'Conceived By Someone Who Never Worked in a Real Job'

Financial Armageddon has long highlighted the disconnect between Main Street and Wall Street. Even now, after an extraordinary number of banks and brokers have failed or are still being bailed out, and thousands of financial industry workers have lost their jobs (excluding those at the top, who should have been the first to go) or had bonuses and salaries slashed, there are still plenty of clueless "experts" running around -- including those who have the power to invest other people's money -- who claim to see all manner of "green shoots" sprouting up throughout the economy. While I could be wrong when it comes to my admittedly pessimistic views about where the bottom is (and when we might reach that point), even a cursory glance at what is happening around the country makes me feel reasonably confident that we aren't there yet. To cite just one example, I refer to the following post from Clusterstock, entitled "About That GDP Inventory Decline..."

An executive who works for a massive global industrial company observes that the much-celebrated decline in inventories in the GDP numbers should not be taken as a sign that GDP is suddenly about to start accelerating:

I watched with some amusement as analysts decided that reduced Inventories in the GDP data boded well for future GDP figures.  While, all else equal, certainly lower would be better, the fact is we are slashing inventories (and trying to do so even more) because there are no orders.  None.  We do take "orders" (non-binding, no cash down payment) which are what is optimistically shared with the Street but binding orders with cash down payments do not exist today, haven't for over 8 months now.  When one lands it is company news and because a government entity somewhere backed it.  And trust me, if we aren't getting orders neither are the next 5 guys.

I suppose either the analysts - and the market, which has been juicing our stock (thanks for that) - are correct and the orders are about to start rolling in, or they are going to be somewhat disappointed later this year when our backlog starts to run dry.  I hope they're right.  But I assure you the absolute last thing that's going to happen is for us to start *growing* inventories without the orders - that strategy can only possibly be conceived in a cubicle somewhere, occupied by someone that never worked in a real job. [MP here: don't you just love that last bit?]

Comments

[roger]

That last bit is a jewel of materialistic understanding
of reality whereas most people think in terms of truncated
idealistic terms.
As for(the bottom) there is NO BOTTOM but there will be
something different-new

[bill]

Heres' a wake-up call...

GDP is made of Personal consumption, Business Investments, Government spending, and corrupted by Imports subtracted from Exports (commerce).

Let's look at the GDP component Investments, which is what makes a country grow:
In 2008, Investments dropped from 2 Trillion (Q1) to 1.9 Trillion (Q4).
In 2009 Q1, Investments dropped to 1.5 Trillion, a -51.8% annualized drop!

Now let's look at commerce (Imports, Exports):
In 2008, Imports went from 2.53 Trillion (Q1) to 2.27 Trillion (Q4).
In 2009 Q1, Imports dropped to 1.87 Trillion,

In 2008, Exports went from 1.8 Trillion (Q1) to 1.7 Trillion (Q4).
In 2009 Q1, Exports dropped to 1.5 Trillion, a -30% annualized drop!

Ref: http://www.bea.gov/national/nipaweb/SelectTable.asp

[dryfly]

Sounds like they are describing a large aerospace company...

[farang]

That last sentence...I don't know, but it reminded me of that photo of Obama's "Middle Class Commission" he set up, that has NO Middle Class members.......

Yes Virginia, when GM doesn't do as quite poorly as the "experts" forecast, then one *could* state "things are improving."

And one could state that maybe Santa will fly reindeer from the North pole, and drop bailout funds in ToyRus parking lots this December...but I wouldn't count on it, either.