Goldman admits we're screwed.

[Doppel]

Remember also that GDP includes government spending and if the government borrows money worth 10% of the total yearly GDP (like it is this year), then the GDP includes its expense, not its debt. So unless the GDP is above 10% the country is not expanding at all unless that debt is going to offer future benefits to money (and it won't, since it's mostly used for covering expenses, not infrastructure or similar investments).

It's like gauging your neighbor's finances against money he spends on cars and toys, not the money he actually makes. His income measures his economic worth, not how many credit cards he has. The deficit has accelerated greatly in the past three years and in a percentage of GDP exceeds the small official positive, so even if the recession is technically over in practical terms it is not at all; the economy is still shrinking and can only stay above water with ever-larger deficits.

 

[Zebo]

You're too smart to be an economist which falls someplace between astrology and a positive thinking seminar. Basically one step above maddam cleo only because they get paid by powerful interests to baffle us with bullshit. if it don't make sense it isnt sense.

 

[little elvis]

I work for a large Fortune 100 company, and late last year our CEO gave a presentation at our branch and essentially said that North America was screwed for the foreseeable future. He predicted perpetually high unemployment (10% +), increased crime and the continued shift of higher end R&D jobs overseas.

It was great morale boosting speach!

 

[Zebo]

I work for a large Fortune 100 company, and late last year our CEO gave a presentation at our branch and essentially said that North America was screwed for the foreseeable future. He predicted perpetually high unemployment (10% +), increased crime and the continued shift of higher end R&D jobs overseas.

It was great morale boosting speach!

Sux.

Did he talk about how highly leveraged he is like most fortune 500s @ 3:1? And getting virtually free FED money to show profit?

 

[werepossum]

I work for a large Fortune 100 company, and late last year our CEO gave a presentation at our branch and essentially said that North America was screwed for the foreseeable future. He predicted perpetually high unemployment (10% +), increased crime and the continued shift of higher end R&D jobs overseas.

It was great morale boosting speach!

LOL indeed, a great speech to make people look for other employment.

Not all of North America though, I think Canada is still doing pretty well.

 

[Ozoned]

Our "economy" is able to house, feed, and clothe 20 million (or more) illegal immigrants, but can't handle this little government spending cut?????? Come on, we got to get real...

 

[bamacre]

Our "economy" is able to house, feed, and clothe 20 million (or more) illegal immigrants, but can't handle this little government spending cut?????? Come on, we got to get real...

Those 20 million illegal immigrants have a lower standard of living than the rest of the country. For now.

 

[Zebo]

more on Bernake fail:
http://market-ticker.org/akcs-www?singlepost=2424703

Bernanke, You Stupid Bastard


Yes, you.

And Trichet, and the rest of the Central Bank fools.

But especially you, Bernanke.

There's dumb and then there's really dumb. Let's take a short walk back down history lane.

You were sure there was no housing bubble.

Then you were sure it wouldn't pop.

Then you were sure when the subprime problem hit, that it wouldn't cause a recession.

Then you were sure you had it under control with Bear Stearns' hedge funds.

Then you were sure you had it under control with Bear Stearns itself.

Then you were sure it was under control with Lehman, even though you had to know Citibank and others were refusing their collateral in the repo market.

You were sure QE would support higher bond prices - and lower yields. The exact opposite thing happened.

You were sure QE2 would suppress long end yields. The exact opposite thing happened.

Oh yeah, you made excuses both times, but in fact you publicly said that in both cases the exact opposite thing would happen that did.

Now let's look at what happened just today.

Oil went up almost $7 today for the WTI contract. For each dollar that crude oil rises, we transfer roughly $95 billion (estimates vary from $90-100) outside of the United States.

That's a direct hit to GDP.

In ONE DAY the entire impact of your so-called "QE2" was ERASED.

(As an aside, yes, I can do the math on the direct import numbers; the argument here is on the total economic impact, which is as noted above. Estimates there vary somewhat, but they're centered around $90-100 billion/year/dollar increase.)

Your entire gambit and what you sold to Congress and President Obama was that you could "restart" credit expansion with your policies. Implicit in your policy was a need to do so, because without it you cannot succeed. The World Economic Forum at Davos released a paper saying that we needed, collectively, to add one hundred trillion dollars of new debt to the system to support the paltry growth numbers you and your economists are putting up. Worse, the CBO stuck up numbers in the TBAC report that show another doubling of Federal Debt in the next nine years and a rough quadrupling of debt service costs to $800 billion, implying a paltry 3% blended rate.

We had the collapse starting in 2007 because people couldn't afford the debt they already had and yet your entire scheme, to succeed, requires doubling all systemic debt AGAIN.

So how are you going to do it Ben?

Who's going to take on that debt, and how are they going to service it?

You know damn well it can't work, and won't. You also know damn well you've goaded and prodded the Federal Government into taking on $4.5 trillion in debt we cannot afford, or nearly 30% of GDP.

How are you going to take that back off Bernanke? You keep being asked this, but all you say is that you're confident "you have the tools."

Uh huh.

You don't have jack and you know damn well you can't pull your pump-job back one iota without laying bare on the table the fact that the Federal Government is supporting 12% of GDP with borrowed money. If it disappears we have an instant Depression worse than the 1930s.

The bad news is that if you keep this crap up it will disappear by force of the market, there's not a damn thing you can do to prevent it, and that day is rapidly approaching.

EVERY prediction you've made about the economy over the last five years has been wrong.

All of them.

The market is rising only because you're "promising" infinite leverage.

But infinite leverage means certain financial ruin if you're wrong about external forces. And the economy is not a closed system under your control. You cannot control other nations, you cannot control commodity speculators and you cannot control other central banks and politicians. You think you can force China off their peg, but they can suppress riots longer than we can. You think you can keep printing but now Egypt has gone down, Libya is collapsing and if Saudi Arabia folds you're instantly ****ED and so are the rest of us.

Never mind that it's not just the Middle East. What if Venezuela folds? Mexico goes feral with their drug war? How about South Korea, which now has how many banks closed due to runs?

The longer you keep this crap up the worse the instability will become. Eventually something will break that's important, and then it's too late.

You can't win this game Bernanke. And the longer you keep trying to protect the banks that should have been shut down and taken into receivership in 2007 the more damage you're going to do. When the history books are written on this catastrophe your name is going to be featured in bright lights as the personal architect and chief jackass who pontificated that he knew it all because he studied The Great Depression.

Yeah, you studied it all right. And now you're duplicating the mistakes made then, writ even larger.

There are no statesmen left in this nation when it comes to Congress. Not one who will haul your ass in front of them by force of subpoena, put your clear and public record of "accuracy" in front of you and then demand that you justify your twisting of the clear English language to come up with "2% inflation" as your "interpretation" of STABLE PRICES.

You're going to fail Bernanke. You're failing right now. You've destroyed one nation's government and this evening, as I write this, a second is falling apart. The madman behind the second, Qaddafi, has apparently ordered his military to strafe civilians, murdering hundreds.

But behind it all, your policies and those of your cronies, believing in an indefinite Ponzi Scheme of exponential debt without bound, are responsible for every bit of what's happening today worldwide - and what is to come tomorrow.

The only way you can stop it is to admit you were wrong, pull liquidity and allow the insolvent institutions to collapse. And collapse they will - all of them. I'm convinced you know that too. And I'm also convinced that there's three words you will never utter so long as you infest Washington DC: I ****ed up.

So here we sit as Americans, with no solution. There is nobody in Congress or The Administration that has the balls to stop you, and you're too much of a douche to admit you blew it and do what should have been done three years ago.

As a result, all we have left is to be prepared for what's to come.

It's not going to be pretty, and I hope Americans are ready for it.

Congratulations Ben Bernnake. Your place in history is secure, and I'm sure Beelzebub thanks you daily for your cooperation.

Some day I'm quite sure you'll meet him face-to-face.

 

[KlokWyze]

So what date/time does the sky fall?

 

[fskimospy]

You gotta read between the lines here but what Zebo has been saying for years is we are in a debt death spiral Goldman recognizes too. Cut deficit, plunge economy into disaster. Debt is the only thing keeping us from recognizing a full-on economic depression we are in. How bad? Just extrapolate what Goldman says by taking away $1.7 trillion deficit would result in a decrease of 28x Goldman's estimate, or 50% of GDP would disappear.


Now you know why republicans are RINOs always despite rhetoric.

Worse, there's no way out - If you raise taxes to cover deficit you subtract directly from private spending by same levels plunging us into same 50% reduction in GDP. Refuse to raise taxes and you are forced to continue to borrow.

That's an awful lot of reading between the lines, and an awful lot of wrong thinking. First of all, the Q2 and Q3 rates they are referring to are annualized ones. That means if you are growing at a 4% annualized rate, you would grow at 1% each quarter. So your catastrophic GDP thing is four times higher than what it would be even if you were right.

Secondly, there are different times for different policies. Not closing the deficit today doesn't mean not closing it ever. Can you point to any credible organizations that share this analysis?

It never ceases to amaze me the sheer number of apocalypses that are predicted on here.

 

[fskimospy]

Yea, that 70% of GDP = consumer spending never really hit me as being straight on. What about spending = product? Meh, I'm not an economist and this shit either confuses or aggravates the shit out of me...usually both.

First of all guys, as mentioned before real GDP growth estimates are adjusted for inflation. So, the watermelon trick wouldn't work, and everyone would ignore it. Consumer spending means transactions on personal goods, a huge percentage of that spending = product. (some of it also means services)

When you buy food, a computer, a car, a whatever, that's 'consumer spending'. I would consider all those things products and wealth.

 

[werepossum]

First of all guys, as mentioned before real GDP growth estimates are adjusted for inflation. So, the watermelon trick wouldn't work, and everyone would ignore it. Consumer spending means transactions on personal goods, a huge percentage of that spending = product. (some of it also means services)

When you buy food, a computer, a car, a whatever, that's 'consumer spending'. I would consider all those things products and wealth.

So make a simple modification. Grow one watermelon, sell it to someone for $1 who sells it to someone else for the same price and so on ad nauseum. Same effect, growing GDP without growing wealth. It's a gross oversimplified example of how GDP can be generated without any accompanying increase in wealth, illustrative of how our economy is increasingly consuming more and more while producing less and less and covering the spread with debt.

Bottom line, increases in GDP funded by debt to cover decreases in wealth production are a bad thing, not a good thing.

 

[the DRIZZLE]

So make a simple modification. Grow one watermelon, sell it to someone for $1 who sells it to someone else for the same price and so on ad nauseum. Same effect, growing GDP without growing wealth. It's a gross oversimplified example of how GDP can be generated without any accompanying increase in wealth, illustrative of how our economy is increasingly consuming more and more while producing less and less and covering the spread with debt.

Bottom line, increases in GDP funded by debt to cover decreases in wealth production are a bad thing, not a good thing.

Thats not how GDP is calculated. If theres no markup than GDP = $1 no matter how many times its resold.

 

[IGBT]

lies or not. When the money stops flowing fighting in the streets will ensue. east and west coast are only 24 hours away from cannibalism if supply lines shut down.

 

[chucky2]

lies or not. When the money stops flowing fighting in the streets will ensue. east and west coast are only 24 hours away from cannibalism if supply lines shut down.

Haha, why do you think they extended Unemployment twice?

 

[LegendKiller]

Sometimes you have to wonder how these people are even able to function in life. Something so simple to figure out as GDP is difficult for them. Then there was somebody who thought that GDP wasn't adjusted for inflation.

 

[The-Noid]

Sometimes you have to wonder how these people are even able to function in life. Something so simple to figure out as GDP is difficult for them. Then there was somebody who thought that GDP wasn't adjusted for inflation.

Well technically there is both a nominal and real index but generally real would be more important unless inflation was negative (like in .jp currently). Inflation should never be used as an addon for productivity growth. JP could have negative nominal GDP this year and positive real GDP growth depending on the drop in JCPI and that equates to productivity loss not gain.

Overall though, Zebo is losing it.

 

[Generator]

All that matter is what rings true. You can actually find truth easily these days in just how boldly the wicked lie. Whatever Goldman Sachs, Bernake, etc say is a absolute lie. Now if you know this and know that these people are completely irresponsible, at some point you need stop letting yourself be duped. In way they are telling the truth, whatever they say should be comprehended with the exact opposite meaning. Bold, honest liars.

One little example is CNBC pushing the shut down of Libya's air zone. The reasoning for this will drop the price of oil. Normally I wouldn't think much of this horseshit reasoning. Except these sons of bitches have lied boldly again and again. Shut down the air zone and watch oil jump to $130 that night, pushed to $150.

 

[dmcowen674]

so what date/time does the sky fall?

12/21/2012

 

[IGBT]

Haha, why do you think they extended Unemployment twice?

to deprive the cannibals??

 

[Moonbeam]

I'm going to have to figure out how to spec my Shaman for recession.

 

[chucky2]

to deprive the cannibals??

To deprinve the cannibals of cannablizing the 'super smart political guys' (Politicians and their minions) and the 'super smart economic guys' (Wall Street/Bankers and their minions), you'd be absolutely correct.

Chuck

 

[wuliheron]

Damn, you guys are making me hungry. Where's the beef? None of that cheap soybean crap either. I want some fat beer fed and messaged daily Kobe beef.

 

[werepossum]

Thats not how GDP is calculated. If theres no markup than GDP = $1 no matter how many times its resold.

Well technically there is both a nominal and real index but generally real would be more important unless inflation was negative (like in .jp currently). Inflation should never be used as an addon for productivity growth. JP could have negative nominal GDP this year and positive real GDP growth depending on the drop in JCPI and that equates to productivity loss not gain.

Overall though, Zebo is losing it.

Since my extremely over-simplified analogy is not getting traction, I'll resort to plucking sections from wiki. Perhaps this will work better.

http://en.wikipedia.org/wiki/Gross_domestic_product

Expenditure approach

In economies, most things produced are produced for sale, and sold. Therefore, measuring the total expenditure of money used to buy things is a way of measuring production. This is known as the expenditure method of calculating GDP. Note that if you knit yourself a sweater, it is production but does not get counted as GDP because it is never sold. Sweater-knitting is a small part of the economy, but if one counts some major activities such as child-rearing (generally unpaid) as production, GDP ceases to be an accurate indicator of production. Similarly, if there is a long term shift from non-market provision of services (for example cooking, cleaning, child rearing, do-it yourself repairs) to market provision of services, then this trend toward increased market provision of services may mask a dramatic decrease in actual domestic production, resulting in overly optimistic and inflated reported GDP. This is particularly a problem for economies which have shifted from production economies to service economies.

GDP vs GNP
GDP can be contrasted with gross national product (GNP) or gross national income (GNI). The difference is that GDP defines its scope according to location, while GNP defines its scope according to ownership. In a global context, world GDP and world GNP are therefore equivalent terms.

GDP is product produced within a country's borders; GNP is product produced by enterprises owned by a country's citizens. The two would be the same if all of the productive enterprises in a country were owned by its own citizens, and those citizens did not own productive enterprises in any other countries. In practices, however, foreign ownership makes GDP and GNP non-identical. Production within a country's borders, but by an enterprise owned by somebody outside the country, counts as part of its GDP but not its GNP; on the other hand, production by an enterprise located outside the country, but owned by one of its citizens, counts as part of its GNP but not its GDP.

To take the United States as an example, the U.S.'s GNP is the value of output produced by American-owned firms, regardless of where the firms are located. Similarly, if a country becomes increasingly in debt, and spends large amounts of income servicing this debt this will be reflected in a decreased GNI but not a decreased GDP. Similarly, if a country sells off its resources to entities outside their country this will also be reflected over time in decreased GNI, but not decreased GDP. This would make the use of GDP more attractive for politicians in countries with increasing national debt and decreasing assets.

Gross national income (GNI) equals GDP plus income receipts from the rest of the world minus income payments to the rest of the world.[17]

In 1991, the United States switched from using GNP to using GDP as its primary measure of production.[18] The relationship between United States GDP and GNP is shown in table 1.7.5 of the National Income and Product Accounts.[19]

Our GDP (which counts consumption as well as production) is increasing. However, our wealth production is decreasing. We fund this in two ways, the most obvious of which is debt. Less obvious is by selling off American companies or divisions of American companies, either directly (such as IBM selling its hard drive division to Hitachi) or directly (by foreign individuals and companies buying up stock.) Just as a farmer who has discovered that selling off lots pays better than farming must eventually run out of land, so must we eventually run out of things to sell to get our Chinese-made goodies. Other countries quickly get tired of little green pictures of dead white men for their own sakes, so sustained net trade deficits have to be made up in things that don't show up trade balances. That's mostly bonds and other debt vehicles, stock, and real estate. The first eventually must be paid back with interest, the last is finite, and the middle cannot increase as quickly as we are spending it. This is made even worse because as we grow government and service an ever-increasing debt, our GDP actually looks healthier. It is a measurement of consumption, including debt servicing, not a measure of production, and as such it masks our problem.

Honestly, I'm all for whistling past the graveyard and I appreciate the remarkable growth in the average family's wealth since World War II, but we're ignoring a coming train wreck.