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I Have Some Bad News About the Economy


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2022 Oct 15, 5:36am   14,367 views  302 comments

by Patrick   ➕follow (60)   💰tip   ignore  

https://www.hennessysview.com/p/i-have-some-bad-news-about-the-economy?publication_id=572577&post_id=78488561&isFreemail=true


Accounts are widely out of balance

How bad, you might be asking yourself, will the economy get? We’re about to find out.




The orange line is US wealth. The blue line is US GDP. The gap is the amount of wealth American households and non-profits must surrender. You see, these two lines must move in lockstep. They do over time. When they get out of sync, something will put them back into sync.

The gap is debt.

Accounts must be settled. It’s called “a reckoning.” And the reckoning is here knocking on the door.

To put this gap into historical perspective, here’s an extended view of the same data with Dr. Hunt’s markups.




From 1951 to about 1997—the year the Monica Lewinsky story broke and Howe and Strauss published The Fourth Turning—the two lines moved in lockstep. Then Alan Greenspan decided to tinker, to grow wealth without growing GDP and without kicking off inflation. ...

What that gap represents is one of two things:

Money stolen from other people (other economies).

Money stolen from future generations of Americans.

How We Borrow from the Future
A few years ago, in the 1990s, we heard a lot of stories parents going to jail for identify theft perpetrated against their own children. About 1990, the government required babies to have a Social Security Number before they left the hospital. (I remember because it happened between our second and third children.)

Some shiftless parents soon realized they could apply for credit using their kids’ SSNs. They could default, and the creditor could do nothing. You can’t collect from a six-week-old infant.

This, of course, constituted credit fraud, so the parents who did this (and there were many) went to jail. (Not sure what happened to their kids who were left with no parents and lousy FICO score, but that’s not the point.)

The point is, all of us have been doing what those parents do only legally. The government allows us to run up our kids’ and grand kids’ debt as long as we do it with the government’s approved identity-theft programs.

So we did.

If you look at that chart, about 1/3 of our household and non-profit wealth is stolen from other generations or other countries. And we have to pay it back. Now. Or soon. ...

How We Borrow from the World
Some months ago, I wrote a series of posts about the US dollar (USD) as the world’s reserve currency and the petrodollar. (Here and here.) To summarize, almost all international debt is settled with USD regardless of the two local currencies involved. Britain settles its debts with Costa Rica in USD, etc. This includes the oil markets. Saudi Arabia, in turn, buys US treasuries (national debt) as a store of value for its copious oil profits. This allows the US run up massive debt knowing there’s always a market for our bonds.

Until there’s not.

Have you notice that Saudi Arbia is drifting out of the US orbit?

I wrote it about in those earlier posts, but the most certain sign of the Kingdom’s pending divorce with from Uncle Sam happened this week. Saudi Arabia disclosed that Joe Biden tried to strong-arm the Saudis into delaying OPEC+ oil production cuts until after the November elections. In diplomatic worlds, this was a slap in the face insult to the US and, particularly, to the Biden regime.

Rumors say Biden threatened to cut military sales to the Saudis if the OPEC+ cuts were announced before the elections. Not only did OPEC+ announce the cuts on its timetable, the Kingdom told the world about Biden’s threat (without disclosing the exact terms or names). Among “partners,” such public humiliation is a sign of pending breakup.

In return, the State Department and Joe Biden announced they would reevaluate the US’s strategic arrangements with Saudi Arabia after the election. That should be interesting.

What it means is that the US might not have as eager a buyer for debt as we’ve grown accustomed to. And that means the price of US treasuries will decline. Less demand means lower prices. When the price of bond goes down, the interest goes up. ...

I’m not saying the Saudis are about to stop taking our checks—I’m saying the for the first time since the Nixon administration, they’re acting like they might. Which means the are going to demand a bigger discount—the difference between the face value of the bond and sale price. That discount is the interest, and the bigger the discount, the less cash we have to spend tomorrow.

That’s one way to close that gap. You reduce the amount of cash you get in return for a future promise to pay. The amount you owe stays the same, but the amount you get now gets smaller.

How Our Kids Get Their Money Back
Remember the two ways we built that gap between wealth and GDP? That’s the first way. The holder of US treasuries want to cash their bonds, and they don’t want to buy new ones.

The gap begins to shrink, and that shrinking is mostly in household wealth.

The second way is intergenerational theft. So how do our kids and grandkids force their accounts settled?

Have you heard about the labor participation rate? Have you heard about the labor shortage?

An odd thing about the jobs numbers in recent months. While the number of “new jobs,” also known as “new hires,” has been strong, the number of people working has been going down, down, down. Why is that? ...

The kids aren’t taking our post-dated checks, either. They’re simply not participating in the US economy—at least, not in the official US economy. They siphoning of that excess household wealth NOW, in the present. They are not working in ways that grows the blue line (GDP). They’re shrinking the gap by lowering the orange line (wealth).

Wonder where inflation is coming from? We’re spending the excess household wealth without increasing the products and services available to buy with it. Inflation is how future generations close that gap. They spend your excess wealth without producing. And it’s happening right before our eyes. ...

In truth, we will only lose our ill-gotten gains.

While, we didn’t personally rob from the kids and foreigners, we were participants in a rigged game—a game that’s getting unrigged in a hurry. We enjoyed the spoils of the petrodollar and zero interest rates.

This account-settling process is called a reckoning, which sound harsh because it is.

https://www.epsilontheory.com/hollow-men-hollow-markets-hollow-world-2/

« First        Comments 190 - 229 of 302       Last »     Search these comments

190   AD   2024 Aug 9, 9:35pm  

Misc says

Funny thing is...with all the outsourcing ... do the auto makers even have enough employees in the US to even make the numbers come close for a bailout???

Maybe we let Mexico bail them out.


Just more reason to move more Ford, General Motors, and Stellantis jobs from the USA to northern Mexico. Might as well as euthanize the United Auto Workers with it being at such a low percentage of total manufacturing jobs in the USA.

************************************************************************************************

WASHINGTON, March 29, 2024 (Reuters) - Membership in the United Auto Workers union fell 3.3% in 2023 to 370,000, its lowest level since 2009, according to a report filed on Friday with the U.S. Labor Department.

UAW membership is down from 397,000 at the end of 2020 and from its 1970 high of 1.5 million members. It fell to 355,000 in 2009 during the Great Recession and the U.S. auto sector restructuring.

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192   Blue   2024 Aug 11, 12:53pm  

AD says

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Dell laying off workers as well :-/

https://www.businessinsider.com/dell-workers-layoffs-reaction-ai-restructuring-jobs-tech-2024-8

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Two Dell employees in human resources told BI that layoffs would bring the workforce to under 100,000 people. Given the company had just under 120,000 full-time employees, according to internal data seen by BI in May, tens of thousands of staff are being let go.
193   AD   2024 Aug 11, 1:03pm  

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Fisker (maker of $40,000 to $70,000 electric vehicles) in bankruptcy woes.

https://www.businessinsider.com/fisker-owners-describe-chaos-to-keep-cars-running-after-bankruptcy-2024-7

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194   AD   2024 Aug 11, 2:03pm  

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Mish at MishTalk.com has shown at least 50% of jobs growth is healthcare, government and education.

All 3 are essentially government jobs as K-12 public schools are the primary jobs creator in the education sector, and healthcare is primarily funded by Medicaid, Medicare, subsidized Affordable Care Act, and Tricare.

This article discusses healthcare jobs growth, which is due to demographics as baby boomers are now putting more demand on health care. What happens in 10 to 15 years as far as healthcare industry job growth ?

https://www.cnn.com/2024/08/10/economy/americas-top-job/index.html

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195   GNL   2024 Aug 11, 2:47pm  

Any guess what IT will look like in 10-15 years?

I got a quote of $5,000 from an overseas tech company for an app that will automatically draw a floor plan using Lidar technology found in iPhones. I can’t imagine what it would cost if I had to hire a US based company.
198   AD   2024 Aug 12, 9:20pm  

Yeah the 15,000 Chinese rich citizens are mainly going to Singapore, and some go to Canada and USA.

https://www.forbes.com/sites/miltonezrati/2024/07/03/high-net-worth-people-are-leaving-china/

Most of the Indian rich citizens go to UAE.

https://www.business-standard.com/finance/personal-finance/4-300-millionaires-likely-o-move-out-of-india-in-2024-uae-top-destination-124062000168_1.html

What is surprising is the United Kingdom is losing that many rich citizens (consider % of population compared to the same statistic with China and India). I wonder if this has to do with the unrest in England and also Labor Party taking over.

I guess most of the United Kingdom rich citizens end up in Miami Beach and South Florida.
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199   AD   2024 Aug 12, 10:21pm  

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"If you've been investing in the stock market for a while, there's a good chance you've benefited from rising stock values in recent years. But if you're among the significant number of Americans who don't own stocks directly or through retirement accounts or investment funds — 42% of US households as of 2022, the Fed's Survey of Consumer Finances found — this hasn't helped your finances. "
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Americans who locked in a job, a home, and stocks are thriving. Everyone else missed out on their ticket to wealth.
https://www.msn.com/en-us/money/markets/ar-AA1oElS6

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

"I got mine."
-Glenn Frey ( https://www.youtube.com/watch?v=68bIkP2zWkQ )

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200   DOGEWontAmountToShit   2024 Aug 12, 10:28pm  

AD says


I guess most of the United Kingdom rich citizens end up in Miami Beach and South Florida.


Probably other Commonwealth countries. New Zealand in particular.

Commonwealth citizens get easy residency visas with other Commonwealth nations.
201   AD   2024 Aug 12, 10:49pm  

DemocratsAreTotallyFucked says

Commonwealth nations.


Yeah like Barbados and Bahamas
https://en.wikipedia.org/wiki/Member_states_of_the_Commonwealth_of_Nations#Current_member_states

or British Overseas Territories like Bermuda and British Virgin Islands

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202   AD   2024 Aug 13, 12:01am  

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Industrial production is a monthly index of real output for all facilities located in the U.S. in manufacturing, mining, and electric and gas industries

It steadily increased from 1920 to 2007, and now it is only about 3% above the average level in 2007 :-(

https://fred.stlouisfed.org/series/INDPRO

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203   DOGEWontAmountToShit   2024 Aug 13, 11:18am  

DemocratsAreTotallyFucked says







On average, households on £50k per year in the U.K. consume more in public services than they pay in taxes.

What would be needed to make up for the tax shortfall of the £500k earner would be additional workers in the top four deciles.

The fact that 60% of U.K. households have more spent on them by government than they pay may explain why most vote for statist policies.

https://x.com/petermiyoung/status/1823419793053245547
204   GNL   2024 Aug 13, 12:55pm  

DemocratsAreTotallyFucked says

DemocratsAreTotallyFucked says








On average, households on £50k per year in the U.K. consume more in public services than they pay in taxes.

What would be needed to make up for the tax shortfall of the £500k earner would be additional workers in the top four deciles.

The fact that 60% of U.K. households have more spent on them by government than they pay may explain why most vote for statist policies.

https://x.com/petermiyoung/status/1823419793053245547

This shouldn't be surprising AT ALL. Get used to it getting worse. You cannot have a society where a small group makes all the money and expect anything different.
206   GNL   2024 Aug 14, 12:47pm  

Canada, Australia, Italy and the UAE? No thank you.
208   AD   2024 Aug 19, 10:35pm  

https://www.marketwatch.com/story/u-s-leading-indicators-index-falls-in-july-but-is-not-signaling-recession-51612145

The numbers: The leading index for the economy fell 0.6% in July, the fifth straight monthly decline, the Conference Board said Monday.

Economists polled by the Wall Street Journal had forecast a 0.4% decline.

The leading index is a gauge designed to show turning points in the economy, but has not worked well in the post-pandemic environment.

The index had fallen for two straight years before briefly turning positive in February.


209   AD   2024 Aug 19, 10:40pm  

As far as the above article and graph about Leading Economic Index (LEI) ,

" When the LEI rises, it suggests an expansion of economic activity in the upcoming months. Conversely, a decrease in the LEI predicts a contraction or slowing down of the economy. For investors, the LEI can guide investment strategies. "

So the economy has been cooling since late 2021. Not sure why the S&P 500 is above its late 2021 level after accounting for inflation.

Need a good 15% correction of the S&P 500 just before early voting starts in October to wipe out the inflation-adjusted or real gains of the S&P 500 since February 2021.

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210   DOGEWontAmountToShit   2024 Aug 20, 12:17pm  

1 million jobs 'disappeared'.


211   AD   2024 Aug 20, 1:35pm  

DemocratsAreTotallyFucked says

1 million jobs 'disappeared'.





I been posting on MishTalk that they will adjust these economic stats being cooked by the bureaucratic state after the election.

Was it not timely how gas prices went up after the November 2022 midterm election ? The Biden Admin released the strategic reserves in 2022 to help the Democrats because they knew they could not win on abortion alone.

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213   Patrick   2024 Aug 21, 11:12am  

https://www.coffeeandcovid.com/p/sanctuarianism-wednesday-august-21


In related news, while DNC surprise speakers gaslit MSNBC anchors and unfortunate viewers with tall tales about the terrific Biden economy, yesterday the Daily Mail ran a terribly awkward story headlined, “US jobs growth in the last year could be revised down by ONE MILLION—refueling concerns the economy is headed for a downturn.” Uh oh.

It’s not unusual for the Bureau of Lying Statistics, I mean Labor Statistics, to “revise” previous employment figures. And nobody is ever surprised that the over-estimating and the inevitable revisions always go the same direction.

But the scale of this revision was very unusual. Bloomberg said that, depending on how it shakes out, this could be the biggest downward revision in employment in over 15 years and maybe the largest in history. Another 2024 record!

The financial articles all debate how big the reduction will be (guesses range anywhere from minus 500,000 to minus one million) and are already laboring to minimize its meaning and find a silver lining. But as usual, they all missed the more meaningful point: Why is it okay for the government to lie like this?

This deceptive shell game is a good tradeoff for an amoral Biden/Harris Administration. Instead of a year of persistent bad economic news, they get 11 months of good (but fake) figures, and only one month of sour news, when they reset the clock. Don’t worry though, they’ll be at it again next month, and will claim Harris fixed everything.

The news was, however, awkward timing, what with the election looming so near, and a Convention under way.
214   Eric Holder   2024 Aug 21, 1:30pm  

DemocratsAreTotallyFucked says






They released it today:

The US economy employed 818,000 fewer people than originally reported as of March 2024, showing the labor market may have been cooling long before initially thought.

The revisions are a yearly practice from the Bureau of Labor Statistics; final revised numbers are expected to be released early next year.

The report, released Wednesday morning, showed the largest downward revisions to the professional and business services industry, where employment was revised down by 358,000 during the period. Leisure & hospitality saw the second-largest downward revision of 150,000.

The report moves down the monthly job additions seen in the US economy over the time period to 174,000 from 242,000.
215   WookieMan   2024 Aug 21, 1:56pm  

Eric Holder says

The US economy employed 818,000 fewer people than originally reported as of March 2024, showing the labor market may have been cooling long before initially thought.

Do they release this stuff by region? I'm sure they do, but I'm lazy. As I've said, I'm an anecdotal guy. I've been noticing my mail is thin/not much. Basically no advertising stuff. Seems weird. We have days with no mail which is weird.

And todays mail was beyond fucked up. My kids got Link cards...??? We make $300k/yr. My nephew is classified as homeless with the school district because his mom is a deadbeat, but I don't get this at all. Questioning if it's a scam, but it looks legit.

I also question if this is a play by Democrats to buy votes from people that appear of lesser means because of my nephews designation. I don't know what to do with it. I'd feel dirty using it. We don't need it. And it would make us look like trash if we used it, which we're not planning on as of now. The joys of taking in a kid. Ends up making you look like trash. Good news is we booked 2 vacations, so his suffering will continue (sarcasm).
216   Al_Sharpton_for_President   2024 Aug 21, 2:41pm  

Dr. Erika McEntarfer became the 16th Commissioner of Labor Statistics on January 29, 2024. She was nominated by President Joseph R. Biden on July 12, 2023, and confirmed by the U.S. Senate on January 11, 2024.

Dr. McEntarfer is a labor economist who has served over 20 years in federal government, with positions at the U.S. Census Bureau, the Executive Office of the President, and the Department of Treasury. At the U.S. Census Bureau, she was the head of research for the Longitudinal Employer–Household Dynamics program, using linked employer–employee data to develop new labor market statistics and improve Census surveys and operations. Prior to joining BLS, she was a senior economist at the White House Council of Economic Advisors, where she advised White House officials on the labor market recovery from the COVID-19 pandemic.
217   AD   2024 Aug 24, 8:28pm  



220   AD   2024 Aug 29, 8:05pm  

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Disney CEO and Amazon CEO said that the consumer is cutting back quite a bit. Big Lots is on verge of going bankrupt.

Now Dollar General is down 32% for the day after it reported about cash strapped customers. Yet the narrative is still about the economy doing very well.

They are just hoping they can keep that narrative intact for enough voters by election day.

https://www.investopedia.com/dollar-general-stock-plunges-on-weaker-than-expected-earnings-outlook-8703719

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221   AD   2024 Aug 30, 6:44pm  

,

https://nypost.com/2024/08/30/business/goldman-sachs-set-to-fire-more-than-1300-employees-report

David Solomon is sharpening the axe again.

The Goldman Sachs CEO will slash more than 1,300 jobs as part of the bank’s ongoing review to cull poor performers, the Wall Street Journal reported on Friday

Goldman’s cuts will affect between 3% and 4% of Goldman’s 45,000-strong workforce, the Journal added, citing people familiar with the matter.

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222   Misc   2024 Aug 31, 2:42am  

As long as a household holds assets, they are doing quite well.

Housing prices are at an all-time high and financial institutions are begging homeowners to tap that equity via HELOCs, but people just ain't biting. The stock market is right near all-time highs. Households also own trillions in CDs with another $6 trillion in money markets. Anyone who had a mortgage prior to 2020 was able to refinance at 3% or less, so their cash flow went up enough to offset the inflation.

GDP NOW has 3rd quarter GDP increasing at a 2.5% rate, with labor markets strong.

For those households without assets...times are bleak. Rents are at an all-time high (and increasing at about a .4% rate every month) and inflation in everything has zapped their buying power to such an extent that they are simply not making their car payments or even trying to pay their credit cards.

Unemployment is edging up particularly for Blacks. There's a few extra hundred thousand unemployed Blacks than there was at the beginning of the year. Since overall employment levels have increased, this means the Blacks are getting displaced by the illegals.

Really a two tiered society and there is a growing chasm between the two groups.
223   GNL   2024 Aug 31, 4:30am  

“ Really a two tiered society and there is a growing chasm between the two groups.”

Exactly what allows a strongman and/or socialism/communism to take hold. The population, having no other choice, will vote for it.
224   Onvacation   2024 Aug 31, 7:06am  

Misc says

As long as a household holds assets, they are doing quite well.

If you can buy insurance and illegal criminal aliens are not taking over your neighborhood
225   HeadSet   2024 Aug 31, 7:29am  

Onvacation says

Misc says


As long as a household holds assets, they are doing quite well.

If you can buy insurance and illegal criminal aliens are not taking over your neighborhood

And the new assessments do not tax you out of your home.
226   GNL   2024 Aug 31, 7:37am  

I think taxes and insurance will crush homeowners, maybe. If "they" want to do socialism/communism, most everyone is going to suffer. The best economy is not one where the up and comers have a harder time than the generation before them.
227   AD   2024 Aug 31, 8:35am  

GNL says

I think taxes and insurance will crush homeowners, maybe. If "they" want to do socialism/communism, most everyone is going to suffer. The best economy is not one where the up and comers have a harder time than the generation before them.


yes, its like everything is upside down and/or backwards, including anarcho tyranny being responsible for a lot of it

SAT and ACT scores as well as other standardized test scores have been trending down

so society cannot even produce students who at least maintain the status quo while more challenges and complexity lie ahead ?

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228   AD   2024 Aug 31, 8:38am  

GNL says

I think taxes and insurance will crush homeowners,


fortunately for florida, they won't increase your property insurance by more than 3% a year because of state law

i have HO-3 for out townhome about 2 miles from the beach in the florida panhandle, and my insurer was going to increase the premium for 2025 from around $1885 to $2345

I increased the deductible from $1000 to $5000 and the premium is $1920 (based on replacement value of around $250,000)
229   WookieMan   2024 Sep 1, 10:05am  

AD says

Big Lots on verge of bankruptcy

Has anyone even been to one? Not news in my world. So poor people don't buy crap?

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