Market Currents
The economy and stock market still have some friends, such as Goldman Sachs' Jan Hatzius, who...
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Tuesday, May 17, 2011, 6:15 PM ETThe economy and stock market still have some friends, such as Goldman Sachs' Jan Hatzius, who believes the U.S. is "years away" from the next recession. "The unemployment rate is still 9%, we're nowhere close to a really tight labor market that usually predicates a recession, so I think we're still be in a recovery for a few years." That's one way of looking at it; here's another.
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Don't we have to have a recovery before we have a recession?
This is not consistent with recession or depression - in any case weren't you geniuses all falling over yourselves to buy silver to protect against deflation. What happened to that idea?
I know the tendency is to ignore the data that does not support the narrative.
Yes recovery is slow - but it is steady. Economy is adding jobs and we are in expansion now. this is the start of a long cycle. but don't believe Hatzius - what does he know? And don't believe me - my credibility is destroyed now that I am a top 50 commenter stud boy
E
And how large is the budget shortfall in the great state of Texas over the last couple of years?
In 2008 we had a financial crisis as excess leverage and bad credit just about took down our banking system. Consumers were also highly leveraged. That leverage drove a lot of growth in our economy. Since then consumers have deleveraged as well as many corporations. Now too many people think that leverage is in the rear view mirror.
But in fact government has leveraged up to levels that are shocking and now the Fed is monetizing the debt. The debt at the government level has drove demand into the economy and growth but they are now hitting their peak borrowing capacity at current rates and they cannot keep driving the economy infinitely with debt. In fact they need to cut because the debt burden is becoming counterproductive and debt at the government level is the most unproductive capital in any economy.
The private economy has not grown much in the past 3 years when you take out government spending. That means if government has to cut back because they have no choice then will the private economy pick up the slack? I am doubtful because we are living through a period of glorifying government and villifying business and the public to private cooperation is as bad as I have ever seen it. We don't have people in government now that know how to move the levers of business and they look at business as a place they can go for riches to fund their goals or use as a whipping boy. In addition the tax debates have business sitting on their hands and just looking to cut costs.
The result is a quiet private sector with high unemployment of 9% which is likely underestimated by a long shot and a noisy and highly leveraged public sector with record employment.
Government spending has been boosting GDP which makes us look like we are not in a recession but it is not sustainable.
If you look you will see this is not an isolated event. Makes those Munis look better doesn't it? Does this smell like recession to you? And consider - with Q1 labor market badly impacted by local and state government - if that bleeding stops than +300k job growth is just around the corner.
Keep focusing on the housing market. I am sure it is the most important indicator.
AUSTIN (KXAN) - The state's struggling budget just got a boost Tuesday, as Texas Comptroller Susan Combs projected a general revenue increase of $1.2 billion for 2012-2013.
“We are updating the revenue estimate after reviewing numerous economic indicators and yesterday’s franchise tax filing deadline,” Combs said.
The increase includes the following:
Sales tax - $1 billion - HOW IS THIS POSSIBLE??????
Motor vehicle tax - $100 million - HOW??????????????
Oil production - $400 million
$300 million of the oil revenue is already dedicated for the Rainy Day Fund and will likely not go toward the next budget cycle. The rest will go to general revenue, which is leading lawmakers to wonder how the change will affect the fiscal matters legislation aimed at pumping billions of non-tax revenue back into the budget.
www.nytimes.com/2011/0...
revenues for the blue states are especially dependent in high income tax payers. In this recession, high incomes fell disproportionately, and are now recovering.
www.reuters.com/articl...
You are cherry picking Keynsian economics.
Keynsian economics also assumed that the government would not take on tremondous debt during periods of growth and thereby they would keep the powder dry for a recession. We entered this recession with a ton of debt and now it has increased to the point where the Fed has pulled on the monetization lever to buy it, keep rates low for all borrowers to keep their servicing costs down and buy time.
Debt has diminishing returns and is counterproductive at some point and we are there since the Fed is doing a lot of the funding of the debt which is terrible for the dollar and standards of living. John Maynard Keynes did not propose the damage we are doing now.
The fundamental question in my mind is what should our total output be if we have to deleverage and in view of other countries becoming a bigger share of the world economy. Shifting it from one sector to another still keeps the leverage in the economy. Should we be a $14 Trillion economy when we got here on debt steriods? Maybe it should be $12 Trillion? If so then our debt mountain looks even bigger and that is a potential disaster as nobody is thinking our economy has to downsize but if debt and output are correlated 1:1 then it is a math problem that is unavoidable.
The debt the US govt has is a serious problem, but the Fed is buying debt to lower interest rates further than it can by using the Fed Funds Rate, not to keep the US government solvent. The Fed reacted to the economy and credit markets, not to the Treasury needing to sell more debt. The US is not Greece, Ireland, or Portugal, it can sell debt on its own at low rates. The Fed's interference in this market is not a signal of weakness related to the US debt situation.
You need to keep studying. On the fiscal side Keynes did not believe that government deficits would be run in good and bad times. Rather he believed that good times would lead to surpluses which would then be drawn down in bad times through extra government spending. We have not done the former so that is why you are cherry picking Keynes as you are only looking at what we have done during after 2008. In addition if you believe the economy is so great then we should pull back on fiscal spending right now.
On the monetary side we are doing the exact same thing many countries have done that had too much debt and so they drove inflation and devalued their currency. Taken to an extreme and you have post WWI Germany, Austria and Yougoslavia. The US has some advantages that Euro countries do not but that is nothing to take much comfort in for very long. Monetizing the debt is transferring wealth from savers to borrowers and lowering standards of living. Never mind that taxpayers own that debt in the long run which has not really set in yet.
Your statements are inconsistent and not shared by anyone I have read except maybe Krugman who thinks we should spend indefinitely and all will be fantastic.
over the last 40 years the barrier has been 22%,,,,
Recession? Looks like and feels like a depression!
Jan Hatzius had best come down out of his ivory tower. Do some grocery shopping. Talk to the common person on main street. Only don't tell anyone he's a banker. For his own security.
What drivel.
What we have today is nothing compared to the Great Depression.....my grandfather lost his job, and he had to beg for food in the streets, he had lost everything....
This generation of Americans can't withstand a depression....
have a good evening
Do some research before writing......
Yes they make money. Nothing wrong with that.
I'm sure they are smart. And certainly smarter than those that may be gullible enough to take their advise for sure.
But, they don't care weather you make money.
Buyer Beware.
...Goldman Sachs gives excellent advise only to a small group of super high net worth clients....
By the way,I'm just pointing out that the data corroborate his claims. The business cycle is in a early stage....
Cotton would probably drop in price as we would only need 1/2 the denim to cover everyones' fat behinds.
LOL, you need to do some more research regarding Hatzius. That chump has revised and restated economic "positions" more times than Michael Jackson visited plastic surgeons.
On the inside track, the guy's known as a joke and flip-flopper (which could be by design knowing Goldman's record).
As for your other comment regarding bears being bears because their in some mentally depressed or angry state...well, it shows me you have no intention on trying to balance an argument within yourself. I mean, really...everything's perfect in American economics, so any contrary talk to the "recovery" MUST be illogically conditioned Freudian "id speak" right?
Scroll down to WMARKW's 18 lines of fact. After reading it, please tell him he must be unemployed or missing the right side of the trade...after all, there's no WAY his recovery contradicting list could be right.
Man I'm tired of you Keynesian mules with you blinders on...haven't you guys done enough damage?
/sarc off
Yes, nothing wrong with leaner and meaner. And you make a very sad point. What is obesity costing us in fuel usage?
why are you posting data? It is so much more fun to voice data-free opinions. A founder of one of the tabloids once famously said: no facts can stand in the way of a good story. The stories about how the world is ending, like tomorrow, either from depression, or inflation, or both at the same time are so much fun to tell. No facts can stand in their way.
Don't bring logic into this argument!
What freakin planet is this dude from? Oh Yeah,
Goldman Sachs, with the rest of our elected officials. Worthless liars.
Jerry
Everbody gets a medal, just like first grade, along with the Union, tenured teachers in charge.
As for the anti-banking comments, its typical of SA. When the economy is losing 700,000 jobs a month, the sky was falling. Now that its adding 240,000 jobs a month, the sky's still falling. In a month retail gas prices will have backed off considerably from $4, and the mood of the country will begin to rebound. Sure full employment is likely still 2 years away, but to say we are still in recession is, by the definition of the word, wrong.
But all depends on the person perspective, most of the SA posters that are bearish is because they are unemployed, divorced or were impacted by whatever calamity that can happen to a person...
There was too many a**holes that were cruising around doing TD's and not leaving a comment to express any point of view and I seen it on a number of comments from various people.
I had a few losers that did nothing but silently TD me by following all my comments...........TD stalkers. Full of hate and no brains.
It would be nice. I actually enjoyed getting the TDs. Curmudgeon that I am, and all.
I am totally with you. Without the validation of the Thumbs Down - it is hard to discern the wheat from the chaff.
Why SA did you remove the best contraindicator around?
It is discombobulating.
Moi a Top 50 Commenter? I have become the thing I despise. Why are you punishing me? Why?
Lumping me with Marketgollum, Eeyore and bunch of other loseimaries??!!
Cruel. Too cruel
E
Yeah,
You will never be able to get out of the Top 50 now, with the new system.
Welcome to the club!!!
Doom, gloom, kaboom!!!! Sing it with me Doc.............
The great Thumb heist is all a grand master plan to get Obama re-elected. Youy know. Make everyone feel good.
It's Thumb inflation - what we need is a return to the Quinn standard.
How's that 1980? - is that crazy enough for you to qualify me as a bona fide Top 50 stud boy?
E
wow, congrats! "Top 50" HAHAHA!!!!
reap it troll boy! You and your 20 alteregos should celebrate and pop a bottle of Asti from your mom's fridge upstairs.
Apparently, SA joined the "everybody gets a trophy" mantra of the "Feelings Age." Now, you can only receive those warm, fuzzy, self-esteem vibes by being "liked."
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"I'm good enough, I'm smart enough, and doggone it, people like me."
-Stuart Smalley
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Marketwatch seems to have lost a lot of user participation in the comments after they removed their thumbs down button. Same thing happened with Mish's blog which used to get 100's of comments on a post and now is lucky to get 30.
Maybe SA wants less comments and page views also?
Whatever. It's stupid to have half a system! Either bring back the thumbs down button or remove the thumbs up.
The rating system...reminds me of the hippies, only peace and love...
"...a new monetary system."
It will be global (call it a Global Currency Unit, or something similar, and it will be entirely electronic - which means it can be erased when accused of a crime or something of that nature).
A black market system using barter, metals and jewelery will back-fill (like Russia in the 1970's and 80's).
Sad, I think.
So go ahead and tell me the positive notes on the economy now? See if you can list 5.
Reminiscent of the positive marketing of CDS Goldman assembled & sold and later still placed short positions against.
1. Real GDP fell to 1.8% in Q1 v 3.1% Q4
2. PPI growing at 6.6% annual rate
3. CPI including food and energy 3.2% latest 12 months.
4. Dollar declined in the last 12 months more than 9%.
5. Industrial production down
6. Retail sales gains flat without auto's and gasoline
7. Unemployment 8%, and who knows what U-6 unemployment should really be.
8. Housing prices still going down
9. Mis-directing zero interest rate policy at the FED will continue to lead to mal-investment and a failure to purge the past bubbles mal-investment.
10. No end in sight $1.5 Trillion deficits.
11. Ongoing QE required to fund federal spending
12. EU leading the way, showing us what will happen because of our debt structure
13. The only real hope to deal with debt is inflation which will further destroy segments of the economy.
14. High(est) rates of use of government handouts like unemployment, food stamps, % of people getting government checks
15. Continuation of government backed mortgages in a falling housing market with only 3.5% down payments
16. Fed, State and Local government have YET to pull the trigger on their austerity programs since they got the benefit of bailout money last year.
17. Commercial R/E loans up for reset total more than $2T
18. Failure of treasury auctions to sell out without FED purchases
OK....my fingers are tired. I'm not planning on any good economic news for...well let's just say years.
We just need the government to get out of the way. And if they don't...well I guess we'll have to go around or under them.
www.businesswire.com/n...
People are buying food and not much else. That is a sign of a sick economy. Looks good from far away but up close people are not making it.
Housing still sucks and energy prices are up.
Those are the biggest expenditure categories in a household and they are all negative.
Alas, you just don't understand the "Walmart effect."
Time and again, Walmart's sales zoom, in all categories, food included, when times get tough, as many people downgrade their expectations, shopping experience and budgets. When the situations reverse, they migrate back to their regular, usually more expensive, stores. We see the reverse effect with on the performances of high-end retailers, like Nordstrom.
So, it's no coincidence that Walmart's performance is lagging over the last couple years, as the economy has been improving. The proof that your implied conclusion that everything must be getting worse is incorrect is that if that were so, the other more expensive retailers would be seeing their performances deteriorate even faster than Walmart. Such is not the case.
Alas but you miss the obvious. And are you implying that Walmart has never grown when the economy has grown?
Don't get hung up on Walmart as that is just a rough measure of what is going on and nothing to drive economic policy. Overall I am not saying that things are getting worse but I am saying they are not getting materially better except if you are a government employee. The private sector is not that healthy. And the government cannot continue to spend for the next 20 years to make this economy run. DI is being chewed up by rising food and energy costs which are hitting all time highs. Housing sucks which was the consumers biggest savings account. The translation is that standards of living are dropping and our economy should be focused on standards of living not just high level metrics.
We have a barbell economy where people with educations are doing fine which is good for me so I have no complaints. But I spend the time looking at what is going on downstream with people who don't have educations and it looks bad. Their income is not going up but their expenses are accelerating. The UE rate at 9% is not the true number and everyone knows that. It will be very difficult to get these people off the dole until the private sector really heats up and the private sector has not been driving the growth in the last 3 years. Now with all the talk about taxes and the anti business rhetoric it probably will not grow enough.
The corporate sector is growing off of foreign earnings and the devalued dollar.
No time for more but we are becoming old Europe.
online.wsj.com/article...
Only a very robust private economy bordering on hot can work us out of this mess and I don't see it.
www.haver.com/comment/...
Whether or not the U.S. sinks into a deeper recession won't be determined by the economy, it will be determined by the dumb things the government does.
All would do well do read this link:
www.cato.org/pub_displ...
I would only ask that SA provide two TU options "Like" and " Like All" it would save time.
Disappointing as the "Im OK, you're OK" system may be, there may be one salutary side effect: Now, when somebody has something genuinely negative to say in reaction to a comment, they are forced to elaborate their position in a reply, rather than merely complain silently, not providing the wisdom of their own rationale.
In terms of a change in the previous rating system, I had actually suggested to SA that they adopt a measurement system that considered the percentage of thumbs-up to total votes, rather than merely the absolute difference between thumbs-ups and thumbs-downs. This would have better recognized the quality of various commenter's contributions, rather than rewarding volume.
Instead, in the new voting system, "everybody gets a trophy."
Though I wasnt aware SA has incorporated a " you must elaborate" function, will they be adding a "thumbs screw" icon :)
The problem with the ratings system is the virus-like invasion of "multiple account fraud". The entire Seeking Alpha rating system has been corrupted now for about half a year. There is a person(s) with multiple profiles (about 20+/-) that loads up's AND down's where they see fit (many "up's" on pro-Bernanke/Keynesian support and many "downs" on anti QE, Bernanke comment). This has dramatically shifted many user "ratings" and skewed the "perception" of public opinion regarding comments.
On multiple occasions, I have watch my and many other users post comment(s) with reasonably balanced ratings "inflow", only then to watch 10-20 thumbs to flood in a 5-10 minute period. You can literally hit the refresh button and watch them add up that fast. I have also seen weeks of comments get hammered with multiple thumbs all at once. Very obvious and certainly NOT the work of a naturally occurring peer opinion ratings system.
I've said this prior, ironically it mimics real life markets and their "ratings systems" where only a select few control and skew the perceived reality of a system . Kind of humorous when put into that perspective.
SA should require a written response with any rating, then only those willing to sit and type and not just click TU or TD will be accepted. This will eliminate the mass rating fraud you speak of. This would also identify those who are on SA just to skew opinions
This is a fantastic suggestion, and I hope you forward it to the SA staff. I believe all would agree with such a logical fix (well, except for the "thumbs troll" of course).
If an SA editor/moderator is reading this thread, perhaps you can chime in.
You have constructed this amazingly elaborate world where a person or people are out to influence public opinion by "subverting" a reasonably balanced rating inflow...
Are you kidding? Voting for comments on SA actually matters?
The opinion of tripleblack and user35732 matter? When they speak - people listen? You are joking right?
One number counts - net worth - the rest is garbage
One thing counts - a comment or opinion well argued and based in fact - not the mean spirited one liner garbage or the conspiracy crap about banksters and the rest of the boogeyman that you and the other Glen Back disciples have imagined.
Anyway that's it for me - I have got to go and update my resume
SA top 50 Commenter stud boy - has a nice ring to it.
E
Well connie ol' boy looks like you better revise your way of thinking then, cause all my "conspiracy" chatter through the years is coming to the surface as...wait for it....fact. Amazing how that happens when you stay consistent with silly things such as "honesty" and "common sense"
Im feeling kinda down because I cant "Like" myself, can somebody give me a TU so I know you like me you really like me!
We'll probably discover they have a side business peddling anti-depressants. :-)