forseeablitiy

in the following article, the obvious is stated

the government has to spend and the Tea Party is stopping it.

please compare this to what I wrote in July 2010.

why?  because there is really not anything happening that is difficult to understand.  the chronology has been simple to predict since 2006.

“The Dow Jones Industrial Average dropped another 3 percent today as Wall Street metabolized the truth most Americans already know: We’re in a recession. The “double dip” has arrived.

Most Americans never really emerged from the Great Recession anyway.

We can get out of this recession but not via the Fed’s “quantitative easing” alone. When consumers can’t spend and businesses won’t spend without additional consumers, government must be the spender of last resort.

Juicing the economy back to health (notice I didn’t use the “s” word Republicans have now vilified) will require at least $700 billion in additional federal spending this year and next. (This number takes account of state and local government cutbacks as well as well as the current shortfall between current economic activity and the economy’s productive capacity at or near full employment.)

But this magnitude of additional spending isn’t feasible in the face of Tea Party Republican intransigence. Hell, Republicans won’t even spend additional money on flood and hurricane relief. The Tea Party obsession about the federal deficit and the size of the government is prevailing.

Not only is this obsession keeping millions of Americans out of work, it’s also starting to bring down the Street.

If this keeps up, we’ll have a showdown between establishment Republicans who understand what must be done—and who will support substantially more federal spending in the short term in order to goose the economy—and Tea Party zealots who refuse to face reality.

The crack in the Republican Party between its establishment and Tea Party wings is viewed politically as a contest between Mitt Romney and Rick Perry. But in reality it’s a brewing fight between economic pragmatists and right-wing ideologues. (Don’t expect Romney to call for more government spending, at least before the Republican nomination.)

The Street may not want to Barack Obama reelected, but the Street has an even greater interest in saving its assets and its ass.”

http://www.huffingtonpost.com/robert-reich/dow-drop-recession-wall-street-_b_976409.html?utm_source=DailyBrief&utm_campaign=092311&utm_medium=email&utm_content=BlogEntry&utm_term=Daily%20Brief

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If you are trying to make sense of what happened today - don’t

the pundits will tell you that the market fell because US Debt was downgraded

The same pundits will tell you equities were sold and there was a flight to safety in US treasuries.

US Treasuries and US Debt are the same thing.  Thus if the real reason the market collapsed was the debt downgrade, US Debt would have been sold, not purchased.

The reality is and has been since 2005 at least that the financial system is broken, the debt crisis never resolved and the daily, monthly and quarterly gyrations of the markets are quant trading programs designed to chase the movement of the prices without any regard for underlying fundamentals of anything.

Thus, we begin this leg down primarily because the quants have now programmed to chase downward momentum.

In the real world, there has not been much change in the last few years and certainly no sustainable economic recovery.

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this time down will be for good

after two years of silliness, the party is finally over

To the extent you hold any equities dump them before we return to 2008 lows

more later

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Bernacke says growth to return in second half

Main street says reality is there is no recovery

WASHINGTON (AP)—Americans borrowed more money in April for the seventh straight month, but they cut back on using their credit cards.

The Federal Reserve says consumer borrowing rose by nearly $7.2 billion, fueled by greater demand for school and auto loans. A category that measures credit card use fell for the second time in three months. It has risen only twice since August 2008, the height of the financial crisis.

The 3.1 percent overall increase pushed consumer borrowing to a seasonally adjusted annual level of $2.43 trillion, just above the nearly four-year low of $2.39 trillion hit in September.

The report includes auto loans, student loans and credit cards, but excludes mortgages and loans tied to real estate. The Fed will give a more complete picture of Americans’ debt on Thursday when it issues its quarterly report on household net worth.

Households began borrowing less and saving more to cope with the recession, which ended in June 2009. Credit card use has plummeted nearly 19 percent over the past 20 months and it has dropped 5 percent over the past year.

Overall borrowing has increased in recent months. But analysts say the reason for that is also a reflection of the weak economy: the gains have been driven by more people borrowing money to attend school—many of whom are out of work.

High unemployment, steep gas prices and a weakening housing market have also forced people to resist reaching for their plastic.

“When you take out student loans, you’re still seeing credit card use, and borrowing overall, falling,” said Paul Dales, chief U.S. economist at Capital Economics. “That’s a sign about how people view the economy.”

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More than an early June swoon

The non-recovery “recovery” rally looks like it finally might be petering out

I have remained quietly on the sidelines because of the desire for the many to keep head in sand.

I am foraying back into commenting because so many people have asked me what I think.
What I think is what I have thought since 2006.  There has been permanent damage to the US due to irresponsible gambling by those who “manage” your money.
The last 2 year “rally” has been based on market manipulation and a child like belief that “the markets” are an indicator of economic health.
The markets instead are a gambling den where the rules have been altered to deceive the multitudes to profit the few.
I have many specifics about the real world I intended to begin writing about again.
However, in a nutshell, get the hell out of the US equity market and be thankful that the manipulators were able to hide behind the curtain (think Wizard of Oz) as long as they have.
The only safe place for the little guys and that is in fact anyone who reads this, is in cash.
Do not buy a house, do not invest in the latest mutual fund being pushed by your “advisors”, and do not think in terms of missing opportunity.  Instead hunker down and be ready for financial disaster.
The housing market will be in free fall again (it actually already is).
There will be no rampant inflation as long as 20% plus of this country is unemployed (that is the real number if you include all the “contract” employees and others who really don’t have jobs, they simply have temporary income).
The Euro is going to implode because Greece really is broke and the infighting has only begun.
More later, it is too sunny and I have a great dog who wants to play.

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