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Anyone who has kids knows what I'm talking about. Have you ever opened your kid's diaper and you leap back in horror at the sight of a Green Poop? It is revolting, disgusting, and will make you gag. With the U.S. economy, I see green poops everywhere. Ben Bernanke and Barrack Obama must have been looking at the economy from a distance when they thought they saw Green Shoots. Their bad.

Whenever the idiots on CNBC tell me everything is getting better and the market will be up 15% in the next year I turn to the people who have been the voices of reason for the last decade. Robert Shiller, who called both the bubble and the housing bubble said this week that the housing market will fall further and then languish for years.

Nouriel Roubini, who predicted the financial system collapse, says that unemployment will officially hit 11% and not recover for years as the jobs continue to go off-shore.

John Mauldin questioned this week how the world will be able to sell $5 TRILLION in debt into the market to pay for their deficits. Interest rates will go up.

Obama will ram through Healthcare and Cap & Trade which will increase taxes dramatically as they let Bush's tax cuts expire in 2011 which is an effective tax increase.

This Green Poop is really starting to smell. It smells like THE GREAT DEPRESSION 2.


Shiller on Housing

by CalculatedRisk on 7/13/2009 10:19:00 AM

 "One thing is true about housing, it is a very inefficient market - and it shows momentum. And in fact, when the rate of decline slows that is evidence that the rate of decline will continue to slow because there has been a second derivative effect that is actually in the data historically."
Robert Shiller, July 13, 2009An interview with Robert Shiller at Tech Ticker: “Another Bubble” In Housing? It Could Happen, Says Yale’s Robert Shiller (ht Dirk van Dijk) The slowing rate of decline in home prices is likely to continue but the housing market is "still in an abysmal situation," says Robert Shiller, a professor of economics at Yale. ... [Shiller] says the housing market could "languish for many years," due to the "huge inventory" of unsold holds, "shadow inventory" of homes kept off the market by banks and other potential sellers, and "a lot of financial problems."

[Shiller] believes "there could be another bubble" in housing, once the excess inventory is worked off. "This is not my more probable scenario [but] people have gotten very speculative in their attitudes toward housing," he says.Housing markets are very inefficient - and that is why it takes several years for prices to fall to a market clearing price. Even if the rate of price declines has slowed, there will probably be a long tail of real price declines in many areas. "My more probable scenario is languishing of the housing market for years."
Robert Shiller


Mounting Job Losses Will Hurt Consumption, Housing, Banks’ Balance Sheets, Public Finances and Lead to Protectionist Pressures
Nouriel Roubini | Jul 14, 2009

Recent data suggest that job market conditions are not improving in the United States and other advanced economies. In the U.S., the unemployment rate, currently at 9.5%, is poised to rise above 10% by the fall. It should peak at 11% some time in 2010 and remain well above 10% for a long time. The unemployment rate will peak above 10% in most other advanced economies (especially Europe and Japan), too, where social safety nets are broader and thus leading to less short term job losses and pain, but where the effects of the crisis on growth have been even more severe than the U.S.


But these raw figures on job losses, bad as they are, actually understate the weakness in world labor markets. If you include partially employed workers and discouraged workers who left the U.S. labor force, for example, the unemployment rate is already 16.5%; even temporary employment is sharply down. Monetary and fiscal stimulus in most countries has done little to slow down the rate of job losses as economies suffer from  problems of insolvency, not just illiquidity, and as the fiscal stimulus programs are too small and not labor intensive enough. As a result, total labor income – the product of jobs times hours worked times average hourly wages – has fallen dramatically.


Moreover, many employers, seeking to “share the pain” of the recession and slow down the rate of layoffs, are now asking workers to accept cuts in both hours and hourly wages. Thus, the total effect of the recession on labor income of jobs, hours and wage reductions is much larger.


Other indicators are suggesting a protracted period of job losses and a persistently high unemployment rate even after the recession is over. The average duration of unemployment is not at an all time high in the U.S. Many manufacturing sectors are on a secular decline (autos, etc.) and employers are shedding jobs on a permanent basis; employment in the previously bubbly sectors (housing and related housing/real estate services, banking and financial services) is falling sharply and will not recover for a long time. The process of offshore outsourcing of both blue collar and white collar jobs is still in full swing. A lot of the job losses in the U.S. and in other advanced economies are structural rather than cyclical; many jobs will never come back.