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The Great Recession Drags On

By Rick Ackerman Posted on August 2, 2013, 12:01 am EDT Last Updated August 2, 2013, 4:39 am EDT

[Today’s edition of Rick’s Picks continues with a new format that replaces the customary daily essay with a question concerning some important issue of the day that readers can discuss and debate until the conversation grows tired. RA]

The Powers That Be would have us believe that the U.S. economy has been recovering for the last several years. In fact, for most Americans The Great Recession of 2007-09 never ended. The term “Great Recession” itself has come to be used mainly by pundits and news anchors who wish to imply that, more than three years after the recession officially ended, its effects are still very much with us. Growth has averaged less than 2% over that time – the feeblest recovery on record – and median household income has actually fallen by $2718, or 5%, in real terms.

This is especially troubling, considering the colossal size of the monetary and fiscal stimulus attempted so far. So feeble have been the results that even economists — as optimistic a bunch of useful idiots as the White House could have on its side — are predicting that second-quarter growth will be even slower than the anemic 1.8% achieved in Q1.

What say you, readers? Here are some questions to consider:

Was the recovery never more than a bunch of statistical lies, doomed from the start? And even if not, can it possibly take hold if payrolls and wages remain stagnant? What if the real estate market suffers a relapse, or – heaven forbid –  the stock market collapses?

Your thoughtful comments are welcome.

  • Steve Jobs August 7, 2013, 11:49 am

    ‘since what you’ve posted here so far makes you sound like you never got past junior high.’

    What do you mean by that Rick? Does it really matter if I past junior high or whatsoever. My ideas and insights I provide are rock solid. Have I insulted anyone in here or you Rick? You owe me an apology. Duly.

    Best,

    Steve JOBS

  • Steve Jobs August 7, 2013, 11:46 am

    That the dollar has real demand is what destructs the seeds of defaltion. Only one cause could bring about deflation. You want to know what? Then follow me!

    Steve JOBS

  • Steve Jobs August 7, 2013, 9:01 am

    Dollar has real demand. To sustain the global trade at current levels and go beyond these level FED needs to print more dollars. Why is FED happy and content with counterfeit dollars? As FED cannot catch up with its obligations the market fills in FED and fulfills its tasks. Free market at task even at counterfeiting dollars. Why? Since the dollar is in scarcity. Dollar demand will push FED to fulfill its due diligence

  • Steve Jobs August 6, 2013, 2:04 pm

    Dear All…

    &&&&&&

    Your posts will never see the light of day in here unless you clean up your act. Here’s a short list to get you started:

    1. Provide your real name and a correct, verifiable e-mail address.
    2. Purge the expletives
    3. Ditch the promotional hype. Instead of talking generically about ‘your book’, talk about the ideas it contains.
    4. Address the Question of the Week.

    If you meet these criteria and stay on-topic for at least two weeks, I may let you mention ‘your book’. However, I have my doubts that whatever you say will be worth anything to the group, since what you’ve posted here so far makes you sound like you never got past junior high.

    RA

    • Steve Jobs August 7, 2013, 8:51 am

      1. Steve JOBS.
      2. OK
      3. I am talking about ideas. I have provided great insights and comments so far. People do appreciate good ideas. I have received great feedback. I do not promote my book as I do not need to. It will be distributed freely anyways. I am trying to help people. Do you see my point?
      4. As we live along, no deflation no hyperinflation no recession in sight. You have been talking about coming deflation for as long as I have known you but it has not arrived yet. You still post your ideas why cannot I? I told here couple of weeks ago that the normal course of business is the path for another ten years. So you have been waiting on deflation for about 20 years. When a deflation flavory crash hits for about couple of years 10 ears from now your prediction will come true about 30 years after you started expecting it to arrive. Please a bit of sanity Rick. Deflation can never rule the world for so long under circumstances the world has sustained in the macro area. But I can and will tell you what the real collapse what the real deflation is. You can read my book alternatively.

    • Steve Jobs August 7, 2013, 11:42 am

      Please publish my previous comments Rick. Otherwise that’s not fair. Best.

      Steve JOBS

  • BKL August 5, 2013, 4:29 am

    Here’s the link to an article by James Gruber about what went wrong with investing in China. Gruber was a China fund manager until just recently.

    http://www.financialsense.com/contributors/james-gruber/why-investors-got-china-wrong

  • Troll August 4, 2013, 5:24 am

    An amendment to the above:
    A 1382.25
    B 1685.75
    C 1553.25
    p 1705.00

  • Troll August 4, 2013, 5:21 am

    An alternative pattern on the ES (a one-off), if it hasn’t been mentioned in the chat room (it shows up quite well on the weekly)

    A 1382.25 C 1685.75 p 1705.00

    Enough said.

  • Cam Fitzgerald August 3, 2013, 11:59 am

    And here is one last article that might help enlighten you a little more, Mario. Fitch agency has recently stated that China’s credit bubble is unlike anything ever seen in modern history.

    It is unprecedented in size and scope. “The credit-driven growth model is clearly falling apart. This could feed into a massive over-capacity problem, and potentially into a Japanese-style deflation,” reported Charlene Chu, Fitch’s senior director in Beijing.

    Furthermore, the Chinese Securities Journal (Xinhua News subsidiary), reports that “….total credit in China’s financial system may be as high as 221pc of GDP, jumping almost eightfold over the past decade. Chinese corporate debt burdens are much higher than those of other economies. Much of the liquidity is being used to repay debt and not to finance output, it said”.

    Analyst Says China’s Credit Bubble Is Unlike Anything In Modern History
    http://www.businessinsider.com/fitch-chinas-credit-bubble-is-a-record-2013-6

    With respect to the question of the day that Rick has posed I think we can conclude that a credit crisis in China has the potential to derail the best laid plans designed to bring about a domestic recovery.

    Presumably you have access to stories out of the Chinese Securities Journal, Mario, which are representative of the governments opinion. The paper and journal are both arms of the government and express opinions first vetted by higher authorities. You can discount Fitch perhaps but give a little more credit to the analysts within China itself that have been sounding the alarms. You must stop minimizing and downplaying the problems that more informed people see as certain to lead to a crisis if not averted. They live there too…..who should I believe, them or you?

    • BKL August 3, 2013, 2:27 pm

      Thanks for the link, Cam.

      The answer to Rick’s original question is looking more and more like “severe deflation” with an undercurrent of energy price inflation.

    • gary leibowitz August 3, 2013, 7:14 pm

      If I was to try and compare China’s current situation I might loosely equate it with the turn of the century economic development in the United States. Sure there are differences such as importing as opposed to exporting commodities, political ideology, and history, but the economic situation is similar. They both came from a period of domination. China can have major blunders and absorb them at this early stage of their cycle. I wouldn’t worry about their developing bubbles as much as their trade policies toward us.

    • mario August 3, 2013, 11:48 pm

      Rick is in possession of my article I submitted to him about a month ago which specifically references those articles with the views of Fitch’ s Ms. Chu. I’m only being a parrot when I state again the problem is far more under control and able to be responded to in myriad ways as needed internally in China.

    • Troll August 3, 2013, 11:52 pm

      A good argument, Cam, but the same could be said that you are accessing extremely biased, American propaganda fed to you by a media controlled by – among other things – the banks. I am not saying that’s the case, I’m just throwing it out there 🙂

    • mario August 3, 2013, 11:52 pm

      Well said Gary. I am much more concerned with the economic, political cold war that is going on between the major powers. Your words did a better job quickly than my own at making the case: China’s ability to absorb the challenges that come along.Perfect, thanks.

    • mario August 4, 2013, 12:02 am

      Hi Troll, that’s all I’m trying to say! And it’s not just western media putting out half the story or stories laced with deletion, generalization or distortion, same PR scrubbed info comes out of Asian/Chinese media.

      Example, Vanke’ s top honcho came out with public comments in an interview on 60 Minutes regarding China”s real estate prices. Good grief!…whatever he said the guy was fully prepared to say exactly what he was media prepped to say by their PR/communications/public affairs dept! He wouldn’t dare do otherwise! As I also such media prep training/scripting for such execs, I can easily imagine what that prep session for him was like.

      Cheers, Mario

    • Cam Fitzgerald August 4, 2013, 1:04 pm

      Thanks Troll. By the way….I have no idea what the mainstream media is saying as I don’t follow any of them and have not done so for many years. That noise was cut out of my life long ago. I arrive at my conclusions based on first hand experience, the data I can source that tells me what the trends or troubles are and some knowledge of history. It usually gives me a pretty good picture of the future without my having to wade through swamps of conflicting ideas that are often agenda driven and designed to confuse people. It is my opinion that the business cycle can not be beaten under the circumstances and that we now face deflation for the reasons already described. I happen to believe it will be an event shared by much of the global community. Nobody in his right mind wants that outcome of course but there does not seem to be answers to resolve the problems that are all erupting at once and as a result the inertia of market forces will probably prevail. That is to say, the stock market will rise until it reaches the point it must fall, interest rates will eventually creep up, bonds will start their long overdue decline and some currencies will be ruined as attempts are made to balance the improbable forces of overwhelming debt, excess capacity and a surplus developing in commodities. Demographics now rules our daily lives and some aspects of an aging population will create fiscal burdens for which there are no easy answers at a time when deficits are in the process of being rationalized. This tells my quite simply that living standards will fall unless extraordinary attempts are made to defeat a combination of private and public indebtedness. The easy answer is to inflate it away. Can everyone do that though? Not very likely as the net effect would mean we are all stuck in the same situation where we began thus yielding no benefit to any country. It seems to me that some dilemmas are a mathematical impossibility to resolve without drama entering our lives. Honestly, I am only saying the obvious. We all know that times ahead are going to be progressively more difficult unless we North Americans can achieve a high level of economic expansion. The problem is that expansion cannot logically be shared by the four corners of the planet that also need growth to recover. There is simply insufficient demand to power everyone up. At this time almost everyone has serious troubles of their own, China excepted of course because their own developing troubles are still down the road in the future. Someones economy is going to get hurt in this process though as the rationalization of the conclusion of an historic credit expansion that has encompassed the entire globe runs its course. But which will it be?

    • Troll August 4, 2013, 6:30 pm

      Cam, Fitch is owned by the Hearst corporation, which publishes plenty of “mainstream” magazines. I am not saying they or Business Insider have “ulterior motives,” but we should always consider the source. Too many US/western-based publications are controlled one way or another by those who like to “tweak” stories.

      Perhaps China isn’t a bed of roses (I really don’t know), but it wouldn’t be the first time a publication used the deflect (steer readers away from the US) and focus elsewhere (look HOW bad it is in China).

      Anyway, a great debate, Cam and Mario.

      Kindly carry on.

    • Cam Fitzgerald August 4, 2013, 11:18 pm

      Your repeated assumption that my thinking has been contaminated by a nefarious media agenda is getting to be a distraction from the topic, Troll. Instead of looking for the weakness in the argument based on what you think is a weakness in my ability to do my own analysis why don’t you address the subject itself more directly.

      Maybe it is a big shock for you but some people do think for themselves.

    • Troll August 5, 2013, 12:11 am

      Oh, for heaven’s sake, relax Cam 🙂

      Two replies cannot really be qualified as repeated claims (even if one plus one = “repeated” should we go by the book definition).

      Here is my question then, if you don’t mind:

      If you know what everyone else knows, how worthy is it of knowing?

      The markets have most certainly taken what you have to say into account, and quite likely examined the situation much more thoroughly than you or anyone else who frequents this board. There is, after all, billions (if not trillions) of dollars at stake.

      Given the above scenario, wouldn’t you think the money would have already left the markets in droves and headed for the hills?

      I’m just asking.

    • Troll August 5, 2013, 12:22 am

      Besides, Cam, it was you who posted a US-based media article from Business Insider which included Fitch which is owned by US based Hearst and using it for your argument. Why get upset should I or anyone else dismiss this as mere cannon fodder when the source of this information could potentially come into question?

    • Cam Fitzgerald August 5, 2013, 4:48 pm

      You are a news reader, Troll. You get your information after the fact. It is just “NEWS” to you because it already happened and got reported…….but you can’t see what is coming.

    • Troll August 5, 2013, 6:44 pm

      You are mistaking me for someone who reads the news. Sorry, that’s not the case. I do read, but typically it’s charts.

  • Cam Fitzgerald August 3, 2013, 11:19 am

    Here are two articles for you Mario that may assist in clearing up any misconceptions you harbor. I leave them in response to your bizarre post above discussing Chinese wealth in hopes you will gather a better appreciation of how tenuous that wealth really is. The first is from Ambrose Evans-Pritchard whose well written commentary reflects in large part exactly what I have been warning about in the past. In it he refers to an IMF report that is damning of the buildup of credit in the Chinese economy alongside heavy price speculation in property and excessive capital construction. The second article from the New York Times summarizes the IMF report in more detail. Two years ago none of this was even on the radar except amongst a very small group of people who were looking hard at the numbers. They were disparagingly branded China-bears although in reality their observations were just reports on developing risks that offered fair insights into problems that could easily be foreseen. I encourage you to read the two articles as broad summaries of the problems as they are in substantial agreement with the legitimate worries I have expressed in the past.

    China orders ‘urgent’ audit of debts after IMF warnings -Telegraph
    http://www.telegraph.co.uk/finance/china-business/10209560/China-orders-urgent-audit-of-debts-after-IMF-warnings.html

    I.M.F. Tells China of Urgent Need for Economic Change -NYT
    http://www.nytimes.com/2013/07/18/business/global/imf-tells-china-of-urgent-need-for-economic-change.html?pagewanted=all&_r=0

  • mario August 2, 2013, 7:28 am

    Cam, with respect and admiration for your thoughts, let me say for the record that China isn’t going to rollover as some are concerned including yourself…

    amongst other considerations, most people erroneously discount that the Chinese govt has purposely made a variety of policy decisions to put on the brakes, ergo , they are in a position to reverse \ assist them moving forward as they deem may be the best course of action to even the ship’s keel, to rebalance the economy; as a central govt, they have far more flexibility to make new policy choices in an instant, ie in comparison to the U.S. govt system which as we all know is a politically gridlocked clusterf#@k, sadly and disgracefully so.

    I state this to you here at Rick’ s with curiosity, not with arrogant certainty, as to the developments and outcome 1-3 years from now, to give us a reference point to look back at.

    I easily realize there are egregious scary weaknesses / deflationary forces, in the global economy only a fool would ignore. Yet, that’s not the whole of the story, there are sectors of the global economy, the stats, the hard to identify vagaries, where expansion and stability do exist as opposing forces, mostly driven by the rise of Asia led by China.

    Along the way, it seems in historical terms, the U.S. lower/middle class pop. is currently taking the brunt of the fallout from the way that the past twenty years has played out. The implications are horrific, for example, as Detroit may be the beginning of many such scenarios across the country… but China rolling over?…the situation there is in myriad ways so dissimilar.

    We mere mortals can apply our best analysis and at best are still just guessing…

    Cheers, Mario

    • Cam Fitzgerald August 2, 2013, 8:01 pm

      Sorry to disagree but I am not “just guessing”, Mario. That suggests random odds with no real insight or data to back up a hypothesis. In this case we have a substantial amount of both current and historical evidence that can lead us to reasonable conclusions about what is coming down the road. Joe Bloke who gets his information from Wheel-of-Fortune and the back of a Cracker Jacks box has no mathematical advantage in economic affairs. That is not us though. We do have the information and charts that at the minimum serve as guidance. They are damning and leave not a whiff of doubt that we are not in a garden variety global slowdown. This is the big show Mario. It has been decades in the making. If the worlds Central Banks can pull us out of this one I will be the first to sigh a breathe of relief.

    • mario cavolo August 2, 2013, 8:38 pm

      I’m surprised by your thinking on this Cam. You’re working with false figures regarding China. The situation there is much better than they indicate, than they allow outsiders to know. They’ve been cleverly, deceptively, shrewdly playing everyone else for years and winning every step of the way for the past twenty years, they have the upper hand in myriad ways. You are also virtually ignoring the very real fact that the slowdown there is very much purposely engineered and planned by the govt policies to rebalance the economy. There is no credit crisis, there are no ghost towns, there is nothing close to a broad real estate bubble that is overly debt leveraged, domestic consumption is booming beyond the reported 12% annual growth, and the country is rich with trillions in cash both publicly and privately that they have yet to touch if they need to. Therefore, they are far far far from a crisis with many choices available to them to respond to whatever parts of the economy raise red flags in the short term. All we see is an expected slowdown in manufacturing and a growing debt load. But not one single negative article ever mentions the trillions in cash that are there available at their fingertips in the system, unlike the $20 trillion in the west which the overlords have stashed offshore, sucking it out of the economy. Lastly, you continue to deeply discount the power and discipline of their series of 5 year plans, which they execute vigilantly with their #1 priority being the harmony and stability of the society. They have no Congress/Senate clusterf*&k to stop them from doing what they may need to choose to do exactly when they need to do it to fix what needs to be fixed on the day they decide to simply announce it.

      I wrote it around 3 years ago for the first time: the last place on planet earth anyone should be worrying about regarding being in crisis is China. I don’t mean this to sound like praise of them, they are shrewdly self-serving and clever and winning, plenty of reason to tread carefully with them.

      Well, enough, like I said, we’ll see where it will be down the line…Cheers, Mario

    • Cam Fitzgerald August 2, 2013, 11:07 pm

      You forgot to mention that there is no serious environmental damage from industrialization in China and that the tooth fairy is real, Mario. Seriously…..do we read the same material? And let me ask you this….how many times do you think those trillions can be spent before they are gone? I know a trillion sounds like a lot of money but in the case of China lets give that a breather. Divide it up by population and try to see how far it goes if it were turned into pensions for example. The poorest people in the world now live there. Please explain why that cannot be addressed with a modest social program or two and yet the government will be empowered by dollars to paper over the problems that are coming down the road. GDP growth is down from 12% annually just a few years ago. It has hit a reported 7.5% but is still in decline. Do you know how far it needs to fall for China to experience the equivalent of recession? The answer is not zero by the way. It is clear to those in government in China that problems exist in lending and credit markets and that has already been acknowledged so it is amusing you refuse to accept it. What do you know that the Peoples Bank don’t know?

    • mario cavolo August 3, 2013, 12:08 am

      Wow, we’re doing this again? You don’t LIVE there man! You should be thanking me for setting you straight. First of all, I did not say that there are no lending and credit problems in China. I didn’t say the economy isn’t slowing down and its not a reason to worry. I said these problems are not anywhere near as bad as you think and then I told you exactly why. I back every previous statement as clinical reality, not tooth fairy imaginings. You can’t choose to believe or not believe what the facts are. Its not an opinion. We can’t set aside for a moment “a trillion”, its several trillions and it is actively in the hands of the citizen population, circulating in the economy, in addition to the 3 or so trillion in govt holdings.

      We don’t read the same material nor see the same things, nor do you live inside China for fourteen years and I thought by now you would be wise enough to pay attention when someone in my position states their extremely first hand view.
      You and everyone else who reads what you read about China outside China about China are misguided and mostly clueless about China. Ask any intelligent businessman, especially a chinese businessman, not to mention seasoned expats, who lives in China and they quickly agree with me because we know what we know because we live there and know what we know.

      The poorest people in the world now live there? Where? Who? Define poor? Do you mean the 800 million poor farmers? What in heaven’s name are you talking about? They work their butts off 7 days per week but they have shelter and plentiful food and drink and peace and nothing more than petty crime 24 hours a day. Is that the kind of poor and poverty you are referring to or do you mean urban dwellers stuck in a drug/gun gang run tenement in an urban U.S. city without any hope to get a minimum wage job getting handouts from Uncle Sam while afraid to walk their neighborhood? To be “poor” in China is a cakewalk compared to being poor or down ‘n out in America.

      Are you saying that when I tell you that China’s cash economy is 50% to 100% of official GDP, totaling 6 to $10 trillion dollars, that Chinese do business with each other in cash far more than people do in the west, outside of any official GDP #’s, are you saying you don’t BELIEVE it is the case? It isn’t to believe or not believe, it is just the obvious fact to anyone who lives there.

      You actually think they are as poor as they “are”? How did this “poor” country manage to buy 15 million passenger vehicles last year with 80% of those cars being paid for in cash? How do 90% of Chinese families own their homes, 80% of which have no mortgage AND zippo household credit card debt? How do all the “poor” people walk around with I-phones, supposedly costing 3 month’s salary? How do the “poor” people making only $400 USD per month manage to still save 20-30% of their monthly salaries? How did our close friend Sunny put down a deposit of $30k and get a mortgage of $70k when her illustrious career is as an exhibition trade show coordinator earning a salary of $600/month?

      400 million Chinese lower/middle class have at least $15 to $100,000- avg in the bank, and NO debt. I know, I and the rest of us long term expat live with them side by side every single day.

      You are staggeringly off base and misdirected regarding China and desperately need to start referencing other more accurate, less-biased sources.

      Sorry Cam, truly no offense intended, didn’t expect you to hang on to your shingle so tightly..

      Cheers, Mario

    • Cam Fitzgerald August 3, 2013, 9:28 am

      Yes, we are at this again, Mario. You strike me as a little brainwashed, friend, and there is not a medication to cure that except better information. You will need to open your mind a little wider though instead of doing the rah-ray about China all the time if you want to be credible with me.

      Fact is I don’t live in the USA and so that is not my point of perspective. You are lecturing the wrong guy today. I am not that far from China if you need to know and just like you I live in a country where virtually all homes are paid up cash and there is almost zero credit available.

      It is also a poor country with a wide wealth inequality and a housing bubble in its capital city where income/price ratios are between 20 and 30. Very similar to Beijing and Shanghai actually. Like China has done in the past, it is also industrializing rapidly and growth rates range from 6 to 10 percent points annually here. So yeah…..I have a little perspective of my own.

      Salaries here for the rural poor are equal or better than those for some rural regions of China though. The numbers on this subject are damning. Most of the worlds most impoverished people now live in the emerging market economies of Bangladesh, India and China amongst others, not in the traditional poor countries of Africa. The so-called “bottom billion” are now represented in the highest proportion in countries that have taken the rapid track to development and so the widest variation in income equality exist there.

      Many in the fast developing economies like yours have as well suffered from severe environmental issues related to airborne and water pollution that is completely outside their control. Others have been pushed off the most productive lands and away from waterways in order to facilitate the high growth rates, construction of dams, mines, roads, railways and industrial facilities.

      Surely you are aware of this phenomenon taking place in China and have read of how millions of the poorest have lost lands to expropriations or been relocated to open the way for progress and development. That has obviously exacerbated the poverty that has existed there for decades already and made the misery worse.

      Furthermore, the divisions between rich and poor are at their most extreme in the developing countries like your adopted homeland. Home ownership is not even a distant dream for most of the rural poor. What peasant from inland China can come to a coastal city and earn sufficient income to buy a city house even in a single lifetime?

      The “cheap labour” from the country idealism suits the productive side of the economy very well but it does little to benefit those who actually do the daily grind and it should be obvious this will lead to a social backlash over time. There is not social equity in China any longer and that is a large flaw that has developed in the drive to grow the economy quickly.

      Where I live meanwhile, home ownership is a relatively new phenomenon just as it is in China. Few here have memories nor experienced the benefits of private property ownership with regards to credit and lending. As an outcome, virtually nobody understands the risk of falling land prices as they have only ever seen prices go up.

      One other outcome is that there has been a tremendous wealth effect created out of fully paid up property and most of the borrowing has gone into business investments which is the extent to which lending is currently allowed. There are no auto loans permitted for example unless they are for business purposes. So credit growth is not consumption driven as it is in the developed economies but instead serves to funnel money into economic development rather than the trappings of consumption most in the West enjoy.

      The result is very high growth rates and a flourishing of new upstart business’s while savings remain elevated. The process has served to further inflate asset values though and drive even more demand for property which is seen as the ticket to wealth. The formula is simple. There is a very direct connection made between property ownership, business ownership and success in life.

      You must therefore have some and so the idea becomes self reinforcing and prices are bid up well beyond what ordinary incomes can support. The poor are thus priced out of the process and the wealth divide grows more stark. This kind of speculation is not risk free of course.

      It does in fact represent a vulnerability in the system that is dependent on perpetual economic growth that does not account for the cycles of boom and bust that most fast developing economies must ultimately experience. China is NOT IMMUNE, Mario!

      If the collateral is inflated then by virtue of that fact, the credit issued against it is also inflated. It is exactly what has taken place in China that has seen the corporate sector stretch itself so thin on the back of land speculation and development but the downside is China now suffers from massive excess capacity and over-development that now puts pressure on the collateral underlying the system.

      Credit creation and property price appreciation live side by side. They rise and fall together as well. That is where the rubber meets the road and risk first appears when sales decline and production must be curtailed. If your business cannot service its debts them assets must be sold into the market to balance the books and this is how pressure is applied pushing down property prices in a slowing economy. In fact this is exactly where China now finds itself.

      We know therefore it will deflate eventually (nothing rises forever) and thus also know that credit conditions will be impaired in the future with the accompanying business defaults and loans that go sour on the ledgers of the governments banks. These stand to be so significant that a Lehman type failure is real possibility.

      A slowing global economy does not make any of this better nor do efforts to (finally) reign in the obvious hazard of past excess lending and the emergence of a shadow banking economy that magnifies the problem many fold. At least those in power in China now recognize the problem and are taking steps to ameliorate the situation. It remains to be seen if they have taken action soon enough but I have my reservations.

      Your theme during these past years has been that because Chinese citizens have a high percentage of equity wealth in their homes (and thus an implied immunity to economic downturns) fails to take into account that property itself is the collateral backing the majority of credit created to build the corporate and industrial backbone of the country.

      I think your view is misguided and misses the obvious so I cannot trust your analysis of the situation on the mere basis that “you live there”. You strike me as a guy who thinks he is an ambassador to your adopted country but offers a sales theme and snow job to divert the focus instead of offering a genuine commentary on the economy and risk conditions that now exist.

      Problem is, I don’t really know what you are trying to sell me but the agenda stinks and I am not buying it.

    • Cam Fitzgerald August 3, 2013, 9:50 am

      “You should be thanking me for setting you straight. First of all, I did not say that there are no lending and credit problems in China. I didn’t say the economy isn’t slowing down and its not a reason to worry. I said these problems are not anywhere near as bad as you think and then I told you exactly why” ~~ Mario Cavalo

      Actually Mario, you did say all those things. You should really go back and revisit the thread where you and I first began discussing the slowdown in China. Was it just two years ago? At that time I brought up a number of issues with regards to the economy and drew some conclusions that have since all proven to be correct. I tolerated a lot of name calling from you at the time and a variety of other insults. The passage of time has proven you don’t have a clue what you are talking about most of the time and are prone to exaggeration and attempts at writing a narrative for China that is at stark odds with reality. I would appreciate you make a better effort next time. And last Mario…..I will not thank you for anything because I consider you a fool.

    • mario August 3, 2013, 11:42 pm

      My narrative on China is correct Cam. It has been correct, is correct today and is highly unlikely to be incorrect tomorrow. I can’t speak any further regarding the facts of reality I have stated. You seem to constantly ignore my very accurate reminder that any and all information stated for consumption by official media and govt sources are only revealing the part they want you to hear, is cleansed, vetted and self-serving. The symbolic guy telling you he’s poor isn’t telling you about the $50k he has in the bank, isn’t telling you the rest of the story. I am. And so is Mark Mobius, Charles Hu, Jim Rogers and virtually every single Chinese and expat businessman in China with me who reads what I am saying and says “exactly Mario”. The fool is the person who isn’t paying attention to the rest of the story as I’ve explained based on observable societal and behavioral facts which exist in China, not a theme, opinion or idea.

      You and many other readers are of course free to reject that body of knowledge rather than look more deeply yourself into those assertions to find they are quite consistently on the mark. I’ve done my homework on the specific assertions I make and you have yet to identify and refute one of them.

      All rick says, and correctly so, regarding the state of economic affairs in the global economy including all the major sovereign blocs is that in the event of a financial system collapse rooted in multi trillions of leveraged credit, particularly in the derivatives markets, that no society will be unharmed, wherever the source trigger may happen to be.

      Lastly I must emphasize again, there is nothing exaggerated or self-serving or “rah rah” in my view of China. I don’t love it , hate it or anything in between. It’s just another country on planet earth with its unique list of pluses and minuses, many realities of which the public including yourself are deeply misguided and misinformed.

      which country you live in needs to be your secret? Wherever it is in Asia doesn’t change our discourse or my passion on China in any way. I know what I know, I’ve confirmed it and absolutely yes I am the one you should believe.

      moving on to other topics…

      By the way, I am grateful for some heated discourse, as it serves very well as I’m doing final rewrites on my China book. This forces me to insure that I don’t foolishly state what I shouldn’t without enough reasonable research, certainty and rigor and confirms I am well on track according to qualified peer reviews.

      Cheers, Mario

  • gary leibowitz August 2, 2013, 3:20 am

    Rick, looks like your upper range will be met. The irony of this next fall is going to be because of too much of a good thing. Everything will start firing up at the same time. The yield will not be contained by the Fed no matter what rhetoric is used. Fear of continued yield hikes and unrealistic future earnings growth will spoke this market. Not there yet.

    If you look at the numbers such as big auto gains, big drop in unemployment numbers, steady 200K plus employment, retail sales, housing, and a more accommodative financial structure, you will see the consumer start buying into this rally. I constantly get called out on my Pollyanna market calls and somehow that gets merged into my Cassandra macro views. Cycles don’t just happen in a flash. Give it time for over-reach.

  • Andrew Gutterman August 1, 2013, 4:26 pm

    This is long…

    http://michael-hudson.com/2004/01/the-mathematical-economics-of-compound-rates-of-interest-a-four-thousand-year-overview-part-i/

    What the Babylonians recognized that modern economists don’t

    At past Heilbronn symposia I have discussed the importance of tracing civilization’s economic trends back to Sumer and Babylonia.[3] It was in this epoch, over two thousand years prior to classical antiquity, that the basic elements of modern economic relations first appear. These elements included interest-bearing debt and ways of coping with the problems caused by its spread.

    Mathematics played a major role in the training of scribes. This hardly is surprising, as cuneiform writing’s first application (c. 3200 BC) was to economic account keeping. Already in the 3rd millennium BC, scribes were trained in mathematical procedures such as manpower allocation problems (e.g., how many men were needed to dig canals of a given size or to produce a given amount of bricks), the surveying techniques needed to calculate surface measurements (including the geometric analysis of squares and circular shapes), astronomical computations and even quadratic equations. Scribes also were trained to calculate the expected growth of herds and the exponential growth of interest-bearing investments.[4]

    Rather than reflecting economic productivity, profitability or the general ability to pay, the accrual of interest was essentially a mathematical phenomenon. For ease of computation, the normal commercial rate had been built into the system of sexagesimal weights and measures. Interest accrued at the rate of one shekel per mina per month, that is, the “unit fraction,” 1/60th. This rate remained constant over many centuries (indeed, millennia), and worked out to 12/60ths per year, 60/60ths in five years. Compounding occurred quinquennially, once the initial principal had reproduced itself in five years.[5] Interest rates in Greece, Rome and the Byzantine Empire likewise were based on ease of computation in their local systems of weights, measures and arithmetic.[6]

    The fact that these interest rates were not economically based or responsive to changing economic conditions made repayment problems inevitable. Debt problems also develop today, of course, but contemporary theory insists that economies can adjust to any given level of debt charges. The Babylonians made no such assumption. Their student exercises show that they recognized that herds, for instance, increased at a slower pace than did the growth of debts mounting up at 20 percent per year, to say nothing of agrarian rates typically around 33 1/3 percent.

    In light of these exercises I would like to make a suggestion that initially may seem outrageous. Mesopotamian economic thought c. 2000 BC rested on a more realistic mathematical foundation than does today’s orthodoxy. At least the Babylonians appear to have recognized that over time the debt overhead became more and more intrusive as it tended to exceed the ability to pay, culminating in a concentration of property ownership in the hands of creditors.

    Scribal students (nearly all of whom were employed in temple and palace bookkeeping) were taught to calculate how rapidly investments doubled when lent out at interest. A model exercise appears in a Berlin cuneiform text (VAT 8528): How long does it take a mina of silver to double at the normal commercial rate of interest of 1/60th (that is, one shekel per mina) per month? (This often is expressed a 20 percent annual interest, inasmuch as 12/60ths = 1/5 = 20 percent.) The solution involves calculating powers of 2 (22 = 4, 23 = 8 and so forth).[7]

    The answer is five years at simple interest, as compounding began only once the principal sum had entirely reproduced itself after 60 months had passed. At this rate a mina multiplies fourfold in 10 years, eightfold in 15 years, sixteenfold in 20 years, and so forth. A related problem (VAT 8525) asks how long it will take for one mina to become 64, that is, 26. The answer is 30 years, six times the basic five‑year doubling period (Illustration 1).

    The basic idea of interest-bearing debt is one of doubling times. An ancient Egyptian saying that “If wealth is placed where it bears interest, it comes back to you redoubled.”[8] Babylonian agricultural debts at the typical 33 1/3% rate doubled in three years. The Laws of Hammurapi appear to reflect the view that held that when creditors had received interest equal to their original principal – after three years of service – the debt should be deemed to be paid off and the debt bondservants freed.

    Babylonians recognized that while debts grew exponentially, the rest of the economy (what today is called the “real” economy) grows less rapidly. Today’s economists have not come to terms with this problem with such clarity. Instead of a conceptual view that calls for a strong ruler or state to maintain equity and to restore economic balance when it is disturbed, today’s general equilibrium models reflect the play of supply and demand in debt-free economies that do not tend to polarize or to generate other structural problems.

    Adam Smith grounded such ideology in a Deist religious view of the Lord as having started up the universe and then let it proceed harmoniously by its own laws of motion. But in Babylonia the earning capacity of subsistence rural producers hardly could be reconciled with creditor claims mounting up at the typical 33 1/3 percent rate of interest for agricultural loans (or even at the commercial 20 percent rate). Such charges were unsustainable for economies as a whole. At no time in history has agricultural output grown at sustained rates approaching these levels. In situations where the loan proceeds were used for basic consumption needs, interest charges ate into the cultivator’s modest resources and finally absorbed them in toto. Once the usury process got underway and debtors were called on to pay sums beyond their ability to produce, creditors were enabled to draw the land and other wealth into their own hands.

    Economic relations were put back in balance by Babylonian rulers acting from outside the economic system. They cancelled agrarian barley debts no less frequently than every thirty years, proclaiming clean slates on the occasion of their ascending to the throne, or as military or economic conditions dictated.[9] Modern economies would rely on income and price adjustments. But prices for most essentials, and most non-commercial incomes in Mesopotamia, were administered or set by custom. There was no idea that the economy by itself might automatically provide such balance.

    Today’s economists have a problem analyzing the relationship between the debt overhead and the capacity to pay. Academic orthodoxy holds that economies can adjust to any volume of debt, given sufficient price and income flexibility to facilitate the transfer of revenue and assets to creditors. What is not recognized is that the resulting economic polarization reduces the economy’s ability to function well. In addition to missing this negative feedback (the proverbial vicious circle), modern economists tend to overlook the fact that interest-bearing debt grows according to its own exponential laws of increase. The economy rarely can keep up.

    If Sumerian and Babylonian students could learn the mathematics of compound interest and the associated exponential growth of debts, it should not be out of reach for modern economists to do so. But today’s economic ideology does not encourage mathematical models based on intersecting financial and physical trends. For it is at such points of intersection that something has to give, that is, a political solution must be imposed from outside the system.

    The mathematics of wealth addiction and hubris

    Ancient economic thought did not endorse the ideal of accumulating wealth and riches. Rather than praising ambition as the mainspring of progress, Mesopotamian religion condemned the amassing of property. Excess was held to be the primary cause of injustice, and it was characteristic above all of creditors abusing the weak and poor and foreclosing on their lands. It was to avenge the economic injustice done by the rich and strong against the weak that the Sumerian goddess Nanshe moved, as would the Greek goddess Nemesis in classical antiquity.

    Are some debts productive? Certainly they are. Ancient societies drew the distinction (which was made down through the classical economists) between productive and unproductive credit, that is, between commercial loans which provided the business borrower with the resources to earn the money to repay his debt with interest; and consumer or government loans on which the interest had to be paid out of the debtor’s remaining resources. The Bronze Age core economies coped with the debt problem simply by canceling society’s unproductive debts when they grew too large. However, the Sumerians and Babylonians only annulled consumer barley-debts; they left commercial silver-debts intact. (This implicit distinction between productive and unproductive debt represents a third way in which Babylonian economics may be deemed more sophisticated than modern economics (in addition to the afore-mentioned focus on the destabilizing role of debts multiplying at compound interest, and the phenomenon of wealth addiction.) But the modern failure to distinguish between productive and unproductive credit shows the adverse effects of building internally consistent logical models on the basis of unreal or irrelevant economic assumptions.

    • mario August 2, 2013, 6:53 am

      A helluva post, interesting!

    • Cam Fitzgerald August 2, 2013, 8:16 pm

      Thanks Andrew. Very interesting.

  • Steve Jobs August 1, 2013, 2:30 pm

    Hi everyone,

    I am back in town. I have been busy lately studying on a new concept of contraconomics. I have developed a new paradigm for preventing contraction in the global economy. I wıill comment here in a few. Please be patient. I will inform you soon with great insights what has emerged lately in the macro area. Ohh yes Steve is back! Thank you guys.

  • Troll August 1, 2013, 3:58 am

    How bad do things have to get?

    Ask Kinross

    http://ca.reuters.com/article/businessNews/idCABRE96U1D320130731

  • BigTom July 31, 2013, 11:21 pm

    Cam – “Some things are immutable despite the very best efforts of policy makers to intervene for our benefit.” Geeze, where do you see this??

    • Cam Fitzgerald August 1, 2013, 12:29 am

      Tom, I am not amongst those who believe the Fed or any of our Central Banks are on a mission to destroy the world. Not for a second. On the contrary, I think Mr Bernanke has done his level best with the tools available to keep us all on an even keel and try to offset the deflationary forces that are now overwhelming the system. I do not bother to assign blame either. If some of the crazy arm-chair commentators I read daily had been in charge we would be imploding economically right now. Thank God more competent people were given the task. I think we are fortunate we bought this extra time but as I stated above I no longer believe that monetary intervention is capable of fully offsetting the corrective forces that now stand at our gate. Deflation is a certainty once China rolls over and that coming credit event cannot be forestalled forever without seriously magnifying the risks. There are days when I wished we had just allowed the correction to take its course. It might have allowed a very painful adjustment but one that did not leave us all quite so leveraged to the downside I sense is coming. Now it seems we are so far out on the limb there is no going back anymore before the bough breaks altogether.

    • Buster August 1, 2013, 2:40 am

      Cam.
      There is more debt owed than money or assets on the planet . The reason for this is due to the fundamental process of how money is created as a debt that cannot be worked off or paid off without completely destroying the money supply itself. It is well enough documented that the only way to put off a collapse of the economy is to borrow yet more money into it, yet somehow this flaw is continually overlooked in official economic discussion (read: deliberately evaded) Despite the talk of austerity, overall debt levels are seen to be rising dramatically.
      Realisation of this incredible yet fundamental flaw, when coupled with the study of the long history of debt going hand in hand with corruption through the ages & the observation of subjugation of peoples & wealth transfer to those in positions of power who are the beneficiaries of this system they oversee, leaves no other possibility other than this being the grandest conspiracy on a global scale, & to such a point that I am dumbfounded that it is not common knowledge among anyone other than those receiving medication,……. or maybe Jerry Springer viewers.
      It must surely be the lesson of our age, & one that we absolutely must grasp if we wish to understand what is wrong with the economy.
      Quite specifically, we are being conned & kept ignorant to the crime of a system of money designed to enslave the masses & centralize power in the hands of the few through unlimited debt. There is no escape from economic ruin for an increasing number of us without there being a debt jubilee. This is necessary in order to balance power, & is the only solution to our woes.

      How bad do things have to get & for how long before this lesson is learnt?

      &&&&&&

      I can’t quite imagine opinion-shaper Krugman rising to the level of conspirator. He’s more like an imbecile and leftist ideologue (a redundancy, I know) with a Nobel in Economics. And yet, I don’t doubt that he fervently believes in the sort of monetary and fiscal stimulus that you and I — and the village idiot, for that matter — can easily recognize as claptrap. RA

    • Benjamin August 1, 2013, 6:40 am

      Buster,

      I think it will take an ice age or another Little Ice Age. Colder winters, shorter growing seasons, food supply problems, and the resultant rise in disease leave little room for BS-as-usual.

      Interesting note: the LIA took place roughly between the 1300s, up to 1850. During that time, we had the Renaissance and Enlightenment. Prior to that, we had 2,000 years (give or take) of “civilization”. That rise to those earlier forms themselves were possible because the earth didn’t slip way back down into the mean temperatures (well below that of the LIA), as it routinely had in the past. So, in summary…

      It wasn’t until it stopped being warmer that things changed. How are the sun spots doing?

    • Buster August 1, 2013, 11:54 am

      Yes Rick. On this point I concede & accept why many don’t believe these men are conspirators. But therein lies the mistake, as these mere PR men aren’t really the conspirators, being barely more than the receptionists. Since Krugman, Bernanke & their like have spent their lives looking at numbers inside the very box built for them, & their rise to prominence within this system is reliant on their acceptance of it or inability to see out of it, they may well even be zealous believers in ‘the faith’. The beneficiaries of corruption have great difficulty seeing it as a crime, & will justify it & their actions no matter how unjustifiable the situation may be, yet one quickly understood & seen through by those who suffer injury at the hands of it.
      Millions of people have perished horrifically as testament to humanity’s rank stupidity & poor judgment to the level of sheer madness, yet still we continue to blindly follow doctrines of demons of debt:
      http://whatreallyhappened.com/WRHARTICLES/ATHEISM/inquisition.php

    • Cam Fitzgerald August 2, 2013, 4:41 pm

      It seems even the manufacture of public debt has its limits, Buster. As it turns out there is not infinite potential to create money and credit out of debt issuance when so many have lost their taste for it and refuse to partake of the meal. There seems to be a big problem with the collateral backing the system. The two key asset classes of stocks and property are constantly at risk. Both will not keep climbing forever without employment and income rising. I don’t think that is in the cards anytime soon. The outcome must therefore be that the collateral impairments will eventually express themselves in a contraction of credit and thus a correction in the broad economy. I have my doubts it will be gentle. You might just get your Jubilee by default, Buster. Only these days they call it bankruptcy!

  • Cam Fitzgerald July 31, 2013, 9:56 pm

    PS…..sorry to take up so much space on your site today Rick. Been awhile since I had anything to say. I must have been saving up!

    • Rick Ackerman August 3, 2013, 3:43 pm

      You just go, guy! Your posts have been great.

  • gary leibowitz July 31, 2013, 6:55 pm

    Be careful what you wish for. It is coming true. Real tangible economic growth. While the GDP number is stuck at or below 2 percent, you will see it going higher. All indications are showing acceleration. The feel good housing prices, along with less restrictive home purchase policy (not yet here, but will be shortly), and wider yield spread, is setting us up for a scenario no one thought possible. Bernanke knew what he was talking about when he started preparing us for the bond taper. After 4 plus years of monetary support to banks they are starting to see real profits. I know all about the “hidden” debt, but so does the street. they have made a calculated bet that the Fed will continue to support this policy.

    Once again the main focus is the 10 year note. it is rising again and could break out. The next bear market (corrective) should be a result of economic expansion, not the reverse. we are nearing a correction. not sure if we spike up from here, but time is running out. This weeks data and next weeks speech should give a clear indication if we have hit the top or not.

    • Cam Fitzgerald July 31, 2013, 9:54 pm

      You know what Gary? I could be wrong. I have been wrong before and this is one time I truly hope I am mistaken. But I have been looking at this puzzle for years now and when I go over all the data available to me I feel sick. I believe we are in a stock bubble of large proportions that cannot be sustained for much longer than a year or so and that the debt overhang (public and private) is simply too great a burden to be overcome by the inertia of such a minor recovery as we are experiencing. Looking out across the globe and trying to find some hope in other economies leaves me even more distressed because they are for the most part in deeper waters than even we are. We are living in a time when a brave experiment has been tried in order to defeat the long trend business cycle but I fear now that some aspects regarding corrections revolving around excess credit can only be resolved in the way they were always resolved. Through time. Some things are immutable despite the very best efforts of policy makers to intervene for our benefit. My optimism is very low right now but I will keep an open mind and hope for the best. Cheers.

    • gary leibowitz August 2, 2013, 2:36 am

      Not about keeping an open mind. If your theory is right what would cause the next debacle? Use that and back test the results. If it hasn’t happened yet than you are still in the game. if the market failed your test than you must find another marker.

      The other point I can’t grasp is the argument that the economy is getting stronger. manufacturing, jobs, sales, earnings, bank balance sheet, etc… are all showing signs of accelerating. The 10 year note reflects this. the notion that the Fed tapers soon is also being accepted by the street. Everyone insists the last 4 years was a prop job by the Fed and there is no real data to show improvement. Logic would dictate that the outcome has to be a better economy. yes has to. if you throw trillions at a problem the problem goes away.

      We are now in a situation that the 10 year yield should continue to rise. Its not the Fed’s inefficiencies that has to be discussed. it’s the ability by them to s-l-o-w-l-y build up the economy without causing interest rates to move much higher. A low interest yield environment has clearly been acceptable to the creditors and debtors.

      Everyone complains that the Fed can’t seem to get this economy going. be careful what people wish for. It is now just starting to build on its own momentum.

      It’s like a heroin addict getting methadone to solve the problem. Obviously it doesn’t solve it, but makes it manageable. Until he/she goes back on heroin. We are starting to see the temptation now.

      We should have a final push right here. top should be SPX of 1780 or lower. S/B a sharp fast final move if I am correct. It will be followed by a bear market based on over expectation on earnings and fear of interest rates continuing to rise. If anyone read my theory 2 years ago I expected this to happen. Lets see if the end game goes my way or I foul that up.

    • Cam Fitzgerald August 2, 2013, 4:25 pm

      I don’t see the recovery you are referring to Gary. Housing seemed a bright spot initially but then it got ahead of itself and left the general public behind.

      The idea of a housing wealth effect is that the largest part of society might participate so in that sense it would be a jobs creator and generate consumption stimulus out of the growing assets of Joe Public.

      Instead the country got turned into a new class of rentiers, lease prices climbed (which amounts to a tax), employment stayed flat and incomes dropped. This could not have been the real intention behind MBS and other bond buying initiatives.

      Those were designed to keep interest rates very low for long enough to stimulate and prop up asset prices while discouraging saving. What we are seeing happen instead though is that savings have indeed been discouraged, but rather than a prop being put behind housing with wide public participation there has been a tendency towards speculation in equities.

      Granted we saw private fund speculation in homes from Hedges and others and this has gone a long way towards creating the conditions for price stability as the overhang was mopped up, but it has not yet succeeded in attracting enough buying from the general public to be self sustaining.

      Maybe that is still coming.

      Boomers and retirees meanwhile are more intent on making a buck on stocks for their pension plans than they are on starting new families and buying homes (obviously!).

      What I am saying is that the age group who control the vast amount of free capital that might be the fuel to fire up the housing market have diverted their interest risk assets rather than the core housing sector.

      I think when this particular equity bubble finally pops that the lot of them will be a lot poorer for the efforts they made. Demographics really is dictating what is happening right now. We only need to look at the numbers and see which age groups control how much wealth versus where they are putting it all.

      Clearly there is not money in the under 30’s group compared to their parents generation. Nor does there seem to be a lot of pent up energy amongst the younger people to start new families which might form the new demand for starter homes in the future.

      First time buyers play a huge role in the health of the housing market. Obviously you can see we have entered an age-related trap from both the top and bottom ends of the population pyramid. In the backdrop, private debt is still quite high and others have expressed in detail how even the deleveraging cycle has been distorted where savings were being depleted just to keep up with current payments while debt itself has not been properly addressed by the public.

      Anyone who robs his nest egg trying to hold together a past standard of living and uses that money to pay something like monthly mortgage payments must realize they are on the road to hell when the savings run out and the economy does not in fact recover.

      How to replenish savings when the jobs outlook is so dismal? How do you do it when you are nearing age 65? And yet that is exactly what we are seeing as many folks have turned to living out of their retirement funds instead of making the adjustments to their lifestyle that are necessary to balance the books.

      What is that they say about eating your crop seeds again?

      Anyway, this is just one of the outcomes of many years of zero growth in cash accounts that might formerly have yielded a few percentage points and been enough to give people the impression that savings had some merit!

      In the big picture though this experiment in QE is attempting to do something that has never been tried before on such a large scale. The various interventions are actually trying to beat the business cycle itself.

      I no longer believe that is possible because of the way it creates distortions and bubbles in other parts of the economy, (even other parts of the world), that must all be resolved individually as special projects on their own. We are painted into a corner now and have reached a stage where ever more intervention can only bring on a greater fall in the end.

      My belief is that a credit bust in China (inevitable) will be the trigger that sets off the real correction that has only been forestalled these past 5 years. The business cycle will play out as it always has…….it will just be a lot more severe for the delay.

    • gary leibowitz August 5, 2013, 2:02 am

      I don’t argue that the middle class is being squeezed and has to find new ways to stay afloat. I also believe that trend has been going on for a long time, way before the debacle. Savings rate has been the lowest at the time of the crash. it crept up and is now being used again. I don’t argue over these trends and that they are not healthy. How quickly do you expect all to hit a critical point? More importantly what or how will it be seen? What markers are you using to decide enough is enough? I try not to use hypotheticals when investing.

      As for the young verses old argument I see a different world. In my area house prices hit new highs, building on every available lot, and tearing down old buildings. Park Slope is a young area. restaurant business best its ever been. Bars, entertainment, night life, and babies everywhere. How they manage these things is beyond me. I assume their parents help out. The point being these trends have NOT been broken yet.

      10 year has risen with economic expectations and some indication of real improvement. bond market has had a pretty darn good record for understanding future trends. Sequester and payroll tax’s hit this year. People once again called it the trigger that will break this economy. We shall soon see.

      Why do we use technical methods for investing yet don’t do so when talking about the health of the economy? Are there any indicators today that is flashing a warning, one that is worse off today than the last 4 years? We would need to see consecutive and cumulative data that points to a “falling over the cliff” so to speak.

  • Rich July 31, 2013, 4:38 pm

    Rich Cash ‏@richcash8 15s

    Bot SPY Aug puts at previous lows of the day

    • Pat August 1, 2013, 6:48 pm

      How are those puts and calls workin’ out for ya?

  • Rich July 31, 2013, 4:05 pm

    Rich Cash ‏@richcash8 5s

    Sold QQQ calls for a double lock
    May reload later today toward the close…

  • John Jay July 31, 2013, 3:45 pm

    Winston Smith is alive and well at the Ministry of Truth!

    “The Commerce Department has made changes to how it calculates gross domestic product, designed to have the data better reflect the so-called knowledge economy. The U.S. government adjusted data all the way back to 1929, and other countries have or are about to make similar changes to their data. ”

    Link: http://tinyurl.com/l6jbq4h

    Next up………Chained CPI!
    And chocolate rations have been increased from 30 grams per week to 25 grams per week!

    Here is your guidebook to DC Operations:
    http://www.newspeakdictionary.com/ns-dict.html

    Have a nice day citizens!

  • Buster July 31, 2013, 12:30 pm

    The parties:

    A Monarchy
    B Government
    C Financiers/Religious order/Military/Industrial Complex (Corporatists)
    D Sheeple

    Historically, the power struggle has generally been between these four groups, with each under attack from various factions of the others as well as some blurring of the lines that separate them all. All four entities are fraught with serious flaws of ‘character’ due to human nature, but when power is balanced between them all there can be relative peace. However, when one or more gain too much influence it allows the extreme nature of man to exert itself by manifesting the overall destructive influences of selfish interest & irresponsibility to the point that it effects the other parties adversely. The current troubles are fundamentally the consequence of group A) under King George having given monetary control away to group C). The total advantage of the monetary system group C) installed, a ‘debt based’ one, allowed group C) to become what it is globally today via accumulation of wealth & that allows it to control all three of the other groups. We see this most obviously in the present Corporatist influence over Government, otherwise known as Corporate Fascism, with its consequences, ‘Financial terrorism’, Military conflict, & even moral decline.

    Allowing for the fact that human nature is flawed for the task of centralised governance due to this selfish motivation, the obvious solution should be to balance power between the parties. However, this has been tried so many times before, with the US Constitution as just one example, that it can only be regarded as a temporary lull in the storm, as either concentrated power breaks the peace from within a country or via invasion from another land that sells itself to this beast of power & self glorification.

    The next stage in this storyline is either devolution/balancing of power, as most of us who suffer under this system would hope for & has indeed been strived for for thousands of years, OR, a continuation of the trend currently in place of centralisation, taken to it’s Earth bound conclusion of Global governance/control, often referred to as the New World Order. Either outcome will be a bloody one.

    I don’t have any faith in any group or solution, though I do hope in the possibility of a worthy purpose. I trust that humanity could live in peace with the right system in place that allows our creativity & sense of justice to keep on top of our selfish motivation & violent tendencies. We are still a remarkable species yet to realize our true power.

    Recently I’ve been investigating the theory of ‘Radio DNA’, championed by such great people as Bruce Lipton. It is quite convincingly argued that the DNA strand is effectively a radio ‘aerial’ compressed within each & every cell in the body, which picks up a signal from ‘somewhere’ telling the cell what to become in that part of the body. Research seems to support this using low EMF. I would theorize that the source of this ‘signal’ is the mysterious ‘aura’ that has been shown to be present with all living things. Of note is that this strange glow is seen even when limbs have been lost & where once existed, as if independent from the flesh itself. So incredible is this possibility & the logical progression of it’s consequences on life’s existence, when put together with other sobering research on what is reality, I’m left to seriously wonder whether anything is chance??
    I’m well aware of so much deceit in the world that it’s tempting to give up on humanity & any sense or purpose to justify the suffering of life on this sorry Earth. In such blackness I can’t declare what life should or could be, but I’m sure this is not it.
    This is certainly not it!!

    “In the beginning was the word…….
    and the life was the light of men……..
    and the light shines on in the darkness…..
    for the darkness masked it not.”

  • wayne siggard July 31, 2013, 9:59 am

    The last impediment to a dictatorship is the impoverishment of the middle class – Friedrich Hayek. Are we there yet?

    • Cam Fitzgerald July 31, 2013, 12:00 pm

      All society is being turned into a class of rentiers, Wayne. Capitalist idealism and entrepreneurial ideas are most unwelcome in the new world of top-down control where management of the people for the good of the people is now being practiced in warm up for the big show that still lies ahead. The equalizing force is that most everyone will be impoverished together so on the surface it will feel quite fair. Dissent is to be discouraged. Your meal ticket depends on it. And nobody is to be trusted anymore. Where the internet and your technological devices are unable to intrude into the small crevices of your mind there will always be friends, family and acquaintances willing to expose the truth in order to endear themselves to the new masters in a tightly controlled society that allows no students to colour outside the borders anymore. I have to say the future is dismal for the creative amongst us. Worse for those who might question authority as times get tougher in the coming years. With half the population on benefits of some kind or another and as many as a third on food aid we can only predict that as a genuine economic slide begins in the absence of stimulus that few will escape becoming effective wards of the state. That includes virtually all pensioners who are going to see their assets demolished in time. As you suggest, the middle class is going to be wiped out. But it will be fair. Everyone will get wiped out together so there will be no point crying about it to each other because all of us will be in the same boat. What eventually emerges is not yet known but we can let history be our guide and make a best guess at the future. I don’t think many will like it.

  • Cam Fitzgerald July 31, 2013, 9:27 am

    The bloodbath has barely even begun for all commodities Troll. Each one will have its own narrative for why it declines as the months wear on but ALL will be falling in the coming years. Dramatically in many cases. Gold, sorry to say, is going to be amongst them as it correlates much more strongly to oil than it does to dollars. This is utterly baffling to those who keep insisting that precious metals are “insurance” against the unknown. If they are right then oil must also be insurance along with a host of other commodities that express themselves as wealth when currencies look unstable. And yet oil is especially vulnerable right now and set for a large long term decline due in part to a slowing global economy, flat or falling incomes, the re-emergence of recession in the US and a glut of industrial overcapacity. What is problematic for that group of die-hard believers in the mythology of metals is that oil has a long hard road ahead of it now. It is behind the trend in this case as many other commodities have already begun to fall as the news from Asia on the credit front grows a little darker each day. China is frankly a disaster. Recent data suggests its real GDP growth based on energy and electrical consumption may be as low as 3%. Strip out the incredible environmental damage that has been sustained there in the past two decades and that country is quite literally verging on zero real growth. China GDP of 7.5% is a complete myth. Anyone who buys that bunk needs to do a review of PT Barnum’s most famous sayings. This is a story that is a tough nut for most to swallow but I am calling it exactly as I see it. We are now in a time that is almost a carbon copy of the events that precipitated the last Great Depression. With regards to China itself which is nearing a credit collapse as the collateral backing the system is at high risk of declining there is also the aspect of massive manufacturing overcapacity to contend with. They simply produce too much of everything and in quantities that can no longer be absorbed by the global economies that buy from them. Their reliance on export incomes therefore leave them particularly vulnerable to a broad slowdown in the rest of the world and as so many of their companies are already on a subsidy life-line it is easy to conclude what the outcome will be. Other than a few of the commodity exporting nations there are few that will suffer such serious consequences as the next depression unfolds as will those Asian tigers with their necks fully exposed. China is in a bitter vise and they cannot possibly escape what is now coming. We can expect widespread failures in the corporate sector therefore and sharply rising unemployment as the massive excess of past credit issuance begins to take its toll. I believe the next wave of bank failures will begin in Asia as debts there are equally unsustainable as they are here although for different reasons. The weak links in this case are a combination of a highly inflated property sector and corporate debt risk that cannot be repaid in our current environment. This is just part of the business cycle but unfortunately it coincides with serious debt problems in all the developed nations of the world along with an impending crisis of aging demographics in Japan and the West that will ensure few of us escape the consequences of our collective mistakes in the past. When I review the circumstances of credit markets in China with consideration to the number of countries with direct exposure to the ill winds that are now blowing and then reflect on the depression conditions that exist in Europe compounding with what will eventually be a hyper-inflationary bust in Japan, I don’t get warm fuzzy feelings. We are hurtling into a deflationary abyss at this time even if most cannot see it and the conditions created where tapering will slow in conjunction with US tax increases just assures a bad conclusion. There is in fact very little positive news on the horizon anymore while the prospect of even gently rising interest rates will be met by most with a sick feeling in the pit of their stomachs. I see China taking the lead role in triggering the next phase of contraction. They are simply so out of balance on every metric known to analysts that no good can come of it anymore. They have reached the end of the road where even intervention yields just marginal positive results. GDP continues to fall even by official records and this despite trillions of Yuan infused into the system. Some people will know that the Great Depression was marked by commodity prices that dropped dramatically and that global trade fell by two thirds in Europe and America. The hallmark of that period of time, like our own, was that industrial capacity had grown far in excess of market demand. England in particular was very hard hit once the slowdown began and unemployment rocketed up due to their risk exposure to trade in manufactured goods. By coincidence, stocks had bubbled and perked while leverage (margin) in broker accounts reached new all time highs. A combination of deficit spending, private debt and equities bubbles were the seeds to set off an epic decline across the world that lasted the better part of a decade. We have again reached just such a moment and as we are hearing today from ECRI the US is already in recession despite its highly inflated stock markets and housing resurgence. To me it seems obvious where we are heading when I reflect on history. We will probably see stocks correct modestly this fall. That will only be the first shot across the bow. The real show is coming in 2014 in my opinion as some of the conditions that are already in play in Asia finally come to the fore and the business cycle there reaches its conclusion. This coming drama has been a long time in the making. Decades really. I no longer think monetary intervention can make much of a difference and further steps will only lead to disaster for the Fed if not its eventual dissolution as leverage even there has gone too far and assets prices may not fully recover for more than a decade. I don’t know about what others are doing but personally I will stay in cash now. I mean that literally. Bonds are within a year or two of a peak, stocks cannot possibly sustain as high as they are much longer, commodities will decline sharply along with a drop in Chinese demand and corporate failures while even gold will wither as the dollar strengthens. You need cash to get through this. You need cash in hand so you are not a victim of coming bank failures that cannot possibly be insured against the turmoil that is on the horizon. For anyone who wonders why I take that position you might just want to read up on how much of our system is pure credit and electronic bits and bites and how much is physical paper. That insight alone will help some make a decision about strategy before the bank holidays begin next year………just my point of view……sorry to all readers if I sound depressing today. We are very near the end of the road though where the economy is concerned and Keynesian theory has failed as it was only really intended to deal with recessionary conditions, not outright depression. It is now time to prepare for the worst case scenarios.

    • KevinR July 31, 2013, 2:07 pm

      To take a quote from your post Cam:

      “You need cash to get through this. You need cash in hand so you are not a victim of coming bank failures that cannot possibly be insured against the turmoil that is on the horizon. For anyone who wonders why I take that position you might just want to read up on how much of our system is pure credit and electronic bits and bytes and how much is physical paper. ”

      This is the same thing in gold too Cam. Like 95 paper oz contracts to 1 physical oz. They both seem to be based off the ‘fractional reserve lending’. So with that thought process, physical gold should have the same status. Will it come to pass? I have no idea! I want to say I think so (because gold has survived for 5000+ years and eventually all empires fiat money dies), but in any case I have both physical dollars and physical gold.

      There is a great transfer of physical gold so something is up. It’s hard to tell 100% for sure what exactly is going on because it is manipulated so much. Gold is the canary in the coal mine. Governments will do everything in their power to keep the farce going.

    • Cam Fitzgerald July 31, 2013, 2:54 pm

      Thanks Kevin. Good point about gold being fractionalized too. In the old days gold and dollars were in essence one and the same. Certificates could be traded for physical gold and vice-versa. As such the two side by side currencies traded up and down in tandem as each was convertible for the other at par. That should suggest a 100% correlation existed. In reality it did not work out that way though but conceptually dollars and gold were one and the same until the system was broken and gold was forced into the world of commodities. It is why crude now offers better insights into the value of metals than fiat currency does as a general rule. Actually even the Euro often tracks gold better than dollars. Perhaps the reason is that the vast stores of gold in the many EU Central Banks could effectively be used to fully back that currency if the need ever arose. It makes sense from that perspective that Euros and gold often move together although. I remain deeply doubtful about the strength of gold in any case. As a speculative investment it has been great for well on longer than a decade but it is currently overpriced in my opinion. As we deflate and oil prices fall we should see active gold mines becoming relatively more profitable even at reduced prices. There is a popular theme going around these days that a floor price must exist under gold because of the cost of mining itself but this is going to prove to be a moving target. I don’t subscribe to the notion that X or Y amount is the fixed bottom line for gold when it remains in a strong down channel. Gold in fact has been crashing for most of the past year. That is not the same as a corrective decline in a long running bull market and so I will remain short until I see a genuine strengthening period arise. I still anticipate prices to fall below 1000 dollars before the current rout is over. Mine closures under those circumstances do not worry me one bit. The advent of failures is just evidence of the business cycle playing out to its natural conclusion and merely reflects that a true bottom is finally being put in. Meanwhile I personally would not be invested too heavily in the PM sector until the time has ripened a little more. Dollars as you will note have staged quite a solid bounce versus gold which has been hit hard. It is clear to me at least which of the two choices have been preferable these past months. Dollars will strengthen still further if my thesis regarding a credit crisis in China and a financial/debt crisis in Japan play out. Both will take us into a deflationary period that will be difficult to escape from as investor psychology becomes progressively more negative and savings rise. We will be tested in the coming year with all the hazards that now present themselves. Some will pass and others will fail. This is not a test you can afford to screw up on though because there won’t be recovery for the losers. Just a bad report card and the memories that the gold thesis might have been correct if only all those damn banks would sign on to the idea of agreeing to allow their asset bases be destroyed by a massive devaluation of the currency. Not going to happen. The Western banks will never agree to being wiped out by a currency event. We will deflate instead which will empower the survivors even further while the gold bugs will be left gasping for air.

  • John Jay July 31, 2013, 4:52 am

    Mario,

    I did not vet this but I just saw on a PBS news item that the worlds’ 300 richest persons have more wealth than the bottom 3 billion!
    I think the eventual results of this situation are quite predictable.
    All that’s lacking is an initiating incident and a leader.

    The latest incarnation of the Romanovs are very much aware of this possibility, hence the ceaseless assault on the 2nd Amendment in this country.
    As well as the rise of the Police State here and all over the world.
    When I was a kid there was no talk of “Gun Control”.
    Of course, that was before the “War on Drugs” and the family killing “Great Inflation”.

    The wealth of the world is now so concentrated that the Stock Market is just an Applause Meter for the oligarchs.
    Look how rich I am!
    One Oligarch argues that if you are making 35k a year in the US you are part of the 1%, globally speaking of course!
    I am not certain, but it looks like we are approaching the end game rapidly.

    • Cam Fitzgerald July 31, 2013, 5:16 pm

      Wealth inequality typically declines after a credit crisis, John. A re-balancing occurs once the orchard has been picked clean. We are heading into a period when taxes will rise substantially and the wealthy will be most affected. In conjunction with that the fields will look barren where previously there had been millions invested in all the financial instruments of our time. The harvest is almost completed and now the time for a correction is at hand. The charts from the Great Depression make this obvious. Wealth transferred to the top declined by half between 1929 and 1935. There was nothing meaningful to pick during that time and so the burden fell on those with means to patch over the lack of revenues in the system. It is normal and expected. If you are amongst the top income earners then get ready to open your cheque book because this is always how it turns out. Just saying the obvious…….

  • Troll July 30, 2013, 10:37 pm

    Potash Corp (POT)

    A 80.46
    C 63.90

    Midpoint 31.58 surpassed in the panic sell-off. The close depends on whose data one uses, but it’s around the midpoint of the pattern. The above pattern leads to negative numbers, which could very well mean the bloodbath isn’t over for potash, the commodity, nor Potash, the corporation.

  • Rich July 30, 2013, 3:46 am

    Whether or not Q2 GDP is more or less than the 1.2% Wall Street’s largest derivatives house reckons, we will have more QE, whether or not Vice Chair J Yellen ascends to the Chair.

    QE started in November 2008 when mortgage rates were around 6.17% and began to decline with lower demand volume to below 3.5% in January of this year when they began to climb. Institutional vulture funds just borrow directly from Fed Reserves that almost quadrupled.

    Thirty Year Treasury rates on the other hand went from 3.656% in Nov 2008 to 4.752% in Mar 2010 as volume increased, then to 2.54% in May 2012 with economic contraction, then 3.677% this July 2013 as QE3 jumped to $85 B a month. In any event, TSY-30 rates are higher, not lower, after several trillion Fed Fiat Funny Monies were invested in Treasuries when China and Japan cut back but Congress, Courts and the President did not stop borrowing, spending and taxing, causing the economy to contract further because government does not create, it only consumes and destroys.

    Along the way commodities including crude and physical precious jumped until markets figured monetary velocity (GDP to money supply) was contracting to all-time lows as uncreative debt destruction outweighed everything else.

    More to the point, it took equity Markets four months to respond to QE from SPX 666, and they have not looked back yet, up +155% to 1698.78 so far, after the SPX 1140, 1240, 1340, 1440, 1540 and 1640 targets most people used to roll their eyes over.

    Since Ben Bernanke admitted the market would tank if/when QE stopped, it will not stop until the powers that be are good and ready.

    Until then SPX is targeting an amazing 1940, albeit not tomorrow, with hidden pivot tradeable downs and ups.

    Real Estate is targeted by Martin Armstrong to rebound to a lower high in 2015:

    http://armstrongeconomics.com/wp-content/uploads/2012/03/a-forecast-for-real-estate-111509.pdf

    Crude and gold will take off with Domestic Insurrection or more MENA War, with WTIC targeting 114 and gold targeting 1610.

    Big4 insiders just began to buy Gold again for the first time in a long time.

    Big4 Insiders are also accumulating USB and UST, with only the latter targeting higher +19% to 150, confirming an economy contracting at a real -2% according to John Williams at Shadowstats.

    Thanks to QE, the only slow games left in town appear to be Precious, RE, SPX as more debt implodes.

    If QE stops in September as some think mayhap, Treasuries (but not SPX) may continue to rise until 0Care tax revenues and sequester fall/fail.

    Of course these are all long-term imaginings and no-one does ST better than Rick.

    Regards All*Rich

  • John Jay July 29, 2013, 8:16 pm

    What you are seeing in the USA now is just the final chapter in the Great Looting that has taken place here for decades.
    Manufacturing has vanished here so a few Oligarchs could get obscenely wealthy by selling their foreign made goods to the still vibrant US economy financed by debt.
    That game is almost over now, we have no manufacturing left and no vibrant economy either.
    Plenty of debt though!

    Small bribes paid to sociopath politicians enabled this looting.
    Open Borders………. more of the same.
    As the real economy here faded away, we saw the rise of the Police State to take it’s place.
    Because in spite of the “Land of Opportunity” flim-flam, the guys running the show know what happens in the end, and they are preparing to keep us on a tight leash when they come out and finally tell the truth.
    And the truth is one word.
    Detroit.
    That’s it.
    Detroit, plain and simple.
    That’s the future here.
    Detroit.

  • mario cavolo July 29, 2013, 6:01 pm

    People who are victim of the new recessionary circumstance will and are quietly responding to it. I talked to a restaurant owner yesterday who told me that his landlord gets paid, his bank gets their loan payment, his 2 top cooks get $39k each after being with him for ten plus years, etc. and that at the end of the day, he ends up with not a dime for himself.

    He’s foolish because he is too nice. Are bankers nice? Is GS nice? I think not and an individual has to start thinking for himself as he himself is an entity, a corporation that must do what it must do for self-interest as reasonably as possible. He doesn’t yet understand the full power of INFORMING all of his mutual participants that unfortunately they will begin to also experience the results of difficult business.

    INFORM the landlord that if they would need to get a new renter for the space, that they would only be able to get $8000k, and so here is my check for $8000 per month. I have renegotiated, officially or not, our lease, which has had yearly rent increases for 20 years to now $12000. After twenty years you are lucky to have me, my rent should be going down, not up.

    Banker INFORMED of receiving the reduced loan payment from $5 to $3k.

    Chefs – INFORMED that life is tough, that they have a choice, take a pay cut or find another job. Yes, I feel bad, but that’s life. They cannot replace their cushy job with a new one anywhere nearby, and so then they participate in the slowdown in business as partners. Sorry.

    Note that all such moves are deflationary in the society and amongst the lower/middle class there are more and more people who desperately need to stop being so nice.

    I bet 99% in above case, ALL will simply accept their new reality. The bank won’t take him to court. The landlord knows his spot will sit empty for months or years and so he will quietly acquiesce and same for the chefs.

    America’s shadow economy is growing, the off the books cash economy, because more and more people are figuring out that many of the threats of fear from the overlords are self-serving hot air.

    Too many Americans in difficult circumstances are too nice. Why would you pay back a single dollar to your bank’s unsecured credit card line when you first need it for your household for wife, children, food on the table, to go to the doctor, to eat, to get educated. Your bank’s unsecured credit card line is least important thing on your list of priorities and it is easier than you think to tell them to fly a kite, accept the lousy credit score, because you don’t need loans or a mortgage anyway. If this is your circumstance, rent and buy what you need that you can afford with cash you have and continue on and improve your own life living within your means as best you can.

    Cheers, Mario

    • Cam Fitzgerald July 29, 2013, 8:36 pm

      Great post Mario! Enough is enough. Why indeed are all our creditors so hell bent on getting their pound of flesh without considering the new circumstances? Landlords could usually give a flying leap if you succeed or fail as long as SOMEONE pays the rent. That pack of mercenaries could care less about loyalty to you or the years you paid their nut costs. You cut your payment as suggested and they will have you in court, kick you out for breach of contract, cut of the water or all three. And yet you MUST renegotiate or you will lose it all. I guess it all starts with talk. Give warnings months in advance so there are no surprises. Be candid about the changing circumstances and also be ready to walk away if the creditor balks at a modified payment. It is a huge risk. Nobody in business 20 years in a single location wants to take the risk of losing a prime location and yet if you are being squeezed you have no option but to pass some of the losses along. Most landlords of commercial space are total a$$holes though. They would gladly show you their resolve by keeping good space empty for 24 months and losing the place to the banks above accepting a smaller rent modification and surviving in most cases. Utter morons. That is the nature of the landlord though. To cut off his own face to prove a point. Let them all rot.

    • Rich July 30, 2013, 2:54 am

      Well put Cam and Mario

      The antidote to depression and recession is creative individual imagination apart from the madding matrix:

      http://jonrappoport.wordpress.com/2013/07/29/the-great-open-sky-of-imagination-for-those-who-understand/

    • Rich July 30, 2013, 3:53 am

      And JJ…

    • mario July 30, 2013, 4:31 pm

      Getting worse for the expanding lower end of the population…

      http://finance.yahoo.com/news/exclusive-4-5-us-face-175906005.html

      Mario

    • BKL July 30, 2013, 7:01 pm

      There are a lot of business owners like that here in Japan. It is important to remember that in a country with a strong social safety net, business owners tend to feel a greater obligation to their employees. The owners sense that the safety net is there for them, too.

      If they were to leave their employees high and dry, the social ramifications, for them, would work out almost as bad as being destitute.

      It is one way of organizing a society. Can you predict with confidence, that America’s way of doing things will last another 50 years?

    • Jill July 30, 2013, 7:08 pm

      Rich, thanks for that article. An interesting one.

    • paul August 1, 2013, 7:32 pm

      Great post Mario!
      The private sector is getting haircuts and living with it. My pet peeve is why isnt the public (government) sector adjusting like the private sector?

  • Buster July 29, 2013, 4:05 pm

    “It’s all about the debt……..stupid!”

    I suppose we’re somewhere near the tipping point of the current debt based monetary system, where each new $/£/E/Y etc issued with it’s attached debt not only fails to produce growth in real terms, but actually suffocates the economy a little further. If the point hasn’t been reached through the increased debt burden directly, I imagine that the indirect burden of it through taxes, fines, fees & licenses is enough to do the job of ruination, likely proven out by the sheer numbers of the Sheeple who are sinking further into the economic abyss or giving up entirely, let alone working toward their own progress.
    One thing that can be said of the Corporate Fascist model, it is a fairly efficient way of ‘processing’ the human being without too much real resistance.
    Even in Ireland, well accustomed to the technique through their long history of subjugation, there is nothing much for the Banksters to lose sleep over. OK, there were a few dozen protesters at a recent auction of other people’s homes & three MP’s have recently resigned from the occupying political regime managing the asset strip, citing gross injustice, but apart from that most of the world just moves out onto the street & shivers while the far more important task of paying the pound of flesh is played out:

    http://www.irishtimes.com/news/environment/allsop-property-auction-cancelled-due-to-protest-1.1452696

    Meanwhile back in the motherland, where King George originally enacted his gross failure of responsibility upon the relatively modern age a few centuries ago, setting in motion the sufferance of millions upon millions of us to follow , Londoners are increasingly moving away from the capital, priced out by the increasing numbers of the super wealthy. One wonders where all their money is coming from(??!!), since hundreds apply for any jobs offering a barely subsistence wage??!!
    Yet the sheer numbers seeking work don’t appear quite high enough for the UK’s own occupying regime, who are, it appears, hell bent on stopping as many people from getting survival benefits for failing to apply for these scarce jobs, even simply due to illness or poverty. Apparently, these folk are to be singled out as to blame for fecklessness & overall scapegoats for our economic woes, coupled with a recently ruled big pay increase for MPs for sorting out this mess!
    Hear! Hear!
    Advice centres & food banks, even animal rehoming volunteers aren’t able to cope with the sheer numbers of ‘War of Debt’ casualties at the sharp end of it all & yet still the onslaught intensifies with ever more attacks on the ‘lower order of people’.

    So it really is all about the debt, then….stupid! as no amount of new homes built, cars manufactured, tv’s shipped, faster & smaller PC’s or even I-phones given away has ever changed the backdrop of debt that controls our lives, & increasingly so. Neither will yet trillions of fracking barrels, graphene advancements or 3D printed toys change this in the future either, no doubt, as we get closer & closer to the singularity at the end of this fibonacci spiral vortex.
    How will it all end, one wonders, as we are so very close ‘the point’?
    A. Either when there is nothing left to take from the World, ie. the end of the trend, or when something breaks this trend.

    I’ll wait & see which it is
    …..if I can endure long enough, that is.

  • nitram July 29, 2013, 1:36 pm

    Most people don’t realize but we are experiencing “protectionism” with our Eagles football team in Philadelphia, Pa. Pre season football practice being held in Phila, first time since 1943. Keep the $ within the city limits. To me that’s an economic indicator.

  • Frank July 29, 2013, 5:13 am

    Dear Rick,

    I am the patriarch of a large family of 22. I have been retired with a good pension for over 20 years. I can tell you first hand that despite yearly cost-of-living raises, my monthly check is buying less and less.

    I have 2 well educated sons working jobs that pay just above the poverty level. I have a grand daughter with a college degree that can only find temporary positions. I have a grandson with a degree working for minimum wage trying to support a family of 5. He is eligible for food stamps.

    Despite the above we will survive unless conditions get even worse. other families I know of have already fallen below the survival criteria.

    Does all of this say we are not in a recession? I believe my story is the common, not the unusual family story.

    • Jason S July 30, 2013, 4:32 pm

      Frank, my parents are in a similar situation as you are. My Dad retired with a good pension and they were living comfortably 17-18 years ago. Now, despite both of them adding social security to their income rolls they are barely scraping by and looking at relocating and other options to reduce expenses and free up equity.

      Thanks to Uncle Ben, we have stolen from savers and retirees and given the money to the too big to fail institutions only to watch them grow larger and suffer from even greater bouts of moral hazard.

  • John July 29, 2013, 5:10 am

    I’ve always thought the term “great recession” has a certain arrogance to it. I’ve always taken it to mean “no matter how bad this gets, it can’t get worse than the great depression.” Sooner or later, the media are going to have to admit this is something much bigger than a recession.

    As for real estate, I think the relapse has already begun. I live in a midwest city of about 100,000, and I continue to be impressed with how bad the housing market is here. Even in the “old money” neighborhoods with the big stately houses by the park, you’re beginning to see “for rent” signs. I just saw a house today listed for a “new price” of $309,000, and the sellers paid $395,000 for it just three years ago. Ouch. And you have to figure that if 30-year mortgages reach 6 or 7%, you can easily take off another $100,000. I think we’re still in the early innings of this housing real estate collapse.


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