Solarbird (solarbird) wrote,

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this has less depth to it than I'd like

So last time I got around to posting something extensive, I posted a few contrarian viewpoints to the "up Up UP!" consensus that's developed in the major financial media. I think this is important, because said major financial media never really acknowledged a problem until it was far beyond rational denial - it had to get downright ludicrous before any problem could be admitted. And the underlying debt issue hasn't gone away - it's just been shuffled about. These huge numbers of bad securities aren't improving with age - but I've gone on about that already.

Here is a contrarian view to all of this, Ken Fisher of Fisher Investments, who says that the US (and globe) are radically under-indebted, and that soaring debt will be rocket fuel for a recovery. I'd really, really, really like to see his math, because I do not buy it. But I thought I'd post it, and give a paragraph to a superbull.

In that same spirit, here's Jim Grant saying similar things - that there isn't too much debt and that the American consumer is just too scared to go into even more debt and that'll be over soon. Tim Iacono begs to differ, commenting on Mr. Grant's op-ed.

I'm not onboard with this, as you might expect. I've been suspecting a Japan scenario for some time. We're on that path at the moment, both in performance and underlying debt management or the lack thereof. This assumes various very bad things don't happen, which could.

Separately, here's Mish Shedlock's examination of the possibility for a double-dip recession. Fundamentally, he thinks that the pop out of recession numbers comes primarily on the back of short-term stimulus programmes (Cash for Clunkers, housing tax credits) and that this is not functional economic growth. We do know that car sales are tanking - brutally - now that CfC is over. We do know that 2nd quarter GDP, reported as -1%, would've been -3.3% without the stimulus package, which sounds great unless you consider that all that was bought on the basis of both advanced demand (demand being moved up, rather than created) and additional debt (of which we have, imo, too much).

The same report, btw, thinks stimulus will add 3% to 3Q GDP, so when those numbers come out positive (as it's now broadly assumed they will), consider that reality. In this context, I think the phrase strenuously overbought has possible validity in the equities markets. (Current market valuations assume a strong, quick economic recovery. We'll see.)

Various observers also want to know how a consumer economy reliant on imports can be growing when you have shippers reporting things like this, and how strong a consumer recovery can be with consumers in massive debt, losing asset value, and looking at 520,000 new unemployment claims a week. But perhaps these are silly questions.

Finally, enjoy this interesting CNN video about Zimbabwe and its abandonment of its own currency, and how the economy is actually picking up a bit under the coalition government and the foreign-currency-only system.

Really, I need to get back into the habit of digging deeper into the actual data. Most of this post is second-level analysis roundup, and who the hell needs that? But summer's almost over and that means so is festival and market season, and we'll dig in a bit more deeply soon.
Tags: economics
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