Thursday, December 02, 2010

Forget the Double Dip. ECRI Says America Is Experiencing a “Revival in Growth". BAAAAHAAAA!

I saw this on Yahoo this morning and think I threw up a little bit in my mouth

It’s just amazing to me how many people serve an ideology rather than actually understanding what they are talking about.

ECRI serves an ideology.  And why shouldn’t they?  It has been very financially-rewarding serving their invented master of beliefs. 

Let’s take a look at the four points made by Achuthan in his deluded view of reality.

1) Profit growth and productivity are on the rise and that leads to capital investment and hiring. 

We make a lot of statements on here that are place markers.  They often don’t include a lot of explanation.  Eventually we’ll go back and put all of the puzzles together.  But one of the statements we made long ago was that it was the role of government to continually interject inefficiency into markets.  If anyone understands how productivity is measured and what the implications are, they realize that is part of what is killing the American economy.  Citing it as a positive is a sign of economic ignorance. (Something the eminently ignorant Alan Greenspan always pumped.) 

Additionally, profit growth is primarily a function of a service economy and a financial bubble.  That the Federal Reserve bailed out Wall Street’s massive criminal and fraudulent debts and has now foisted that bill upon society is what has allowed a predatory financial profit bubble to recover.  It is killing our economy.  The profit engine is destroying America.   Additionally, much of the financial profit growth is because banks are depleting their loan loss reserves.  Or as they have been doing for ages, it’s called accounting chicanery.  Remember, early this year we said we were bearish on financial stocks again.  Since then, they have re-entered bear market territory with good reason. 

And unlike ECRI’s statements of capital investment, as we wrote years ago, the U.S. is in an investment depression.  You can pretend or wish or hope as ECRI is doing but the facts are the facts.   

2) Housing has stabilized.

What can I say?  The Federal Reserve and our government have given billions of taxpayer money to banks and are backstopping their criminal Ponzi schemes with over $20 trillion dollars.  That is what has kept housing from collapsing.   The housing market is dead.  We wrote years ago it would not recover for decades.  And it will not.  Even with an economic recovery, housing is dead money.   And as we have said, housing will NOT lead the U.S. out of this crisis.   Those watching this as a recovery tool, have no understanding of economics.  None.

3) Cheap capital as a result of low interest rates is leading to job creation. 

The U.S. has less jobs today than when Obama took office.  We have over forty million people on food stamps.  We have some age, educational and racial segments of the American population with 30-50% unemployment.   We have yet to create enough jobs in any month to absorb the new entrants into the economy let alone deal with the ones who currently are underemployed or unemployed.  Therefore, every single month our employment situation gets worse.   How many lies and distortions can one create?  Apparently as many as you can find idiots to swallow.

4)  Consumers have frugality fatigue and are spending again.   

An enormous amount of consumer spending is concentrated in the top 5% and then 1% of the population.  As is our national income.  Are any of the underemployed or unemployed or those just trying to hang on, as cited above, on binge spending sprees?  Ahem.  Let’s get real.   Many mass segments of retail are in a depression.   

The Federal Reserve has flooded the globe with trillions and trillions of dollars.  This gives the appearance of growth but that is a mirage.  It’s simply a temporary inflationary dynamic which manifests itself in what looks like positive growth.   And citing GDP is a joke.  As we have remarked,  GDP is not an accurate gauge of our economy.  That total trade in our economy is many times greater than GDP.  If ECRI actually understood what they were talking about, they would realize positive GDP is a function of the money tsunami.  And that it wasn’t sustainable.

If ECRI understood how our economy was structured, they would know it is a mathematical impossibility for a service-based economy to grow.  And that is why we have a debt bubble.  Not because fractional reserve banking is an exponential function as every single deluded mind in the world seems to believe.   Would we eventually have a debt problem?  Sure.  But fractional reserve banking is not the evil behind this mess. 

Paying bankers to push around money or other service-based businesses has the same effect on our economy as paying unemployment benefits.  There is not one iota of difference.  We would have the exact same economy if the government paid bankers to sit at home and watch TV.  Something no economist ever seems to understand. 

And as we wrote earlier this year, government spending is now 60% of national income.  Think about that.  What are the implications?  Well the clear one is that unless you are on the government dole as a corporation or a bank or an individual, you are getting screwed.  And you aren’t being kissed before being screwed either.   If corporatist con men Republicans cut unemployment benefits or other social safety nets, the remaining wealth is so concentrated that the entire economy will literally implode.  

As we have said too many times to count, there is no recovery.  There is only a new normal building before our eyes.  And we have yet to hit the back end of the global collapse.

The U.S. economy can only recover with a new economic model.  And we need to do it quickly while the Federal Reserve and our government work together to hold open the existing monetary spigot to prevent an even bigger mess.  But the status quo is too corrupt to embrace truth. 

How about that “Revival in Growth”?  Baaaahaaa!!

posted by TimingLogic at 12:09 PM

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