Also, the Customers' Inventories Index remained below 50 percent for the second consecutive month, offering encouragement that supply chains are starting to free themselves of excess inventories as nine industries report their customers' inventories as 'too low'.
This is not an inventory-driven "recession". There's an inventory cycle superimposed on the collapse that's giving false inflection-point readings.
The concept that your savings is someone's debt is true EVEN IF WE'RE TALKING ABOUT GOLD-BACKED CURRENCY.
It's amazing to me that why very few people understands what true savings are.
Unless you're a miser, who saves just for the sake of saving and will never spend anything. (maybe a twisted pleasure from watching savings account numbers increase in digits) Most people will save for a future withdrawal.
Savings is a claim on future production.
Thus it's TWO transactions when you save, not one: The savings, and the future withdraw (of that savings).
Both actions act on a dynamic system.
Should the world's production go up, it will be able to produce the extra to service your withdrawal when you do it.
Should the world's production go down, your withdrawal may end up producing less.
It's not hard to envision:
1. When I save enough money for 10 tons of rice, in a world that produces 100 tons of rice; my expectation is to be able to access 10 tons of rice (plus some interest, possibly) in some future time. My savings claim is also 10% of the world's production is another way to look at it.
2. However, lets say disaster strikes:
2A. Some massive crop failure occurred, we only have 10 tons of rice in world production worldwide. Question to ask now is: is my savings still 10% of world's production; meaning 1 ton of rice; or still 10 tons of rice? The answer you give here is telling of your philosophy here. Typically, someone with ABSOLUTE world view will demand 10 tons of rice, since he saves 10 tons; world disaster be damned.
2B. Lets say the world no longer produces rice (maybe rice as a species went extinct), and produces wheat instead. Lets say that wheat is easier to grow but is less satisfying, the world produces 150 tons of wheat, but one have to consume double the amount of sustain oneself. (Bear with me here, I'm just using analogies, not really rice vs wheat) Again, the same relevant question applies: when you withdraw, is it 10 tons of wheat? or 10% of world's production (15tons of wheat) or absolutist's answer: 20 tons of wheat (since it's functionally equal to 10 tons of rice).
You'll notice I don't describe what currency is in the scenarios, because currencies are transient. Value is the ultimate thing being traded.
I also submit that most goldbugs are also absolutists... Thinking they can preserve absolute value in the face of disaster.
I will submit this: When the world's production capacity collapses, even gold's value collapses, simply because there's not enough production to buy anymore, no matter how much gold you have.
If you disagree, imaging how useful gold is, in a desert, or on the moon. Then compare to how valuable it is to know how to access water or make oxygen on the moon. In each scenario, knowledge/inventiveness/production outweight absolute weight of gold.
Does anyone think it makes sense for the market to be up 200 pts today? I mean, GM bankruptcy, economy cratering, still a massive housing problem with the biggest part of the pain not yet started. It's just hilarious. And if anyone was wondering whether the speculative pressures in the economy were rung out? Ha. Just look at oil. Total joke.
What's that song? (come on ride the train, ride it...)
So much for the light at the end of the tunnel. (Kaboom in 3...2....1...)
Manufacturing contraction should reverse soon as the USD drops.
The building crisis here is going to EU. They're going to weather strong EUR, plus collapsing demand, plus relentless China assult.
If EUR can survive this crisis, then it will have gone though the "trial by fire". Right now I'm not so sure they'll be able to hold it together. The game's just starting.
except that most of the capacity for it has been destroyed and you can forget about actually getting credit to start it up again....unless you use some well-placed friends (cough....GS...cough) to circumnavigate any "issues" you might have.
GDD9000:
Does anyone think it makes sense for the market to be up 200 pts today? I mean, GM bankruptcy, economy cratering, still a massive housing problem with the biggest part of the pain not yet started. It's just hilarious. And if anyone was wondering whether the speculative pressures in the economy were rung out?
The tide just went out. And it turns out the bears were swimming naked.
It baffles me to realize each time the market ascends, that there are STILL BEARS around to fuel a short squeeze. I was amazed all the way from SRS = 70 to now in the teens. I would've though bears would exit from being burned, but wow... unending sea of bears?
THAT my friend, is the problem. This change of tide shows that almost everyone (hedge funds and individuals, inclusive) is a bear. A big pile of bear makes for best short squeezing, fundamentals be damned. It's almost a disasters of the short's own making, because of sheer overwhelming numbers.
However, this relentless ascend will also plant the seeds of it's own doom. As now there's more and more windcatchers who try to ride the wave on the other side.
It's spectacular to watch both sides. I'm just going to be on the sidelines for a while.
Actually that might be precisely what is happening. FED and other plunge protection team members (major banks) outright buying stocks to keep them rising and at the same time dollar crashing even harder.
hc - the one nice thing of late, is that the global liquidity slosh is easy to watch, confirm, and still have time to get on board. The swings now are obvious, well reported, and last a good long time. So, you can afford to enter late, bull (easier) or bear (riskier), make your money, and when things get a bit iffy, take a break. Im about to take a break from the bull run, and soon, the dollar bear run oil bull run - very soon. Perhaps today. It's been a nice surge from yearend. I knew with the Fed's plans for CMBS you couldnt touch SRS. But there was much money to be made in that earlier. I think there will yet be again. But I wont get on that yet...still too iffy. I may never get on it again. It's been hard to make money on the short side lately, because when people pile on that, the gubmint no likey like, and will talk your arse out of your money. Usually there is a good one day bashing that signals something is amiss. Not like the Treasury bustup of recent days, though. I got into TBT too early. But got out too early too. Ha. Cant win all bets in the Feds casino. But as long as you know it is now a casino, and that the game is rigged, you can have some fun. As for fundamentals...pish posh. Who needs that, right? well, I think they will come back to haunt, and soon.
History shows that bear markets break almost every market player, almost every one. Those that were wrong at the beginning forget to change their game plan, those that were right at the beginning eventually make the same mistake.
"Manufacturing contraction should reverse soon as the USD drops."
No, it won't. Relocating factories from country A to B take years of negotiations. Even when euro was much higher last year, US manufacturing sectors still lost a lot of jobs every single month. No reversal of outflow.
Eurozone is holding up nicely, total trade is well in balance, about 1500 billion euros both imports and exports. Nothing like 50-60 billion dollar MONTHLY deficits for years now, like in the USA.
Even allowing dollar to crash won't rescue Americans because it will collapse the society. People will not just suck it in when their real purchasing power goes down from 2000-3000 dollars to 300 dollars per month while the costs (especially all oil and food related things) just keep on rising.
Yancey - that is very true. You have to have to have to adapt. There was a ton of time to make money as a bear. There migth be again, but I dont think it will be quite the volatile easy money play. It might be a slow leg down, but that is harder to make money on. Takes more determination, and stronger constitution and more long term thinking. I dont have the guts for bear plays at the moment. But Im enjoying this bull run, at least for a very short while longer. I just dont think the fundamentals support it going on much longer. Im thinking the job losses keep coming, and then the phase 2 housing bust kicks in. I see no way they prevent that tsunami, just as they failed to limit the subprime damage. The timing of that I just cant get down. But I think we go sideways a bit soon, before the next descent.
"People will not just suck it in when their real purchasing power goes down from 2000-3000 dollars to 300 dollars per month while the costs (especially all oil and food related things) just keep on rising."
........Except for people that have anticipated that.........their "costs" are no longer that - but provided on-site. (Milk, eggs, produce, no bills, etc.)
expectations....were they rational? bwahahahahaa...economists and their rational expectations. If we ever needed proof that people arent rational, the last few years have provided it. This should really help out the cause for the behavioral economics folks. Hope they rise to the challenge.
This morning, I read an inspiring story about GLL Centres, a London-based non-profit
operating gyms for the benefit of the community. (check their site at gll.org). This is
truly brilliant thinking, as it uses the current environment to subtly undermine the status quo. The non-profit model would be a brilliant
Total credit market debt as a percentage of GDP has risen from 130% of GDP in 1952 to 350%
of GDP today. The various bailout and stimulus schemes enacted in the last year will drive
this percentage above 400% in the near future. When a country allows this much debt to
accumulate versus its GDP, they have done something seriously wrong. The country’s
politicians, business leaders, and citizens have all contributed to this disaster.
Yes, manufacturing is still contracting, but the reading means that in other service areas of the economy we have likely started to grow.
A reading above 50 means that not only is the economy expanding, but manufacturing is also...
Actually the trend in the manufacturing index has been on track to return to growth by Q4 of this year. The reading today actually confirms that trend... have a look at the chart here.... ISM Data Signals Return to Growth is Near
TII,R?
GLD cratering.
Green chute?
Also, the Customers' Inventories Index remained below 50 percent for the second consecutive month, offering encouragement that supply chains are starting to free themselves of excess inventories as nine industries report their customers' inventories as 'too low'.
This is not an inventory-driven "recession". There's an inventory cycle superimposed on the collapse that's giving false inflection-point readings.
The concept that your savings is someone's debt is true EVEN IF WE'RE TALKING ABOUT GOLD-BACKED CURRENCY.
It's amazing to me that why very few people understands what true savings are.
Unless you're a miser, who saves just for the sake of saving and will never spend anything. (maybe a twisted pleasure from watching savings account numbers increase in digits) Most people will save for a future withdrawal.
Savings is a claim on future production.
Thus it's TWO transactions when you save, not one: The savings, and the future withdraw (of that savings).
Both actions act on a dynamic system.
Should the world's production go up, it will be able to produce the extra to service your withdrawal when you do it.
Should the world's production go down, your withdrawal may end up producing less.
It's not hard to envision:
1. When I save enough money for 10 tons of rice, in a world that produces 100 tons of rice; my expectation is to be able to access 10 tons of rice (plus some interest, possibly) in some future time. My savings claim is also 10% of the world's production is another way to look at it.
2. However, lets say disaster strikes:
2A. Some massive crop failure occurred, we only have 10 tons of rice in world production worldwide. Question to ask now is: is my savings still 10% of world's production; meaning 1 ton of rice; or still 10 tons of rice? The answer you give here is telling of your philosophy here. Typically, someone with ABSOLUTE world view will demand 10 tons of rice, since he saves 10 tons; world disaster be damned.
2B. Lets say the world no longer produces rice (maybe rice as a species went extinct), and produces wheat instead. Lets say that wheat is easier to grow but is less satisfying, the world produces 150 tons of wheat, but one have to consume double the amount of sustain oneself. (Bear with me here, I'm just using analogies, not really rice vs wheat) Again, the same relevant question applies: when you withdraw, is it 10 tons of wheat? or 10% of world's production (15tons of wheat) or absolutist's answer: 20 tons of wheat (since it's functionally equal to 10 tons of rice).
You'll notice I don't describe what currency is in the scenarios, because currencies are transient. Value is the ultimate thing being traded.
I also submit that most goldbugs are also absolutists... Thinking they can preserve absolute value in the face of disaster.
I will submit this: When the world's production capacity collapses, even gold's value collapses, simply because there's not enough production to buy anymore, no matter how much gold you have.
If you disagree, imaging how useful gold is, in a desert, or on the moon. Then compare to how valuable it is to know how to access water or make oxygen on the moon. In each scenario, knowledge/inventiveness/production outweight absolute weight of gold.
JCP up almost 10%. Consumption is down. That HAS to be good for retail, right?
stocks are crashing upward
Does anyone think it makes sense for the market to be up 200 pts today? I mean, GM bankruptcy, economy cratering, still a massive housing problem with the biggest part of the pain not yet started. It's just hilarious. And if anyone was wondering whether the speculative pressures in the economy were rung out? Ha. Just look at oil. Total joke.
What's that song? (come on ride the train, ride it...)
So much for the light at the end of the tunnel. (Kaboom in 3...2....1...)
Manufacturing contraction should reverse soon as the USD drops.
The building crisis here is going to EU. They're going to weather strong EUR, plus collapsing demand, plus relentless China assult.
If EUR can survive this crisis, then it will have gone though the "trial by fire". Right now I'm not so sure they'll be able to hold it together. The game's just starting.
hc-
except that most of the capacity for it has been destroyed and you can forget about actually getting credit to start it up again....unless you use some well-placed friends (cough....GS...cough) to circumnavigate any "issues" you might have.
Ciao
MS
GDD9000:
Does anyone think it makes sense for the market to be up 200 pts today? I mean, GM bankruptcy, economy cratering, still a massive housing problem with the biggest part of the pain not yet started. It's just hilarious. And if anyone was wondering whether the speculative pressures in the economy were rung out?
The tide just went out. And it turns out the bears were swimming naked.
It baffles me to realize each time the market ascends, that there are STILL BEARS around to fuel a short squeeze. I was amazed all the way from SRS = 70 to now in the teens. I would've though bears would exit from being burned, but wow... unending sea of bears?
THAT my friend, is the problem. This change of tide shows that almost everyone (hedge funds and individuals, inclusive) is a bear. A big pile of bear makes for best short squeezing, fundamentals be damned. It's almost a disasters of the short's own making, because of sheer overwhelming numbers.
However, this relentless ascend will also plant the seeds of it's own doom. As now there's more and more windcatchers who try to ride the wave on the other side.
It's spectacular to watch both sides. I'm just going to be on the sidelines for a while.
"stocks are crashing upward "
Actually that might be precisely what is happening. FED and other plunge protection team members (major banks) outright buying stocks to keep them rising and at the same time dollar crashing even harder.
hc - the one nice thing of late, is that the global liquidity slosh is easy to watch, confirm, and still have time to get on board. The swings now are obvious, well reported, and last a good long time. So, you can afford to enter late, bull (easier) or bear (riskier), make your money, and when things get a bit iffy, take a break. Im about to take a break from the bull run, and soon, the dollar bear run oil bull run - very soon. Perhaps today. It's been a nice surge from yearend. I knew with the Fed's plans for CMBS you couldnt touch SRS. But there was much money to be made in that earlier. I think there will yet be again. But I wont get on that yet...still too iffy. I may never get on it again. It's been hard to make money on the short side lately, because when people pile on that, the gubmint no likey like, and will talk your arse out of your money. Usually there is a good one day bashing that signals something is amiss. Not like the Treasury bustup of recent days, though. I got into TBT too early. But got out too early too. Ha. Cant win all bets in the Feds casino. But as long as you know it is now a casino, and that the game is rigged, you can have some fun. As for fundamentals...pish posh. Who needs that, right?
well, I think they will come back to haunt, and soon.
History shows that bear markets break almost every market player, almost every one. Those that were wrong at the beginning forget to change their game plan, those that were right at the beginning eventually make the same mistake.
"Manufacturing contraction should reverse soon as the USD drops."
No, it won't. Relocating factories from country A to B take years of negotiations. Even when euro was much higher last year, US manufacturing sectors still lost a lot of jobs every single month. No reversal of outflow.
Eurozone is holding up nicely, total trade is well in balance, about 1500 billion euros both imports and exports. Nothing like 50-60 billion dollar MONTHLY deficits for years now, like in the USA.
Even allowing dollar to crash won't rescue Americans because it will collapse the society. People will not just suck it in when their real purchasing power goes down from 2000-3000 dollars to 300 dollars per month while the costs (especially all oil and food related things) just keep on rising.
except that most of the capacity for it has been destroyed and you can forget about actually getting credit to start it up again.
I think this is exactly right.
Yancey - that is very true. You have to have to have to adapt. There was a ton of time to make money as a bear. There migth be again, but I dont think it will be quite the volatile easy money play. It might be a slow leg down, but that is harder to make money on. Takes more determination, and stronger constitution and more long term thinking. I dont have the guts for bear plays at the moment. But Im enjoying this bull run, at least for a very short while longer. I just dont think the fundamentals support it going on much longer. Im thinking the job losses keep coming, and then the phase 2 housing bust kicks in. I see no way they prevent that tsunami, just as they failed to limit the subprime damage. The timing of that I just cant get down. But I think we go sideways a bit soon, before the next descent.
Investor Hopes for Rising Oil Demand Aren't Borne Out by Reality - WSJ.com
regarding fundamentals...the oil price rise is very much the same trend in the stock market...all hope, little to no substance.
"People will not just suck it in when their real purchasing power goes down from 2000-3000 dollars to 300 dollars per month while the costs (especially all oil and food related things) just keep on rising."
........Except for people that have anticipated that.........their "costs" are no longer that - but provided on-site. (Milk, eggs, produce, no bills, etc.)
i reckon that number is growing, but from a very small base
Didn't MFG beat expectations!?
Yahoo! 404 - Page Not Found
/snark off
expectations....were they rational? bwahahahahaa...economists and their rational expectations. If we ever needed proof that people arent rational, the last few years have provided it. This should really help out the cause for the behavioral economics folks. Hope they rise to the challenge.
Huh? Rick Santelli told me this morning on the tee-vee that the ISM numbers were GOOD news? You mean we're still contracting?
This morning, I read an inspiring story about GLL Centres, a London-based non-profit
operating gyms for the benefit of the community. (check their site at gll.org). This is
truly brilliant thinking, as it uses the current environment to subtly undermine the status quo. The non-profit model would be a brilliant
Total credit market debt as a percentage of GDP has risen from 130% of GDP in 1952 to 350%
of GDP today. The various bailout and stimulus schemes enacted in the last year will drive
this percentage above 400% in the near future. When a country allows this much debt to
accumulate versus its GDP, they have done something seriously wrong. The country’s
politicians, business leaders, and citizens have all contributed to this disaster.
I came across this interesting site.. Econ & Finance Articles Updated Daily
And with the ISM report we now have three very reputable indicators marking the end of this recession.
Three Clear Markers: The Recession is Over
@ucgal,
Yes, manufacturing is still contracting, but the reading means that in other service areas of the economy we have likely started to grow.
A reading above 50 means that not only is the economy expanding, but manufacturing is also...
@timmyone,
Actually the trend in the manufacturing index has been on track to return to growth by Q4 of this year. The reading today actually confirms that trend... have a look at the chart here....
ISM Data Signals Return to Growth is Near