Economic REALITY thread

[antagon]

i see the far east trailing our economy because of the producer/consumer relationship we have. the only drag i can conceive is that of china on the dollar. what relationship do you see between the EU and the US which could drag us under. our economy is a lifeboat for sinking investment in the eurozone. if that does not pan out in our favor, shrinking investment from the EU comprises a fraction of total investment, which in turn is a small fraction of our economic base. they've now managed to underrate the euro, and that won't last for long enough to create persistent consequences to trade.

 

[bugs]

Stocks are down over 10% in the last 30 days...
Stocks turn sharply lower in late trading - Yahoo! Finance

NEW YORK (AP) -- Stocks took another late-day dive Tuesday after the government said it was starting criminal and civil investigations into the Gulf of Mexico oil spill.

The Dow Jones industrial average dropped almost 113 points. Its plunge came shortly before the close and minutes after Attorney General Eric Holder made the announcement. Stocks in energy companies and oil service providers tumbled on the news, and other stocks followed.

Holder would not say which companies or individuals might be under investigation. But investors quickly dumped stocks across the energy industry. BP PLC, which operated the rig that caused the spill, fell almost 15 percent. Anadarko Petroleum Corp., which has a stake in the rig that exploded, tumbled nearly 20 percent. Oil services company Halliburton Inc. fell almost 15 percent.

Analysts have said the oil spill has been among the many issues nagging at investors in recent weeks. Among the fears in the market is the potential economic hit from the spill. But Tuesday's announcement raised the possibility that oil companies might have to pay out huge amounts in fines, or see their operations hampered by a government investigation.

"Right now it's headline risk that's killing us in this market," said Ken Kamen, president of Mercadien Asset Management in Hamilton, N.J. He said the question marks that pop up when news breaks are making traders think it's safer to just retreat.

"When you just get over third-degree burns you don't go too near that stove. Last year is not too far out of peoples' minds," Kamen said, referring to the market's slide in 2008 and early 2009.

Bottom Line.. Stock Market is GOING DOWN.. and i See "0" Evidence of ANY Economic Recovery..

 

[antagon]

this is the right thread for you then, bugs. there's plenty of ammo here for those who want to ignore any recovery.

 

[Zander]

this is the right thread for you then, bugs. there's plenty of ammo here for those who want to ignore any recovery.

I think there has been a recovery, but it is now over. We are heading for another recession. We still have not dealt with deflation.

 

[Zander]

Stocks jumped 2% today - they are now only down 10% since April 23rd.
Stocks rise after pending home sales top forecasts - Yahoo! Finance
This represents an excellent opportunity to sell. Do it while you can. Cut back all exposure to stocks and corporate bonds. If you are financially savvy, consider buying an inverse mutual fund, or shorting the market.

 

[william the wie]

i see the far east trailing our economy because of the producer/consumer relationship we have. the only drag i can conceive is that of china on the dollar. what relationship do you see between the EU and the US which could drag us under. our economy is a lifeboat for sinking investment in the eurozone. if that does not pan out in our favor, shrinking investment from the EU comprises a fraction of total investment, which in turn is a small fraction of our economic base. they've now managed to underrate the euro, and that won't last for long enough to create persistent consequences to trade.

The EU zone seems to be headed for at least a currency split and more like a complete collapse.

 

[uscitizen]

Is it even proper/realistic to put economics and reality in the same sentance?

 

[william the wie]

Stocks jumped 2% today - they are now only down 10% since April 23rd.
Stocks rise after pending home sales top forecasts - Yahoo! Finance
This represents an excellent opportunity to sell. Do it while you can. Cut back all exposure to stocks and corporate bonds. If you are financially savvy, consider buying and inverse mutual fund, or shorting the market.

Internally that makes sense:

Recovery is weak due to the huge debt overhang.

The stock market has outrun fundamentals.

But externally the US remains the best of the worst and that is why the stock market has gone too high. The Far East and EU are both in deep trouble making the US look comparatively good. Both have unfunded liabilities that are worse than the problems the US has with unfunded liabilities. The US markets could end up anywhere given the disconnect between internals and externals.

 

[uscitizen]

Without Job growth we are still spiraling in.

We exist for quite a while on inertia.

 

[antagon]

i see the far east trailing our economy because of the producer/consumer relationship we have. the only drag i can conceive is that of china on the dollar. what relationship do you see between the EU and the US which could drag us under. our economy is a lifeboat for sinking investment in the eurozone. if that does not pan out in our favor, shrinking investment from the EU comprises a fraction of total investment, which in turn is a small fraction of our economic base. they've now managed to underrate the euro, and that won't last for long enough to create persistent consequences to trade.

The EU zone seems to be headed for at least a currency split and more like a complete collapse.

i find this to be far-fetched on either prognosis. i dont see any likelihood of a split in the next 2-3 years. i think that people hop on the bandwagon of panic without realizing that southern europe was invited into the euro to moderate its sky-rocketing value in the first place. in such a deflationary environment as this, it is no doubt that germany, a manufacturing power welcomed an opportunity to hype up weakness in the euro. italy, spain, portugal and greece, maybe ireland had their head in a vice with economies of their nature and a currency of so high a value obtained in so short a span. the current trend bodes well for them too. it is now more likely to hold together than before grecophobia kicked in.

and collapse how? its funny to me: the arbitrary collapse predictions.

 

[Toro]

Bottom Line.. Stock Market is GOING DOWN.. and i See "0" Evidence of ANY Economic Recovery..

I think we're bottoming here, at least in the near-term.

And in case you think I'm talking my book, I hedged out much of my exposure today, only to be whipsawed by the action.

Intra-day volatility is very high. The last few times it has spiked like this, it indicated a bottom. Don't know if it does again, but we are extremely over-sold.

 

[Zander]

Bottom Line.. Stock Market is GOING DOWN.. and i See "0" Evidence of ANY Economic Recovery..

I think we're bottoming here, at least in the near-term.

And in case you think I'm talking my book, I hedged out much of my exposure today, only to be whipsawed by the action.

Intra-day volatility is very high. The last few times it has spiked like this, it indicated a bottom. Don't know if it does again, but we are extremely over-sold.

In my view, the stock market is showing the kind of extreme volatility and severe strains that typically precede major implosions. I wouldn't let any temporary rallies lull you into a false sense of bullishness. Best of luck!

 

[Big Fitz]

this is the right thread for you then, bugs. there's plenty of ammo here for those who want to ignore any recovery.

It's not that, well okay for ME, I'm not ignoring some of the positive signs, but often they are based on the fact they are being propped up by government borrowing and subsidies and rebates. Cash we don't have. It's just paying off one credit card with a different one, hoping we can keep one step ahead of our debtors.

For instance, home sales are still improving a little bit or not declining as fast because of the home buyer's credit. The instant this credit goes away, that will stop and quickly reverse course. This is due to the fact that the fundamental flaws that have caused the housing crisis have not been fixed, only refilled with borrowed/printed cash.

The job market isn't improving really because unemployment benefits keep getting extended. I have five friends collecting unemployment and would be totally fooked if it wasn't for the fact they're getting them. 3 would result probably in home mortgage defaults as well. But what this means is that when the money runs out for these benefits, currently supplied by borrowing as well, people will be diving for jobs like crazy, and you'll start seeing those people showing up in the data again. There is a vast pool of disenfranchised unemployed out there, just waiting for a sign they can get work again that even comes close to resembling what they used to get... and many of those jobs aren't there anymore are years from coming back.

We have bandages on sucking chest wounds. We can survive for now, but not for long if we don't start trying to fix the foundational injuries before we bleed out.

 

[Big Fitz]

Bottom Line.. Stock Market is GOING DOWN.. and i See "0" Evidence of ANY Economic Recovery..

I think we're bottoming here, at least in the near-term.

And in case you think I'm talking my book, I hedged out much of my exposure today, only to be whipsawed by the action.

Intra-day volatility is very high. The last few times it has spiked like this, it indicated a bottom. Don't know if it does again, but we are extremely over-sold.

In my view, the stock market is showing the kind of extreme volatility and severe strains that typically precede major implosions. I wouldn't let any temporary rallies lull you into a false sense of bullishness. Best of luck!

And when it goes, you are going to see multiple implosions in banking, housing, energy and a few other sectors.

 

[Neubarth]

Why? Greece is on the verge of default, Dubai had to be bailed out by Abu Dhabi, Lithuania and Ireland have had to make extremely deep cuts to their budgets, and the world's governments have transferred the liabilities of their financial sectors to their own balance sheets.

And gold sits near an all-time high.

Because you know as well as I do that the American economy is significantly larger than those of Greece, Ireland, Lithuania, and the UAE, and that gives us significantly more room to maneuver. I'm not saying we don't need to get our debt under control, only that some of the claims made about it are significantly overblown.

The question is not whether or not America is going to default. The question is what is the probability of a default?

I do not believe that the US is going to default, but I believe that the market is underpricing the risk of a default. If the market thinks the odds are 5%, then I think it is higher, maybe 15%. That still means that I don't think the US will default but it is higher than most people believe.

The reason is simply because the math does not work. We already have a high amount of debt, we have accelerating liabilities in social security and medicare, and we are piling on more liabilities with this administration. Either taxes have to go up significantly and/or spending and entitlements have to be slashed drastically.

Having seen similar crises in other countries - and I mean developed countries, such as New Zealand, Canada and the UK - what must first happen is that the country must be pushed to the brink, and a realization and consensus that something must be done must come to the populace. America is nowhere near that point. If that consensus never comes, America will default on its debt.

I am optimistic that Americans will eventually come to that consensus, but I am less optimistic than I was a few years ago. People are becoming more, not less ideologically strident. That is a recipe for failure. I am not an American. I always assumed that I would eventually become an American citizen, but after watching the political dialogue over the past few years, I am now for the first time reconsidering nationalization. As a Canadian, I am not taxed on my worldwide income. Americans are. If a consensus is not reached, then bad things are going to happen in this country, and it may be best that I re-locate to the Caymans or Bermuda to avoid the financial chaos that could ensue. I don't think that will happen, but I am now considering that it may.

TOTALLY IDIOTIC SUPPOSITION. When are you guys going to wake up. If we did away with the FED, we would have no choice but to default. Otherwise, as long as we have the FED, we are home free.

 

[antagon]

this is the right thread for you then, bugs. there's plenty of ammo here for those who want to ignore any recovery.

It's not that, well okay for ME, I'm not ignoring some of the positive signs, but often they are based on the fact they are being propped up by government borrowing and subsidies and rebates. Cash we don't have. It's just paying off one credit card with a different one, hoping we can keep one step ahead of our debtors.

For instance, home sales are still improving a little bit or not declining as fast because of the home buyer's credit. The instant this credit goes away, that will stop and quickly reverse course. This is due to the fact that the fundamental flaws that have caused the housing crisis have not been fixed, only refilled with borrowed/printed cash.

The job market isn't improving really because unemployment benefits keep getting extended. I have five friends collecting unemployment and would be totally fooked if it wasn't for the fact they're getting them. 3 would result probably in home mortgage defaults as well. But what this means is that when the money runs out for these benefits, currently supplied by borrowing as well, people will be diving for jobs like crazy, and you'll start seeing those people showing up in the data again. There is a vast pool of disenfranchised unemployed out there, just waiting for a sign they can get work again that even comes close to resembling what they used to get... and many of those jobs aren't there anymore are years from coming back.

We have bandages on sucking chest wounds. We can survive for now, but not for long if we don't start trying to fix the foundational injuries before we bleed out.

i like medical analogies myself. the role that the government is playing in our economy at the moment is a bit like a pain reliever which is also indicated to reduce swelling. when your buddies on unemployment get their check, it is indeed a relief of the pains which come from losing your income. when the government issues the check, it is helping to reduce swelling which cuts circulation to a wound, increasing the chance for infection and slowing or damaging its ability to heal itself.

the bills and expenditures which unemployed are still managing to pay because of their benefits help to slow the deflationary action which unemployment creates. if the demand for goods and services is slashed due to unemployment seriously altering the average earnings in a city, that businesses in the city will respond by further reducing the labor force - either by layoffs or when they go belly-up. this will, in turn, further reduce the demand for goods. when homes and goods are repossesed, deflationary activity amounting to tens of thousands of dollars is realized. when businesses cant sell a widget or widget repair service for a dollar, and discount that service to 80 cents on that dollar, further deflation is realized in the market. less wealth is created at a given transaction and a cycle lending to further unemployment will take hold.

this is all happening anyhow. the government and agencies like the fed are the only on the planet which will try to shore that situation up. the business community will not hire your friends in an effort to get the economy going, but on the basis of demand for their services. what might be pain relief for your friends is an effort to protect forces driving down that demand, looking at the bigger picture. what else do you expect the government to do? how else would you expect the economy to recover from such a deep trough without this sort of help?

there's no way the government could fix the 'foundational injuries' sustained in the last couple years. that will have to come with time and some corrections in the private sector. it is even more realistic to look at the economy as a plant: it is more freeform. dependencies on employment and credit are two which our economy will shrink away from in this recovery, latching onto some other forces which will give these time to heal well into the expansion.

 

[editec]

It's damned hard for those of us who are without employment to see a recovery happening.

And when it comes to economics, there is some merit in thinking that perception is reality.

When enough of the people percieve that they are in trouble, they are going to act accordingly.

And our economic system DEMANDS public confidence to advance.

So if we want to the economy to revover, we have got to find real EMPLOYMENT for the millions of American who need jobs.

 

[Neubarth]

It's damned hard for those of us who are without employment to see a recovery happening.

And when it comes to economics, there is some merit in thinking that perception is reality.

When enough of the people percieve that they are in trouble, they are going to act accordingly.

And our economic system DEMANDS public confidence to advance.

So if we want to the economy to revover, we have got to find real EMPLOYMENT for the millions of American who need jobs.

So very true!

As I have been pointing out to the uneducated on this board, Artificial GDP bought with excessive Federal expenditures does not a recovering economy make.

We have seen no signs of actual recovery, but we did come close in the past two months. Now it looks like it is all going to collapse. Hopefully not overnight.

When you see the actual Unemployment Claims starting to edge up like they are doing, you have reason to fear. Remember this, the only viable Unemployment numbers are the new claims from the states. The states do not make up an artificial labor force that is 15 million short of reality. The states do not conduct sham surveys. The states just count the number of new Claims and report that to the media and the DOL. The DOL has to report the numbers, or it would be accused of total dishonesty. They then say they have to adjust the numbers to make them more acceptable to the present administration. They do that and then say, "See how wonderful everything is getting?"

It is not getting wonderful. We are losing 100,000 more workers than we are generating.

UI Claims were 410,302 in the week ending May 29, an increase of 3,427 from the previous week. We are now falling again.

 

[pinqy]

Remember this, the only viable Unemployment numbers are the new claims from the states. The states do not make up an artificial labor force that is 15 million short of reality.

But only going by UI claims, you're NOT counting millions of people who are unemployed but not collecting or eligible for UI benefits. The state UI claims numbers show only 4,330,107 collecting benefits (ignoring the Federal numbers because those don't come from the states). What do you want to bet the Employment Situation gives a higher number by at least 10 million. Only in Neubarthland can one claim that Unemployment is really 30 million and the govt is lying when it says 15 million but the states are accurate in saying 4.3 million.

The states just count the number of new Claims and report that to the media and the DOL.

Which is nowhere near the total number of unemployed.

They then say they have to adjust the numbers to make them more acceptable to the present administration. They do that and then say, "See how wonderful everything is getting?"

Well, first, they don't say that at all, which means "You are a satanic lying sack of shit. You have proven yourself to be the most pathological liar I have ever encountered in my life." And second, that doesn't account for all the times where the seasonally adjusted numbers are WORSE than the unadjusted numbers. In other words: "That is a damned lie and you are a damned liar. Why do pathological liars like you abound on this forum? Please get psychiatric help. Lie after lie after lie after lie from you and you think it is perfectly normal to carry on as you do."

It is not getting wonderful. We are losing 100,000 more workers than we are generating.

UI Claims were 410,302 in the week ending May 29, an increase of 3,427 from the previous week. We are now falling again.[/QUOTE]

 

[Paulie]

The good news is that our children and grandchildren won't be paying for our mistakes.

The bad news is that WE will be paying for our mistakes.

Taxes and inflation, my man. I don't see how either one is avoidable at this point, absent some kind of miraculous epiphany in congress.

Fears of inflation are way, way overblown.

The gold market doesn't seem to think so, and the gold market is usually right.

But this being said, I'm curious to know your reasoning.