often the case, you don't want to examine where that government check comes from, and it benefits you.
This is the casino system now and you have to play the game to survive. I don't believe that's what built this country to what it once was.
With the FDIC now broke shouldn't alarms be going off about getting your money out of the banks? What are your thoughts?
No, that is probably the last place to worry about - at least at the present.
The MOMENT that Americans with bank deposits had any fear of the safety of those deposits, there would be a massive "run" on the U.S. banking system.
Much simpler/safer for the government to "guarantee" everything in those accounts - and back them up with the Bernanke printing press (which is also the only thing keeping the FDIC semi-solvent).
The real area of concern is the solvency of states, and thus the greatest worry for Americans is the safety/reliability of state medical coverage and pension plans/benefits. Clearly a number of states are facing the choice of unilaterally slashing the benefits of those plans/programs - or be forced into default and even MORE severe cuts at that point.
Thus, you have U.S. states heading for debt-implosions at the same time the federal government is committed to policies which can only lead to hyperinflation.
In 2010, look for SEVERAL states to formally request federal bail-outs for the express purpose of avoiding an imminent debt-default. The real question will be when that happens does the Obame regime get Bernanke to REALLY crank-up the printing press to bail-out those states (hastening hyperinflation) OR turn his back on the states and risk a NATIONAL debt-implosion?
On Oct 20 12:27 PM Johnny Oxygen wrote:
> Jeff.
> With the FDIC now broke shouldn't alarms be going off about getting
> your money out of the banks? What are your thoughts?
Oct. 20, 2009, 1:38 p.m. EDT · Recommend (56) · Post:
Death of 'Soul of Capitalism:' Bogle, Faber, Moore
20 reasons America has lost its soul and collapse is inevitable
www.marketwatch.com/st...
reading these articles back to back makes me want to buy the non confiscatable gold and get my kids passports up to date
> The real area of concern is the solvency of states, and thus the
> greatest worry for Americans is the safety/reliability of state medical
> coverage and pension plans/benefits.
I understand Calpers “earned” $65B last quarter to supplement their account earmarked for California state employees, (including California’s law enforcement personnel), vested in their program. (Not to be confused with the government educator’s equivalent: CalSTRS that represents 295,000 additional California participants) These were $s earned in the latest run up of equities engineered by GS, JPM and other members of the Bankers without Borders (or consciences), to continue to mask the domestic ambivalence to the obvious international recognition of our domestic insolvency. Once again, California is leading the way.
imho
But with many banks now trading at a 40PE and div yield of <1% -- despite rising foreclosures and unemployment, anyone in their right mind has to look at them as overbought.
Even just a healthy return to the 200MA for SPY would produce solid gains in the short ETF of your choice.
Long term, 5-10+ years from now, plays on TBT & gold look like sure things.
As previous commentaries have pointed out, U.S. equity markets are a rigged 'game' - where Wall Street literally controls more than half of all the trading (I saw a recent estimate putting that number at 75%)...and that doesn't even factor in the manipulations of the Plunge Protection Team.
I've chosen to pursue what I consider to be a much safer course: investing in non-U.S. markets (in my case Canada's equity market) - and capitalizing on the CONSEQUENCES of a collapsing U.S. currency, and an economy fueled by nothing but propaganda and a printing press.
Similarly, while I have no doubts that China's economy will continue its long-term growth cycle, I have no desire to look for ways to invest in those markets DIRECTLY.
There are abundant profits to be made by investing in companies/countries which FEED China's insatiable appetite for commodities (with Australia and Canada being the two most-obvious examples for Westerners).
On Oct 21 11:06 AM Champstar2 wrote:
> I agree with all of the points made by the author. The huge question
> is *WHEN* will the shit hit the fan? I've been burned along the
> way by underestimating the efforts of GS & the Fed to prop up
> the economy and stock values.
>
> But with many banks now trading at a 40PE and div yield of <1% --
> despite rising foreclosures and unemployment, anyone in their right
> mind has to look at them as overbought.
>
> Even just a healthy return to the 200MA for SPY would produce solid
> gains in the short ETF of your choice.
>
> Long term, 5-10+ years from now, plays on TBT & gold look like
> sure things.
However, to directly cover state budget deficits is not tied to any existing Federal program explicitly targeted at this function. To push for such a program would be political suicide, not to mention impossible to administer.
Also, it is in the states constitution that the budget must be balanced from state revenue. Taking Federal money for state budget shortfalls will be vigorously challenged in the courts at both the Federal and state level. Federal money to close state deficits would not be a gift, but a loan. What if a state defaults on such a loan. No, this slope is even too slippery for Obama's appetite.
On Oct 20 01:49 PM Jeff Nielson wrote:
> Hi Johnny.
>
> No, that is probably the last place to worry about - at least at
> the present.
>
> The MOMENT that Americans with bank deposits had any fear of the
> safety of those deposits, there would be a massive "run" on the U.S.
> banking system.
>
> Much simpler/safer for the government to "guarantee" everything in
> those accounts - and back them up with the Bernanke printing press
> (which is also the only thing keeping the FDIC semi-solvent).
>
> The real area of concern is the solvency of states, and thus the
> greatest worry for Americans is the safety/reliability of state medical
> coverage and pension plans/benefits. Clearly a number of states are
> facing the choice of unilaterally slashing the benefits of those
> plans/programs - or be forced into default and even MORE severe cuts
> at that point.
>
> Thus, you have U.S. states heading for debt-implosions at the same
> time the federal government is committed to policies which can only
> lead to hyperinflation.
>
> In 2010, look for SEVERAL states to formally request federal bail-outs
> for the express purpose of avoiding an imminent debt-default. The
> real question will be when that happens does the Obame regime get
> Bernanke to REALLY crank-up the printing press to bail-out those
> states (hastening hyperinflation) OR turn his back on the states
> and risk a NATIONAL debt-implosion?
All we seem to get from you is flag-waving BS. Blind patriotism doesn't pay the bills and it isn't very patriotic either!
On Oct 20 10:30 AM GreatWhite wrote:
> This Article is barely worth commenting on!
>
> Everybody lets all go Jeff Nielsen's website "bullion bulls cananda"
> and by some Gold. Maybe this will stop these US bashing Articles.
>
>
> Also to the casual reader Jeff Nielsen has publicly stated a conspiracy
> theory in essence blaming the USA government of planning the 9-11
> attacks on it's people and killing thousands of people.. He has also
> stated that eh US Government is a worse enemy to the American people
> than Al Qaeda is.
>
> His quote"
I've been in the investment business for nearly 30 years and those high-tech stocks you talk about are the absolute worst stocks at these Bubble-like valuation levels - investors should avoid them at all costs.
On Oct 20 12:36 PM Angel Martin wrote:
> I still say this economic recovery is unfolding as normal. If you
> don't trust government statistics, look at corporate earnings. High
> PE multiple tech leads the cycle. Both GOOG and AAPL exceeded expectations.
> More importantly, they were both UP year over year in both profit
> and revenues. Yr over year revenue growth would not be possible for
> any company if the doom laden scenarios in this article were real.
Mathematics, in this case grade 6 arithmetic does not lie. Of course you must be able to comprehend this level of number calculation to get at what you are saying in your article. Unfortunately there are many who are functionally illiterate that won't be able to receive the message contained in your article, compliments of the very expensive public school system that is in place throughout the country. It is exactly this level of comprehension that the oligarchical elite delight in! Keep the citizenry dumb and stupid so they don't interfere with the looting going on right beneath their very noses. Keep them fat and entertained with their large flat screen TVs and mindless 'reality' shows that are so far removed from reality so as to be tragically funny. God help us! America - WAKE UP, PLEASE?
What is beyond dispute is that they both reported yr-over-yr profit and revenue growth.
This is just what one would expect at the start of a recovery. The high PE tech companies like Apple, Google etc are always the first to see better revenue and profit growth.
On Oct 21 03:46 PM Tony Daltorio wrote:
> What nonsense!
>
> I've been in the investment business for nearly 30 years and those
> high-tech stocks you talk about are the absolute worst stocks at
> these Bubble-like valuation levels - investors should avoid them
> at all costs.
Cable tv, free housing, designer duds and cell phones for all.
How long will it take another 1/6th of society to figure out the living is better when you don't work at all?
Not long, already happening.
On Oct 20 09:51 AM User 353732 wrote:
> 1. At present no state outside California(the infamous and disgraceful
> IOUs) has been able to emulate the US Central Politburo in issuing
> fake "money" to "invest" in fantasy infrastructure and non-existent
> projects. However, this may change in 2010 as contempt for the Constitution
> and the glorification of thuggery spreads from the WashDc-Manhattan-Holly...
> axis of malevolence to other parts of the country. Then the fiat
> dollar will be joined by its younger siblings, fiat IOUs (or state
> units of account or transitional monetary units or other names the
> propagandists conjure up). Americans, by their millions will continue
> to confuse ersatz and fake federal and state currencies with"money"
> and liquidity fed financial asset inflation with prosperity.
>
> 2. A majority of Americans, so far or so it seems, have outsourced
> not only economic decision making but even economic reasoning to
> the Regime. If the Regime tells them that expanding bonuses on Wall
> St and privileges in Wash DC and increasing Big company profits based
> entirely on cost (especially payroll) cutting is "recovery", they
> will believe it as long as the welfare and transfer payments and
> "cash for soul" programs keep proliferating.
> If the Regime tells them that
> unemployment/underempl... the credit suffocation of new and small
> businesses and record foreclosures are the very stuff of a "V" shaped
> recovery, why so it must be.
> When digital addictions , lust for entitlements and taking without
> giving become , for a season, the derelict norms of a society, then
> a compression is indeed an expansion and a depression is a boom and
> disgrace is honor.
>
> However, unreality and non-being prevail for only a while and can
> never corrupt all people in all places.
> There is a remnant in American civil society that refuses to be seduced
> or soiled. From that remnant will come a rebirth......but first,
> there will a painful death of false assumptions, entitlements and
> appetites. There is every reason to be fearful but no reason to despair.
On Oct 21 06:41 PM Angel Martin wrote:
> Tony, you may well be right that Google and Apple are overvalued.
>
>
> What is beyond dispute is that they both reported yr-over-yr profit
> and revenue growth.
>
> This is just what one would expect at the start of a recovery. The
> high PE tech companies like Apple, Google etc are always the first
> to see better revenue and profit growth.
On Oct 22 01:32 PM TeresaE wrote:
> Those that take are already entrenched.
>
> Cable tv, free housing, designer duds and cell phones for all.<br/>
>
> How long will it take another 1/6th of society to figure out the
> living is better when you don't work at all?
>
> Not long, already happening.
You managed to write a criticism that did not address a single, solitary fact in the article. Instead you chose to try to discredit the source - despite the fact that the mathematics he presents are repeated in hundreds of other articles, and are unassailable.
I defy you use a factual argument to prove him wrong.
On Oct 20 10:30 AM GreatWhite wrote:
> This Article is barely worth commenting on!
>
> Everybody lets all go Jeff Nielsen's website "bullion bulls cananda"
> and by some Gold. Maybe this will stop these US bashing Articles.
>
>
> Also to the casual reader Jeff Nielsen has publicly stated a conspiracy
> theory in essence blaming the USA government of planning the 9-11
> attacks on it's people and killing thousands of people.. He has also
> stated that eh US Government is a worse enemy to the American people
> than Al Qaeda is.
>
> His quote"
They prey on the collective ignorance of the sheeple electorate.
Leftfield: On target in general ; but beginning with "gov't statistics show..." all bullshit from any an all gov's. "1 in 6 in poverty in US"; you gotta go to any second and third world country and see how our "impoverished" are so overly- embellished. Right TeresaE; not enough crackberries and big screen TVs.
To Great White; Dude, what are you smoking when you read and comment on these articles. Jeff's comment about Al Qaeda is a figurative allusion.Google the meaning (figurative allusion)up on Wikipedia. I agree with the sentiments of his statement. I think you need to be following one of the more liberal-Marxist-social... (you know, the Obama-lings) blogs .
Might I suggest Keith Olberman, Rachel Madow, the New York Times,the Huffington Post, or anything mini-master-minded by George Soros or friends.
Your comments remind me of closed minded religious fundamentalists arguing with atheists. Neither side can prove the existence nor the non existence of a deity!
Without actual tangible,black and white facts NOBODY can prove that there is a GOD,and NOBODY can prove nor disprove that the Bushes and their old friends the Bin Ladens did not attack our country!
I find it interesting that anyone who swallows the info or "facts" dispensed by ANY of our administrations, is considered a "normal" human being. BUT ANYONE who has the audacity to question or investigate the info spoon fed to the public is immediately labeled a conspiracy theorist or worse.
I need to remind you that It wasn
As per his statement regarding the govt. orchestrating the 9/11 attacks please direct me to conclusive evidence to the contrary.
Your comments remind me of closed minded religious fundamentalists arguing with atheists. Neither side can prove the existence nor the non existence of a deity!
Without actual tangible,black and white facts NOBODY can prove that there is a GOD,and NOBODY can prove nor disprove that the Bushes and their old friends the Bin Ladens did not attack our country!
I find it interesting that anyone who swallows the info or "facts" dispensed by ANY of our administarations, is considered a "normal" human being. BUT ANYONE who has the audacity to question or investigate the info spoon fed to the public is immediately labelled a conspiracy theorist or worse.
I need to remind you that It wasn't that long ago that the "etched in stone" facts regarding the flat earth, and the geo-centric theory were disproven!
Open your mind. Think and research for yourself. Don't react viscerally. Accept the possibility and the eventuality that ANYTHING is possible! If you can't accomplish this,you are destined to spend the rest of your life being just another "flock thinker". If that's what you want for yourself,GOD bless you! If there is a GOD!
peace to all of us for '09 and beyond.
On Oct 20 10:30 AM GreatWhite wrote:
> This Article is barely worth commenting on!
>
> Everybody lets all go Jeff Nielsen's website "bullion bulls cananda"
> and by some Gold. Maybe this will stop these US bashing Articles.
>
>
> Also to the casual reader Jeff Nielsen has publicly stated a conspiracy
> theory in essence blaming the USA government of planning the 9-11
> attacks on it's people and killing thousands of people.. He has also
> stated that eh US Government is a worse enemy to the American people
> than Al Qaeda is.
>
> His quote"
On Oct 20 10:30 AM GreatWhite wrote:
> This Article is barely worth commenting on!
>
> Everybody lets all go Jeff Nielsen's website "bullion bulls cananda"
> and by some Gold. Maybe this will stop these US bashing Articles.
>
>
> Also to the casual reader Jeff Nielsen has publicly stated a conspiracy
> theory in essence blaming the USA government of planning the 9-11
> attacks on it's people and killing thousands of people.. He has also
> stated that eh US Government is a worse enemy to the American people
> than Al Qaeda is.
>
> His quote"
On Oct 26 12:54 PM marvkan wrote:
> Your comment is worth commenting on
> As per his statement regarding the govt. orchestrating the 9/11 attacks
> please direct me to conclusive evidence to the contrary.
On Oct 25 10:16 PM dragonpaw wrote:
> on these articles. Jeff's comment about Al Qaeda is a figurative
> allusion.Google the meaning (figurative allusion)up on Wikipedia.
> I agree with the sentiments of his statement. I think you need to
> be following one of the more liberal-Marxist-social... (you know,
> the Obama-lings) blogs .
> Might I suggest Keith Olberman, Rachel Madow, the New York Times,the
> Huffington Post, or anything mini-master-minded by George Soros or
> friends.