- Thursday Humor: GDP – Grossly Dubious Projections (ZeroHedge, May 29, 2014):
In the middle of the last great financial crisis, the Bureau of Economic Analysis (BEA) proclaimed that Q1 2008 was the US economy grow at a modest 0.6%. This was met with hockey-stick prognosticators looking to the heavens for the next few quarters and bleeting about transitory factors affecting the economy. However, as the following chart shows, five years later (and after numerous adjustments) the +0.6% growth for Q1 2008 had somehow morphed into a clench-worthy 2.7% collapse in the economy…
- Excluding Obamacare, US Economy Contracted By 2% In The First Quarter (ZeroHedge, May 29, 2014):
As if the official news that the US economy is just one quarter away from an official recession (and with just one month left in the second quarter that inventory restocking better be progressing at an epic pace) but don’t worry – supposedly harsh weather somehow managed to wipe out $100 billion in economic growth from the initial forecast for Q1 GDP – here is some even worse news: if one excludes the artificial stimulus to the US economy generated from the Obamacare Q1 taxpayer-subsidized scramble, which resulted in a record surge in Healthcare services spending of $40 billion in the quarter, Q1 GDP would have contracted not by 1% but by 2%!
The history of healthcare spending’s contribution to GDP. The outlier needs no highlighting: Continue reading »
- US Economy Shrank By 1% In The First Quarter: First Contraction Since 2011(ZeroHedge, May 29, 2014):
Weather 1 – Quantitative Easing 0.
Spot on the chart below just how high the culmination of over $1 trillion in QE3 proceeds “pushed” the US economy.
Joking aside, while the realization that nobody can fight the Fed except a cold weather front, is quite profound, in the first quarter GDP “grew” by a revised -1.0%, down from the +0.1% first estimate, and well below the -0.5% expected, confirming that while economists may suck as economists, they are absolutely horrible as weathermen. This was the worst print since the -1.3% recorded in Q1 2011.
Bottom line: for whatever reason, in Q1 the US economy contracted not only for the first time in three years, but at the fastest pace since Q1 of 2011. It probably snowed then too.
The breakdown by components is as follows: Continue reading »
From the article:
“Therefore Renzi will have a greater margin this year to spend” without breaching the deficit limit, he said.
- Hookers And Blow: How Changing The Definition Of GDP Officially Jumped The Shark (ZeroHedge, May 22, 2014):
A year ago it was the US which first “boosted” America’s GDP by $500 billion – literally out of thin air – when it arbitrarily decided to include “intangibles” to the components that ‘make up’ GDP (in the process cutting over 5% from the US Debt/GDP ratio). Then Spain joined the fray. Then Greece. Then the UK. Then Nigeria, which showed those deveoped Keynesian basket cases how it is really done, when it doubled the size of its GDP overnight when it decided to change the base year of its GDP calculations. Now it is Italy’s turn, and like everything else Italy does, this latest “revision” of the definition of GDP easily wins in the style points category. As Bloomberg reports, “Italy will include prostitution and illegal drug sales in the gross domestic product calculation this year.” Yup: blow and hookers. And that, ladies and gents, how it’s done. Continue reading »
- If It Wasn’t For Obamacare, Q1 GDP Would Be Negative (ZeroHedge, April 30, 2014):
Here is a shocker: for all the damnation Obamacare, which according to poll after poll is loathed by a majority of the US population, has gotten if it wasn’t for the (government-mandated) spending surge resulting from Obamacare, which resulted in the biggest jump in Healthcare Services spending in the past quarter in history and added 1.1% to GDP …
… real Q1 GDP (in chained 2009 dollars), which rose only $4.3 billion sequentially to $15,947 billion, would have been a negative 1.0%!
- GDP Shocker: US Economic Growth Crashes To Just 0.1% In Q1 (ZeroHedge, April 30, 2014):
Despite consensus at 1.2% growth QoQ, the “weather” destroyed the fragile stimulus-led economy of the US which managed only a de minimus +0.1% QoQ growth (the lowest since Q1 2011). However, as Steve Liesman noted on the heels of Mark Zandi’s comments “basically ignore this number” – ok then. Spending on Services, however, surged by the most since 2000 – heralded as great news by some talking heads – but is merely a reflection of the surge in healthcare and heating costs (imagine if it had not been cold and if Obamacare hadn’t saved us). As a reminder – this is the growth that is occurring as QE has run its course, as stimulus ends, and as escape velocity nears… if the “weather” can do this much damage to the US economy, should stocks really be trading at the multiple of exuberant future hope that they are?
The full breakdown of GDP components: Continue reading »
- Capital Controls and 200% Price Hikes in Ukraine – And Ukraine Is In Better Shape Than The US! (Activist Post, March 31, 2014):
In a TV address to a torn nation, Ukraine’s PM Yatsenyuk first implied heating prices would rise incrementally, and then later confirmed a plan to increase prices 100% in the next two years (and nearly 200% by 2017) as the cost of imported Russian gas is expected to rise to $500 from the current $84.
Not only did the Ukrainians have the hard rug of the consequences of statism pulled out from underneath them, but the move was followed with tougher capital controls, which restricted cash purchases to $1,300 per person per day after the Central Bank said “amid a tense situation in money markets” it is now broke. (We covered a reported shipment of gold out of Ukraine a couple of weeks ago) Continue reading »
- Moody’s Puts Russia On Downgrade Review; Cites Event Risk, Investor Sentiment, And Weakening Economy (Zerohedge, March 28, 2014):
Hot on the heels of what S&P said was not a “politically motivated” shift to rating watch, Moody’s (who did not downgrade the USA and are not currently in a lawsuit over such terrible misrepresentations) has decided now is the time to put Russia on rating downgrade watch. The decision was triggered by 3 key factors: the weakening of Russia’s economic strength, potential shifts in investor sentiment, and susceptibility to event risk.
Full report below… Continue reading »
- S&P Brings Out The Big Policy Guns – Downgrades Russia To Outlook Negative (ZeroHedge, March 20, 2014):
S&P, still deep in the mire of a legal battle with the US government, has decided now is an opportune time to cut the ratings outlook on Russia:
- *RUSSIAN FEDERATION OUTLOOK TO NEGATIVE FROM STABLE BY S&P
- *S&P SEES EU-U.S. IMPOSING FURTHER SANCTIONS
Russia remains a BBB credit (but with the outlook shift remains open to a downgrade with 24 months). S&P has cut 2014 GDP forecast to 1.2% and 2015 to 2.2%. Of course, we are sure, this would have nothing to do with currying favors with the US government (who threatened them when they downgraded the USA). Full report below.
S&P Reduces Russian Federation outlook to Negative from Stable.
Below is the full report: Continue reading »
- If You Are Considering Buying A House, Read This First (ZeroHedge, March 15, 2014):
In September of 2011, when looking at the insurmountable debt catastrophe that the world finds itself (which has only gotten worse in the past several years) we warned that “the only way to resolve the massive debt load is through a global coordinated debt restructuring (which would, among other things, push all global banks into bankruptcy) which, when all is said and done, will have to be funded by the world’s financial asset holders: the middle-and upper-class, which, if BCS is right, have a ~30% one-time tax on all their assets to look forward to as the great mean reversion finally arrives and the world is set back on a viable path.”
Two years later, the financial asset tax approach, in the form of depositor bail-ins, was tried – successfully (as there was no mass rioting, no revolution, in fact the people were perfectly happy to accept the confiscation of their savings) – in Cyprus, further emboldening the status quo, in this case the IMF, to propose, tongue in cheek, that the time has come for the uber-wealthy to give back some (“it’s only fair”), and to raise income taxes through the roof (which of course would mostly impact the middle class as the bulk of current income for the 1% is in the form of dividend income, ultra-cheap leverage extraction on assets and various forms of carried interest).
And now, a new tax is not only on the horizon but coming fast and furious to allow the insolvent global regime at least one more can kicking: one which will impact current and future homeowners across the world.
But first, let’s step back. Continue reading »
- Fed’s Fisher Admits Stocks Are At “Eye-Popping Levels” /ZeroHedge, March 6, 2014):
While Janet Yellen fell back on the ubiquitous central banker statement that she “would do all that [she] can” it was Dallas Fed’s Richard Fisher who raised the most eyebrows yesterday. In a speech in Mexico City, the central banker said he was concerned about “eye-popping levels” of some stock market metrics warning that the Fed must monitor the signs carefully to ensure bubbles were not forming. While other Fed members have paid lip-service to bubbles, Fisher explicitly discussed stocks in the context of the dot-com boom of the late ’90s warning of “the ghost of ‘irrational exuberance'” and worried about corporate bonds too.
In his speech in Mexico City, Fisher said some indicators like the price-to-projected forward earnings, price-to-sales ratios and market capitalization as a percentage of GDP, are at levels not seen since the dot-com boom of the late 1990s.
- THE RETAIL DEATH RATTLE (The Burning Platform, Jan 19, 2014):
“I was part of that strange race of people aptly described as spending their lives doing things they detest, to make money they don’t want, to buy things they don’t need, to impress people they don’t like.” – Emile Gauvreau
If ever a chart provided unequivocal proof the economic recovery storyline is a fraud, the one below is the smoking gun. November and December retail sales account for 20% to 40% of annual retail sales for most retailers. The number of visits to retail stores has plummeted by 50% since 2010. Please note this was during a supposed economic recovery. Also note consumer spending accounts for 70% of GDP. Also note credit card debt outstanding is 7% lower than its level in 2010 and 16% below its peak in 2008. Retailers like J.C. Penney, Best Buy, Sears, Radio Shack and Barnes & Noble continue to report appalling sales and profit results, along with listings of store closings. Even the heavyweights like Wal-Mart and Target continue to report negative comp store sales. How can the government and mainstream media be reporting an economic recovery when the industry that accounts for 70% of GDP is in free fall? The answer is that 99% of America has not had an economic recovery. Only Bernanke’s 1% owner class have benefited from his QE/ZIRP induced stock market levitation. Continue reading »
- If You Are Waiting For An “Economic Collapse”, Just Look At What Is Happening To Europe (Economic Collapse, Jan 8, 2014):
If you are anxiously awaiting the arrival of the “economic collapse”, just open up your eyes and look at what is happening in Europe. The entire continent is a giant economic mess right now. Unemployment and poverty levels are setting record highs, car sales are setting record lows, and there is an ocean of bad loans and red ink everywhere you look. Over the past several years, most of the attention has been on the economic struggles of Greece, Spain and Portugal and without a doubt things continue to get even worse in those nations. But in 2014 and 2015, Italy and France will start to take center stage. France has the 5th largest economy on the planet, and Italy has the 9th largest economy on the planet, and at this point both of those economies are rapidly falling to pieces. Expect both France and Italy to make major headlines throughout the rest of 2014. I have always maintained that the next major wave of the economic collapse would begin in Europe, and that is exactly what is happening.
The following are just a few of the statistics that show that an “economic collapse” is happening in Europe right now:
- CFTC Announces It Is Undercounting Size Of Swaps Market By As Much As $55 Trillion (ZeroHedge, Dec 19, 2013):
What is $55 trillion between friends? Very little according to the CFTC. In perhaps the biggest under the radar news of the day – to be expected with every watercooler occupied by taper experts – the WSJ reports that the Commodity Futures Trading Commission said Wednesday that technical errors at two so-called swaps data repositories, which collect and supply regulators with transaction data, have led the CFTC to misreport the overall size of the swaps market by undercounting its size. Isn’t it curious how all these “glitches” always work out in the favor of preserving market calm and confidence and away from spooking investors and speculators? Either way, a better question is how big was the so called undercounting? The answer: as large as $55 trillion!
Regulators aren’t sure how much the repositories are undercounting. One CFTC official familiar with the matter said the discrepancy could be as high as $55 trillion, though another official said the figure is closer to $10 trillion once regulators cancel out certain transactions to prevent double counting.
One just has to laugh: the total US swaps market is what – roughly $400 trillion? So… just add enough notional to that number equal to the GDP of the entire world - or 4 times the size of US GDP – and call it a day. And in this environment somehow the Fed and other central planners are expected to have any clue what they are doing on a day to day basis? Continue reading »
- When They Say The Global Economy Is Growing They Really Mean This… (ZeroHedge, Nov 29, 2013):
Forget “A Tale Of Two Cities,” the entire world is “A Fiction Of Two ‘Economies'”…
- China Is On A Debt Binge And A Buying Spree Unlike Anything The World Has Ever Seen Before (Economic Collapse, Nov 26, 2013):
When it comes to reckless money creation, it turns out that China is the king. Over the past five years, Chinese bank assets have grown from about 9 trillion dollars to more than 24 trillion dollars. This has been fueled by the greatest private debt binge that the world has ever seen. According to a recent World Bank report, the level of private domestic debt in China has grown from about 9 trillion dollars in 2008 to more than 23 trillion dollars today. In other words, in just five years the amount of money that has been loaned out by banks in China is roughly equivalent to the amount of debt that the U.S. government has accumulated since the end of the Reagan administration. And Chinese bank assets now absolutely dwarf the assets of the U.S. Federal Reserve, the European Central Bank, the Bank of Japan and the Bank of England combined. You can see an amazing chart which shows this right here. A lot of this “hot money” has been flowing out of China and into U.S. companies, U.S. stocks and U.S. real estate. Unfortunately for China (and for the rest of us), there are lots of signs that the gigantic debt bubble in China is about to burst, and when that does happen the entire world is going to feel the pain.