Here Comes The Double Dip Pt. 4 (merged) Archived

[Daniel_Plainview]

"The End Game: 2012 And 2013 Will Usher In The End"

"The world has no engine of growth with most of the G20 growth approaching stall speed at the same time. The Western World is about to enter its second recession in an ongoing depression..." In addition:

----- We can join the dots from where we are now, to the collapse of the first major bank… With very limited room for government bailouts, we can very easily join the next dots from the first bank closure to the collapse of the whole European banking system, and then to the bankruptcy of the governments themselves.

----- There are almost no brakes in the system to stop this, and almost no one realises the seriousness of the situation.

----- The problem is not Government debt per se. The real problem is that the $70 trillion in G10 debt is the collateral for $700 trillion in derivatives… Yes, that equates to 1200% of Global GDP and it rests on very, very weak foundations

----- From an EU crisis, we only have to join one dot for a UK crisis of equal magnitude.

[Daniel_Plainview]

Britain's manufacturing sector shrinks at fastest rate in three years

Britain's manufacturing sector contracted at the fastest rate in three years in May, signalling the economy is still mired in recession.

[Daniel_Plainview]

Eurozone crisis: manufacturing sector shrinks in May
Prospects for eurozone manufacturing sector were bleak after the sector contracted at the fastest pace in almost three years in May and even Germany suffered a large fall.

The Markit manufacturing PMI for the region fell to 45.1 from 45.9 in April, where anything below 50 signals contraction. In Germany the index fell to 45.2, which was a 35-month low. “Eurozone manufacturers reported a deepening downturn in May, indicating that the damage to the real economy caused by the region’s financial and political crises continues to spread across the region," said Chris Williamson, chief economist at Markit. "The data suggest that the sector is contracting at a quarterly rate of around 1pc, suggesting that manufacturing will act as a major drag on economic growth in the second quarter."

Ireland was the only country where manufacturing expanded in May, while the sector contracted in Spain, Greece, France and Italy.

“All four of the largest Eurozone nations are now reporting worryingly sharp downturns in their manufacturing sectors, but the situation is perhaps now the most intense in Spain, where the PMI fell below that of Greece to signal the steepest deterioration of business conditions of all countries surveyed," Mr Williamson said.

Gee, I wonder whether all of the signs are pointing toward a global economic recession? Or are we headed for a deflationary depression?

[Armageddon]

Phase 2 of the global economic crash is starting. This time, is the gov't out of magic bullets ?

[AgentR11]

There will be no deflation.

If Bernanke has to get in a magic slay and stuff cash into every dang pocket in the country to keep modest nominal inflation going, then that is what he will do.

I suspect the solution won't need to be so drastic, but to even type the word "deflation" in a fiat money economy, managed by a central bank with as much power as the Fed has; its silly. Can't happen.

Understand, deflation in the 30's depression was painful and difficult; deflation in the 2010's would be lethal, and lethal, FAST.

[Fishman]

"Understand, deflation in the 30's depression was painful and difficult; deflation in the 2010's would be lethal, and lethal, FAST"
Not disagreeing Agent, but please explain why you think such.

[dsula]

Tech is NOT about reducing work. Its about making it possible to do more, faster, harder, better.

There you have it. Till you make things so fast, it takes you a split second to make everything.

And it absolutely destroys jobs.

I hope so, or else what's the point of having all that productivity, if you can't enjoy it?

[AgentR11]

"Understand, deflation in the 30's depression was painful and difficult; deflation in the 2010's would be lethal, and lethal, FAST"
Not disagreeing Agent, but please explain why you think such.

I fail every time I try to explain what I'm thinking on this topic, and it is just my opinion afterall. But an assumed positive inflation rate, with a coupled interest rate floating just a bit above inflation is built in to every assumption underlying every financial transaction.

Say I have a company with $100 in receivables, $5 in cash, and I have a $10 payroll obligation tomorrow and a set of rental payments totaling $30 next week. If I fail to make payroll, that's game over. If I fail to make rent, game over. I can borrow money against the value of my receivables though, or at least always have been able to in the past. So I go about the process and people loan me money for a day or three days based upon the value of the receivables, and I roll them over as they come due, essentially making my receivables work sorta like cash. What happens one morning and we're now in a deflationary spiral? Those people who were loaning money, now sit on it and want to be paid out on what they have outstanding, in cash they are making solid increases in value with no risk, no taxes. Meanwhile... my payroll is still due, but instead of $105 of effective liquid spendables, I got $5, if I'm lucky. When my employees don't get paid, there is no magic Easter Bunny that will show up and pay their light bill or their mortgages. The company is done. And those employees are hosed; and it won't take months or years to come all unglued; it'll take hours.

There are no limits to which those in power will go to prevent a deflationary condition in any of the world's major trading currencies. Because the penalty for deflation, is annihilation.

Right now, you can honestly say things are kinda broken, interest rates are below even reported inflation, and they are WAY below inflation as reported on alternative measures. Everyone is still playing the game though because tomorrow's dollar is worth less than today's dollar, and any yield is better than none or all-risk-no-pay be lucky to escape with your hide...

[dohboi]

Big drop in the Dow today -274.88‎ (-2.22%‎) to 12118.57. DAX down 3.5%.

Bad news on jobs,

http://www.philly.com/philly/business/breaking/156359215.html

and Euroland continues to spin into the abyss.

Danish Banks Downgraded

http://www.heraldsun.com.au/business/breaking-news/moodys-downgrades-nine-danish-banks/story-e6frf7ko-1226376101009

Total Emergency; Fear Grips Markets in Spain

http://www.telegraph.co.uk/finance/financialcrisis/9301270/Spain-faces-total-emergency-as-fear-grips-markets.html

Record High Unemployment in Eurozone

http://www.reuters.com/article/2012/06/01/us-eurozone-unemployment-idUSBRE8500EY20120601

"Eurozone Unsustainable" says Head of European Central Bank, Mario Draghi

http://www.telegraph.co.uk/finance/financialcrisis/9304027/Eurozone-is-unsustainable-warns-Mario-Draghi.html


http://www.ft.com/intl/cms/s/0/c3200410-aa6b-11e1-899d-00144feabdc0.html#axzz1wZyXiNUD

The summer of 2012 offers an eerie echo of 2008

[Daniel_Plainview]

Amid all of this dire economic news, there's even more bad news for the future generations as they're forced to confront an out-of-control national debt:

As of May 31, US Debt Swells by $54 Billion to a Record $15,770,685,085,364.10



Notice how the rate of change in the national debt is significantly steeper than GDP's slope. IOW, the growing debt is utterly unsustainable. And if today's disastrous economic news worsens over time (which it will, as predicted by peak oil), then we can expect GDP to further deteriorate, while the annual deficits will continue to escalate.

We can expect that, by 2020, the US national debt will be significantly worse than the CBO's estimates:



As Karl Denninger notes:

If we keep deficit spending we are simply debasing the purchasing power of the common man in a puerile attempt to pacify the people and avoid holding the financiers who were responsible for this debacle, including Bernanke, Greenspan, Paulson and Geithner along with both Obama and George W Bush to account. This attempt is mathematically doomed to fail as median family income has not moved which means that we're shifting an ever-greater part of the population to social programs like food stamps and other handouts while the taxpaying productive population continues to shrink. This is exactly how Greece and Spain went down the bowl and we're right behind them unless we stop this crap right now.

... Exponential growth, as I have repeatedly pointed out, is utterly unsustainable over the long term. It doesn't matter if you want these sorts of schemes to work or not; the longer you continue to pretend that there is some path forward that achieves these goals the worse the outcome is when you discover that you're wrong. ... There is no such thing as a Unicorn -- that is a mythical creature -- and what's coming from its ass are not candies.

[Daniel_Plainview]

Deer, Meet Headlights

Today's 2.5% drop in the S&P 500 back below its 200DMA, its largest single-day drop in seven months, and the accompanying flood into safe-havens has left Gold and Treasury Bonds now outperforming Stocks for the year (with the Dow red YTD). S&P 500 e-mini futures volume was it highest of the year as we sit at the edge of the waterfall level from last July/August's plunge. Gold's 4% gain is the biggest day since January 2009.



Treasury yields plunged to new all-time record lows [of 1.5%] with 30Y showing a 2.50% handle and 10Y a 1.43% handle. All the high-beta hope names were crushed with financials down 3.7% - their largest fall in 7 months (with the majors even more). VIX jumped 2.6 vols to close above 26.5% at 7 month highs. What is perhaps most disconcerting is the total lack of bounce into the close now two days-in-a-row - deer, meet headlights.

Gold and 30Y Treasury bond prices are now outperforming the S&P 500 YTD.

[Repent]

We all got used to the bad news; falling stocks, high unemployment, rising gold and silver, bank fraud, ect, ect.

People have gotten on with their lives, its not news anymore, it is the new normal!

[Daniel_Plainview]

Nearly Half Of The New Jobs In America Were Created By One Industry

The economy added a net 69K new jobs in May, according to this morning's Non-Farm Payrolls report. And nearly half can be attributed to one industry: Healthcare. Over 30K new jobs were created in this industry.

What's more, as you can see in the chart below (which measures the monthly change in the industry), there hasn't been a single negative month in this industry all through the recession and recovery.



And really, over the long term, if you just look at the growth of this industry, it really is a thing of beauty.



For some reason, people sometimes say that healthcare jobs don't count or whatnot, but we think that's nonsense. America is aging. This is the industry of the future!

Thanks to the proliferation of health insurance and medicare/medicaid (which have allowed healthcare prices to increase between 8-12%/yr), healthcare has become the greatest bubble of all time. It and the education bubble are the mother of all bubbles ... and all bubbles eventually pop.

[eXpat]

"The End Game: 2012 And 2013 Will Usher In The End"

"The world has no engine of growth with most of the G20 growth approaching stall speed at the same time. The Western World is about to enter its second recession in an ongoing depression..." In addition:

----- We can join the dots from where we are now, to the collapse of the first major bank… With very limited room for government bailouts, we can very easily join the next dots from the first bank closure to the collapse of the whole European banking system, and then to the bankruptcy of the governments themselves.

----- There are almost no brakes in the system to stop this, and almost no one realises the seriousness of the situation.

----- The problem is not Government debt per se. The real problem is that the $70 trillion in G10 debt is the collateral for $700 trillion in derivatives… Yes, that equates to 1200% of Global GDP and it rests on very, very weak foundations

----- From an EU crisis, we only have to join one dot for a UK crisis of equal magnitude.

Good presentation, and it give us some idea of the time, 6 months, more or less.

[eXpat]

WORLD BANK BOSS: We're Headed For "Impending Catastrophe" -- "A Rerun Of Great Panic Of 2008"

The head of the World Bank, Robert Zoellick, is about to step down after a 5-year term.

That means he can say what he really thinks.

Here, via the Daily Mail, is what he really thinks about what's going on in Europe and the global financial markets:

financial markets face a rerun of the Great Panic of 2008.

It's ‘far from clear that eurozone leaders have steeled themselves’ for the looming catastrophe amid fears of a Greek exit from the single currency and meltdown in Spain.

‘Events in Greece could trigger financial fright in Spain, Italy and across the eurozone. The summer of 2012 offers an eerie echo of 2008.... ‘If Greece leaves the eurozone, the contagion is impossible to predict, just as Lehman had unexpected consequences.’

'There will not be time for meetings of finance ministers to discuss the outlook and debate the politics.... 'In panicked markets, investors flee to safe assets, sparking other flames.’

Read more: http://www.businessinsider.com/world-bank-boss-impending-catastrophe-a-rerun-of-great-panic-of-2008-2012-6#ixzz1wfyRXK00

[Armageddon]

Buckle up bitches

[eXpat]

Buckle up bitches

That´s a very good brief of the situation.
Nobel Laureate Says Globe Headed For Financial “Breakdown” and “Radicalism” (EWG, FXE, VGK, EUO, VWO)

Dominique de Kevelioc de Bailleul: The world is in the midst of a complete global economic “breakdown,” according to Nobel Laureate economist Paul Krugman, with the implications of political “radicalism” quickly brewing in Europe and the United States.

“We are living through a time where we face an enormous economic challenge,” Krugman told Russia Today (RT). “We are facing — obviously — the worst challenge in 80 years and we are totally mucking up the response.”

Traders of German Bunds and U.S. Treasuries agree and have sold PIIGS paper for other paper higher up on the food chain.
As a result, rates on Bunds and Treasuries have reached record-low levels Wednesday of 1.59 and 1.23 percent, respectively—levels that Dan Norcini of Jim Sinclair’s JSMineset.com said signals a Lehman-times-10 event around the corner. With Spain’s 10-year note spread higher by 520 basis points more than the yield on 10-year Bunds, a near-record level as well as depositors decidedly motioning into a trotting bank run on Spanish banks, Europe is again on the slippery slope to doom.

Krugman blames policymakers for the impending crash, fearing a replay of Nazi Germany as a result of a radical drop in standards of living on both sides of the Atlantic due to Germany’s (NYSEARCA:EWG) refusal to inflate the euro (NYSEARCA:FXE).

“We’re doing a terrible job. We’re failing to deal with it,” Krugman added. “All of the people, the respectable people, the serious people, have made a total hash of this. That is a recipe for radicalism. It is a recipe for breakdown.”

Forcing nations to swallow austerity contributed greatly to the rise of the Third Reich following severe reparations exacted upon Germany post-WWI—a mistake Krugman doesn’t forthrightly say in the RT interview, but may be inferred by his Jewishness, gleaned through numerous posts on his NYTimes Web blog and attributed to his notorious allegiance to a failed monetary system under intense fire from people of all nations affected by the crisis.

http://etfdailynews.com/2012/06/01/nobel-laureate-says-globe-headed-for-financial-breakdown-and-radicalism-ewg-fxe-vgk-euo-vwo/

[Armageddon]

The head of the World Bank yesterday warned that financial markets face a rerun of the Great Panic of 2008.

[Daniel_Plainview]

Rates on Bunds and Treasuries have reached record-low levels Wednesday of 1.59 and 1.23 percent, respectively—levels that ...signal a Lehman-times-10 event around the corner. With Spain’s 10-year note spread higher by 520 basis points more than the yield on 10-year Bunds, a near-record level as well as depositors decidedly motioning into a trotting bank run on Spanish banks, Europe is again on the slippery slope to doom.

Have your popcorn ready!

[Daniel_Plainview]

Looks like Japan is not too happy about the state of the economies in the US, China, Eurozone, etc.
Japan's Stock Mkt Suffers Worst Losing Streak Since 1975, Plunging to Depths Not Seen Since 1983

(Reuters) - Japan's shares fell sharply in early trade on Monday, with the Topix index falling to a more than 28-year low, as disappointing U.S. jobs data added to concerns over a slowing Chinese economy and a deepening euro zone debt crisis.

The broader Topix index lost 2.1 percent to 693.35, a level not seen since late 1983. Last week, it fell for the ninth straight week, marking its longest such run since 1975.

The Nikkei dropped 2.1 percent to 8,267.31 to a six-month low.

The Nikkei has fallen 19.4 percent since hitting a one-year high on March 27 on concerns over a deepening euro zone debt crisis and slowing global growth. If the benchmark were to drop to around 8,200, it would technically enter bear market territory.

"The investment sentiment is quite weak, so there's a possibility of a further sell-off. The Nikkei can go down more, that's a possibility," said Hisao Matsuura, equity strategist at Nomura.

"From a valuation view point, it is attractive, and investors almost seem to agree, but they don't want to buy now."

U.S. job growth braked sharply for a third straight month in May and the unemployment rate rose for the first time in nearly a year, raising the chance of further monetary stimulus from the Federal Reserve to support the sputtering recovery.