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Is there anyone you know who can predict the next recession? How about yourself?
Before you answer, consider this historic episode in the shaky-and-shady world of economic forecasting …
The scene is the annual Fed gathering at Jackson Hole, Wyoming; the time, August 2005.
Conference attendees are invited to honor the outgoing Fed Chairman under the theme “The Greenspan Era: Lessons for the Future.”
And they include three brilliant minds at the pinnacle of America’s economics intelligentsia:
Robert Rubin, former Secretary of the Treasury.
Larry Summers, also former Treasury Secretary and President of Harvard University, plus …
Alan Greenspan, himself, appointed Federal Reserve Chairman by Ronald Reagan 18 years earlier, serving almost as long as the longest-tenured Fed chief in history, Bill Martin (1951 to 1970).
On the first day of the conference, giddy optimism is unanimous and palpable.
The financial markets, they all seem to believe, are virtually fine-tuned to perfection.
The global economy, they agree, couldn’t be on a better long-term track.
Even the U.S. housing boom, according to Greenspan, is one of the greatest things that’s happened to average consumers in many decades.
On the second day, however, a jack-in-the box pops up unexpectedly; one lone speaker who dares inject the four-letter R-word into his speech title — risk.
Adding insult to injury, the speaker, University of Chicago’s Raghuram Rajan, pokes a hole in Mr. Greenspan’s pet economic theory by suggesting that maybe, just maybe, the housing boom might actually be a bubble in disguise.
The vicious vibes of the crowd are virtually visible: “How dare you defy and defile this sacred ceremony for the one man who has so prominently promoted the building boom’s benefits and blessings?!” goes the subtext of the audience’s response.
Everyone looks around to see who will rise to the occasion, tell the “truth,” and put the rebel in his place.
They’re not surprised when Harvard President (and Pollyanna-in-Chief) Larry Summers steps up, making it obnoxiously obvious that absolutely nothing is abnormal except the speaker himself.
Eventually, however, all three of the most prominent participants admit their blunders and each turns over a new leaf:
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| Robert Rubin (top left), Alan Greenspan and Larry Summers. |
Alan Greenspan comes clean during dramatic testimony before Congress following the debt debacle of 2008. He declares that it’s the worst crisis in 100 years — in other words, even worse than the banking busts of the 1930s.
Larry Summers sheepishly admits his error four years later, when he takes the podium at the IMF’s annual conference, delivering a speech that shakes the world of economics. The weak recovery, he argues, isn’t just a hangover from the Great Recession. It’s evidence of a chronic sickness that predates the crisis.
His diagnosis: Even in seemingly good times, the U.S. economy is incapable of creating enough demand without bubbles or extraordinary stimulus.
That’s also around the time when Robert Rubin wins what one commentator calls “the gold medal of the economic policy show-no-shame contest.” In a Wall Street Journal op-ed, Rubin vigorously argues that “the Fed needs to take the risk of asset bubbles more seriously.”
But if you think this story is on the pitiful side, consider these
Pitiful Numbers …
15 percent: The probability of a deep recession given by the entire staff of the New York Federal Reserve in the fall of 2008. And this was the number they came up with even after the housing bust, and even after a massive collapse of financial markets.
5.9 percentage points: The New York Fed’s error in its 2008 GDP growth forecast. They predicted it would be a +2.6%. It actually turned out to be a minus 3.3%.
11.4 percent: The proportion of recessions around the world that are predicted by the consensus of economists, even just three months before the recessions begin.
Zero: The confidence establishment economists merit from investors like us, especially when they tell us there are “no recession signs on the horizon,” or “no core indicators pointing down.”
In a moment, I’ll show you why, as of the latest data, these last two platitudes are verifiably invalid today, based on establishment economists’ own approach.
But first, let’s explore why they have always been, and probably will continue to be, so far off target in times like these.
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Reason #1
Ancient Modern Math
Modern economics is based on calculus, the mathematics developed by Isaac Newton and Gottfried Wilhelm Leibniz. In the 17th century.
It’s also the math which drives the Holy Grail of economic forecasting models: The same model that earned Wharton professor Lawrence Klein the 1980 Nobel Prize in Economics; essentially the same model the Fed still uses today; and almost universally the same forecasting approach relied upon by economists all over the world.
All still based on 17th century calculus.
It’s very good at calculating rates of change.
Very inadequate for predicting changes in direction.
And downright horrible when it comes to anticipating sudden breaks with the past.
Think of a simple rubber band. It’s easy to predict how far it will stretch with each added unit of force applied. What’s hard to predict is precisely when it will snap. That’s what happened in 2008. That’s what could happen again in the future. And that’s why most economists are as clueless today as they were then.
Reason #2
Prejudice and Pride
I’ve been telling you the sad saga of bias in the world of financial analysis for over thirty years.
How decision-makers at Moody’s, S&P and Fitch were so profoundly riddled by conflicts of interest that they consistently gave “excellent” ratings to the largest soon-to-fail banks and insurers in history, right until the day of failure.
How most Wall Street analysts continued issuing “buy” grades on stocks even after they had lost over 90% of their value, even after the companies filed for Chapter 11.
How many analysts knew their conclusions were dead wrong, but failed to issue downgrades strictly because of the “culture”… the culture in which truth-tellers are terminated; falsifiers, richly rewarded.
What I have not yet discussed in detail is how a similar culture pervades establishment economic forecasting:
To stand before an audience of Greenspan worshipers in 2005 and talk about dangers in the financial system was a sacrilege.
To work at the Federal Reserve of New York in 2008 and dissent from the staff’s consensus GDP forecast would create even greater career risk.
And today, even after years of post-recession repentance, anything more risqué than the usual eco-speak euphemisms still elicits ridicule and ostracism from peers and superiors.
Reason #3
Dubious Data
You’d think that, after the biggest credit crisis in nearly a century and the worst blow-ups of derivatives ever, economists would start paying more attention to data in those two categories: Credit and derivatives.
But they’re not. Nor are they recognizing how sensitive these two factors are to the small interest-rate hikes that we know are coming (despite just-announced delays).
Instead, economists are still living in their comfort-food world of data they can digest. Like the “tried-and-tested,” “Big Four” indicators heavily relied upon by the National Bureau of Economic Research (NBER), official arbitrators of America’s recession calendar.
OK.
For argument’s sake, let’s disregard the official fact that these indicators are not predictors; that they strictly tell us what’s happening now.
Let’s turn a blind eye to recent history — the historical fact that these same indicators (plus many others) failed to detect the Great Recession until it was far too late.
And let’s just look at them objectively to see where we stand …
Two of the Big Four indicators are holding up pretty well so far: Real Retail Sales and Real Personal Income (excluding Transfer Payments). But the two others have been sinking steadily for months.
Industrial Production: The rate of growth has been sinking virtually nonstop for about four years. And the actual level of industrial production has been mostly contracting for nine months.
In fact, as you can see from the red dots in the chart below, the U.S. Industrial Production Index is now below the level that predicted nine of the last ten recessions.
The one exception: The Great Recession, when financial collapse knocked the economy down even before industry stalled badly.
Nonfarm Employment: Economists and administration politicians, tirelessly raving about job growth, suddenly went silent this month when the Labor Department shocked the world with one of the most dismal reports since 2009.
The reason — the plunge you see in the chart below — is pretty obvious.
So you know this already. It’s been batted around the news like a ping-pong ball ever since. But what most people may not yet realize is the fact that jobs (and industrial production) are slipping badly despite still-massive money-printing by the Fed.
Thought the Fed’s quantitative easing (QE) was over?
It’s not.
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Call it “QE3 Extended.” Call it “Jaws 4.” Use whatever fancy or not-so-fancy term that suits your needs.
But the facts are the facts:
The Fed’s balance sheet, which reflects its massive money-printing operations, continues to grow at approximately the same pace as it has since the fateful day in September 2008 when we experienced the Big Bang of 21st century financial history: The failure of Lehman Brothers.
But just as Larry Summers lamented at the IMF gathering a couple of years ago, despite all this financial stimulus, the economy is still not generating much new demand … and two of the most-watched core indicators are sinking.
So … now are you ready to venture a guess about the next recession? If so, post your thoughts to Mike Larson’s afternoon edition.
I point you in that direction for three reasons:
That’s where a lot of debate and discussion about recession is now happening.
He’s one of the few that warned of the Great Recession before it began.
And his latest issue of our Safe Money Report, dedicated to this topic, is such a blockbuster, we decided to give it to you here.
The headline title is “RECESSION 2016-2017?” And if you want to download the pdf, go here.
Good luck and God bless!
Martin
Dr. Weiss founded Weiss Research in 1971 and has dedicated his entire career to helping millions of average investors find truly safe havens and investments. He is Chairman of the Weiss Group, which includes Weiss Research and Weiss Ratings, the nation’s leading independent rating agency accepting no fees from rated companies. His last three books have all been New York Times Bestsellers and his most recent title is The Ultimate Money Guide for Bubbles, Busts, Recession and Depression.
{ 68 comments }
There is NO doubt in my mind that a Depression is coming. Also, it seems a large % of our population is in denial of this coming. If you have read an of Leo Buscaglia’s writing he has used the expression “some of the stupidest people I know have PHD”S ” Unfortunately Leo it seems the appointed leaders in key positions fit this description. Intelligent yes but?? To end this madness we need to confiscate their printing presses and begin dealing with the massive debt. Being a Canadian I remember too well Pierre Trudeau’ comment when Prime Minister ” Debt it is only a number on a piece of paper”
And we wonder how these disasters are created.
Hey Mike, my dire prediction is in line with Peter Schiff . The Dow will plunge to 4324 and the process will be done by 2019.
The world will be a different place so I hope you are ready to be self sufficient. It’s not a pretty sight.
Good luck and may God bless you all. DP
I just finished reading the Asian and European stock market results on the right hand side and see Christmas is coming early this year. Forget the fact that there no presents under the tree. Boy Asia and Europe are really trying hard to push on this string. Good luck. Geeze a change in the Brexit winds over the weekend and the whole world goes mad with greed. Incredible!! What has this got to do with increased earnings apart from the fact that the sheeple in England are again being hoodwinked by big business to do their bidding.
Hi Gordon. What people fail to realize is that Brexit is a symptom, not the cause.
Just read your non farm payroll figures starting to look like an inverse step ladder.
According to the statistics I’ve been reading – Republics only last some 200 years. The U.S. has been in existence long enough to fill that requirement. They cease to exist because the people will learn who to elect that will give them the most from the public treasury. Look at our situation as it exists today. You work and you have to pay taxes. You don’t work and the government pays YOU. Something just is not right with that scenario,
I think there is a difference between Republic and Democracy. I also think that we were established as a Republic but became a Democracy with the direct election of Senators.
Hmm,
Might want to add, no replace, women’s suffrage for “direct election of Senators”
At least if government helps the unemployed, the money goes right back into the local businesses. With a little help to stay alive, an unemployed person can buy a bus ticket, have a phone or address where a prospective employer can reach him/her. The question is not whether government should help- the question is why are there not enough jobs paying a living wage for the people who need them.
Thomas; You hit the nail dead on and drive it home. The do-nothing sheep have out bred the producers and risk takers to the extent that the so called “rich” have become “any person that gets ahead and plans for the future”. Our producers and risk takers have become enemies of the indecent and set upon as greedy for not sharing.
Dr. Weiss,
This is one of your best articles. Your Reason #1 ” Ancient Modern Math “. The forecasting is not based on the calculus. It is based on their model. The model is not based on the calculus. The calculus just processes the model. Their forecasts are wrong because the model is wrong.
Agreed. I thought that too when as I read.
Oh For The Love Of Pete…….
1. Rubin (A Republican from G.S.) counsels Clinton to sign the removal of Glass-Steagall, which has kept the financial markets in control since 1933 (after the Pecora Hearings lay 1929 at the feet of runway Banking, Brokerage and Insurance). Then, soon after the removal is passed, Rubin leaves the Treasury for a seat on the Board of Citibank for a $million a year (until years later a New York Times (not WSJ, Barrons or Fortune or any other financial rag) reporter finds that he’s NEVER attended one meeting) !
2. Greenspan (A Republican) who sees not problem with the G.S. Removal…..
3. The “Inner City Restriction” on the relaxed lending standards is removed from Barney Frank’s Legislation to encourage Inner City home buying, before being passed by a Republican Majority Congress (which makes the big banks billions and lets “Lair Loans” run wild, nationallyand sets us up for the assurred Housing Crash….
4. GATT and NAFTA are dreamed up during Reagan and H.W. Bush which removed millions of Middle Class jobs from America, reducing many billions in Tax receipts and exacerbating the already, rapidly increasing Deficit and Debt since the Republican Revolution of 1981…..
5. Then comes the HUGE tax cuts under Reagan that removes more billions from the treasury without corresponding Spending cuts…..
The huge tax cuts under Reagan increased business productivity in the private sector and stimulated the markets. The result was increased revenue in the treasury through taxation from economic growth of about 4% average a year. That is a recorded fact !!! That stimulus was boosted by Gingrich when he was “Speaker of the House” with his “Contract with America” legislation. Bill Clinton got the credit because the press is control mainly by the liberal elitist media and the sheeple believe what they tell you to believe…
Just a few facts, revenues decreased the first 2 years after the advent of Reaganomics and increased AFTER Social Security taxes were raised (on the bottom of the income ladder). During the 12 years of Republican leadership 1981 – 1993 the debt increased by 3.2T while GDP rose 3.6T. After Bush I and Clinton raised taxes (partially replacing voodoo with fiscal conservatism) the debt increased 1.5T while GDP rose 3.5T 1993 – 2001 under Democratic leadership. As to that “Contract with America”, how’d those term limits do?
Mike,
I’ve always called that the Contract ON America… Just another Republican lie….. Listen to what they say and then try not to be too surprised when it turns out just the opposite!…. :( Like I’ve said many times, “Only the wealthiest 3% (who fund the GOP candidates campaigns) gain under the Republicans”!…. :(
So after the Obama 7.5 years of stagnant recession and slow growth policy are you voting for more of the same with Hillary?? Or would Sander Claus be a better choice after the FBI indicts Clinton next month?? I am not a fan of either party and Gary Johnson looks like the best choice, but will never make it as a 3rd party Libertarian…
DBD,
The ONLY reason that the stock market rallied under Reagan was because Fed Chairman Volcker( appointed by Carter), stopped the Nixon Inflation…. That brought the Rally… How did Reagan thank him? He fired him and appointed “mumbles” Greenspan who led us into the Crash of 2007!… :( When will they ever learn”!
Look at what the Demo have done with excessive regulation on small business’s .. Forget about trying to start a new business in NY state you don’t have a chance.. That tax break law for 10 years that Governor Cuomo brags about is in limited depressed area’s around the state… A TOTAL JOKE…
I’m with you. The trouble that we’ve had
won’t look the tiniest bit bad…
Compared to what’s to come!
Greenspan/Ayn Rand
Bush/Clinton
Bush/Obama
Run for your mama!
Here Clinton comes again!
Yes, by all means a woman!
Just not THIS woman…
But for heaven’s sake not Trump!
There’s really only one thing left to do
Find a freaking plank, walk it and JUMP!!
Reagan cut NOTHING for the middle class except jobs and decent living wages. It was all a Ponzi trickle down scheme. It took no genius to take from half the people and give it all to the other half. But…like all Ponzi schemes, the day of reckoning has come. Those workers do not buy like they used to. They are too poor AND too tired. Who did Reagan think he was going to sell goods to…the other half? All wealth made…was made on the backs of people that USED to have something worth working for. The government had to have been LOSING all the taxes that could have been paid on lost wages by that half of the population. I suppose that is why the deficit has soared since 1980. Trickle down is coming to an end. Unfortunately, so is our whole country.
When will everyone recognize that the reps and dems are twins raised in the same house with the same bad character and education. If y’all continue to argue about the same things over and over, you will continue to get the same results. Rather than saying this one is good and that one is bad, can’t we just eliminate them and have one less thing to worry about, after all, should the peoples money be allowed to be manipulated up and down for the sake of votes? Seems to me, the more moving parts anything has, the more failure points exist with complexity. Neither party is blameless
Goes all the way back to Carter and the Community Reinvestment Act. Took away the five C’s in lending (Capital, Capacity, Collateral, Character, Conditions) in favor of giving loans to people who didn’t qualify because of minority status. It passed late in the Carter Administration. It was ignored by Reagan and Bush, but ended up being enforced by Clinton. After 8 years of Clinton, the genie was out of the bottle and the second Bush just put gasoline on the already expanding fire allowing the no income qualification on home loans. After 2009, we pulled the lending back, but the new economic stimulus basically did make the banks and large companies whole, but did nothing for the common man except tax credits for A/C and Windows. Now we have been in this perverse cycle where we have allowed people to run up huge debts at low rates for everything from student loans, to housing, to autos, to unsecured credit. But, the economy is tanking again on fewer jobs and negative economic growth. The price still has to be paid, and the bill is finally coming due.
Clarification – Didn’t qualify on the five C’s, but the CRA forced banks to make the loans anyways. Minority status was allowed to override the five C’s.
The current rally in the SPX up from 1810 earlier this year seems real to me. I remain neutral until 1810 is penetrated. Needless to say I am building a cash trove to the full extant .
If the yield curve has inverted months prior to any previous recession, and it’s nowhere near flat or inverted, how is this cycle different? How has money printing distorted this gauge?
And Many more important regulations are cut and deficits allowed to run wild along with much the same types of highly dangerous, highly leveraged tradings that brought us 1929 (and made Martin’s Father wealthy when he shorted the mess)……
And NOW we are surprised that 2007 occurred in the First Place. and with many of those really important financial regulations still off the books and GATT and NAFTA still in force, we are starting to ponder another crash? Gee, that is akin to shooting yourself in the foot and then asking “Did that hurt when I knew it would”? And based on past history is another 1929 and 2007 likely to happen again?
Perhaps the bigger question is when are the American voters and Leaders who understand economics going to stand up and say “ENOUGH” and demand to re-establishment of G.S. and the removal of GATT and NAFTA, the return of pre-1981 tax rates and finally admit that, yes, those were really dumb moves that benefited only the wealthiest 3% and great cost to the 97%…..
I would disagree that these three men that hail from Harvard and Columbia, etc… are brilliant. They totally missed the great recession of 2008-2009….and, they are all now oblivious to the coming debacle. A simple study of economic cycles and wave theory would have told them that trouble was (and is) brewing.
Larry Summers has failed upward his entire life.
Reminds me of the old saying from the Forest Gump movie “Stupid is as stupid does” the following excerpt from a speech by the Bank of Japan governor. He must have to put on a brave face to spout this BS. Things are really getting crazy on the investment front. Another example is the stock market opening in New York. Clutching at Brexit stay polls. What a receipt for disaster.
Bank of Japan Gov. Haruhiko Kuroda said Monday he sees a “positive” impact emerging from its negative interest rate on the real economy.
Kuroda, speaking in a question and answer session after delivering a speech at Keio University in Tokyo, acknowledged that the BOJ failed to achieve its initial goal of a 2 percent inflation target in the roughly two years since 2013 but pledged to do so as soon as possible.
As the negative interest rate policy was new, “initially, there were some confusion and uncertainty but the new policy framework…is well understood and having a positive impact on the real economy,” Kuroda said. He did not elaborate.
Amid concerns among some Japanese banks that their profits will be undermined by the new policy, Kuroda said the policy’s impact on their profitability will be limited.
Under the negative rate policy, BOJ imposes a 0.1 percent charge on a small portion of the reserves that financial institutions hold at the central bank, he said.
Last week, the BOJ kept its monetary policy unchanged at a meeting as policymakers apparently tried to assess the impact of the negative rate policy ahead of Britain’s referendum on whether to leave the European Union.
AND THE YEN SURGES YET AGAIN.
Thanks Dr Weiss. In my opinion the entire economy concept is being propped up like a house of cards in the wind in hopes the whole affair will stand until Election Day. My expectation is that the wind will carry too many cards away for much house to be left for Obama be able to say “Not on my watch.”
In any event I must agree with you that recession is in the wind, but I also expect price inflation; which is why I keep saying to look for stagflation. Inflation is needed to pay off debt, but wasted money from that debt is stagnating the economy. Consumption for durable goods was brought forward by falsified interest rates, leaving less demand for today; after production was expanded for false expectations that the demand expansion could last. As a result steel, cars, office and retail space all grew into bubbles that will soon be bursting in the air. Bubbles blown from the wind of falsified interest rates.
Thankyou Dr. Weiss for your work and
the team you’ve built…a guiding light in
a dark world! I just want to say they should
use my math model. “The debt bubble is
to big NOT to fail !!!” All real lasting wealth
comes from the ground. These “gods”
seem to believe fiat math and manna they
rained down from their heaven will work.
You can’t push on a rope and you can’t
push wealth in a vacuum. – Allen
Summarising it in three words:’Winter is coming’.
Economies and markets tend to rise, then fall, then rise and fall again. What we have seems like a sort of Alchemy, trying to convert base metals to gold. What we need, is a Chemistry that will correctly predict when the rises and falls will happen, at least within a short time. Any Robert Boyles* out there who can come up with that? Of course you will cause the end of speculative markets.
*Robert Boyle – an Englishman considered by some to be the real father of Chemistry.
Chuck,
Here’s a simple political answer…. The Republicans blow the markets up and the Democrats repair them……. Think that is nuts? Both Stock Market Crashes and Depressions in the past 100 years happened under Republican Administration with Republican Majority Congresses after long periods of Republican domination….. During the past 83 years (1929-2012) the Stock Market advanced almost 64 times more under Democratic Administrations than under Republican….. If that study period was advanced to the present day, it would be more like 75 times more!…
wealth skew gentlemen. wealth is made to be put to work as a tool that generates more wealth. wealth is not meant to be hoarded or concentrated in the hands of a few as it is today and was in the 1920s. the economy is sputtering because the purchasing power needed by the middle class and working class has been eroded to the point that many are living on food stamps. why you ask? because wages have been reduced by one-half in the name of cost effectiveness while the minimum wage has been increased to levels that sustained the working class back in the 1980s. we have forgotten how to behave as a country and an economy. the trouble we see on the horizon is merely the consequences of our actions. America is great because she is good. well gentlemen, we haven’t been very good recently.
I find it interesting that people are apparently reading the materials about secular stagnation which were popular a generation or two ago.
I think we are usually about two years into a recession before the economist finally admit it. I say we probably are already, the stock market just hasn’t reacted with it. This could be due to all the ‘fixing’ that goes on to keep it from nose diving. Sooner or later the market will react, hopefully most readers don’t have big exposure to bonds or equities currently.
Thank you for your historical perspectives. Those who don’t pay attention to history are doomed to repeat it.
Hi Martin,
Read ALL of the above.There seems to beREAL doom and gloom out there.Most intelligent people sense it.Some intelectuals are’educated beyond their abilities’. My advise is to batten down the hatches,and trust your own god given instincts.
I agree with Bill on the point about already being in a recession, which will only be recognized after all the revisions. Where I diagree is in the stock markets reaction. Stocks have not reflected the economy for years. They are in the process of replacing govt bonds as the new safe haven. When the sovereign defaults get into full swing and rates start spiking, where do you think global flows will end up when investor’s concern is return OF most of their money?
The Majority of the time the stock market has been a harbinger of what is going to come in the economy
A noticeable exception was in 1929 when the market continued to rise for 6 months after the onset of a recession. However, don’t worry, be happy things will be different this time!
The differernce now, compared to 1929, is that this time it is govts that are defaulting. Pensions and insurance funds are already moving out of govt debt, which is unsecured, and replacing it with corporates, which have not defaulted. I will ask again, where is the all the money that will be exiting govt debt going to go?
“where is the all the money that will be exiting govt debt going to go?”
Into a wheelbarrow to buy a dozen eggs.
Great food for thought. This is really tough, I’ve been sitting mostly in cash since last September waiting for this stock market “bubble” to pop. Yet the market continues, up 200 pts as I write this. Feel like Braveheart where he is telling his people hold, hold, as the English cavalry charges.
The majority must always be wrong, and most will miss the next doubling of stocks. Many will pile into the top of the bond bubble just before it pops, and not get into stocks until it feels good, which by then will alsi be a top around 2020.
You missed one big point. Employment. Figures are +,- 100000 . Think about that margin of error, 100000.! +or – !
One of the big problems is the reliance on economic numbers that have been cooked, fried, roasted, fricasseed, baked, broiled and par boiled. GDP uses an implicit deflator to remove the effects of inflation. This, of course, is a nonsensical number fabricated using formula developed by the Boskin Commission which arbitrarily removes price increases (inflation) from the inflation number! When you throw in “seasonal adjustments†and other factors the algorithms will spit out what you need to put a smiley face on what might otherwise by an economic nightmare. My favorite bit of economic larceny is the Birth/Death model used in determining job creation.
Looking at earnings, the empty stores in the malls, people in the malls with no packages, the local electrician going out of business, and no sign of jobs creation enough to bring back all those still off the unemployment numbers rolls by the BLS.
That fact is I just can’t believe anything this government prints or says. Used to be lies but usually hard to tell. Nowadays they lie with no concealment.
I suspect that we are in a recession especially if you use the GDP figures as previously calculated before BO added 3% to them. It sure doesn’t feel prosperous, It doesn’t look prosperous, I bet the car dealers aren’t thinking car sales are booming. So just what is doing well? Maybe medical. No we are headed down!
I think we need to ban any voter on government assistance, illegal aliens,people who are dead, and people without identification. That’s a start to a better country! If you don’t work for a living then you don’t deserve a say! Then we can get down to fixing the economy!
I think we need to ban any voter whose family is not listed in the Forbes 400. After all people who must work for a living only exist to serve us anyway. If it makes you feel better we will allow you to look down on others as we look down upon you. Never forget your place however.
Some of the comments appear politically motivated. Historical macro economics do not support such comments. Simply, in our society the middle class drives our economy – not government and taxes. All government does is collect and does not generate revenue. While needed to run a country, big government become highly inefficient, wasting “billions” annually – this should be no revelation to anyone.
Creating jobs / wealth / stability in an economy is generated by allowing the masses to secure and sustain a “living” wage to maintain an acceptable level of “living” – which is an individual level when it comes to acceptable “living”. The latter is the root of a democratic driven country – it allows people to seek at which level they believe become their individual “living” wage. The only holdback is the “Peter Principle” where one reaches their maximum level of competency.
If we look around the world as your guidepost, those countries where big government is the provider, or attempts to control what one is provided does not work efficiently. It leads to corruption, and over time, an inverse relationship among those producing vs those being recipients or beneficiaries. Greece and Venezuela are your poster children.
Looking on the horizon, big government debt (existing in many of the major countries economies worldwide) coupled with international monetary policies to mask the problems results in economic and social turmoil, and will eventually result in a significant dysfunctional global system. As the Bible says – “the meek will inherit the earth.” This prophecy just may be coming.
If you perma-bears had a batting average you would all be below The Mendoza Line. For years we have been listening to this mountain of cash and I’m all PM stuff while missing out on one greatest Bond and Stock Market rallies of all time, not to mention the Dollar. Commodities are next. They are ridiculously cheap at present. If you have maintained a conventional, balanced portfolio with some smart hedging you have done just fine and will continue to do so. Jim
I am not a financial whizz-kid but I read a lot of comments from people who obviously know what they are talking – or writing – about.
One article I read was the claim that more than 100 years ago group of Russian economists estimated that recessions occurred around every 30 years and that the really bad recessions (read Depressions) came every third in the cycle.
The incredible economic mess that so-called economists have created in the world today is the perfect example of Albert Einstien’s Insanity: doing the same thing over and over again and expecting different results.
He believed there was no limit to humans’ stupidity.
Please accept my apology for the error which read “Albert Einstien’s insanity” which should have read “Albert Einstien’s take on insanity”.
can we predict a recession, you ask? of course we can. every recession we’ve had in our lifetime has been preceded by a yield curve inversion that was deliberately orchestrated by the fed to slow down an overheated economy.
no one can give you the date of the next recession any more than they could give you the date of the next snow storm. but it’s safe to say it will snow next winter and be hot in the summer. likewise, whenever the fed inverts the yield curve we’ll have a recession. we’ll see it coming.
The recession/depression started in July 2015. accelerated October 2015-Feb 2016 then was masked by a coordinated central bank direct buying of stocks and commodities since the economy was not responding to stimulus and money printing. All forecasting models use government statistics which are “seasonally adjusted” or use some fudge factors. Money velocity is still the best single indicator of economic prosperity.
TRUMP 2016 OR BUST……
Trump 2016 AND BUST!……. Study American history…… ALL of the Stock Market Crashes in American history have happened during Conservative Administrations after periods of Conservative Domination….. All of them…… That means that if Drumpf or any other Conservative is elected President, the probabilities of another Stock Market Crash and Depression goes up GEOMETRICALLY!…… Got it?….. :(
Got it.. I am voting for Hillary so we won’t have a Market Crash in the next 4 years… LMAO….
i got news for you a recession has already started nothing is as simple as you say if the democrat strongholds of illinois california michigan new york were as you say those economies in those states should be booming but instead all we see is busted state economies corruption and graft democrat strongholds are all going broke trying to give it all away if we have to worry about trump destroying the economy the last thing this country needs is another 4 more yrs of a hillery (obama) economy ive learned you cant give it all away i get the feeling your worried somebody is going to take away your gravy train that why eagle495 your constant whine never ends
To Eagle495 : If you would take a closer look at The Reagan Administration, you would see that during the first 4 years Pres Reagan lowered taxes. During the 2nd administration the Democrats had a large enough majority in congress that he couldn’t accomplish much because they were capable of overriding his veto.
He was in office from 1981-Jan 1989.
Don’t forget the Democrats had a riot in Chicago during their 1968 convention in which they turned the authorities of their party over to the Communists. Tom Hayden, one of the top Communists, was out side the hotel, they were renting, wearing a wig trying to convince the people to ignite the hotel. “Radical Son” by David Horowitz pp166
Mules
In reality Republicans controlled the Senate during Reagan’s first 6 years thus his vetoes could only be overridden with substantial Republican support. In his last 2 years at least 13 Republican Senators were required for an override.
The recession started in 2008. and has been masked by government compensation; it is now that the mask is proving so loose that it is slipping off and showing what it is covering up. And that face is ghastly, altogether loosing its Botox…and no one will marry what was covered up. This will be the year of unveiling and complete rejection of the ugly bedfellow passed off as a great petticoat prize: already saturated with worms.
John Nash was one of the greatest economists of all time and look what happened to him. You should read his book a beautiful mind. It’s not a very nice story to read. 30 years in the same job is a hell of a long time. God bless his soul.
Folks,
Please when u talk about GOvernment…there are 4 Main Levels: Federal, State, County, City(Municipal, Town, Village,etc.) State & Local regulations affect everyone more than Fed. Regs…50 states, all those counties…what about ALL the Multi-Jurisdictional Agencies that are in the Counties but below the State Level. The wasted $$$ are staggering…we DON’T Teach CIVICS in the school system…you people are so worried about the Fed Reserve & Taxes…start fixing things locally and pay ur d.mn taxes & shut up about it. Try getting the do-nothing Congress Dem.&Rep. to collect 2-3$$$ trillion overseas by our lovely corporations that we own stock in. Eagle945 thank u for ur comment!!