Saturday, May 16, 2009

Strange days indeed!

Greetings good citizen,

Well, the markets are down for the week and the economic news from the rest of the world has driven a stake in the heart of the ‘green shoots’ BS.

I’m of a mind to make tonight’s offering ‘brief’, so let’s cut to the chase.

First up is today’s flash update from Shadow

Flash Update Subscription required May 15th, 2009
• April CPI-U Annual Deflation of 0.7% versus SGS-Alternate Estimate of 6.7% Inflation
• Seasonal Factors Mask Rising Monthly Energy Costs
• Peak-to-April Industrial Production Is Down a Depression-Like 16%

[And just two days earlier…]

Flash Update Subscription required May 13th, 2009
• New Accounting Fraud for Monthly Federal Deficit Reporting
• Annual Retail Sales Plunge a Depression-Like 10.1%
• Monthly "Core" Retail Sales Down 0.1% versus Official 0.4% Decline

It’s difficult to tell which is worse good citizen, the fact that they’re robbing us blind or that they’re lying to us left, right and center.

If you support the current administration, which is becoming increasingly difficult to distinguish from the previous administration, you’ve got rocks in your head!

So we proceed to tonight’s excellent (and eerily similar to Mr. William’s post) by Ilargi

Ilargi: Today's a pivotal day, the entire system has started to visibly tumble in on itself, and it takes unfortunately takes me more time than I have right now to detail it. There's always tomorrow. But the evidence still doesn't lie.

Exchanges can rally all they want. When you see that "US prices fall most since 1955", you’re looking at something that could change rather quickly. Once you get to "US production capacity utilization lowest since records began in 1967", that is not the case. There's a lot more inertia in capacity utilization. Detroit runs at 42% of capacity, and all economic numbers except for those blurting out of Wall Street and Washington indicate that even that is nowhere near a bottom in actual sales.

Like a diabetic junkie camping out at a fast food takeout counter, President Obama, after increasing government debt and borrowing close to fourfold, says the debt and borrowing that are on his tab are not sustainable. And then pledges to bail out insurance companies, for no reason that anyone can seem to fathom, and to prop up the municipal bonds markets, after ensuring the death of those very markets himself with the announcement of the issuance of mind-boggling amounts of federal bonds.

Everything that still functions to a degree in the US now runs on government hand-outs, bail-outs and guarantees. Everything. That's it. And I’m not kidding here. Take out government support for banks, home purchases, car loans and all the rest, and you would be looking at a barren lunar economic landscape. And things are getting visibly worse every single day. GM and Chrysler may or may not come out of bankruptcy proceedings, their present predicaments will cost millions of jobs this year alone. Those losses will be added up on top of the millions more not car-related firings, and there will come a point, and soon, when something breaks in the chain that cannot be mended easily, if it can at all.

America has been consuming a lot more than it has been producing for years now. What makes today stand out from what has been before is that what we are now witnessing is that the consequences of overconsumption are starting to further deplete production, and with a vengeance. The government is losing its grip at lightning speed, even though you would of course never know from their public utterances. Don't underestimate the possibility that they have reached the same conclusion that people like Stoneleigh and I did quite a while ago, that there is no way back, no recovery anywhere is sight. If that were so, and you would be in their shoes, what would you do? [You can add my name to the list of folks that predicted over a year ago that there is no way to fix the system using the system.]

I can tell you what their choice is: keep up the semblance of normality as long as possible, while behind the curtains frantic efforts are taking place to save and safeguard as much as possible for themselves and their own people. And no, you are not among their own people, you are not Obama's people. to know whose people you are, look around you in your homes, your towns and your families.

Take another good look at those home prices, and the beat of the trendlines they move to. We’ve seen them lose 31% nationwide so far, much more in some specific places. And the "experts" are still looking for bottoms predicted by "fair value" and "3 times income" and data like that. Those data no longer apply. There is absolutely nothing at all, other than them, that provide any indication that prices are about to stabilize. US home sales depend on one source of financing, and one only: your money, provided through the government and its Fannie, Freddie, FHA and FHLB agencies. Without them, where would prices be? It would make you shudder to know where.

The nation, and its economy, along with much of the -western- world economy, would have already fallen to bits and shreds and pieces if not for the full faith and credit of what the taxes on your labor will provide as revenue to the state. However, you will desperately need the fruits of your labor to pay off your debts. That is, if there are any monetary fruits of your labor. The fact that production capacity utilization is at its lowest point in at least 42 years doesn't bode well. While you are getting poorer by the day, the future of the nation rests on you getting richer. [and that’s not gonna happen!]

And try to understand the following, and never lose sight of it: the only way your government has on offer to provide you with a job that will pay you actual revenues, as in anything above the red line, with which you can pay off your debts or even make any future purchases, is by using your own money to lift production, and capacity utilization, to a degree at which some enterprise would wish to employ you.

That is at best zero-sum, but more likely, with 99.9% certainty, a losing proposition as temporary as the leaves of spring you see on the trees around you. Look at it this way: everything you've seen go wrong in the economy so far has been like kindergarten. Now you're going to have to learn how to read.

Trust me good citizen, ‘civil society’ wants very much for you to work for a living wage…it’s the ‘employer class’ that is determined to underpay you!

In what is sure to be disturbingly profound, capitalism is socialism with ‘parasites’.

Especially when we consider the ‘true source’ of capital.

I promised a brief post so I’ll drop it here…there is much to chew on in these short paragraphs.

Thanks for letting me inside your head,


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