NO ONE GETS OUT OF HERE ALIVE

“The seasons of time offer no guarantees. For modern societies, no less than for all forms of life, transformative change is discontinuous. For what seems an eternity, history goes nowhere – and then it suddenly flings us forward across some vast chaos that defies any mortal effort to plan our way there. The Fourth Turning will try our souls – and the saecular rhythm tells us that much will depend on how we face up to that trial. The saeculum does not reveal whether the story will have a happy ending, but it does tell us how and when our choices will make a difference.”  – Strauss & Howe – The Fourth Turning

As we wander through the fog of history in the making, unsure who is lying and who is telling the truth, seemingly blind to what comes next, I look to previous Fourth Turnings for a map of what might materialize during the 2nd half of this current Fourth Turning. After a tumultuous, harrowing inception to this Crisis in 2008/2009, we have been told all is well and are in the midst of an eleven-year economic expansion, with the stock market hitting all-time highs.

History seemed to stop and we’ve been treading water for over a decade. Outwardly, the establishment has convinced the masses, through propaganda and money printing, the world has returned to normal and the future is bright. I haven’t bought into this provable falsehood. Looking back to the Great Depression, we can get some perspective on our current position historically.

Continue reading “NO ONE GETS OUT OF HERE ALIVE”

DEMORALIZED, DEPRESSED, DETACHED & DEFIANT

Image result for occupy wall street hot girl

I’ve now been running The Burning Platform blog for over ten years. It’s been over eleven years since I wrote my first article – Why We Need Ron Paul – in May 2008 during the Republican primaries. I really thought I could change enough minds through my writing to influence voters and help wake up people to the truth about our deteriorating financial situation. I would send op-eds to my local paper, and they would publish them. My articles on Seeking Alpha in 2008/2009 were the most read and commented on their site.

My assessment of the Wall Street banks, coming financial crisis and recession were accurate enough that I was being sought out by Glenn Beck on CNN, Neal Cavuto on Fox, and Maria Bartiromo on CNBC to be interviewed on their shows. I didn’t want that kind of attention, since it would likely have negatively impacted my day job – which actually supported my family.

Continue reading “DEMORALIZED, DEPRESSED, DETACHED & DEFIANT”

US vs. THEM (PART II)

In Part I of this article I discussed why the “Us versus Them” mindset permeates society and how Trump has become a lightning rod for hate. Now I will assess his progress in fighting the Deep State and try to peer into a murky future.

Image result for deep state versus trump

In addition to not being Hillary, the main reasons I voted for Trump was he promised to build the wall, he promised to repeal and replace Obamacare, he promised to end our foreign military interventions, he said he would bring fiscal sanity to the budget, he said the Federal Reserve had blown an immense stock market bubble, he questioned the fake economic data spouted by government drones, and he called out the fake news bullshit media. When I regularly assess his progress on these issues, the standard response from Trump acolytes is “Would you rather have Hillary?”. No, I would not. But that doesn’t get Trump off the hook for his failures in my book.

Continue reading “US vs. THEM (PART II)”

10 YEARS LATER – NO LESSONS LEARNED

“A variety of investors provided capital to financial companies, with which they made irresponsible loans and took excessive risks. These activities resulted in real losses, which have largely wiped out the shareholder equity of the companies. But behind that shareholder equity is bondholder money, and so much of it that neither depositors of the institution nor the public ever need to take a penny of losses. Citigroup, for example, has $2 trillion in assets, but also has $600 billion owed to its own bondholders. From an ethical perspective, the lenders who took the risk to finance the activities of these companies are the ones that should directly bear the cost of the losses.”John Hussman – May 2009

This month marks the 10th anniversary of the Wall Street/Fed/Treasury created financial disaster of 2008/2009. What should have happened was an orderly liquidation of the criminal Wall Street banks who committed the greatest control fraud in world history and the disposition of their good assets to non-criminal banks who did not recklessly leverage their assets by 30 to 1, while fraudulently issuing worthless loans to deadbeats and criminals. But we know that did not happen.

You, the taxpayer, bailed the criminal bankers out and have been screwed for the last decade with negative real interest rates and stagnant real wages, while the Wall Street scum have raked in risk free billions in profits provided by their captured puppets at the Federal Reserve. The criminal CEOs and their executive teams of henchmen have rewarded themselves with billions in bonuses while risk averse grandmas “earn” .10% on their money market accounts while acquiring a taste for Fancy Feast savory salmon cat food.

Continue reading “10 YEARS LATER – NO LESSONS LEARNED”

GOLDILOCKS IS DEAD

“Once you strip out the effects of the debt binge, the artificial stimulus via currency depreciation, and the fabled ‘wealth effect’ from the equity market runup, real GDP growth stripped-down to its core was the grand total of 0.7% last year. Potemkin would be proud.” David Rosenberg

Click to visit the TBP Store for Great TBP Merchandise

It appears every president finds the religion of false economic narrative once they ascend to power. Trump never stops babbling and tweeting about the fantastic economy and raging jobs market since his election. He has embraced the stock market bubble as proof of his brilliant leadership, rather than the tens of trillions in debt propping up the most overvalued market in world history. Every president takes credit for any good news, spins bad news as good news, or blames the previous president for bad news that can’t be denied. The president has absolutely zero impact on the economy or stock market over the short term. It’s like taking credit for the sun rising in the east each morning.

The Big Lie method works wonders when you have a willfully ignorant, mathematically challenged, easily manipulated populace. I spent the entire Obama presidency obliterating the fake economic data perpetuated by his BLS, BEA and every other government agency trying to paint a rosy economic picture. I voted for Trump because the thought of Crooked Hillary as the president made me ill. Despite disagreeing with many of his economic, budgetary, and military policies during his first year in office, I’d vote for him again over Hillary in an instant. The thought of having that evil shrew running the country gives me chills.

Continue reading “GOLDILOCKS IS DEAD”

LIES, LIES AND OMG, MORE LIES

It’s that time of year again. It’s open enrollment for health plans at my employer. They are biggest employer in Philly and have the most leverage possible with the insurance companies. They have such good leverage that my premiums are going up “only” 9.8% this year for a basic HMO plan. Based on what I hear from others, I should be thankful for just a 9.8% increase.

This isn’t a new development. Since I’ve been tracking all my expenditures using Quicken since 1991, I know exactly what my annual health insurance costs have been every year. Obamacare was passed in 2009 and began to be implemented in 2010. Obama declared that families could expect $2,500 of savings per year. I know for a fact my annual medical expenses were $2,000 higher in 2015 than they were in 2010.

Continue reading “LIES, LIES AND OMG, MORE LIES”

THE GREATEST DECEPTION EVER TOLD

The American Dream and government statistics – you’d have to be asleep to believe either. The blatant disregard for the truth and the utter contempt for the common man by the ruling class in NYC and DC is breathtaking to behold. The lies, obfuscation, misinformation and propaganda issued by the government and mindlessly regurgitated by their MSM lackey brigade has approached hyper-speed as this shitshow we call America descends into an epic clusterfuck of  deception, corruption and fraud. 

Exposing The Deception: How The US Economy “Grew” By $140 Billion As Americans Became Poorer

Tyler Durden's picture

This is simply stunning.

Regular readers will recall that last month, at the same time as the US Bureau of Economic Analysis reported was a far better than expected 3.9% GDP (since revised to 5.0% on the back of the previously noted Obamacare spending surge), it also released its Personal Spending and Income numbers for the month of October, or rather revised numbers, because as we explained exactly one month ago “Americans Are Suddenly $80 Billion “Poorer“” thanks to (upward) revised spending data and (downward) revised income. What this meant a month ago is that as a result of a plunge in the imputed US savings rate, some $80 billion in personal savings was revised away from the average American household and right into the US economy.

After all, something had to grow the US GDP by a massive amount in order to give the Fed the green light it needs to hike rates eventually, just so it can then ease when the global dry powders from all the other central banks is used up.

And sure enough, this is how just one month ago, personal income was revised lower…

 

… Even as personal spending was revised higher:

 

Leading to an $80 billion revision lower in personal saving, and by mathematical identity, a comparable growth in US GDP.

 

* * *

Fast forward to today when we find that… absolutely nothing has changed, and in order to boost US GDP some more, the BEA engaged in precisely the same data revision trick!

On the surface, today’s Personal Income and Spending data were inline to a little bit better than expected:

  • Personal Income supposedly rose 0.4% in November, up from a 0.3% revised growth in October, and in line with expectations.
  • Personal Spending supposedly also rose, this time by 0.6%, up from an upward revised 0.3%, and just above the 0.5% expected.

So far so good: nothing abnormal, and in fact, in isolation this data would be good, suggesting the US consumer is spending more as the year closes.

And then we looked at the Personal Savings number: it was reported at 4.4% in November, down from 4.6% in October. Which is odd because last month, the October savings rate was disclosed as 5.0%, in turn down from a downward revised 5.6% in September.

Wait, could the BEA be engaging in precisely the same deception in November as it did in October.

Why yes, Virgina: not only did the US Department of Economic Truth completely fabricate its GDP numbers earlier, but the way it got to said fabrication is by fudging – for the second month in a row – both the entire Personal Income and Personal Saving data series.

Behold what the original data looked like in October, in November, when the extensive and already documented data revision took place, and just now, when the December data shows that the BEA once again revised everything just as it had previously.

To wit: here is Personal Income, revised substantially lower yet again, for every single datapoint of Q3 and then some, from July until October!

 

Sure enough, here is the revision to Personal Outlays: once again, a reduction in income magically meant that US household spent more in retrospect. As the chart below shows, Personal Outlays (Spending) was revised higher from July until October as well. What is most impressive is how the revision shifted the slope of US personal spending from one of Slowdown as reprted in October, to a literal explosion based on the latest data.

 

So how was all this spending funded? Simple: Americans “supposedly” dug massively into their savings, and as the following chart shows, Personal Savings have now crashed from what was originally an “unrevised” 5.6% in September, subsequently revised to 5.0% in November and 4.5% currently, and all the way down to 4.4% in November. Incidentally, this is the lowest savings rate since 2013, and the lowest savings rate for the month of November since 2006!

 

So what do all these revisions mean numerically? Luckily we can put absolute numbers alongside the savings rates, and as the following chart show, as of September 30, or the end of Q3, when US GDP supposedly soared by 5% annualized we now know that data revisions of personal income and spending alone generated…

 

… A whopping $140 billion in GDP!

So what does this mean? Well, as we learned earlier US GDP grew in Q3 by a nominal $272 billion to $17.6 trillion. We now know that more than half of this increase came from, drum roll please, data revisions!

In other words, US GDP, using pre-revision data, would have been less than 2.5%. But that woul dhardly lead to the euphoric blow-off top rally we have seen today which sent the DJIA for the first time ever above 18,000, which in turn is so critical to boost consumer confidence so Americans will, in real life, do what the BEA hopes they have already done at least on paper, and that is reduce their savings by a whopping 20% at the end of September, or by some $140 billion, to $593 billion in order to spend, spend, spend.

And the other irony: as the BEA also reported, what did Americans allegedly spend the bulk of their savings on?

Obamacare.

So in short, today the market is euphoric and hitting all time highs because Americans dug into their savings and spent billions on the “Affordable” Care Act.

And that, ladies and gentlemen, is the short answer why the US is “growing” when the rest of the world is mired in a triple (or quadruple if one is Japan) recession.

Source: Bureau of Economic Analysis

Here Is Why Americans Are Suddenly $80 Billion “Poorer” (In Some Government Spreadsheet)

The government is a fucking joke. If the unemployment rate has really plunged from over 10% to under 6% in the last few years, how can disposable personal income be so pitiful?

The government statistics fed to the sheep and unquestioningly reported by the six mega-media outlets are nothing but, lies, propaganda and bullshit.

Open your eyes to see the truth. Look at the decaying office buildings, strip malls, and small manufacturers as you drive our decrepit roads. Look at your own financial situation. Are you better off than you were in 1999? I doubt it. Are you experiencing too little inflation? Is your paycheck going up at a rate higher than the true rate of inflation?

The US Titanic is sinking and you are locked below deck, while the .1% head for the lifeboats and the MSM band plays on.

Tyler Durden's picture

The final major datapoint of the day was the Consumer Income and Spending data from the US Dept of Commerce’s Bureau of Economic Analysis, the same outfit that yesterday shocked everyone with just how much better US GDP was. Well, today, we learned just where the offset came from. Because while on the surface, both income (+0.2%) and spending (+0.2%) missed expectations of a 0.4% and 0.3%, respectively…

… it was the revised data that the US department of data fudging once again showed why it has long since surpassed China.

Behold what is perhaps the most important data series in all of US eco: Disposable Personal Income. We say behold, because there are some rather massive variations between what the BEA reported a month ago, and what it reported today, as relates to all the data issued since March. To wit:

Essentially, the just reported Disposable Persona; Income print of $13.109 trillion as of the end of October, is where according to the old, unrevised data US houshold income was some time in August. Whatever happened to two months of income?

Which brings us to the other all important number: the personal savings rate. At just reported at 5.0%…

… something strucks us: this number was reported at 5.6% last month.

And sure enough, since Disposable Personal Income flows into personal savings, net of outlays, it was clear that American savings would be dramatically impacted as a result of the massive data revision.

Sure enough, this is how the US personal savings rate looked like based on the old and just revised data.

 

And, the punchline: US savings in absolute terms, an $80 billion decline in savings from the old September print and the latest, post-revision.

So there you have it: in order to “suggest” that the US economy had grown by a far greater than expected run-rate, the BEA was forced to revise away personal income, and “assume” these had instead been invested in the US economy, in the form of a surge of durable goods purchases. Sure enough, while both incomes and savings tumbled, spending magically surged:

So if that “statistical” amount of money you thought you had saved in the BEA’s savings.xls spreadsheet just dropped by 10%, fear not dear Americans: it was all used for a good cause: to fabricate a much stronger than expected Q3 GDP number.

Source: BEA

NO, THE GOVERNMENT GDP REPORT IS NOT AN ONION ARTICLE

You know when Onion articles are more believable than government reported data, your country has jumped the shark. Last quarter your government reported GDP GROWTH of 0.1%. They ultimately admitted it was really NEGATIVE 2.9%. Now the government goes back and “adjusts” 15 years worth of their worthless data and surprise surprise, it was ONLY NEGATIVE 2.1%.

Now these BEA drones have the balls to report a 4% 2nd quarter increase. This figure is beyond laughable. It is complete and utter bullshit. Three months from now they will revise it to 1.5%. They needed a big number today because the world situation is going to shit and Obama’s approval rating hits new lows every day.

Zero Hedge points out that the BEA admitted to making wild ass guesses about the two biggest components of the surge because they had incomplete June data. The downward revisions will follow after they get their all-time stock market high based on bullshit data.

They had the gall to say that consumer spending spiked when major retailers have been reporting shitty 2nd quarter sales. Who do you think is lying?

They say that residential construction surged in the 2nd quarter. We know for a fact that new home construction plummeted in the 2nd quarter. All of the housing market is lower than last year. How can durable goods purchases be surging (appliances, furniture, electronics) when the retail sales figures for those retailers are negative versus last year?

This entire report is bogus. I know it, you know it, and the government drones know it. But CNBC and the rest of the captured corporate media will shout the awesome news from the mountaintops and the Wall Street shysters will pump the rigged market with their HFT supercomputers.

All is well in our Brave New World of finance and propaganda.

 

Q2 GDP Surges 4%, Beats Estimates Driven By Inventories, Fixed Investment Spike; Historical Data Revised

Tyler Durden's picture

Moments ago the Commerce department reported Q2 GDP which blew estimates out of the water, printing at 4.0%, above the declining 3.0% consensus, as a result of a surge in Inventories and Fixed Investment, both of which added over 2.5% of the total print, while exports added another 1.23% to the GDP number. The full breakdown by component is shown below.

What is interesting is that the Commerce Department announced that as a result of incomplete June data, the biggest components of the GDP beat, Inventories and Trade, were estimated. In other words, assume that future revisions of Q2 GDP will be lower, not higher, as the actual data comes in, and especially as the CapEx data, which contrary to the GDP report, has not rebounded. Speaking of revisions, today the BEA also released its annual revision of all data from 1999 to Q1 2014, which made last quarter’s -2.9% print a more palatable -2.1%, in the process throwing everyone’s trendline calculations off as yet another GDP redefinition was implemented.

The chart of the original and revised data is shown below.

We are currently combing through the years of revisions and will provide a snapshot shortly but for the time being here is Bloomberg’s take:

  • 2Q personal consumption up 2.5% vs est. up 1.9% (range 1.5%-2.9%); prior revised to 1.2% from 1%
  • Core PCE q/q 2% vs est. 1.9% (range 1.4%-2.3%)
  • Gross private investment up 17% in 2Q after falling 6.9% in 1Q
  • Residential up 7.5% after falling 5.3%
  • Purchases of durable goods jumped 14%, most since 3Q 2009
  • Corporate spending up 5.9% vs little changed q/q
  • Inventory accumulation added 1.7ppts to GDP

DOES THE GOVERNMENT JUST MAKE SHIT UP?

How can the government be off by $50 billion in healthcare expenditures from its first estimate in April to its final estimate two months later? Do they just take wild assed guesses with this crucial economic data? Or do they manipulate the numbers to achieve their desired outcome?

They have decreased their estimate of real GDP by over $100 billion since their first report. If your numbers are that horribly inaccurate, why report them at all until you are sure?

The talking heads on CNBC and the faux mainstream media journalists will blather about weather and assure you the future has never been brighter. Meanwhile, on the historical FACT side of the ledger, every single time in U.S. history that GDP was negative 1.5% or worse, the country was either in recession or about to enter recession. EVERY TIME!!!!

But the MSM will tell you why this time is different. So it goes.

Here Is The Reason For The Total Collapse In Q1 GDP

Tyler Durden's picture

Remember back in April, when the first GDP estimate was released (a gargantuan by comparison 0.1% hence revised to a depression equivalent -2.9%), we wrote: If It Wasn’t For Obamacare, Q1 GDP Would Be Negative.” Well, now that GDP is not only negative, but the worst it has been in five years, we are once again proven right. But not only because GDP was indeed negative, but because the real reason for today’s epic collapse in GDP was, you guessed it, Obamacare.

Here is the chart we posted in April, showing the contribution of Obamacare, aka Healthcare Services spending. It was, in a word, an all time high.

 

Turns out this number was based on…. nothing.

Because as the next chart below shows, between the second and final revision of Q1 GDP something dramatic happened: instead of contributing $40 billion to real GDP in Q1, Obamacare magically ended up subtracting $6.4 billion from GDP. This, in turn, resulted in a collapse in Personal Consumption Expenditures as a percentage of GDP to just 0.7%, the lowest since 2009!

Don’t worry thought: this is actually great news! Because the brilliant propaganda minds at the Dept of Commerce figured out something banks also realized with the stub “kitchen sink” quarter in November 2008. Namely, since Q1 is a total loss in GDP terms, let’s just remove Obamacare spending as a contributor to Q1 GDP and just shove it in Q2.

Stated otherwise, some $40 billion in PCE that was supposed to boost Q1 GDP will now be added to Q2-Q4.

And now, we all await as the US department of truth says, with a straight face, that in Q2 the US GDP “grew” by over 5% (no really: you’ll see).

DREADFULLY PLEASANT WEATHER IN APRIL KEEPS CONSUMERS FROM SPENDING

I’m guessing you’ve heard a spokesmodel “journalist” or Wall Street Ivy League economist hack, on the corporate mainstream media, bloviate about the dreadful weather keeping consumers from spending over the last six months. They assured the technology sedated masses that they would resume their debt financed orgy of consumerism as soon as the warm winds of Spring arrived.

Well, Spring arrived right on time in April. Temperatures rose, the sun came out, and consumers spent even less. Oops!!!!

Frantic calls are being made to Madison Avenue public relations maggots for a new spin on data proving we are in recession. Maybe it was too sunny and warm in April. Consumers just wanted to sunbath in their backyards because 92 million of them aren’t in the labor force anymore.

It seems we just experienced the largest drop in consumer spending since September 2009, when all of the highly educated, highly paid, mouthpieces for the establishment insisted we would see a consumer spending revival as soon as the snow melted.

Propaganda, storylines, lies, misinformation and cheer leading constitute our entire society at this point in our long decline. We all know for a fact we are paying far more for energy, food, and Obamacare boosted insurance premiums. The collapse in Retailer sales and profits proves we have nothing left to spend on anything else. Weather has nothing to do with anything.

http://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1#reqid=9&step=3&isuri=1&903=76

Looking at the data on the BEA website reveals these tidbits:

  • The government actually wants you to believe that taking funds from your paycheck for social security, medicare, medicaid and obamacare and then handing them to other people constitutes INCOME. These government transfers went up by $129 billion in April versus last April.
  • Meanwhile, the 120 million or so Americans still working for companies only increased their income by $247 billion.
  • Government drones are now “earning” 16.4% of all the wages paid in this country. Despite a storyline of government austerity, wages of government drones continue to rise.
  • Turning off the spigot of extended unemployment is clearly seen in the data as unemployment payments have crashed by $31 billion over last April, a 55% reduction. It seems cutting off people from 2 years of unemployment and reducing their food stamps has put a little crimp in our fake economic recovery.
  • The most damning statistic in the data is Real Disposable Income Per Capita. This is how much you have left to spend after taxes, adjusted for inflation (using understated BLS number). This figure stands at $37,174 today. This figure was $37,584 in May 2008, just prior to the Federal Reserve created financial meltdown. So here we are six years later and the average person has 1% less real disposable income.

We have less real disposable income, fewer jobs, higher energy, food, and health insurance costs and the stock market continues to hit all-time highs as the oligarchs use their HFT supercomputers to fleece the muppets, rig the system and reap Federal Reserve created riches for themselves. The sheeple hate Congress and then vote 99% of incumbents back into office.

If you want to understand why we are in an inescapable downward financial spiral look no further than what percentage of personal income constitutes government entitlement transfers from the productive to the non-productive:

1988 – 11.3% of personal income was made up of government transfers

2000 – 12.0%

2008 – 14.2%

2014 – 17.0%

Does this trend seem to be sustainable, or have we crossed the point of no return?

And so it goes.

YES VIRGINIA, EVEN THE MANIPULATED GOVERNMENT GDP REVEALS RECESSION

We all know the government’s first reported economic number is manipulated to its best result in order for Wall Street shysters to levitate the stock market with their HFT supercomputers. Then subsequent revisions downward are downplayed and ignored. It’s the American way. This figure will be revised into negative territory over the next few months.

The pitiful reported 0.1% GDP number is a joke. The BEA bozos actually expect you to believe that inflation was only 1.4% over the last year. Their manipulated bullshit figure is even lower than the CPI lie put out by the BLS drones. Inflation is running north of 5%. REAL GDP is in the NEGATIVE 4% to 5% range.

The propaganda peddlers on CNBC are ecstatic about the 3.1% gain in consumer spending. WOO HOO!!!!

It seems the dramatic surge in consumer spending was to pay for the massive increases in health insurance premiums due to Obamacare, the sky high heating bills from the frigid winter, and the 13% increase in gasoline prices. Oh I forgot. The BLS tells us that gasoline prices were falling in the 1st quarter.

How can the talking heads blame the cold winter for the terrible GDP when consumer spending accounts for 71% of GDP and it surged due to the cold weather? Hmm.

So we have an “economic recovery” driven by people forced to spend more for healthcare, energy and food while receiving 0% return on their savings, seeing their real wages decline, and being taxed more by local, state and federal governments. At least there are still those gigantic potholes on every road in my state.

This report was an absolute disaster and PROVES we are in recession. Wall Street will be ecstatic and will levitate to new highs. If Obama can just get World War III started in the 2nd quarter, GDP will soar and economic recovery will have arrived.

GDP Shocker: US Economic Growth Crashes To Just 0.1% In Q1

Tyler Durden's picture

Despite consensus at 1.2% growth QoQ, the “weather” destroyed the fragile stimulus-led economy of the US which managed only a de minimus +0.1% QoQ growth (the lowest since Q1 2011). However, as Steve Liesman noted on the heels of Mark Zandi’s comments “basically ignore this number” – ok then. Spending on Services, however, surged by the most since 2000 – heralded as great news by some talking heads – but is merely a reflection of the surge in healthcare and heating costs (imagine if it had not been cold and if Obamacare hadn’t saved us). As a reminder – this is the growth that is occurring as QE has run its course, as stimulus ends, and as escape velocity nears… if the “weather” can do this much damage to the US economy, should stocks really be trading at the multiple of exuberant future hope that they are?

 

Oops!

 

The full breakdown of GDP components:

 

If It Wasn’t For Obamacare, Q1 GDP Would Be Negative

Tyler Durden's picture

Here is a shocker: for all the damnation Obamacare, which according to poll after poll is loathed by a majority of the US population, has gotten if it wasn’t for the (government-mandated) spending surge resulting from Obamacare, which resulted in the biggest jump in Healthcare Services spending in the past quarter in history and added 1.1% to GDP …

… real Q1 GDP (in chained 2009 dollars), which rose only $4.3 billion sequentially to $15,947 billion, would have been a negative 1.0%!

 

It’s curious how the weather impacted (or rather is used as an excuse to explain) everything but government-mandated healthcare spending in the first quarter.

And of course, for all those who correctly point out that mandatory spending on healthcare, also known as malinvestment, took away from spending on every other discretionary item possible, well… you are right.

 

About That CapEx Spending Renaissance…

Tyler Durden's picture

For all the talk that imminent, inevitable, “any second now” CapEx spending renaissance is getting, we can only assume we are looking at a wrong chart of the change in quarterly fixed income spending that plugs straight into the US GDP calculation. There is no other possible explanation.

GOTTA LOVE THE PROPAGANDA PEDDLERS

This little propaganda press release from the government/mainstream media mouthpieces is a beauty. Based on the headline, the mindless masses see that consumers are spending at a healthy pace. All must be well. The first sentence declares this was the highest rate of spending since November. Of course that is unequivocally false, since last month the propaganda peddlers reported a 0.4% increase in spending. But wait, they only over-reported last month’s increase by 100%. Their bad. The increase was really only a pitiful 0.2%, and not a strong 0.4%. Guess what will happen next month? The 0.3% reported increase will be adjusted back to 0.1% and the media will report the strongest growth since November again. Do you get it?

Did you notice why consumer spending surged in January? Your heating bill and health insurance premiums surged. Yes. Paying more due to Obamacare and the record cold caused by global warming is considered a positive economic development by your government keepers. We also know for a fact that real wages are stagnant or declining, so any increase in spending is happening using debt. That is wonderful for the debt peddlers on Wall Street and in the government (student loans, Ally Financial), but not so good for the average person.

The last couple sentences of this fabulous economic release is that inflation has only grown by 0.9% in the last year. That’s precious. Have your expenses only grown by 0.9% in the last year? I didn’t think so. Hurry up and turn on CNBC to watch Liesman and Cramer be exhilarated by this fabulous consumer data.

Consumer spending rises 0.3% in February

WASHINGTON (MarketWatch) – Consumer spending in the U.S. rose in February at the fastest rate since November as Americans spent more on health care and utilities, but purchases of durable goods fell for the third straight month in a negative sign. Spending climbed 0.3% last month on a seasonally adjusted basis, the Commerce Department reported Friday. Partly offsetting the gain, however, was a reduction in rate of spending in January. Spending increased at a 0.2% clip in the first month of the year instead of 0.4% as previously reported. Personal income also rose 0.3% in February. Economists surveyed by MarketWatch had forecast a 0.3% gain in spending and a 0.2% rise in income. The U.S. savings rate edged up to a four-month high of 4.3% from 4.2% in January. Inflation-adjusted disposable income, meanwhile, jumped 0.3% to mark the biggest advance in five months. Also, inflation as gauged by the core PCE price index posted a slight 0.1% increase in February, and it’s up just 1.1% over the past 12 months. The overall PCE index also rose 0.1% last month and its climbed 0.9% in the past year, offering further evidence that inflation remains muted.
Here is a link to the government propaganda report:http://www.bea.gov/newsreleases/national/pi/pinewsrelease.htm

When I go to the charts and peruse the data, I find these interesting factoids:

  • Real disposable personal income per person in the U.S. is currently $37,010. That is using the bastardized under-reported inflation figures from the BLS. Even using that joke of an adjustment, real disposable personal income per person is 1.5% below what it was in May of 2008.
  • Bernanke’s ZIRP is the gift that keeps giving to senior citizens as interest income is $158 BILLION lower now than it was in May 2007. All the grandmas out there eating cat food know who to thank.
  • When the crisis hit in 2008/2009 people began to come to their senses and the savings rate spiked to 6% – 8%. Now the masses are either broke or delusional, as the savings rate is near record lows at 4.3%.
  • Personal income has risen by $430 billion in the last year and $85 billion (20% of total) of that is government transfers (SS, Medicare, SNAP, Vet benefits, Medicaid, unemployment). Only in Orwellian America is the redistribution from producers to non-producers considered income.
  • Less than 50% of the increase ($211 billion) is from private industry wages. Who needs jobs when the government is distributing the cash?
  • Laughably, the government drones say that you spent less on gasoline, natural gas and electricity this February versus last February. Anyone who gets a heating bill every month knows that is not true.

It gets tiring poking holes in the propaganda spewed at us every day, but I’ll keep trying.

 

 

GDP ADJUSTED UPWARDS BECAUSE WE PAID MORE FOR HEALTH INSURANCE

Sometimes you just have to laugh at the gibberish dumped from the government propaganda agencies. Not only is the BEA overstating GDP by laughably telling us that inflation is only 1.6%, but they just adjusted GDP higher because we all spent more in the 4th quarter paying for healthcare than previously reported. Think about that for one minute. Obamacare forced you to pay higher health insurance premiums and the government considers that a BOOST to GDP.

WOW!!!! No wonder Obama is happy about Obamacare forcing insurance premiums up by 30% to 50%. It’s boosting our economy. What a fucking joke this country has become. And CNBC, along with the other media mouthpieces, will report this GDP increase as a positive for the American people.

Final Q4 2013 GDP Misses Expectations, Rises 2.6% Annualized – Full Breakdown

Tyler Durden's picture

And so the various estimates of Q4 GDP have made an almost full circle: starting at 3.22% in the first forecast, plunging to 2.38% in the second, and finally settling at 2.63%, a miss from the expected 2.7%. This is down from 4.1% recorded in Q3 which however as everyone knows by now was purely due to a unprecedented, record inventory build up.

In terms of components, Personal Consumption was the silver lining in this latest economic miss, rising at a 3.3% pace higher than the expected 2.7%. This was driven by greater than expected spending on health and financial services. Yes – higher health insUrance costs are somehow a boost to GDP. How this offsets spending on other end goods and services with a finite and declining disposable income stream remains to be seen.

In terms of the actual contribution, Personal Consumption was 2.22%, above 1.73% in the prior revision, offsetting yet another decline in the contribution from Capex, i.e. Fixed Investment, which dropped from +0.58% to +0.43%. By now, however, even Larry Fink has figured out that as long as the Fed is around, there can be no true CapEx growth. Which means it is all about boosting Personal Consumption through the “Russell 200,000” wealth effect channel.

The full breakdown of quarterly GDP is shown below.

 

But don’t worry: those hoping Q1 will be better, don’t hold your breath. This is what’s coming. You know – “snow in the winter” and all that.

THE FOURTEEN YEAR RECESSION

 “When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.”Napoleon Bonaparte

 Click to View

“A great industrial nation is controlled by its system of credit. Our system of credit is privately concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men … [W]e have come to be one of the worst ruled, one of the most completely controlled and dominated, governments in the civilized world—no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and the duress of small groups of dominant men.”Woodrow Wilson

When you ponder the implications of allowing a small group of powerful wealthy unaccountable men to control the currency of a nation over the last one hundred years, you understand why our public education system sucks. You understand why the government created Common Core curriculum teaches children that 3 x 4 = 13, as long as you feel good about your answer. George Carlin was right. The owners of this country (bankers, billionaires, corporate titans, politicians) want more for themselves and less for everyone else. They want an educational system that creates ignorant, obedient, vacuous, obese dullards who question nothing, consume mass quantities of corporate processed fast food, gaze at iGadgets, are easily susceptible to media propaganda and compliant to government regulations and directives. They don’t want highly educated, critical thinking, civil minded, well informed, questioning citizens understanding how badly they have been screwed over the last century. I’m sorry to say, your owners are winning in a landslide.

The government controlled public education system has flourished beyond all expectations of your owners. We’ve become a nation of techno-narcissistic, math challenged, reality TV distracted, welfare entitled, materialistic, gluttonous, indebted consumers of Chinese slave labor produced crap. There are more Americans who know the name of Kanye West and Kim Kardashian’s bastard child (North West) than know the name of our Secretary of State (Ketchup Kerry). Americans can generate a text or tweet with blinding speed but couldn’t give you change from a dollar bill if their life depended upon it. They are whizzes at buying crap on Amazon or Ebay with a credit card, but have never balanced their checkbook or figured out the concept of deferred gratification and saving for the future. While the ignorant masses are worked into a frenzy by the media propaganda machine over gay marriage, diversity, abortion, climate change, and never ending wars on poverty, drugs and terror, our owners use their complete capture of the financial, regulatory, political, judicial and economic systems to pillage the remaining national wealth they haven’t already extracted.

The financial illiteracy of the uneducated lower classes and the willful ignorance of the supposedly highly educated classes has never been more evident than when examining the concept of Federal Reserve created currency debasement – also known as inflation. The insidious central banker created monetary inflation is the cause of all the ills in our warped, deformed, rigged financialized economic system. The outright manipulation and falsity of government reported economic data is designed to obscure the truth and keep the populace unaware of the deception being executed by the owners of this country. They have utilized deceit, falsification, propaganda and outright lies to mislead the public about the true picture of the disastrous financial condition in this country. Since most people are already trapped in the mental state of normalcy bias, it is easy for those in control to reinforce that normalcy bias by manipulating economic data to appear normal and using their media mouthpieces to perpetuate the false storyline of recovery and a return to normalcy.

This is how feckless politicians and government apparatchiks are able to add $2.8 billion per day to the national debt; a central bank owned by Too Big To Trust Wall Street banks has been able to create $3.3 trillion out of thin air and pump it into the veins of its owners; and government controlled agencies report a declining unemployment rate, no inflation and a growing economy, without creating an iota of dissent or skepticism from the public. Americans want to be lied to because it allows them to continue living lives of delusion, where spending more than you make, consuming rather than saving, and believing stock market speculation and home price appreciation will make them rich are viable life strategies. Even though 90% of the population owns virtually no stocks, they are convinced record stock market highs are somehow beneficial to their lives. They actually believe Bernanke/Yellen when they bloviate about the dangers of deflation. Who would want to pay less for gasoline, food, rent, or tuition?

Unless you are beholden to the oligarchs, that sense of stress, discomfort, feeling that all in not well, and disturbing everyday visual observations is part of the cognitive dissonance engulfing the nation. Anyone who opens their eyes and honestly assesses their own financial condition, along with the obvious deterioration of our suburban sprawl retail paradise infrastructure, is confronted with information that is inconsistent with what they hear from their bought off politician leaders, highly compensated Ivy League trained economists, and millionaire talking heads in the corporate legacy media. Most people resolve this inconsistency by ignoring the facts, rejecting the obvious and refusing to use their common sense. To acknowledge the truth would require confronting your own part in this Ponzi debt charade disguised as an economic system. It is easier to believe a big lie than think critically and face up to decades of irrational behavior and reckless conduct.

What’s In Your GDP                          

“The Gross Domestic Product (GDP) is one of the broader measures of economic activity and is the most widely followed business indicator reported by the U.S. government. Upward growth biases built into GDP modeling since the early 1980s, however, have rendered this important series nearly worthless as an indicator of economic activity.  The popularly followed number in each release is the seasonally adjusted, annualized quarterly growth rate of real (inflation-adjusted) GDP, where the current-dollar number is deflated by the BEA’s estimates of appropriate price changes. It is important to keep in mind that the lower the inflation rate used in the deflation process, the higher will be the resulting inflation-adjusted GDP growth.”John Williams – Shadowstats

GDP is the economic statistic bankers, politicians and media pundits use to convince the masses the economy is growing and their lives are improving. Therefore, it is the statistic most likely to be manipulated, twisted and engineered in order to portray the storyline required by the oligarchs. Two consecutive quarters of negative GDP growth usually marks a recession. Those in power do not like to report recessions, so data “massaging” has been required over the last few decades to generate the required result. Prior to 1991 the government reported the broader GNP, which includes the GDP plus the balance of international flows of interest and dividend payments. Once we became a debtor nation, with massive interest payments to foreigners, reporting GNP became inconvenient. It is not reported because it is approximately $900 billion lower than GDP. The creativity of our keepers knows no bounds. In July of 2013 the government decided they had found a more “accurate” method for measuring GDP and simply retroactively increased GDP by $500 billion out of thin air. It’s amazing how every “more accurate” accounting adjustment improves the reported data. The economic growth didn’t change, but GDP was boosted by 3%. These adjustments pale in comparison to the decades long under-reporting of inflation baked into the GDP calculation.

As John Williams pointed out, GDP is adjusted for inflation. The higher inflation factored into the calculation, the lower reported GDP. The deflator used by the BEA in their GDP calculation is even lower than the already bastardized CPI. According to the BEA, there has only been 32% inflation since the year 2000. They have only found 1.4% inflation in the last year and only 7.1% in the last five years. You’d have to be a zombie from the Walking Dead or an Ivy League economist to believe those lies. Anyone living in the real world knows their cost of living has risen at a far greater rate. According to the government, and unquestioningly reported by the compliant co-conspirators in the the corporate media, GDP has grown from $10 trillion in 2000 to $17 trillion today. Even using the ridiculously low inflation BEA adjustment yields an increase from $12.4 trillion to only $15.9 trillion in real terms. That pitiful 28% growth over the last fourteen years is dramatically overstated, as revealed in the graph below. Using a true rate of inflation exposes the grand fraud being committed by those in power. The country has been in a never ending recession since 2000.   

Your normalcy bias is telling you this is impossible. Your government tells you we have only experienced a recession from the third quarter of 2008 through the third quarter of 2009. So despite experiencing two stock market crashes, the greatest housing crash in history, and a worldwide financial system implosion the authorities insist  we’ve had a growing economy 93% of the time over the last fourteen years. That mental anguish you are feeling is the cognitive dissonance of wanting to believe your government, but knowing they are lying. It is a known fact the government, in conspiracy with Greenspan, Congress and academia, have systematically reduced the reported CPI based upon hedonistic quality adjustments, geometric weighting alterations, substitution modifications, and the creation of incomprehensible owner’s equivalent rent calculations. Since the 1700s consumer inflation had been estimated by measuring price changes in a fixed-weight basket of goods, effectively measuring the cost of maintaining a constant standard of living. This began to change in the early 1980s with the Greenspan Commission to “save” Social Security and came to a head with the Boskin Commission in 1995.

Simply stated, the Greenspan/Boskin Commissions’ task was to reduce future Social Security payments to senior citizens by deceitfully reducing CPI and allowing politicians the easy way out. Politicians would lose votes if they ever had to directly address the unsustainability of Social Security. Therefore, they allowed academics to work their magic by understating the CPI and stealing $700 billion from retirees in the ten years ending in 2006. With 10,000 baby boomers per day turning 65 for the next eighteen years, understating CPI will rob them of trillions in payments. This is a cowardly dishonest method of extending the life of Social Security.

If CPI was calculated exactly as it was computed prior to 1983, it would have averaged between 5% and 10% over the last fourteen years. Even computing it based on the 1990 calculation prior to the Boskin Commission adjustments, would have produced annual inflation of 4% to 7%. A glance at an inflation chart from 1872 through today reveals the complete and utter failure of the Federal Reserve in achieving their stated mandate of price stability. They have managed to reduce the purchasing power of your dollar by 95% over the last 100 years. You may also notice the net deflation from 1872 until 1913, when the American economy was growing rapidly. It is almost as if the Federal Reserve’s true mandate has been to create inflation, finance wars, perpetuate the proliferation of debt, artificially create booms and busts, enrich their Wall Street owners, and impoverish the masses. Happy Birthday Federal Reserve!!!

 Click to View

When you connect the dots you realize the under-reporting of inflation benefits the corporate fascist surveillance state. If the government was reporting the true rate of inflation, mega-corporations would be forced to pay their workers higher wages, reducing profits, reducing corporate bonuses, and sticking a pin in their stock prices. The toady economists at the Federal Reserve would be unable to sustain their ludicrous ZIRP and absurd QEfinity stock market levitation policies. Reporting a true rate of inflation would force long-term interest rates higher. These higher rates, along with higher COLA increases to government entitlements, would blow a hole in the deficit and force our spineless politicians to address our unsustainable economic system. There would be no stock market or debt bubble. If the clueless dupes watching CNBC bimbos and shills on a daily basis were told the economy has been in fourteen year downturn, they might just wake up and demand accountability from their leaders and an overhaul of this corrupt system.          

Mother Should I Trust the Government?

We know the BEA has deflated GDP by only 32% since 2000. We know the BLS reports the CPI has only risen by 37% since 2000. Should I trust the government or trust the facts and my own eyes? The data is available to see if the government figures pass the smell test. If you are reading this, you can remember your life in 2000. Americans know what it cost for food, energy, shelter, healthcare, transportation and entertainment in 2000, but they unquestioningly accept the falsified inflation figures produced by the propaganda machine known as our government. The chart below is a fairly comprehensive list of items most people might need to live in this world. A critical thinking individual might wonder how the government can proclaim inflation of 32% to 37% over the last fourteen years, when the true cost of living has grown by 50% to 100% for most daily living expenses. The huge increases in property taxes, sales taxes, government fees, tolls and income taxes aren’t even factored in the chart. It seems gold has smelled out the currency debasement and the lies of our leaders. This explains the concerted effort by the powers that be to suppress the price of gold by any means necessary.   

Living Expense

Jan-00

Mar-14

% Increase

Gallon of gas

$1.27

$3.51

176.4%

Barrel of oil

$24.11

$100.00

314.8%

Fuel oil per gallon

$1.19

$4.07

242.0%

Electricity per Kwh

$0.084

$0.134

59.5%

Gas per therm

$0.712

$1.078

51.4%

Dozen eggs

$0.97

$2.00

106.2%

Coffee per lb

$3.40

$5.20

52.9%

Ground Beef per lb.

$1.90

$3.73

96.3%

Postage stamp

$0.33

$0.49

48.5%

Movie ticket

$5.25

$10.25

95.2%

New car

$20,300.00

$31,500.00

55.2%

Annual healthcare spending per capita

$4,550.00

$9,300.00

104.4%

Average private college tuition

$22,000.00

$37,000.00

68.2%

Avg home price (Case Shiller)

$161,000.00

$242,000.00

50.3%

Avg monthly rent (Case Shiller)

$635.00

$890.00

40.2%

Ounce of gold

$279.00

$1,334.00

378.1%

Mother, you should not trust the government. There is no doubt they have systematically under-reported inflation based on any impartial assessment of the facts. The reality that we remain stuck in a fourteen year recession is borne out by the continued decline in vehicle miles driven (at 1995 levels) due to declining commercial activity, the millions of shuttered small businesses, and the proliferation of Space Available signs in strip malls and office parks across the land. The fact there are only 8 million more people employed today than were employed in 2000, despite the working age population growing by 35 million, might be a clue that we remain in recession. If that isn’t enough proof for you, than maybe a glimpse at real median household income, retail sales and housing will put the final nail in the coffin of your cognitive dissonance.

The government and their media mouthpieces expect the ignorant masses to believe they have advanced their standard of living, with median household income growing from $40,800 to $52,500 since 2000. But, even using the badly flawed CPI to adjust these figures into real terms reveals real median household income to be 7.3% below the level of 2000. Using a true inflation figure would cause a CNBC talking head to have an epileptic seizure.        

Click to View

The picture is even bleaker when broken down into the age of households, with younger households suffering devastating real declines in household income since 2000. I guess all those retail clerk, cashier, waitress, waiter, food prep, and housekeeper jobs created over the last few years aren’t cutting the mustard. Maybe that explains the 30 million increase (175% increase) in food stamp recipients since 2000, encompassing 19% of all households in the U.S. Luckily the banking oligarchs were able to convince the pliable masses to increase their credit card, auto and student loan debt from $1.5 trillion to $3.1 trillion over the fourteen year descent into delusion.

When you get your head around this unprecedented decline in household income over the last fourteen years, along with the 50% to 100% rise in costs to live in the real world, as opposed to the theoretical world of the Federal Reserve and BLS, you will understand the long term decline in retail sales reflected in the following chart. When you adjust monthly retail sales for gasoline (an additional tax), inflation (understated), and population growth, you understand why retailers are closing thousands of stores and hurdling towards inevitable bankruptcy. Retail sales are 6.9% below the June 2005 peak and 4% below levels reached in 2000. And this is with millions of retail square feet added over this time frame. We know the dramatic surge from the 2009 lows was not prompted by an increase in household income. So how did the 11% proliferation of spending happen?

Click to View

The up swell in retail spending began to accelerate in late 2010. Considering credit card debt outstanding is at exactly where it was in October 2010, it seems consumers playing with their own money turned off the spigot of speculation. It has been non-revolving debt that has skyrocketed from $1.63 trillion in February 2010 to $2.26 trillion today. This unprecedented 39% rise in four years has been engineered by the government, using your tax dollars and the tax dollars of unborn generations. The Federal government has complete control of the student loan market and with their 85% ownership of Ally Financial, the largest auto financing company, a dominant position in the auto loan market. The peddling of $400 billion of subprime student loan debt and $200 billion of subprime auto loan debt has created the illusion of a retail recovery. The student loan debt has been utilized by University of Phoenix MBA wannabes  to buy iGadgets, the latest PS3 version of Grand Theft Auto and the latest glazed donut breakfast sandwich on the market. It’s nothing but another debt financed bubble that will end in tears for the American taxpayer, as hundreds of billions will be written off.

The fake retail recovery pales in comparison to the wolves of Wall Street produced housing recovery sham. They deserve an Academy Award for best fantasy production. The Federal Reserve fed Wall Street hedge fund purchase of millions of foreclosed shanties across the nation has produced media proclaimed home price increases of 10% to 30% in cities across the country. Withholding foreclosures from the market and creating artificial demand with free money provided by the Federal Reserve has temporarily added $4 trillion of housing net worth and reduced the number of underwater mortgages on the books of the Too Big To Trust Wall Street banks. The percentage of investor purchases and cash purchases is at all-time highs, while the percentage of first time buyers is at all-time lows. Anyone with an ounce of common sense can look at the long-term chart of mortgage applications and realize we are still in a recession. Applications are 35% below levels at the depths of the 2008/2009 recession. Applications are 65% below levels at the housing market peak in 2005. They are even 35% below 2000 levels. There is no real housing recovery, despite the propaganda peddled by the NAR, CNBC, and Wall Street. It’s a fraud.   

It is the pinnacle of arrogance and hubris that a few Ivy League educated economists sitting in the Marriner Eccles Building in the swamps of Washington D.C., who have never worked a day in their lives at a real job, think they can create wealth and pull the levers of money creation to control the American and global financial systems. All they have done is perfect the art of bubble finance in order to enrich their owners at the expense of the rest of us. Their policies have induced unwarranted hope and speculation on a grand scale. Greenspan and Bernanke have provoked multiple bouts of extreme speculation in stocks and housing over the last 15 years, with the subsequent inevitable collapses. Fed encouraged gambling does not create wealth it just redistributes it from the peasants to the aristocracy. The Fed has again produced an epic bubble in stock and bond valuations which will result in another collapse. Normalcy bias keeps the majority from seeing the cliff straight ahead. Federal Reserve monetary policies have distorted financial markets, created extreme imbalances, encouraged excessive risk taking, and ruined the lives of working class people. Take a long hard look at the chart below and answer one question. Was QE designed to benefit Main Street or Wall Street?  

The average American has experienced a fourteen year recession caused by the monetary policies of the Federal Reserve. Our leaders could have learned the lesson of two Fed induced collapses in the space of eight years and voluntarily abandoned the policies of reckless credit expansion, instead embracing policies encouraging saving, capital investment and balanced budgets. They have chosen the same cure as the disease, which will lead to crisis, catastrophe and collapse.  

“There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.” – Ludwig von Mises