Goldman Sachs chief economist in a nutshell says we're getting back on track in 2014, and that 2013 will be fairly stagnant. What says the hive?

Crockashit.

Mariannas Trench

QE-4 was announced on 12/12/12.  There can't be a recovery until after the crash and the crash has been delayed since TARP.

Explain that to me like I'm 10.

Glad I'm not the only one.

Ink, how does it work?

QE-3 ad Infinitum is the digital creation of an additional $45 billion dollars a month.  Now, when you create money, it's OK if there is a corresponding increase of tangible goods that are produced.  If there isn't a corresponding increase of tangible products, then the creation of money only decreases the value of existing money.  It's too much money chasing too few goods.  (Guess what?  We can't produce tangible consumer goods like we used to because we outsourced our production overseas.  We can't sell that many airplanes or tanks either to make up for it. Food is great but we've been hit by a drought.  So, production is down and dolllars on the books is up).  QE-4 was Spaceman "To infinity and beyond!" Ben of the Ber Nank's annoucement of an additional $40 billion per month.  That means every month the Fed Res is digitally increasing (no one prints anymore) increases the money supply by $85 billion, or about $1 trillion a year.  The devaluing of our currency catches up in the form of inflation.  Remember about four years ago when SPAM was only .89 cents a can?  It's about $3.19 if you're lucky.  Conveniently, food and fuel are not calculated in the Consumer Price Index so that type of inflation is hidden from view (even though people know its there).

Turning to the needed correction, the economy has been in decline for several years.  The economy has been artificially propped up by numerous bubbles (remember the dot-com bubble of the late '80s and early '90s, the housing bubble, the easy credit bubble, the stock market bubble during the Clinton years?).  Well, those bubbles have burst and an economy cannot sustain that type of growth.  It needs to fall before a recovery can happen (read Peter Schiff's book, How an Economy Grows and Why it Crashes, for a simple explanation of economics).  The days of cheap money are over and the bubbles are gone (housing market crashed and dragged down the commercial real estate market - look at the closed stores and malls. Suggested reading is Wiedemer, Wiedemer and Spitzer's Aftershock, 2nd Ed. ).  Our consumer based economy died when the consumers can't consume (who can when they don't have jobs or when their middle class jobs are outsourced elsewhere and are replaced with burger-flipping, coffee jock jobs that are slightly above minimum wage?) and those who do consume are doing it on credit (yes, credit bubble is  bursting and people are being denied loans now when they want to buy homes).  By bailing out the too big to fail with TARP and then the various QEs, the Fed is attempting to reinflate a deflating bubble.  It doesn't work and only delays the crash and magnifies it when it does happen.  The biggest bubble, the derivative bubble, is something most Americans aren't even aware of.

The free market has not been allowed to operate.  Free market capitalism would not have allowed a TARP to bailouts of the too big to fail. Had the free market been allowed to operate, we may well be on the road to recovery.

Our collapse can happen super fast too because the basis for our dollar, the petro-dollar, is being superceded.  When Nixon renounced the Bretton Woods Agreement of 1944 and  took us off the gold standard in 1971, the petro-dollar was substituted as a basis of keeping the dollar as the world's reserve currency.  The petro-dollar was based on Saudi Arabia being the biggest producer of oil in the world.  Last year Russia produced more than the Saudis.  Last year Russia agreed to take yuans from China as payment.  Seven Asian nations (South Korea, Singapore and Japan still do) no longer peg their currency to the dollar but to the yuan.  They don't go through SWIFT (look that up) when then exchange their currencies for yuans.  Other nations that don't necessarily go through the dollar when they trade with China include Brasil, India, South Africa, Australia and Germany.  BTW, when it comes to trading for oil with Iran, Iran accepts India's rupees, China's yuan and Turkey's gold.  They really don't want the dollar either and the US did them a favor by saying that the dollar can't be used to trade for their oil.   What does this move from the dollar mean?  The dollar as the world's reserve currency is losing its place.  When foreign holders of dollars don't want it anymore and why should they with QE-3 Ad Infinitum and QE-4, they'll dump it.  What's holding them back is that they want a gradual exit.  It'll be like the game Old Maid and no one wants to be the left with the old maid.  The first to dump will cause a panic and the dollar could hyper-inflate overnight as these digital dollars come home.  China has been slowly exiting first by slowing down their buying of treasuries (they began by selling more than they bought and now they won't buy any) and then converting their dollars into tangibles (agricultural land, mineral rights and following the ABCDs of investing) and buying gold.  They actually bought more gold this year than that held by the Bank of England.

I should add that Goldman Sachs who said things will pick up in 2013 has a history of ph*cking over their clients.

Back in the thirties they formed a holding corporation that they offered for over  $100 a share.  After the collapse, they bought it back for $1 something a share.  

Today they're telling their clients to sell gold (see the financial forum here in General).  This is at a time when many of the Central Banks are buying the shiny stuff.  this is at at time when nations want their shiny stuff (Venezuela got theirs back and Germany asked for her 3,400 tons back - ha ha ha.  The Fed offered them 50 tons a year).

... my strategy has always been to stay in front of the economy and increase my disposable income as time goes by

My new word for 2013!





 

Obama admin will jack everybody off on gun control for the next twelve months and not do anything.  That in turn will spur massive gun and ammo sales driving the economy forward.

Im waiting for Sherrick to tell me what's going to happen

Nothing structural is changing that would result in real growth in GDP beyond a paltry 1.5%



Everybody is scared shitless to make any major investments/risks due to increasing and/or growing uncertainty with regulations. Obamacare is just the tip of the iceberg. EPA is getting stupidly out of control. Unions are gasping to try and regain power that is being rolled back in red states. Fiscal cliff and the associated tax increases as well as reductions in discretionary funding is real. Congress is going to be gridlocked between the upper and lower chambers. Oboingo is taking absolutely no leadership role what-so-ever by design.



Bottom line, if you think it is a bad climate for business now, there is nothing that is changing that is going to make it any better. Quite the opposite.



On the consumer side, real unemployment is outrageous. Extended unemployment and payroll tax deduction expire end of the year which means more broke people and businesses.



If Goldman-Sachs thinks this utter shitstorm will blow through in a year and everything will be copacetic, they are smoking crack. More likely, they are working some angle to make billions.

Okay, I get the QE thing......my question is this.....

When they "presto" the money......where does it go?? All the major banks get a cut?? Directly to the gov??

Who gets the 45 billion a month??

the illuminati!!  

why would anyone give two shits about what goldman sack of shits says.

thanks for the summary, i am going to go jump off a cliff now

Goldman Sachs also licks obama's ass cheeks.  Seriously, they do.

The New Normal.

This is it.

Start here.

Zerohedge

Market Ticker

Shadowstats

Everyone has an agenda, and the opinion at the above are swayed by that. However, math generally doesn't lie.

Unfunded liabilities & debt. The former continue to grow exponentially. The latter as well. Since 2008 we have solved a debt problem with more debt. Until the system clears (crashes), this will continue.

[edit: Hey cool, post .223!]

So the pigs will be flying in 2014, best go get a helmet for when I walk outside and new wiper blades for the cars, those will be bigs turds falling from the sky.

The economy is not going to change much for the good, anytime soon. It may very well get much worse.

At some point intrest rates will have to come UP, and then economic termoil!!

Stocks, bonds and precious metals, in both China and the US.

Correctomundo

Basically the recovery is a false recovery with QE efforts.  Gov is pumping money in, markets react in a positive fashion to free money in hopes they all make commissions...but banks and companies are sitting on all excess cash due to the unknown of Obama and taxes, etc.

basically you are seeing a false picture designed to keep people in office while we suffer

Lloyd Blankfein should be in prison getting a c**k up his a** regularly.  

Some banks in Europe want to settle a score with Lloyd for all the toxic housing debt he sold as mortgage backed securities

We converted sherrick


You need to take about 5 bottles of antidepressants, then ask LRRPF52.

First post nails the fuck out of it.

Buy beans, bullets, band aids, and hold on to your ass.

It could be worse.  It could be Microsoft Outlook 2013.



...



I'll just see myself out.



 

I'm still trying to figure out Outlook 2010.

I have no faith in our economy. Unlimited currency inflation can not go on without dire consequeces.

Mostly crappy with a 50% chance of fail.

Short and to the point.

The Fed Res and its member banks are spending it on the defaulted houses.  They are literally paying "zero" for the houses they are buying.  That is, they create the money, loan it out for free at zero interest, and buy the bad mortgages.  Who says you can't get something for nothing?  At the same time they are destroying our income, our savings and our retirement.  Its charter expires in 2013.  They are positioning themselves to be the owners of USA when it expires.

BTW, this is all man made stuff.  The world isn't going to end on 2012.  We will survive and we will recover.  Just prepare yourselves and your households. I expect the depression to last over a decade (since the Great Depression of the '30s didn't end until we had WW II).  Recovery can be faster, but that's asking a lot of ourselves.

Disclaimer: I am not a macroeconomist.  

1.  I was at a forecasting conference recently and their consensus seems to be that next year is even lower growth than this year, and then 2014 improves.  This follows conventional wisdom.  These forecasters have a decent track record and play things straight--they don't fudge their models or data as some do.  The fiscal cliff is the real wild card.  It could easily trigger a real recession.

2.  I tend to bet against conventional wisdom, because it's off routinely.  Many recessions and expansions are mis-predicted, often amplified by the press with their political bias.  

3.  The forecasters admit that where we are now could be the "new normal".  Economists call this "hysteresis".   I fear this is the new normal because of all the additional taxes and regulations associated with Obama and his Obamacare, EPA, Dodd-Frank, etc.  Notice that the blue states (California, Illinois, New York, etc.) are doubling down on more taxes and regulations.  They will drag the rest of the states down.  One-third of all welfare cases in the country are now in California.  

4.  Every man for himself!

This

I've noticed the more I understand it the more pissed off I get.

The economy is being artificially sustained.  How's that?

If the interest rate goes up on what we pay for our debt we are fucked in every way you can measure. IMO that is the ticking time bomb, the fiscal cliff, we are waiting to go over. IMO it will happen. When and by how much it will go up who knows but when it does the economic correction will begin. No more shekels for the FSA, no more money for socialist cradle to grave bullshit. YMMV.

IMO by cooking the books on inflation and unemployment with willing allies in the MSM, continuing to borrow money at a low intrest rate to pump into the economy along with inflating the money supply.

The fed buys back bonds they are selling on the open market.  Other countries are not purchasing enough of the bonds.



The fed is holding its own debt



 

At least in the 1930's they were honest about unemployment.  Today they can't change their algorithm to account for those who have fallen off the tail end of unemployment  and are no longer considered unemployed.  



 

2014 is when obamacare really kicks in. 2014 won't be booming.  If they don't do anything else and let business get an equilibrium, then maybe late 2015 or 2016 when we see some actual growth.   I don't see .gov not stop fucking with business though.

There you go.  ^

You didn't.  The electorate did.  Anyway, I still don't think a total economic collapse is around the corner.  But something is going to eventually break when we get to 200% of GDP debt.

No, that's not the way the country will go. Perhaps a Bolshevik revolution......

Some ideas are easier to communicate than others.  I wasn't claiming to personally have bagged the tiger.