Philly Fed Misses - Markets Soar

We are watching greed coupled with ignorance - blind the world.

Even though underlying economic data continues to deteriorate (unemployment, wages, manufacturing, inflation, local – state – federal deficits, etc.), stock markets rocket on the news that central banks are ‘helping’ the European dollar liquidity issues (albeit with more debt) and the hope of additional QE.

The world is placing its hope with the very people planning its demise.

Expect extreme volatility to continue throughout markets until the rug is pulled out from under us.

Remember – all of this ‘help’ is being done now so that the central bankers and world political leaders can tell you later that they did everything possible to save the system.

We know the truth.

jg

September 15, 2011

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Philly Fed Misses, Market Soars As Inflation Roars Back With Prices Paid Doubling

http://www.zerohedge.com/news/philly-fed-misses-market-soars-inflation-roars-back-prices-paid-doubling

Submitted by Tyler Durden on 09/15/2011 10:10 -0400

Love bizarro day, Embrace bizarro day, Have its child. The Philly Fed missed consensus of -15.0, printing at -17.5, though better than last month's abysmal -30.7 print... and stocks rip on expectations of more, more, more, intervention. As for how QE will work when the Philly Fed just announced its Prices Paid category doubled from 12.8 to 23.2... well, it don't matter to Jesus.

From the report:

"Responses to the Business Outlook Survey this month suggest that regional manufacturing activity is continuing to contract, but declines are less widespread than in August. The survey’s broad indicators for activity, shipments, and new orders all remained negative for the second consecutive month. Responding firms, however, indicated that employment was slightly higher this month. The broadest indicator of future activity remained positive and rebounded this month, suggesting that recent declines are not expected to continue over the next six months."

And on Inflation, which is back:

Increasing costs were somewhat more widespread this month compared to last month. Nearly 29 percent of firms reported paying higher prices for inputs this month. Only 6 percent reported lower prices. The prices paid diffusion index increased 10 points, its first one?month increase in seven months.

Full table:

And chart:

How to Fake an Economic Recovery - February 16, 2011

This is one of the best articles I’ve seen that describes the deception surrounding our current ‘recovery’.

No comments needed.

jg – February 16, 2011

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http://www.zerohedge.com/article/guest-post-how-fake-economic-recovery

Guest Post: How To Fake An Economic Recovery

Submitted by Tyler Durden on 02/16/2011 07:44 -0500

Submitted by Giordano Bruno of Neithercorp Press

How To Fake An Economic Recovery

This may be a highly distasteful proposition, but just for a moment, I want you to sit back, and imagine that you are a member of the corporate banking elite. You are a walking talking disease ridden power mad pustule who naively believes himself intellectually superior to the vast majority of humanity and above the inherent laws of conscience, honor, and general good taste. You are a villain in the purest sense, in that you not only do great harm to the world, you actually SEEK to do great harm to the world, if only to benefit yourself and your exclusive circle of “friends”; a clan of degenerate blood thirsty sociopaths with delusions of omnipotence that stalk the night like Armani wearing Chupacabra exsanguinating the joy from poor unsuspecting cultures. You are capable of anything, and sadly, you take “pride” in this fact…

You aren’t “rich” in the traditional sense. You aren’t a “Bill Gates” or a “Donald Trump” (I’m beginning to wonder if Donald Trump is even solvent, or if his entire fortune is a special-effect courtesy of NBC). No, you don’t “make” money, you MAKE the money. You are a global financier. You are a central banker. You create the fiat that the rest of the country uses to sustain its fantasy economy. You dominate trade through monopoly and corporate fraud. You control the flow of currency through an economic system using fractional reserve banking, artificially pegged interest rates, and your ever trusty printing press. You put your substantial monetary clout behind BOTH major political parties, and groom presidential candidates to your globalist standards. Any politician who desires to climb the ladder of power turns to you for assistance, not the voting public. You have a tremendous financial stake in every corporate news provider in the country, if not own them outright. You invite their top reporters to posh banquets, give them unlimited access to prominent social figures and high rollers, and fly them to private alcohol addled orgies in the middle of the California Redwoods (I wish this was all made up). Forget responsible journalism, they love hanging out with you, and would probably write whatever you tell them to.

Now that you have placed yourself in the tight fitting shoes of the “enlightened few”, I want you to imagine that you have engineered an implosion in national credit sectors using ultra-low interest rates to fuel mortgage and derivatives bubbles that would contract at an unprecedented pace once it is revealed to the wider investment world that those equities which they prized only days before are now “toxic”, essentially worthless, due to mass debt defaults on loans which never should have been made in the first place. Yeah, you’re a real dirtbag.

Of course, you aren’t finished yet! Your ultimate goal is centralization, and the key to centralization is to remove all options available to the masses but one; the option which garners you the greatest amount of dominance. A global economic system based on a single world currency and a single unaccountable governing body would be ideal. What would you call this world currency? I don’t know, how about something innocuous sounding like….Special Drawing Rights (SDR’s), which you can then label as a mere “basket of currencies” when it is really a parasitic financial instrument meant to absorb currencies until it replaces them completely:

http://money.cnn.com/2011/02/10/markets/dollar/index.htm

http://www.rte.ie/news/2011/0214/g20-business.html

In order to begin instituting this world currency, you would first need to remove the standing world reserve currency from its exalted position, that currency being the U.S. dollar. This seems rather impossible to many mainstream analysts who cannot fathom the possibility of a breakdown in the mighty Greenback, but you have already set the stage. You have created a progressive debt singularity so immense that no amount of fiat, no amount of taxation, no amount of austerity could ever satiate its hunger. You now have the perfect excuse to print the dollar with wild abandon until its withered, corpsified remains are six feet underground, leaving the door wide open for the tap dancing fast-talking SDR to take its place.

The issue is, how do you convince the general public that all is well until you are ready to unleash hyperinflation and fiscal Armageddon? How do you make them believe with all their hearts that they are not in the midst of a debt meltdown and the end of their financial sovereignty, but basking in a full-on economic recovery?!

You can’t stop wealth destruction now that the avalanche has been set in motion. You can’t stop inflation and dollar devaluation (nor would you want to. Hey, you’re evil incarnate, remember?). The effects on mainstreet are beyond your ability to hide, but, what you CAN manipulate, are the statistics and indices that Americans rely on for psychological comfort. You give everyone a blindfold and a cigarette and you do what you do best; lie!

Here is a step by step guide to fabricating an economic recovery out of thin air….

Don’t Count The Unemployed, Discount Them: Jobless people are a real downer and a pesky nuisance because they represent living breathing proof that a recovery is not taking place. By most standards, a recovery in jobs markets can be claimed if meaningful evidence shows a return to unemployment standards (normal unemployment) set before the recession / depression was triggered. If you are a global banker today, however, this will not due. Instead, you simply change the definition of “normal unemployment”. Thus, the debilitating jobless rate which was originally thought of as “bad”, is now thought of as “natural”. You must then publish long-winded white papers using more subjective statistics devoid of common sense while feigning a logical pretense:

http://www.frbsf.org/publications/economics/letter/2011/el2011-05.html

This only satisfies a small portion of the populace, though. Next, you must rig the manner in which unemployment is calculated to always overlook certain subsections of jobless. Never count those people who have been unemployed so long that they no longer receive benefits. Always count people who are underemployed as fully employed, even if they are only able to scrape together ten hours a week through part time McSlavery. After this, change the manner in which raw data on unemployment is actually collected.

First, the Labor Department derives most of its raw data on unemployment not through any traditional mathematical means, but through two separate surveys which are open to wide interpretation; an establishment survey, and a household survey. The establishment survey is what we hear about at the beginning of every month, while the household survey tends to float under the mainstream radar. In 2009 and 2010, the Labor Department deemed the household survey data (a phone driven survey of 60,000 households) “more reliable” for indicating job growth, because it was accurate in counting small business hiring and self-employment. So, you have two separate surveys (unscientific indicators of employment) combined together to produce a job growth rate number, and an unemployment percentage, both of which represent, at the most, a GUESS on the current state of jobs in this country.

While the establishment survey showed only 36,000 jobs created, the household survey somehow showed around 600,000 new jobs created!?:

http://www.bls.gov/news.release/pdf/empsit.pdf

Basically, the BLS is asking you to believe that over 600,000 people either started their own businesses, or were hired by home based businesses in the month of January alone. I’m curious as to where all the capital inflows are coming from to launch such a revolution in home entrepreneurship in the middle of the greatest credit crisis in history. Oh well, if the Labor Department says it’s true, it must be…

The juxtaposition of odd data collection methods is the reason why the government was able to claim a drop from 9.4% to 9% in the jobless rate while announcing only 36,000 jobs created! The household survey has become an incredibly useful tool for generating arbitrary employment data which can be molded to say whatever government officials and central bankers want it to say. Anyone who controls the source data for a calculation controls the outcome of that calculation. It’s that simple.

What I wouldn’t want, if I was the Labor Department, is for some outside independent citizens group to monitor my survey methods while in progress. That would make life for a statistical huckster very difficult indeed.

As Long As Stocks Are Green, The World Is Golden: Near zero interest rates can be very useful if a central bank wishes to throw a tidal wave of fiat into a particular index in order to make it appear healthy. Certainly, the Fed has avoided admitting to any manipulation of the stock market. QE measures are all “above the board”, and all is well in Bernanke’s Mayberry. A question arises here though that desperately begs to be answered; if the stock market’s meteoric rise from near destruction to the 12,000 point mark is “real”, and completely in tune with a legitimate recovery, then why is the Fed still keeping interest rates at near zero after almost three years, and why are they continuing quantitative easing measures? Could it be that without constant liquidity injections from the Fed, the stock market would once again collapse like a wet paper sack? We know that in 2009, it was revealed that bailout funds which were supposed to go towards muting the effects of toxic bank assets were actually being pumped into the equities of healthy banks instead, meaning,the money has not been allocated to the areas promised:

http://www.associatedcontent.com/article/1436061/more_shocking_news_on_2009_bailout.html

We also know that top hedge fund managers have openly stated that stocks will remain bullish because QE funds are propping up the market:

http://www.marketwatch.com/story/tepper-tells-cnbc-fed-will-prop-up-market-2010-09-24

And, frankly, if you are a global banking cartel intent on keeping the American people in the dark, it makes perfect sense to prop up stocks. A Dow in the green is like a mass dose of fiscal lithium; it calms investors into a stupor. Even people who are otherwise unconcerned about economics will keep track of the Dow as if it is a solid indicator of their personal financial safety. A great test would be to observe market reactions to a Federal Reserve interest rate hike and a freezing of QE in order to counter inflation. Will the Dow stand on its own two feet then? I seriously doubt it, but then again, I don’t know that the Fed will ever raise interest rates again…

Inflation? What Inflation?: Unmitigated inflation spells doom for any society. It’s like some monetary based animal instinct deep down in our collective unconscious. The moment we hear the word “inflation” or see prices rise dramatically, we revert to survival mode and begin honing our mammoth bone battle mallets. Governments and central banks throughout history have made it their top priority to hide the effects of inflation from the citizenry at all costs.

To mask inflation is nearly impossible, especially where commodities and base goods are concerned. That’s why our government and private central bank calculate the Consumer Price Index (CPI) without counting food or energy. Most grains and crude oil have doubled in price over the past year alone, and this does not reflect well on the safety of the dollar, or the effectiveness of liquidity measures by the Fed. China, whose inflation is but a prequel to our own, is also distancing food and energy price surges from its CPI numbers, giving the false impression of leveling markets:

http://www.zerohedge.com/article/china-lowers-weighting-surging-food-prices-cpi

Corporate retail chains have a tendency to absorb rising prices of base goods to avoid alienating their customer foundation, hoping that the increases are temporary. When retailers realize that prices are not going to drop back down, they eventually relent, and shelf costs skyrocket. The bottom line is clear; overall worldwide food averages were up over 28% in 2010:

http://www.fao.org/worldfoodsituation/FoodPricesIndex/en/

Crude oil prices continue to hover near the $90 mark even though inventories are at a 20 year high:

http://www.zerohedge.com/article/gasoline-inventories-jump-20-year-high-gas-price-surges

The World Bank is now warning of possible disasters (which they helped create) in the wake of “dangerous price levels”:

http://www.reuters.com/article/2011/02/15/us-worldbank-food-idUSTRE71E5H720110215

Our government’s response? Complete denial that there is any significant threat of inflation. Denial that overprinting of the dollar and its subsequent devaluation has anything to do with rising prices. Scapegoating everything from weather, to speculators, to the fake “recovery” itself for price spikes. The longer they keep the terminology of inflation out of the mainstream, the less Americans are likely to prepare for an onslaught of the dollar.

Create Debt To Pay Off Debt: This is pretty self explanatory. If foreign investors want nothing to do with you, your explosive national debt, or your depreciating currency, where is your government going to get the money to continue spending like a drunken trophy wife at Macy’s? If you default, the jig is up, and no one will buy your recovery yarns. Instead, print even more fiat and use it to purchase your own Treasury bonds! This serves two purposes; first, it props up the federal bureaucracy which gives the impression of stability (at least for a time), and, it furthers your goal of squeezing the dollar like a grape.

Remove All Checks And Balances: If you plan on decimating an economy, you can’t very well have people pointing fingers at you while you do it. That would be inconvenient. It’s funny, but for years, ratings agencies like Moodys helped global banks facilitate the mortgage and derivatives crisis by categorizing worthless assets as AAA securities. Without them, no one would have invested in such garbage in the first place, and the banking fraud would have been immediately exposed. Now that ratings agencies are finally doing their job and downgrading the creditworthiness of banks and countries that possess extreme liabilities, the SEC is moving to marginalize them:

http://www.reuters.com/article/2011/02/09/us-financial-regulation-creditraters-idUSTRE7180OD20110209

Interesting that as the U.S. nears a possible credit downgrade, we suddenly no longer care what ratings agencies have to say.

The SEC in itself is one enormous joke, and in no way a practical overseer of banking activity. The organization has shown itself to be either fantastically incompetent, or deliberately indifferent to ongoing financial fraud. I never thought I would find myself agreeing with a cretin like Bernie Madoff, but according to the middle-weight Ponzi artist, global banks he dealt with, like JP Morgan and HSBC, had to be perfectly aware of the scam he was undertaking, otherwise, it could not have been possible:

http://www.reuters.com/article/2011/02/16/us-madoff-interview-idUSTRE71F0QD20110216

Likewise, the SEC’s complete lack of proper investigation into such activities turned Wall Street into a globalist playground where much bigger conmen than Madoff have nested and bred like fleas. It’s not that the system needs more regulation, or more legal wrangling; this would accomplish nothing, because the system is regulated by the criminals! Therefore, new laws can be enacted in concert, and the government can deem the system reformed and recovered, all while the underlying corruption remains untouched. If the poison that instigated the fall of the markets is not uprooted, treachery will continue to reign supreme, and healthy markets a childish illusion.

The Creeping Terror

Two years ago I was in my local Borders bookstore and noticed that they had downsized their stock selection by what looked to be nearly a third. I made a point to ask if this was a chain wide phenomenon. Most employees I talked with said yes. I then asked if they had begun cutting employee hours by significant margins and specifically laying off longtime workers that had built up substantial pay increases. Again, the consensus was yes. Finally, and most importantly, did Borders discuss these changes with their staff in a manner that was informative and open, or, was there a lot of confusion amongst employees as to what exactly was going on? The response was that they were overwhelmingly bewildered by Borders’ lack of clear communication as to the direction of the corporation.

My suggestion to them was to start looking for another job, because their company was about to declare bankruptcy. They, of course, denied this was remotely likely:

http://online.wsj.com/article/SB10001424052748704329104576138353865644420.html

It may sound like a stretch, but the reason I bring up Borders’ impending chapter 11 is because, to me, it represents a microcosm of the creeping nature of economic collapse, especially when that collapse is being wielded and delegated. [TD: Borders filed for Chapter 11 this morning]

Borders has been on the verge of default for quite a while. Did they refuse to relay this information openly to their employees because they selfishly wanted to maintain profit margins just a little longer until they were ready to pull the plug? Of course! Do global bankers with aspirations of a centralized currency keep the true destabilization of the market spectrum and the coming international dollar dump to themselves because in the end they will benefit from our shock and awe? Of course!

Whether a person loses everything all at once, or a piece at a time, the end result is the same, however, there is something especially cruel in the idea of fiscal theater; the act of inspiring false hope that a financial environment is sound when it has, in truth, already suffocated. Why would our modern day robber barons put so much energy into constructing a fake recovery? There are many reasons, but first and foremost, to create apathy. To lure us towards inaction. To swindle us into assuming the storm will blow over, and all will return as it was. Unfortunately, recovery without intense restructuring of our economic system is impossible. The fundamentals do not support the suggestion in the slightest. The question is, who will be at the helm when the dust settles and this restructuring does eventually occur? Will the American people take the lead, as they should, and commit to a concrete free market rejuvenation of our financial environment? Or, will we sit back yet again, and let the banksters set us up for the next grand disaster?

Global Economy Gains Steam?

It appears that anxiety is rising over the stock market in recent days. Financial ‘experts’ are starting to focus on the underlying problems – sky high stock prices compared to plunging earnings, employment continues to deteriorate, September has historically been the worst month for stocks, etc. At the same time, we’ve seen a chorus of mainstream media articles trumpeting a global economic rebound. Headlines today (September 2, 2009) in the Atlanta Journal Constitution and Wall St. Journal (and many others) are touting recent ‘improvements’ in economic data.

I suppose this is why the IMF has revised its 2010 global economic growth forecast to 3% from July’s forecast of 2.5%. You might ask yourself - how can the IMF accurately ‘estimate’ global growth next year? What really caused their forecast to gain .5% over the past month? I have no idea – and I’m not sure anyone else does either. Most likely, someone at the IMF is taking an official dart and throwing it against an official wall labeled with various percentages. Who knows? Regardless, it seems like someone is trying to allay our fears by printing lots of positive economic news.

Let’s take a look at some of the information in the Wall St. Journal article below (front page headline article) and compare it to reality to determine if mainstream media is telling us the truth or ‘spinning’ misleading data.

The article begins:

“Manufacturing gains in the U.S., Europe and Asia added to evidence the global economy is improving at a faster pace than was widely anticipated a few months ago.”

The article is referencing the recent manufacturing activity index that reported a reading of 52.9. What does this really mean? Is manufacturing improving?

Let’s go to Nathan’s Economic Edge (http://www.economicedge.blogspot.com/) for the truth.
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Tuesday, September 1, 2009

Manufacturing ISM INDEX Shows Growth… or Does it?

The Manufacturing ISM index came in at 52.9 for the month of August, that is an increase from 48.9 the month prior, the headlines will shout that’s a 9% growth in manufacturing! LOL, NO, not even close.

Look, Manufacturing fell off a cliff after being in decline for years and years in this country. An index value of 50 indicates that the fall stopped, at least for now, and anything over 50 means that some growth is occurring over the last reporting period, and that’s what this report says. But it’s misleading for what it doesn’t say, and that’s that manufacturing is at such a low level that even cash for clunkers is enough to bump it up for a short time period. But cash for clunkers is now over. Is our manufacturing economy really now growing, and is a 50%+ market rally really pricing in reality?

Here’s Econoday:

Highlights


The ISM's manufacturing index burst over the dead-even 50 level for the first time since the beginning of the recession, at 52.9 in August vs. 48.9 in July. New orders led the advance, at 64.9 vs. August's 55.3 and pointing to rising business activity in the months ahead. Production was also very strong in August, at 61.9 for a 4 point gain and pointing to gains in durable goods shipments and total manufacturing sales. Backlogs also increased, at 52.5 vs. 50.0 in July. But manufacturers are not stocking up, instead they continue to draw down inventories where the index is a very weak 34.4 vs. 33.5 in July. Note that future gains in the inventories index, a seeming necessity given rising production needs, will help give the overall index a big boost. Respondents in fact think inventories at their customers' firms are too low, with the customer inventories down 3.5 points to 39.0. Deliveries slowed substantially, up more than 5 points to indicate that current production needs are stressing what has become a pared down supply chain. Production activity and the gain in orders has yet to boost employment where the index only inched forward to a still sub-50 level of 46.4.


All the strength here is flowing through to prices where the prices paid index jumped 10 points to 65.0, an indication that buyers are bidding up prices for raw materials. No doubt boosted by cash-for-clunkers and gains in transportation, the manufacturing recovery is on the way and together with the gain in the pending home sales index indicate that two key sectors are on the acceleration. Stocks jumped in immediate reaction to today's 10 o'clock data.

Wow, look at that chart! Heck, we’re right back where we were, right??? This is how misleading these indexes are… they do not reflect reality as they do not show you what is happening to the base.

Compare the chart above to this chart of manufacturing sector output which is also an index value, but one that’s tied to the manufacturing level in the year 1992:

Or to this chart showing manufacturing sector output expressed in yoy percent change:

You see, the charts above are indexed to a base year, but the ISM index number is based to nothing but the period preceding it. Now, which charts more closely show reality???

There is no doubt that the above charts of manufacturing output paint a far truer picture of what’s occurring because the index value has no connection to the base, it’s just plus or minus over time! So, for real meaningful growth to occur, the ISM must be above 50 and stay there for an extended time.

To confirm that hypothesis, one need only look at the shipping indexes which are simply still scary.

We can also look at the number of people employed in manufacturing durable goods, for example, and when we do we find that the United States currently employs about the same number of people for manufacturing as we did back in 1947! Now, you say that’s because we are way more efficient and productive? But remember that it requires people to earn money to buy things. It takes INCOME to service DEBT. The service sector has been growing while the manufacturing sector has been shrinking. Service sector jobs do not pay, on average, as much as manufacturing sector jobs. Yet DEBT had been skyrocketing until just recently. It takes INCOME to service DEBT.

We can also look at durable goods ORDERS and this is expressed in millions of dollars. Here you can see the cliff dive and the recent turn upwards:

So, you must ask yourself if the market is actually pricing in the future, 50%+ priced in already, or is it actually just disconnected from reality?
_______________________________________________________

Let’s look at a couple of other statements from the article below.

“Businesses and households have been regaining confidence, and economists have revised forecasts upward.”

I don’t know about you and what you’re experiencing – but I don’t see anything in the real economy that affects you and me (business sales/revenue, shipping/freight, employment, home prices, home sales, etc.) that would tell me anyone is ‘regaining confidence’. If you own or manage a business – chances are that sales are struggling and your access to credit is diminished – if not gone altogether. If you’ve lost your job – then you know how hard it is to find employment. If you’re selling your home – chances are that your home value has declined significantly and you’re having a tough time finding a buyer. Bottom line – there is nothing in the real economy that would cause me to ‘regain confidence’.

“U.S. auto sales were the best in over a year……”

Why were auto sales the best in over a year? I think it might have something to do with the ‘cash for clunkers’ program – which is now over. I wonder what auto sales are going to do over the next couple of months? It’s probably safe to say that auto sales are going to tank due to all of the sales pulled forward into August due to the program. I’ve also seen where supplies of new cars are very low due to production cuts and the ‘cash for clunkers’ program. Bottom line – we’re going to see a significant drop in auto sales for the remainder of this year.

Moving on……

“……. the National Association of Realtors index of pending home sales hit its highest level in over two years.”

Here’s a very good article from Chris Martenson that explores a problem with current housing information provided by the NAR.
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House Sales and Mortgage Applications - Something Doesn't Add Up.

Sunday, August 23, 2009, 7:15 pm, by cmartenson

I was not a good father today.

Instead, I engaged in laboriously hand-entering data to satisfy a question that has been bothering me for a while.

The issue that was worrying at me was the apparent discrepancy I'd mentally noted between the happy-happy increase in existing home sales, as reported by the NAR last week, and what I remembered from the MBS mortgage application releases.

But who could be sure?

Perceptions can be tricked and need to be tested and subjected to fact-based inquiry.

Confounding things, the Mortgage Banker Association (MBA) application reports are notorious for changing their reporting methodology, most recently (during the past 3 weeks) dispensing with reporting of an absolute number in favor of a simple percentage change. Where, for example, the number used to change from 1000 to 1100, it is now only reported as having changed +10%.

After a few weeks, who can remember what +10%, -4%, -3%, +12% is supposed to mean? I certainly can't.

At any rate, this shift to a percentage basis altered a convention that went back several years. Now we only get to read the weekly percentage and yearly changes, without the confusing benefit of an absolute number to guide our perceptions. So for those without the time or the inclination to dig through the data, it is what it is.

For me? The only way to resolve this was to obtain all the base data, hand-enter it into a spreadsheet, and see what was up.

Well, this is what's up:

Where the NAR recently reported a gain of +5% in existing home sales for July09/July08, the reconstructed MBA report shows a -22% decline in purchase applications over the same period (in stark contrast to their misleading recent release, which spoke of a yr/yr gain, but was actually referring to a blended gain that included the highly volatile refi apps):

Where the MBA most recently said that purchase applications have been "trending up," I am at a loss to see the period of time to which they are referring. I've boxed in 2009 for reference, but it is difficult to make a case for "trending up" unless one decides to begin randomly at some point after March.

Note that the data I have is all seasonally adjusted and straight from the MBA, so I doubt we are referring to different data.

At any rate, I am simply not in a position to believe that purchase applications are down 22% yr/yr while total sales are up 5%+. This would imply that nearly a third of all national sales are cash-on-the-barrel.

Sorry. No way. Somebody here is lying.

Somebody Not At all Reliable. However, I will retain my judgments - for now.
__________________________________________

The next couple of quotes in the article below are nothing short of ridiculous.

"We had been looking for improvement, but the speed at which it's come and the magnitude with which it has come is surprising," said J.P. Morgan economist Bruce Kasman. "We all went down hard and we're all going up pretty well."


President Barack Obama called the manufacturing data proof "the steps we've taken to bring our economy back from the brink are working."

Our politicians (Republican and Democrat alike) love to grab onto something that appears positive – and then hope that no one actually checks their statements to the truth.

Are we all coming up ‘pretty well’? No. Does the manufacturing data prove that the government’s stimulus packages are working? No. Are Bruce Kasman and President Obama misleading us? Yes.

Here’s probably the most important statement in the entire article:

“One of the largest unknowns is how well the world economy can fare when the huge fiscal and monetary stimulus supplied by many governments, from the U.S. to China, wears off.”

I can tell you now how the world economy is going to fare when the various stimulus plans end. Since these stimulus packages the world over are currently propping up the world’s debt based monetary system (since household/consumer credit is plunging) – we’re going to see some very serious economic declines that will eventually lead to the collapse of the global financial system.

There’s been a lot of talk about China pulling the world out of recession – but here’s the reason the Chinese economy has rebounded and why their stock market is up 30%+ this year.

“China has been pulling out of the global slump more decisively than any other major economy, thanks to an enormous stimulus program.”

China’s banking system has pumped billions of Yuan into their system. Again – this is debt – and will eventually crush their economy – just like ours.

So – the mainstream media spin machine continues on……
__________________________________

SEPTEMBER 2, 2009

Global Economy Gains Steam

Jobs Still a Worry, but Factory Output Rises in U.S., China, France; Markets Falter

Wall St. Journal

By JUSTIN LAHART, ANDREW BATSON and MARCUS WALKER

Manufacturing gains in the U.S., Europe and Asia added to evidence the global economy is improving at a faster pace than was widely anticipated a few months ago.

For the first time since January 2008, an index based on a survey of U.S. manufacturing purchasing managers crossed a threshold indicating factory output grew. Manufacturing activity in China, France and Australia, among other countries, also expanded in August, separate surveys showed. The pace of contraction in Germany and some other nations slowed markedly.

Stocks pulled back Tuesday, but financial markets in much of the world have been rallying in recent months. Businesses and households have been regaining confidence, and economists have revised forecasts upward.

U.S. auto sales were the best in over a year, and the National Association of Realtors index of pending home sales hit its highest level in over two years.

"We had been looking for improvement, but the speed at which it's come and the magnitude with which it has come is surprising," said J.P. Morgan economist Bruce Kasman. "We all went down hard and we're all going up pretty well."

President Barack Obama called the manufacturing data proof "the steps we've taken to bring our economy back from the brink are working."

The global economy remains far from healthy, and not all signs are positive. New figures Tuesday showed the U.K.'s manufacturing sector contracted in August. Banking sectors in several nations continue to struggle with bad loans, the latest worries being commercial real estate loans made by U.S. banks. Financial stocks led a broad selloff Tuesday that sent the Dow Jones Industrial Average down 185.68 points, or nearly 2%, to 9310.60. Wednesday in Tokyo, the Nikkei was down was down 2.7% early.

The positive mood about the economy could dissipate with some disappointing data. Economists estimate a report on the U.S. labor market Friday will show a rise in the unemployment rate to 9.5% in August from July's 9.4%. Continued shedding of jobs acts as a drag on consumer spending, the largest factor in the U.S. economy and a major driver of global demand. Acknowledging the continuing high U.S. unemployment, President Obama promised not to "let up until those Americans who are looking for jobs can find them."

One of the largest unknowns is how well the world economy can fare when the huge fiscal and monetary stimulus supplied by many governments, from the U.S. to China, wears off.

Yet conditions are better than many had anticipated. At the end of July, forecasters polled by research firm Macroeconomic Advisers estimated that the value of goods and services produced by the U.S. economy would grow at a 1.6% annual rate in the current quarter, ending Sept. 30. By last week, that GDP estimate had nearly doubled to 2.9%.



A senior International Monetary Fund economist, Jörg Decressin, said Tuesday that the agency is revising its global growth forecast to just under 3% in 2010, higher than the IMF's July estimate of 2.5%. The new forecast will be released Oct. 1. J.P. Morgan economists expect the 16 nations that share the euro will grow at nearly a 3% annual rate in the second half of this year. In June, they were predicting just 0.5% growth.

In the U.S., the Institute for Supply Management's index of purchasing-manager sentiment rose to 52.9 in August from 48.9 in July, crossing the 50 mark that indicates the sector is expanding. A measure tracking new orders rose sharply, with textile mills, paper products, printing-related products and apparel showing particular strength.

Although the recently ended U.S. "cash for clunkers" program boosted auto sales, that wasn't the whole story. "There's obviously some impact from changes in the automotive industry," said Nobert Ore, who oversees the manufacturing survey. "I think probably the business cycle had as much to do with it."

New economic data show an economic recovery at a faster-than-expected rate. But will it last? WSJ's Economics Editor David Wessel reports.

International Rectifier Corp., which makes semiconductors, has seen improved demand across the industries that use its product, including computers, aviation and autos. Last week, the company reported that it turned a profit in the quarter ended June 28 after five quarterly losses. The company has noted "encouraging signs of stabilization" in North America and particularly strong demand in China and Taiwan.

At Ace Clearwater Enterprises, a Torrance, Calif., company that makes parts for the aerospace industry, orders are up 26% from the last year. The company employs about 245, almost 100 more than a year ago, and is still hiring. "We've been really fortunate," said Gary Johnson, the company's vice president. "And a lot of companies have gone out of business, frankly, that are our size."

China has been pulling out of the global slump more decisively than any other major economy, thanks to an enormous stimulus program. A survey of purchasing managers at Chinese companies, which signaled expansion beginning in March, moved up to 54 in August from 53.3 in July.

Chinese policy makers now face the challenge of sustaining an expansion after withdrawing government support. There are some signs Chinese corporate investment is picking up. BOE Technology Group Co. and a consortium of other Chinese state-owned enterprises said last week they will spend $4.1 billion to build a new liquid-crystal-display factory in Beijing.

Yet investments from nonstate companies have lagged in China, confidence remains fragile, and the initial euphoria over the stimulus has evaporated. The Shanghai stock market fell 23% in August as investors fretted over a slowdown in the pace of bank lending.

Employees work at a Baldor Electric Co. factory in St. Louis. Reports show an upturn manufacturing activity in the U.S. and in several other nations in August, a sign the global recession is winding down.

Although China's stimulus now seems to be more than strong enough to meet the official target of an 8% expansion for 2009, officials remain publicly cautious about the world economy, with China's exports still down 22% from last year.

Japan reported an upturn in industrial production earlier this week. It said industrial production in July rose 2.2% from June, the best monthly gain since the global recession hit.

The euro zone's purchasing managers' index rose to 14-month high of 48.2 in August, up from 46.3 in July, closing in on the 50 level that would indicate activity has stopped falling. The surveys showed manufacturing in France is growing again, and has nearly steadied in Germany. But in some countries, such as Italy, Spain and Ireland, manufacturing declines continued.

As in the U.S., European businesses have cut inventories so sharply that even a modest revival of demand is likely to lead to increases in production.

Skeptics point to three weakness in Europe's German-led recovery. Cash-for-clunkers schemes that have propped the auto sector are due to run out in Germany and elsewhere next year. Banks in the euro zone have done less than in the U.S. to write down their losses in the credit crisis, and are cutting back their lending to businesses to repair their capital ratios.

And third, unemployment in Germany, Italy and some other countries is expected to rise further this year and next. Government measures such as short-shift subsidies have delayed layoffs, but many companies are thought likely to cut jobs over the coming year. That in turn could dent consumer confidence and household spending.

In one respect, Europe is less at risk of a double dip than the U.S., say analysts. It has done less to stimulate growth through fiscal and monetary policy than the U.S., so that the withdrawal of stimulus measures will be a less-significant negative.

Britain could lag behind other regions in pulling out of the global recession, given the U.K.'s heavy debts and reliance on the financial-services industry. British consumers are among the most heavily indebted in the developed world, and their downsizing efforts may put a lid on consumer spending.

That has some U.K.-based companies concerned. Last month, drinks maker Diageo PLC, the maker of Johnnie Walker scotch and Guinness stout, said it doesn't expect a recovery in the alcoholic-beverages industry anytime soon. It issued a lackluster forecast for fiscal year 2010.

—Paul Glader, Neil Shah and Sara Murray contributed to this article.

Write to Justin Lahart at justin.lahart@wsj.com, Andrew Batson at andrew.batson@wsj.com and Marcus Walker at marcus.walker@wsj.com

Bernanke Sees Recovery

As usual – stock markets rise on Bernanke’s positive comments.

Remember these comments. I wonder what he’ll say when things begin to fall apart? I’m willing to bet that the fault will not lie with the Federal Reserve.

I’m sure we’ll see ‘comprehensive reform’ – but it will be preceded by a comprehensive economic collapse.

We (Americans) are being setup for an historic fall.

jg – September 15, 2009
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SEPTEMBER 15, 2009, 11:44 A.M. ET

Bernanke Sees Recovery, Defends Fed Actions

By MAYA JACKSON RANDALL

Wall St. Journal

WASHINGTON -- U.S. Federal Reserve Chairman Ben Bernanke Tuesday said it's likely the recession has come to an end, but he reiterated that tight credit conditions and a soft labor market will prove to be a challenge.

Fed Chairman Ben Bernanke answers a question at a Brookings Institution forum.

From a technical point, the "recession is very likely over at this point," Mr. Bernanke said in a question-and-answer session at the Brookings Institution.

But he added that even if recovery is underway, it's still going to feel like a very weak economy because credit conditions remain tight and any decline in the unemployment rate will probably only happen gradually. He noted that one risk is that the economy will grow in the second half of 2009, but not enough to trigger a rapid recovery.

If there is only moderate economic growth, "employment will be slow to come down," he said. "It will come down, but it will take some time."

Meanwhile, Mr. Bernanke expressed confidence that policymakers will move forward on plans to overhaul the nation's finance rules.

"I remain pretty optimistic that a comprehensive reform will be coming," he said.

In response to a question about the securitization market, Mr. Bernanke said he expects the market "will come back." But he said he's seen "very encouraging" signs that the market is improving. Still, the market will be "simpler, smaller, less opaque" and subject to more oversight by regulators, all things that could constrain its growth for a period of time, said Mr. Bernanke.

The market probably "will not return to the size it was before," he said.

Write to Maya Jackson Randall at Maya.Jackson-Randall@dowjones.com

Economic Recovery or Continued Decline?

We continue to see many positive economic articles by mainstream media outlets. It seems that many of the pundits on CNBC, CNN, Fox News, etc. – see our economy on the road to recovery and continue to talk about economic ‘green shoots’. I have listed below some headlines from recent mainstream media articles.

When things really begin to collapse – remember all of these positive articles and all of the positive comments by our political and financial leaders and ask yourself – were they really this blind or was there another agenda at work?

I have added a blog post by Jeff Nielson at the end of this post. Jeff tells us the true state of our economy and where we’re heading.

jg – October 22, 2009
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Transport Stocks Blaze Recovery Path
WSJ - October 22, 2009

China Gains Confidence in Recovery
WSJ - October 22, 2009

[Federal Reserve] Beige Book Sees Stabilization Signals
WSJ - October 22, 2009

Business Spending Looks Up
WSJ - October 21, 2009

Commercial Market Gains Footing
WSJ - October 21, 2009

Construction Industry Forecast to Rebound in 2010
WSJ - October 16, 2009

Dow at 10000 as Crisis Ebbs
WSJ - October 15, 2009

Wall Street On Track To Award Record Pay
WSJ - October 14, 2009

Trade Upturn Hints at a Recovery
WSJ - October 12, 2009

Recovery Hopes Stir Markets
WSJ - October 7, 2009

BHP points to signs of broad global recovery
CNN – October 21, 2009

Google: Worst is behind us
CNN – October 21, 2009
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Greater Depression for U.S. Rebuts 'Recovery' Talk

By Jeff Nielson

http://seekingalpha.com/article/167538-greater-depression-for-u-s-rebuts-recovery-talk?source=feed

It has gone from irritating to nauseating listening to media market-pumpers talking about an “U.S. economic recovery” which has supposedly already begun. Indeed, the hype has gone from a debate about whether the “recession” is over, to an inane debate about whether the U.S. is experiencing a “V-shaped recovery” or may suffer a “double-dip recession” or W-shaped “recovery”.

In the real world, however, all that has occurred is that an U.S. economic collapse, which was in a near-vertical drop, has eased to a more moderate rate of decline. The “double-dip” talked about by some semi-realistic analysts is in fact nothing more than the ongoing collapse regaining downward momentum. There is no “debate” here. It is a matter of simple arithmetic that the U.S. economy cannot recover.

First of all, in the “big picture”, the U.S.'s $11-trillion economy (all that remains once statistical “padding” is removed) is much too small to service the more than $57 trillion in existing public and private debt. Even if we pretend the U.S. still has a $14 trillion economy (despite the government's own numbers that this economy has shrunk by more than 10%), it is still much too small to service its debts. Meanwhile, lurking in the near future are roughly $70 trillion in additional “unfunded liabilities”.

As I have pointed out on a number of occasions, the U.S. can never afford to raise interest rates again (at least not until after the inevitable national default on its massive debts). Every 1% rise in U.S. interest rates drains over $500 billion per year from the U.S. economy, equivalent to roughly a 5% drop in GDP for every 1% rise in interest rates. It is also inevitable that the bond market will impose much higher interest rates on the U.S. economy – as deficits get more out-of-control (and myopic U.S. creditors finally see the total insolvency of the U.S. economy). Thus, the U.S. is guaranteed to go bankrupt – the only issue is when.

The Obama stimulus package is far too small to stop the current collapse in the U.S. economy. Keep in mind that the same propagandists who claim that Obama's stimulus package would “save” the U.S. economy were saying the same things about the much smaller Bush “stimulus package” - little more than a year ago.

The fact is that the U.S. consumer economy has lost somewhere in the neighborhood of $2 trillion per year in spending power. At the peak of the U.S. housing bubble, home-equity financings injected $840 billion into the economy in one year. Not only has such cash-flow into the U.S. economy completely evaporated, but now the debtors have to pay back the trillions in debt which they squandered.

Contrary to the absurd jobs propaganda, the U.S. economy has already lost somewhere in excess of 15 million jobs already – subtracting at least $1 trillion per year in spending from the economy once the “multiplier effect” is factored in. This disconnect from the real world reached its peak this summer, symbolized by a Reuters article that actually stated that while U.S. unemployment was “improving at the national level” it was getting worse on a state-by-state basis (see “BLS jobs numbers contradict BLS jobs numbers”).

Obviously the U.S. economy is represented by the collective economic performance of its 50 states. Yet in the fantasy-world of U.S. economic propaganda, we are supposed to believe that nationally the U.S. economy can be improving, while state-by-state the economy continues plummeting downward. The only difference between the U.S.'s “national economy” and the “state-by-state economy” is that the federal government has incorporated far more statistical contrivances to distort the numbers.

If the real condition of the U.S. economy is not already evident to people from the information above, certainly the following graphs and data on state tax revenues make things crystal-clear. The Rockefeller Institute (.pdf) recently went back as far as data was available (nearly 50 years) and discovered that the current collapse in state revenues is unprecedented – evidenced by the sickening plunge in these charts.

Again, it is a matter of elementary arithmetic that with U.S. states suffering the worst collapse in revenues on record (and with most states already maximizing their annual borrowing) that only two things can happen. Either U.S. states will have to engage in the most-punishing combination of tax-increases and spending cuts (i.e. lay-offs) on record or the Obama regime will have to dramatically increase federal hand-outs to the individual states.

Currently, in the most-recent fiscal year (ending in June of this year), declines in U.S. state revenues were more than double the amount of “stimulus” they received from the Obama regime. What makes this situation worse, most of this so-called “stimulus” involved either increasing the duration of unemployment insurance in the most-devastated regions and/or providing funds to states whose unemployment benefits were completely spent. There was virtually no money spent on creating jobs (contrary to the promises and claims of the Obama regime).

Given that shortfalls in unemployment insurance funding will be much worse in the current fiscal year, the Obama regime could double “stimulus” hand-outs to the states and still create zero jobs – doing nothing but keeping unemployment insurance payments flowing to the jobless.

This still leaves U.S. states with somewhere around $100 billion in increased deficits which will need to be covered in the current fiscal year (above and beyond their pre-existing structural deficits). Keep in mind that the entire amount of “stimulus” reaching the economy from the Obama “stimulus package” was only about $250 billion this year (using the government's own numbers). Overall, this replaces little more than 10% of the lost spending power from this economy.

The numbers are unequivocal. There is no “economic recovery” taking place in the U.S. This year is much worse than last year – and 2010 will be much worse still. The only thing currently preventing the debt-implosion of the U.S. economy is the Bernanke printing press, and continued, excessive “monetization” of debt is a guarantee of hyperinflation. All claims to the contrary represent wishful thinking or deliberate deceit.

Bernanke Says Moderate Economic Growth to Continue in 2010

What do you do if you’re the Fed chairman and your actions are destroying the value of the dollar? If you wanted to disguise your actions – you might lie to the American people and tell them that economic growth will continue next year. You might also lie and tell the American people that this ‘growth’ coupled with the Fed’s actions will stabilize the dollar – in an attempt to momentarily stabilize our falling currency.

What is the truth? To find the truth (as I’ve said before) – we must look at actions and the results of those actions. We cannot depend merely on what we’re told – because we’re being told many lies on a daily basis.

Let’s disregard what Bernanke is saying since he’s only trying to prop up the dollar with meaningless talk – and look at what he’s actually doing. As you’ve seen – the Federal Reserve is propping up Treasury auctions, the Stock Market, the Banking system and Housing. Due to all of the recent Fed ‘actions’ over the past 1 ½ years – the Fed has basically become our economy. How do they do this? They do it by printing trillions of new dollars to buy assets. What affect does this have on our fiat currency? It erodes the value of the U.S. dollar. Anyone who is paying attention (China is certainly paying attention) can see that the Fed is directly monetizing our debt – on a massive scale. There’s only one way for the dollar to go – down - and it’s now heading in that direction at a quickening pace.

Is the real economy (jobs, housing, corporate sales/revenues, tax receipts – things we can actually measure) really growing? No – it’s not. Is there anyway under current conditions that the dollar will ‘stay firm’? Of course not.

You can see how ridiculous Bernanke’s statements are – they are nothing more than well concealed lies - lies that give us a false sense of security.

Remember Bernanke’s comments when things begin to head south – and then compare his new lies with the old ones.

Also notice the media spin on this article. What is causing the current decline of the dollar according to the article?

In a rare move, the Fed chief made several remarks on the U.S. dollar, which has fallen in value recently as global economic activity picked up and investors no longer sought the safety of dollar assets.

The reason we’re given for the dollar’s decline is that investors no longer seek the ‘safety of dollar assets’. I’m sure there are investors fleeing the dollar – but this isn’t the underlying cause of the dollar’s decline. You’re not going to see a mainstream media article telling us the truth. There is a coordinated deception playing out here.

The Federal Reserve is causing the decline of the dollar – plain and simple. Remember this.

jg – November 16, 2009
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NOVEMBER 16, 2009, 1:07 P.M. ET

Moderate Economic Growth to Continue in 2010, Bernanke Says

Wall St. Journal

By LUCA DI LEO

WASHINGTON -- The U.S. economy will continue to grow in 2010 and this expected strength will help ensure the dollar stays firm, Federal Reserve Chairman Ben Bernanke said Monday.

In a rare move, the Fed chief made several remarks on the U.S. dollar, which has fallen in value recently as global economic activity picked up and investors no longer sought the safety of dollar assets.

"Our commitment to our dual objectives [of maximum employment and price stability], together with the underlying strengths of the U.S. economy, will help ensure that the dollar is strong and a source of global financial stability," Mr. Bernanke told the Economic Club of New York.

The Fed chief stressed the central bank will keep a close eye on the dollar's recent slide, but at the same time reiterated that the key federal funds target rate is expected to remain at record lows for some time due to a fragile recovery.

To lift the dollar's value, the central bank would need to raise rates, thereby increasing the return investors get on U.S. dollar assets.

However, that could hurt the economy's recovery, which Mr. Bernanke cautioned was threatened by weakness in the labor market and tight bank lending.

"I expect moderate economic growth to continue next year. Final demand shows signs of strengthening, supported by the broad improvement in financial conditions," Mr. Bernanke said.

Holding his first official speech since the Fed voted to hold its key interest rate at a record low earlier this month, Mr. Bernanke said jobs are likely to remain scarce and inflation low for some time.

The Fed kept its benchmark interest rate at a record low Nov. 4, citing a sluggish recovery. The central bank said it expects to keep its federal funds target rate close to zero for an "extended period" in the face of high unemployment and low inflation.

For the first time, the Fed's rate-setting committee earlier this month spelled out the three key indicators it will be looking at to set rates: unemployment, core inflation and inflation expectations.

"Both the decline in jobs and the increase in the unemployment rate have been more severe than in any other recession since World War II," Mr. Bernanke warned.

The U.S. economy is slowly recovering from its worst recession since The Great Depression. Although the economy expanded in the third quarter for the first time in more than a year, the recovery remains fragile, with unemployment at a 26-year high of 10.2% in October.

Later Monday, Fed Vice Chairman Donald L. Kohn will talk about the central bank's policy challenges.

Write to Luca Di Leo at luca.dileo@dowjones.com