That's Incredible!

Greetings good citizen,

Most of you know what’s on tap for tonight… What fresh Orwellian hell is this?

Earlier this week I cautioned you to read the offering with that catchy little tune that pops into our heads with most MSM reports, “Listen to the bull shit fly,” apparently they can’t get enough of it, or they really do think you’re so stupid that you’ll swallow anything!

Anyway, the markets have closed for the week and it appears that it was Europe’s turn to be ‘out of synch’ with the rest of the world. After spending most of the day in positive territory, US markets ended in negative territory. Which only adds to the ‘conundrum’ of such an, er, ‘optimistic’ GDP report.

U.S. Economy Grew at Fastest Pace in 6 Years Last Quarter

By CATHERINE RAMPELL
Published: January 29, 2010

The United States economy grew at its fastest pace in over six years at the end of 2009, but a sluggish job market is still souring economists on the sustainability of the recovery. [What smacks you in the eye here is the total absence of proof of an uptick in economic activity. It appears GDP reporting has gone the way of consumer price inflation measurements and unemployment statistics…they ‘are’ whatever they say they ‘are’ and have no discernable basis in reality.]

Gross domestic product expanded at an annual rate of 5.7 percent in the fourth quarter, well above analysts’ and any sane persons’ expectations. It had grown at an annualized rate of 2.2 percent in the previous quarter. [Revised down from the originally reported 3.5%] Analysts had forecast annualized growth of 4.8 percent in the fourth quarter, and the better-than-expected result sent stocks higher when trading opened on Wall Street. [So we return to yesterday’s statement that the market ‘responds’ to influences that are not necessarily ‘fact based’…making the nature of money itself ‘questionable’…]

“It was an excellent report, but it’s not clear how sustainable this pace of growth is,” said John Ryding, chief economist at RDQ Economics. [ John who?] “We need numbers like this for the next two years, and I just don’t think we can achieve that.” [And we should care what he thinks, why?]

The biggest lift to economic activity came because businesses ran down their stockrooms at a much slower rate than they had earlier in the year. The change in inventories added 3.39 percentage points to the fourth-quarter change. [Oh, that clears up the whole thing! Which is to say are you fucking jerking me? How the fuck does slower inventory turnover create higher GDP unless the morons are measuring it wrong? Anyone want to take a stab at that? Bueller? anyone? Bueller?]

Slower inventory liquidation is not the most promising way to guarantee growth going forward, [Can we get a no shit!] but economists are hoping that once companies become more confident about the recovery, they may ramp up production to refill stockroom shelves. [WTF! Talk about ‘wing and a prayer’!]

“What goes down wildly has to go up at a pretty good clip,” said Robert Barbera, chief economist at ITG. [Again with ‘the who’ and ‘the why’?]

Still, many economists worry more about trends in final sales to consumers and businesses.

Consumer spending grew at an annualized pace of 2 percent in the fourth quarter, after an increase of 2.8 percent in the third quarter. That is better than many had feared when the quarter began, considering that the cash-for-clunkers program was no longer around to help stimulate spending.

But consumer spending has still been disappointing to many economists, given the trends in previous recoveries. In the past, housing and consumption often helped drive growth in the wake of a recession. [Yeah…but that was then and this is now. Until the fucktards stop shipping jobs overseas the economy won’t have a prayer of righting itself, not now, not ever!]

Without the benefit of similarly bombastic inventory changes, many economists are expecting tepid growth in the quarters ahead. Ian Shepherdson, chief United States economist at High Frequency Economics, expects output to expand by a mere 1 or 2 percent, at an annualized rate, this quarter and next. [So what the fuck is this 5.7% bullshit all about? I’m still baffled as to how this was achieved via ‘slower’ inventory reduction rates…sounds more like an accounting problem!]

The biggest challenge going forward is the job market.

“Our focus must remain on getting Americans back to work,” Christina Romer, chairwoman of the President’s Council of Economic Advisers, said in a statement. “That G.D.P. rose strongly in the fourth quarter of last year while employment fell and the workweek increased only slightly emphasizes the need for policy actions designed to help spur private-sector job creation.”

Also on Friday, the Obama administration released details of a proposed tax cut for businesses that hire workers or raise wages, a policy intended to encourage companies to start investing more in their workers.On net, the economy lost 208,000 nonfarm payroll jobs last quarter, and the unemployment rate rose to 10 percent. As long as the labor market remains weak, consumers — whose purchases make up the bulk of economic output each quarter — will be reluctant to spend money. That means businesses will need to look for other sources of demand, like exports.

Perhaps the most promising trend, at least for job growth, to come out of Friday’s report was the pickup in equipment and software spending.

Businesses increased their investment in these areas at an annualized rate of 13.3 percent last quarter, compared with an increase of 1.5 percent in the third quarter.

“Businesses that are spending more on equipment and software probably going to be hiring more as well,” said Nigel Gault, chief United States economist for IHS Global Insight. “If we see more hiring, that means we may see more consumer spending, too.” [This asshole we’ve heard of, but it seems he’s ignorant of the concept of replacing outdated technology…which doesn’t add a single US job…in fact it usually eliminates a couple.]

Total government spending fell slightly, by an annualized rate of 0.1 percent, from the third quarter to the fourth quarter, largely thanks to declines in military spending and state and local government spending.

Federal nonmilitary spending rose at an annual rate of 8.1 percent last quarter, after rising 7 percent the previous quarter.

International trade over all increased last quarter, and exports grew nearly twice as fast as imports, helped along by a relatively weak dollar. [Too bad our main exports are food and raw materials that we no longer process here. The drop in imports isn’t necessarily ‘good news’ either as it is due to our being unable to pay for more useless dreck, thanks to weakness in the overall economy.]

The G.D.P. number is a broad measure of the economy’s total output of goods and services. While it is, by definition, a backward-looking figure, analysts watch it to get a sense of where the country may be headed.

The number can be subject to major revisions, especially when the economy is at a turning point. The annual growth rate initially reported by the government for the third quarter of 2009 was 3.5 percent, but was later revised to less-impressive 2.2 percent.

The government’s final figure for last quarter’s G.D.P. will be released in March.

What can you say good citizen, when they ‘cook the books’ they don’t do it halfway, do they? Guess this brings us to the hallmark of neo-conservative philosophy, ‘if you’re going to lie, lie big!’

Which brings us to another chilling reality: After a certain point it is no longer possible to discern the truth, regardless of the source.

When trust breaks down to the point you can only moderately trust the people you have intimate interactions with (you know them quite well) and you don’t dare trust anyone else, the world becomes one huge armed camp.

The establishment of the ‘rule of law’ was supposed to put these fears to rest, but now the criminals have taken over the machinery of the law. It can no longer be trusted.

Now there’s a ‘pendulum’ that literally ‘snaps’ back and forth between extremes, a ‘squeaky clean’ legal apparatus prosecutes everyone for everything until the message is clear that one had best not even appear to step out of line for fear of some very real consequences.

That’s the ‘trouble’ with the law, either it works too well or it doesn’t work at all.

Thanks for letting me inside your head,

Gegner

Madness!

Greetings good citizen,

The stupidity index gained a few points this morning before it dropped into negative territory, where it pretty much stayed…all by its lonesome, until after the close. The Dow closed down 18.9 points, the S&P was up a fraction and (thank heavens for technology) the Nasdaq closed up a few points.

But, like yesterday, it was not the market’s performance that disturbed me, it was er, ‘non-headline news that I found troubling.

Tonight’s abbreviated first offering is from none other than Henry CK Liu:

The folly of deregulation
By Henry C K Liu

On October 7, 2009, the United States House of Representatives Committee on Financial Services at long last held a public hearing on "Reform of the Over-the-Counter (OTC) Derivative Market: Limiting Risk and Ensuring Fairness".

OTC derivatives are contracts executed outside the regulated exchange environment whose values depend on (or derive from) the values of underlying assets, reference rates or indexes. Market participants use these instruments to perform a wide variety of useful risk management functions. The Bank of International Settlement (BIS) reports that the notional value of all outstanding OTC derivative contracts ending June 2009 was US$49.2 trillion worldwide against a 2009 world gross domestic product (GDP) of $65.6 trillion.

Stop right there! 2007 world GDP was 53 trillion dollars, Um we all know the global economy ‘shrunk’ over the past two years so how the fuck did it grow to 65 trillion dollars!

The only ‘logical’ explanation here is inflation (which has been reported to be ‘negative’) $12 freaking TRILLION DOLLARS worth to be precise!

How the fuck does global GDP increase $12 trillion dollars when the planet’s largest consumer population has slashed trillions in net income from our economy? WTF is this, magic? We have 18 million unemployed in the US and our GDP went up 3.5%…for no discernable reason!

So, there’s no inflation and ‘somehow’ world GDP went up while payrolls around the world are shrinking? There’s something very wrong with this picture good citizen.

Someone’s going to get stuffed but good and you can bet it won’t be those who so ‘richly’ deserve it.

Moving along we arrive at tonight’s second offering for yet another look at an ‘extreme outcome’… [Hat tip: Some Assembly Required]

The Consequences of Underemployment
by: Tom Lindmark December 01, 2009

The next time you hear a politician talk about the number of jobs saved or created by the stimulus package or listen to a commentator on CNBC talking about the improving labor market, hark back to this story. It’s from the WSJ and it’s the unfortunate reality that isn’t and maybe can’t be addressed.

The story talks about a few Americans that have seen their world turned upside down by the recession. Here is one family’s experience:

After being laid off by the New Jersey battery plant in 2006, Mr. Crane took a job stocking shelves at Costco (COST) in the fall of 2006. His pay was $10.76 an hour — the same money he earned when he was hired by Delco in 1983, just out of high school. “It’s sad,” says Mr. Crane, who had been earning about $28 per hour at Delco, before overtime.

In late 2007, he took a job at Lowe’s (LOW) while working at a series of fast-food jobs on the side, as well as a stint at Pathmark supermarket. He still works at Lowe’s, earning $15.96 an hour selling lawnmowers, outdoor furniture and Christmas ornaments. At night, he pumps gas at a Quick Check for $13.70 an hour.

Typically, he works between 61 and 63 hours per week. It wouldn’t be so bad, he says, if the hours were consecutive. But with the gap between jobs, he can only sleep a few hours a night now — sometimes just an hour. Last week, he managed to clock 87 hours and barely saw his son.

Mr. Crane was a heavy equipment operator at a Delco plant earning more than $100,000 a year when he was laid off. [Um, this is pretty extreme considering the true ‘average wage’ for a working male here in the US is right around $30,000 a year…half of all men make more and half make less…which is more ‘typical’ than Mr. Crane’s $100k working a ‘blue-collar’ job. Just to give you an idea of how ‘extreme’ we’re talking here, Mr. Crane’s $100k put him in the top 20% of earners…also known as ‘paycheck peasants’; which is what he has truly become.]

This is the sort of thing that I suspect you like I see every day. People who have seen their standards of living slashed and now work just to survive with little hope of better days ahead. [Uh, You KNOW Mr. Crane has a better chance of meeting God than he has of getting his cushy union job back, that bad boy is gone for good!]

There is an emerging consensus that somehow, someway the government needs to expand the amount of money it collects in order to deal with a deficit that some consider out of control. Honest pundits readily concede that the only way that can be accomplished is to tax more and to tax broadly. That may be a truism from an abstract policy perspective but the reality is that the stones from which those would extract more money are indeed truly quite dry. [You know and I know that taxation is not how the government raises more money, our pal Hill Billy (Clinton) pumped up the economy to the point that he balanced the Federal Budget, not ‘for real’ but he was able to stop digging the hole deeper, an accomplishment in itself. We’ve never faced the problem we’re facing now, where we owe and import so much that it isn’t possible to get ahead of it like they used to.]

Workers like Mr. Crane have no capacity to absorb more calls on their earning capacity whether through higher taxes of any form or sort, increased health insurance premiums or taxes either overt or covert on energy usage. They exist on a razor's edge with no margin for error or any change in the amount of money they now willingly pay. [Yes, good citizen, this is a rare piece that raises issues my readers are already familiar with…]

Americans, no matter how dire the situation may have appeared in the past, have always forged ahead on the assumption that their lot would improve through their own efforts. I’m not certain that hopeful outlook prevails any longer and to the extent that it has diminished the door is being opened to radical social change. People with little faith in the future, particularly those who feel that something has been taken from them, are most prone to favor radical social reordering. How that plays out in a country as individualistic as the U.S. is a question open to a lot of speculation.

The situation with underemployment did not arise solely from the recession. It is the product of a conscious decision of a large portion of corporate America to outsource jobs to less expensive locals. On its face, it made business sense at least from a short-term perspective. Long-term, it may turn out to be a decision of colossal negative implications for those who profited including the political class that traded its obligation to protect the populace for campaign cash. [Pauperizing your own society is NEVER a good idea, even on a short-term basis. Strangely, those who have done us in think they can ‘escape’ by leaving the country…reality says there’s nowhere to run, nowhere to hide.]

Consider Mr. Crane’s current ambitions as you ponder the implications of underemployment. Men and women with this view of the future tend to listen attentively to promises for a better tomorrow no matter how radical the road plan for getting there might be.

Mr. Crane no longer sees his new life as temporary. He no longer dreams of going and fixing equipment at the factory and operating big machines.

“My new goal is to become a manager at Lowe’s,” he says. “That will pay $17 an hour. I’m hoping this happens in the next couple of years, by the time my son is in high school.”

At least Mr. Crane has woken up to the fact that he can’t keep putting in 80-hour weeks without his health suffering. Worse, job performance suffers as well.

Our Mr. Crane was either an extremely frugal individual and he banked a goodly percentage of his former pay or he has suffered some serious setbacks in his family’s lifestyle. Most of us wouldn’t survive a fifty-plus percent pay cut without having to sell off assets at stiff losses.

To ‘re-cap’ we have the criminal conspiracy that operates above the law manipulating the numbers so vigorously they have produced inexplicable outcomes. Then we have a ‘not so average’ citizen kicked severely in the gonads by cutbacks in the automotive industry…which brings us to our final offering and the ‘fuck job’ perpetrated upon the ‘buy and hold’ long term investor… [Hat tip: Jesse’s crossroads café]

America's Lost Decade in Equities

For the first time since the 1930's this decade represents negative returns for the SP500. Remarkably this chart represents nominal total returns. [Follow link to view chart]

Adjusted for the weaker dollar and inflation, the 'buy and hold' philosophy, especially for those nearing their retirements, has been a disaster. But it has been great times for speculators and insiders and the productive economy.

Part of the problem is with the 401k concept as a supplement if not replacement for pensions and savings, as well as portfolios for educational purposes. Their implementation offers too few choices for the average person. Do you wish to buy corporate stocks or corporate bonds? Or money market funds where the value is not guaranteed? Short term Treasuries, if you are fortunate.

The piling into corporate bonds in the US today may be in part driven by this lack of genuine choice, the seeking for 'conservative choices' and is setting up the many for staggering losses in the event that stagflation does indeed occur. Bond funds are no safe havens.

Two tax reforms, or at least stimulus, that the US might consider is increasing the annual allowance of $3,000 which the taxpayer may claim from prior capital losses against current income. The amount has been the same for many years, and an increase would help the average person clean their books up a bit. A second program might be stimulus, in allowing the average person to take for example $10,000 out of their IRA or 401k tax free for one time.

The Reformer [Guess who?] will not do anything that does not benefit Wall Street, but if the US wishes to obtain some serious reforms in its financial system there is a rich ground to sow the seeds of renewal, given the neglect and abuse of the last twenty years.

The banks must be restrained, and the financial system reformed, and balance restored to the economy before there can be any sustained recovery.

Any of you old enough to remember can still hear Saint Ronnie promising us that we we’re all going to be millionaires if we’d just feed our 401k’s as much as we could spare! Understand, the goal wasn’t to make YOU rich, it was a way to pump a steady stream of cash into Wall Street…and the fucks used your retirement money to send your job overseas…talk about ‘double fucked!’.

I’m not crying because I never fell for that bullshit…I don’t have a 401k so I didn’t get screwed. Flipping that rock over, I know people that have lost millions!

Um, Jesse’s heart is in the right place but a vast majority of small companies have never offered 401k’s. I believe the estimated participation rate is still below 40% and that isn’t enough to ‘stimulate’ the economy as most people who have them have tapped them already. There simply isn’t $10,000 to take out or the accounts are ‘dormant’ because neither the company nor the worker can afford to contribute to them anymore.

This naturally brings us full circle with the issue of what does our corporate sector owe us regarding our future economic security. Are we idiots to slave our lives away, making the ungrateful rich while they have no obligation to us?

As we often encounter, the way things should be are not the way things are…and we have to wonder why? How do employers continue to shirk their responsibilities? Is THAT what all of those ‘campaign contributions are all about?

Anyway,

Thanks for letting me inside your head,

Gegner

Amazing Grace...

Greetings good citizen,

Proving that they still possess an iron grip on the ‘Stupidity markets’, the Dow tacked on nearly 200 points today on…wait for it…’better than expected’ GDP numbers!

Why else did ‘Government Sachs’ put out a ‘lowball’ number yesterday if not to distract attention from the totally bogus number that was actually announced?

Um, few openly doubted ‘green shoots’ even though nobody could actually point to one. With that being the case, who will call BS on the announced 3.5% GDP declaration , which involves more ‘slight of hand’ (and accounting tricks) than when David Copperfield made the Statue of Liberty disappear!

3.5% is one highly gimmicked number good citizen and the Obama administration shares that shame if they fail to denounce this falsehood which was authored by the financial sector! (P.S. by the way, don’t hold your breath waiting for that condemnation…it ain’t gonna happen!)

Oh, apparently there’s a new kid in the business section of the NY Times, when I copied tonight’s offering this morning it still carried the ‘anonymous’ AP attribution but the latest update has the new kid’s handle attached to it.

Markets Rise After Upbeat U.S. Growth Report

By THE ASSOCIATED PRESS
Published: October 29, 2009

Investors heartened by news of a stronger-than-expected economy went back into the stock market after a four-day slide. [Notice there is no mention of how moronic this looks to the ‘unwashed rabble’…]

The Commerce Department’s report Thursday that the gross domestic product rose at an annual rate of 3.5 percent in the third quarter gave the surest sign yet that the recession has ended and that the economy is healing, although problems remain. [Sadly, the fact these figures are fabricated out of whole cloth happens to be one of them…]

The reassurance weakened demand for safe-havens like Treasuries. That, in turn, gave a boost to stocks. A drop in the dollar pushed commodity prices higher, which helped materials and energy stocks. [How can these idiots even PRETEND this is a GOOD THING? Unless we’re back to last night’s ‘class war’ admission that ‘paychecks are for peasants’…]

The G.D.P. increase was faster than the 3.3 percent increase predicted by economists polled by Thomson Reuters. The growth was the best in two years and stops four consecutive quarters of declines that had pushed the economy into its worst recession since the Great Depression. [Too bad the entire figure is an accounting trick coupled with the ‘imaginary effects’ of pushing electrons around…which is to say there wasn’t enough ‘verifiable’ positive economic activity to fill a thimble!]

The economy was bolstered by government stimulus programs, including the popular “Cash for Clunkers” auto program and tax credits for first-time home buyers. Those programs did raise some questions in the market about the sustainability of the G.D.P. increase.

In midmorning trading, the Dow Jones industrial average was up 78.14, or 0.80 percent, to 9,840.83. The Standard & Poor’s 500 index was up 11.47, or 1.10 percent, to 1,054.10, while the Nasdaq composite index was at 2,085.85, up 26.24, or 1.27 percent. [Left unsaid here is what kind of ‘volume’ accompanied these market moves? The ‘problem’ with the six-month rally back to the 10,000-point level has been the consistent low volume of shares being traded.]

Mitch Schlesinger, a managing partner at FBB Capital Partners in Bethesda, Md., said that because of government support, fourth-quarter G.D.P should provide a better picture of how much the economy has recovered.

”Some of the artificial goosing of the numbers will come out and we’ll get a better picture,” Mr. Schlesinger said. He added that the economy will probably grow in the fourth quarter, but probably not at as fast a pace as the third quarter. [That’s his guess, mine would be that the economy will collapse in the 4th quarter…who do you think stands a better chance of being right?]

In the interim, however, investors will welcome the better-than-expected third-quarter report, he said.

Not all the news was upbeat. The number of people claiming jobless benefits for the first time dropped less than expected last week. The Labor Department said workers filing first-time claims for unemployment dipped 1,000 to a seasonally adjusted 530,000 last week. Economists expected a larger decline to 521,000.

However, the number of people receiving unemployment benefits on a continuing basis dropped sharply by 148,000 to 5.8 million, below economists’ expectations. [Which is a fucking disaster good citizen, these people went from ‘next to no money to no money period’…and in case you didn’t notice, winter is right around the corner…]

Investors were also watching testimony by Treasury Secretary Timothy F. Geithner to the House Financial Services Committee. Mr. Geithner told lawmakers the government was not looking to bail out struggling financial companies, and said legislation being considered by the committee would ensure that firms of any size could fail without risking a collapse of the financial markets. [Yet, bizarrely enough, Timmy and Benber are doing everything they can to avoid re-enacting Glass-Stegall…go figure?]

Meanwhile, bond prices fell, which pushed yields higher. The yield on the benchmark 10-year Treasury note rose to 3.47 percent from 3.42 percent late Wednesday.

The dollar mostly fell against other major currencies, while gold prices rose.

Crude oil rose $1.09 to $78.55 a barrel on the New York Mercantile Exchange.

Three stocks rose for every one that fell on the New York Stock Exchange, where volume came to 197.9 million shares compared with 178.1 million shares traded at the same point Wednesday. [This is wicked low volume…on a normal day, billions of shares change hands.]

The Russell 2000 index of smaller companies rose 7.53, or 1.3 percent, to 573.89.

Overseas, Japan’s Nikkei stock average fell 1.8 percent. In afternoon trading, Britain’s FTSE 100 rose 0.7 percent, Germany’s DAX index gained 1.2 percent, and France’s CAC-40 jumped 1.2 percent.

So yesterday it looked like we were staring at the beginning of what will turn out to be a serious market correction…which is still on its way but the gimmicked GDP data provided cover for more insider selling today (because you KNOW something’s rotten in Denmark…)

Think about it good citizen, the economy is bleeding jobs, wholesale yet we are expected to believe that GDP is advancing…somehow?

Naturally, we have choices…either the economy is getting ‘stronger’ relative to what it has been or we are getting our chains jerked in an effort to make things appear better than they actually are. This is being done so we don’t take the bad economy out on either our corporate leaders OR their bought and paid for representatives…who are merely following orders! (From their corporate overlords, not you, silly!)

Which brings us to the crux of the problem, doesn’t it…do you want to be lied to and told everything will be just fine or are you sick of this blatant manipulation to the point where you want to see some of these lying bastards swing for their crimes?

If we’re going with ‘majority rules’ here good citizen, I’m betting on the latter rather than the former.

Thanks for letting me inside your head,

Gegner