Martin Armstrong explains the Private vs Public Wave. A brief post from a longer paper called “It’s Just Time”.
January 31, 2013
End of the Road
John Williams from shadowstats.com
Some say April 2013, some say May 2013, Martin says August 2013. Everyone has a date this year for the beginning of the end.
New Healthcare Law Update
Apparently the Unions are not keen on the new healthcare law (cough, tax) now that someone has actually read it.
(groovygirl is referring to this new law as a tax because the Supreme Court approved the law based on it defined as a tax, not a choice. So, it is a tax.)
gg has heard a rumor that there is some disagreement on the implementation of the tax law, so there is a current “delay” in the process.
January 30, 2013
Economist inadvertently discloses that “recession” will continue
Update (1-31-13): to combat the spin on the GDP release, here is John Williams of shadowstats.com summary:
– Although Recovery Never Took Place, Official Double-Dip Recession Likely Will Be Clocked from Second- or Third-Quarter 2012
– Reported Contraction in Real GDP Designed to Discourage Fiscal Reform?
– Fourth-Quarter Nominal GDP Growth Collapsed to 0.46% from 5.91%
– Real Durable Goods Orders Contracted Year-to-Year, Despite Temporary Orders Boost from Year-End Defense Spending
“Frankly, this is the best-looking contraction in U.S. GDP you’ll ever see,” Paul Ashworth, an economist at Capital Economics, said in a note to clients.
Click here for full article.
The spin, the spin on the CONTRACTION in GDP this morning is truly priceless. Contraction has finally reared its ugly head last quarter as John Williams and other has been saying for some time now with their real stats. Really, we never had a recovery.
Call it what you will, GDP contracted last quarter and no manipulating of official stats could hide it.
However, brilliant economists everywhere say, no fear, because….
Economists said the surprise decrease in the nation’s gross domestic product wasn’t as bad as it looked. The weakness was primarily the result of one-time factors. Government spending cuts and slower inventory growth subtracted a total of 2.6 percentage points from growth.
Those volatile categories offset a 2.2 percent increase in consumer spending, up from only 1.6 percent in the previous quarter. And business spending on equipment and software rose after shrinking over the summer.
“Frankly, this is the best-looking contraction in U.S. GDP you’ll ever see,” Paul Ashworth, an economist at Capital Economics, said in a note to clients. “The drag from defense spending and inventories is a one-off. The rest of the report is all encouraging.”
Groovygirl is confused, how are government spending and defense cuts a one-off? Do they know of a new war somewhere the US is going to engage in?
The US is in major debt, the bond market is under pressure, the Fed’s “printing” produces less and less, and the politicians keep kicking the “cliff” down the road. GG sees no increase in government spending, but a continued decrease.
GG also completely attributes the increase in consumer spending on inflation in prices and nothing else. (Real inflation rate is 10%.)
This contraction must continue, the only way it can (at least) net out is further inflation in prices.
Outsourcing: it doesn’t work at a certain point
Boeing’s new Dreamliner is the perfect textbook example of why outsourcing doesn’t work. Not only does it mean fewer, if any, design and manufacturing jobs in the US, it produces a shoddy product that goes over budget anyway.
Like anything else, outsourcing has a break-even point. Boeing just learned that the hard way. That is one of the problems with the American way of thinking: if it works, do even more of it. That is not how anything in economics, investing, labor, business, education, health, exercise, food, Fed, anything, works. Nothing. There is a point on any line where best way moves to less and then worst. It’s a bell curve. But humans are greedy and they always topple from the height of the top of the bell curve or tipping point. It’s a shame.
GG has mentioned this concept before in describing the 2007 housing market crash. There is a point when you run out of people to buy houses. Even non-living people. Just as there is a tipping point in the number of facebook users. And ipod users. TV and radio manufacturers went through the same tipping point.
Even gold buyers…but we are not there yet 🙂
A high in any cycle or wave is usually 2 or more tipping points coming together. The more of the tipping points coming together at the same time, the worst the low that is following.
January 29, 2013
Relative prices and wages
So, grooygirl went to the Mises Institute Circle in Houston last weekend. Click here.
Mises Institute promotes the understanding and education of the theory of Austrian Economics. It was a good conference. The most encouraging thing was the large number of young people there. They certainly understand that the current economic system is not working.
Tom Woods, one of the speakers, talked about the problems of QE to infinity and government fiscal stimulus plans. The worst problem being that the spending is never targeted toward promoting spending that will develop real economic activity. It is geared toward either pet government programs or no direction at all, thus another bubble is created intentionally or unintentionally.
Current bubble targeting the auto industry and the T-bond market.
Groovygirl gained a better understanding of the concept of relative prices and relative demand and its effect on the real economy. It is a deeper concept, but under the same umbrella as what gg has stated before about the every increasing gap between wages and prices. And how that widening gap slows and stops the real economy despite government spending and QE and distorted stats.
This also distorts relative wages and underemployment. Willy-nilly government spending sends money into bubbles, causing middle and low-income job wages to collapse. Government uncertainty, such as the ever-moving timeline of the debt ceiling causing uncertainty for business. I think we have all seen this in the last 2 years.
Until these issues are addresses, business and expansion will stall.
Here is another illustration of how Gov/Fed spending approach does not work in achieving full employment from Of Two Minds. As you can see, the Fed’s low rates since 2002, has not created more jobs in respect to population.
January 28, 2013
groovygirl loves old stuff…
Cool, cool pictures from 1900’s Paris. They are even colored in an early color-photography process.
Bill Black
Bill Black has another great post, this time on Davos lack of global vision. Click here.
There is a vested interest in the covering up and continuing of global bank fraud accounting practices. It all will continue to implode.