Yet Another Reality Check

"A picture is worth a thousand words."

If you're as befuddled as I am as to what the bulls are looking at, here's an ugly 3,000-word reality check.

Economy

(Source: Zero Hedge)

Government

Stock Market

(Source: Market Anthropology)

Feel free to pass these along to any of the delusionals you might know (not that it will matter, of course).

Comments

[Frankenstein Government]

I was in absolute awe watching this market behave today. It is seriously fucking broken.

[Central Bank News]

Interesting charts, depending where you look in the US, the economy is either in terrible terrible shape, or showing signs of improvement - but do you think it is enough to prompt another round of quantitative easing? For that matter, what will the US government and/or Fed do about the housing market? Bernanke seems to have some ideas, but how will that translate into action?

[Walter Storm]

Listen to my new episode Stock Timer, Call in show. at

http://tobtr.com/s/2788153

http://etf.typepad.com/blog/

http://facebook.com/SUPERSTOCKTIMER

Thank You,

Walter

[Fudging the truth... the new metric]

Everything is broken...

Top Justice officials linked to mortgage banks
Pressure rises on Justice to open wide-ranging probe of mortgage servicers

U.S. Attorney General Eric Holder and Lanny Breuer, head of the Justice Department's criminal division, were partners for years at a Washington law firm that represented a Who's Who of big banks and other companies at the center of alleged foreclosure fraud, a Reuters inquiry shows.

The firm, Covington & Burling, is one of Washington's biggest white shoe law firms. Law professors and other federal ethics experts said that federal conflict of interest rules required Holder and Breuer to recuse themselves from any Justice Department decisions relating to law firm clients they personally had done work for.

While Holder and Breuer were partners at Covington, the firm's clients included the four largest U.S. banks - Bank of America, Citigroup, JP Morgan Chase and Wells Fargo & Co - as well as at least one other bank that is among the 10 largest mortgage servicers.

http://www.msnbc.msn.com/id/46070458/ns/business-us_business/#.TxrRfYF33Tp

Lanny Breur

http://www.cbsnews.com/video/watch/?id=7390536n

[Ever feel like you're behind the 8 ball?]

Maybe all this money is being put to work?

The Global Elite Are Hiding 18 Trillion Dollars In Offshore Banks
The amount of money being funneled through Sankaty today is absolutely stunning....

Today, Bain Capital manages $60 billion in assets, according to a spokesman. The total includes $23 billion in Sankaty debt and credit funds. Half a dozen Sankaty affiliates now are active in Bermuda, corporate registry records show.

The Sankaty debt hedge funds are organized as partnerships in Delaware that produce taxable business income by investing in fixed-income bonds and other debt instruments. Under tax law, even tax-exempt U.S. institutions may face a 35% tax if they invest directly in such hedge funds. By investing instead through a Bermuda corporation, the taxes are legally blocked, experts say.

Of course all of this is perfectly legal.

So nobody gets into trouble for any of this.

http://theeconomiccollapseblog.com/archives/the-global-elite-are-hiding-18-trillion-dollars-in-offshore-banks

[St.Juste]

This is not 2008 re-dux. I agreed with you then, not now but if you won't believe me listen to Jim O'Neil on Charlie Rose. Oil is bursting out of North Dakota, natural gas is at historic lows and plentiful thanks to technology breakthroughs. While the U.S. consumer has another 7 years to work through his debt, the BRICS will take up the slack, GM is back as #1 auto producer with Japan severely crippled as a competitor; China is expanding imports, the dollar is relatively low, U.S. productivity high and U.S. exports very competitive. And to add icing to the cake, it's Saturday and the Republicans are about to begin the nomination of a complete idiot which will keep them out of power and us out of harms way for another 4 years. It will be slow going but the bulls are right.

[Pump it up wasn't just a song...it's economic policy]

Economic Collapse amids a Mini-Recovery

If the entire financial system does not come down upon our heads and if we do not have another war, global growth is going nowhere in the year’s ahead. We had a mini-recovery, but it cost $1.8 trillion. We had a second recovery and that cost $1.5 trillion. We are entering a third of what is becoming yearly recoveries that will probably cost $1.3 trillion. In other worlds without these massive injections of money and credit we would probably be in a deflationary depression.

Over and over again we see other professionals still recommending US Treasuries yielding anywhere from zero to 1.87%, while official inflation is 3.8% and real inflation is 11.6%. These buyers of Treasuries have to have some fierce pressure put on them to purchase such investments; some are predicting a 2-1/2%, 30-year bond and a 1-1/2% 10-year note. Those gains are fine, but they nowhere offset the inflationary risk. For 25 years bonds have outperformed stocks, but few money managers talk about the outsized returns in gold and silver related assets. That isn’t acceptable and probably never will be. Professionals going the income route may be able to return 5% or even 7%, but that is not sufficient in having to deal with inflation and the volatility of the market. Producing gold and silver mines are selling at 15 times earnings when they could sell substantially higher based on P/E and gold and silver prices. You are looking at very easy 50% increases.

As we pointed out earlier retail consumption is going to fall. Except for the second and third world in major countries growth in GDP has only been available with massive stimulus and we see nothing to change that. Look at what the Fed and the ECB did three weeks ago; they poured $10 trillion into the European economies, if needed. That approach won’t change because there is no alternative and the situation is worsening. All Western economies will be lucky to have 2% GDP growth this year in spite of stimulus.

As we have written before, lurking in the wings is the French presidential primary in April. Socialist François Hollande, is now parroting Marine Le Pen of the Front National, to dump the euro and the EU. Sarkozy is only two-points ahead of Hollande and his plan for a financial transaction tax is losing momentum. He may not even make the May final.

In this unsettling atmosphere the US is now running the show, but no one in Europe will admit that. The Fed has lent the ECB, illegally, $1 trillion in what they call a swap, which is simply phony. Using fractional banking prudently we see ultimately $10 trillion being available to function with. Whether fractionalization will be use remains to be seen. As you can see, $1 trillion alone can keep the euro floating for a year, whether one or three countries drop out.

http://globalresearch.ca/index.php?context=va&aid=28777

[How we gonna process those debt payments and manage invoices]

I get so angry whenever I see what has happened to our debt to GDP ratio. It's absurd. I remember four years ago when everyone was like "we should be more like Europe." Now, we A)are looking a lot more like a European country B) looking like a european country isn't exactly a good thing these days.

Part of me feels like 1980 to 2008 was pax Americana. We'll still be relevant, but we've got to realize that we're not always going to be top dog and limit our exposure where there's colossal downside.

[roger]

Economist jargon is designed to obscure,confuse and
mislead,however more often than not they become
mesmerized by their own words, it's has if words
become a reality in themselves.

[MOPE]

Isn' the debt/gdp actually larger when you account for hedonic adjustments?

The accounted size of the USEconomy is subjected to vast distortions in the calculations. As the measured price inflation is kept low by force, the estimated GDP result is lifted higher by the same force. The lie in the CPI has been 6% to 8% for the last few years. That means the GDP has been running consistently negative in the most profound and harmful economic recession in American history. My analysis relies upon the indefatigable work of the Shadow Govt Statistics group. They measure the GDP as one quarter versus the same quarter a year ago to demonstrate a clear downward trend, a chronic recession. Conclude that the US GDP has been in decline by 4% to 6% for consecutive years. Shedlock has reported by means of Bureau of Economic Analysis data, that the US GDP is artificially lifted by a whopping $2.257 trillion in hedonic adjustments, equal to 22% of the entire GDP. That portion of the US GDP is pure myth. The United States is the only major country that hedonically adjusts its GDP, or needs to. The USEconomy is among the weakest in the entire industrialized world from industrial gutting and chronic consumption and pursuit of asset inflation.

http://www.financialsense.com/contributors/jim-willie/2012/01/20/inflation-the-only-tool-left

[Doable Finance]

Debt to GDP ratio is way out of proportion.