Watch Out Below

For anybody who's been paying attention, it's no surprise to learn, according to an association of chief executive officers of leading U.S. companies with more than $7.3 trillion in annual revenues, that CEOs have sharply reduced expectations for the U.S. economy:

Policy Uncertainty Drives Weak Outlook on Sales, Hiring, Capital Spending and GDP

Washington – The results of Business Roundtable’s (BRT) third quarter CEO Economic Outlook Survey for 2012 show a further downturn in CEOs’ expectations for sales, capital spending and hiring for the next six months. The Business Roundtable CEO Economic Outlook Survey Index decreased to 66.0 in the third quarter of 2012 from 89.1 in the second quarter of 2012, the lowest reading since the third quarter of 2009 and the third largest single quarter drop in the survey’s history.

“CEOs foresee slower overall economic growth for 2012 and have lower expectations for sales, capital expenditures and hiring compared to last quarter,” said Jim McNerney, Chairman of Business Roundtable and Chairman, President and CEO of The Boeing Company. “The downshift in quarterly sentiment reflects continuing concern about the strength of the recovery, including uncertainty over the approaching fiscal cliff and accompanying debates about the tax code, sequestration and the debt ceiling.”

For those of you who are into technical analysis (I happen to be a fan), the BRT's Economic Outlook Index appears to have traced out a "head & shoulders" top -- a chart pattern that is often seen before a precipitous drop.

Of course, this time is different -- right?

Comments

[roger]

Of course, this time is different. Not all crisis are born equal, the first are mild and just audible, then the crescendo intensify in speed and sound till the grand finally, think Bolero de Ravel or Tchaikovsky Pathetic. :)

[Tom]

Good one roger!

i have the (sinking) feeling that soon one of these "downturns" is going to go into free fall and we'll not recover: think about if the whole country's electrical grid failed. We'd see what a fiction we've been living then.
All the wasted resources (like cutting grass - what a complete waste!), all the pollution - we'll be drowning in it before it's over.

Humanity, what an ego trip! Made ourselves out to be "something" special. Called ourselves gods because of our corporate "power" to lay waste to the environment. We were decidedly not "wise" in any way. We failed to learn the lessons of the past and fell to the seven deadly sins. Never content. More, always more. Well, this is where our overbreeding, greedy, uncooperative, stupid, wanton behavior takes us - to the end of the line. No matter what we do now there's gonna be hell to pay.

We have seen only the beginning of how bad it's going to get this past few years (10 yrs or so of drought in the breadbasket states have resulted in rivers dryin' up, livestock stressed, crops impossible to grow, no rain for months). Despite record breaking heat, drought and tornados, we keep doing the same thing, never change our ways. Well, the Earth is about to change 'em for us.

[Rocky]

Did you know that the last national elections in Weimar Germany were held on November 6, 80 years ago. For the second time that year, the major political parties were not able to form a coalition government in the Reichstag (parliament). Both times, the Nazi party won the largest number of votes but not enough to form a majority government. In January, 1933, President von Hindenburg asked Hitler to form a government.

Let's hope the outcome of the upcoming US elections on November is better and that Congress does not send this country over a fiscal cliff. But you never know. Billionaire Sheldon Adelson can always flee to Macau where he has a very profitable casino, if the country descends into chaos. But what will you do?

[Rocky]

It should read "upcoming elections on November 6".

[stevef]

"...President von Hindenburg asked Hitler to form a government..."...You forgot to mention Hitler was appointed Chancellor because the Stalin backed street armies in the German major cities were likely to create a civil war leading to a Bolshevik takeover of Germany. Hitler was needed to have the National Socialist brown shirts defeat the Stalinist street gangs with the backing of the Germany government. Without Stalin no one would have ever heard of Hitler and the Nazis.

[roger]

Political economy,key to understanding global events
It is common belief that Individuals make history, since they control government it
appears quiet logical, but wrong. If Tzarist Russia would have treated the people
fairly, Stalin would have remained incognito, if the victors of ww1 would have shown
compassion for the German people ( the treaty of Versailles was terribly harsh) Hitler also would have remained incognito. THE ECONOMIC CONDITIONS OF THE DAY shape the thinking and actions of the masses,and no dictator could acquire power without their consent, that include the Captains of industry who support a strong leader.
In the masses is where power resides, wetter they know it or not, a crowd in rebellion
does not think, it acts, mostly against it's own interest.
People shape their destiny but do not control it.

[Alexander Ač]

Hi Michael,

nice piece. It beggs the question why there was no SHS pattern before 2008-9 decline?

Cheers,

Alex

[Alex Goldman]

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[Marion Shaw]

And if Wall Street banks, well
substantiated history, had not
financed the Bolshevik Revolution,
no one would ever have heard of
Stalin or Hitler, who was also
financed by Wall Street banks. And if the Wall Street Banks, and London and Berlin,had not fianced the illfated Russo-Japanese War in 1904, under the blessed secret guidance of Theodore Roosevelt, no one would have ever heard of aggressive Imperial Japan, even
though it slaughtered the Chinese
Army on the fields of Pyongyang in
1864
And if I stop cutting my grass
where I live in a mountain valley,
even though we may be falling into
the abyss, my yard will be a ruthless takeover of nature gone
wild within weeks. That is the one
task that is still very cheap,
requiring only a little gasoline;
reaping great rewards of man over
nature.

[Marion Shaw]

Erratum: Japan slaughtered the
Chinese in 1894-95; not 1864.
Sorry,

[Watch out above]

Peter Schweitzer: Crony Capitalism is Yielding Compromised Policy and Terrible Economics (video)
Crony capitalism is compromising policy and the economy. In the United States now, the city with the highest per capita income in America is Washington, DC. They passed Silicon Valley last year. Seven of the ten wealthiest counties in America are counties that border Washington, DC. Government is big business. There is serious money to be make. That is leading a lot of young and talented people into influence-peddling. And it is changing the entire incentive structure. Look at hedge funds, for example. Funds that invest in lobbyists and make a lot of campaign contributions consistently outperform hedge funds that don't. It's not because they're smarter – it's because they're getting access to information in terms of legislation or trends that gives them a leg up. It is distorting the entire nature of our free-market economic system.

http://www.capitalismwithoutfailure.com/2012/09/peter-schweitzer-crony-capitalism-is.html

[roger]

America's Siberian Adventure: 1918-1920 [Hardcover]
William S. Graves (Author) (for starters,reality check)
Ultra rich individuals such as Arman Hammer had no qualms about trafficking with the
Russian revolutionaries, there where and always will be hundreds/thousands like him.
But western capitalism has from the inset fought tooth and nails any attempt at creating a better world, child labor, woman's rights, better labor conditions, you name it they where against it. Man over nature or the arrogance of man, nature is the
source of life and cannot be dominated, granted nature is harsh but also sweet, working in harmony with natures laws, avoiding the bad but emphasizing the good is the
only way to go. Little homo Sapiens know your roots or you wont be around for long.

[America’s romance with the lie]

A Culture of Delusion

But success as a whore is about the only kind of success that can occur in Washington or in the media these days. Those who refuse to prostitute themselves arouse pity and denunciation, not admiration. A couple of years ago an acquaintance from a university in the northeast called me to say he had recently had lunch with some of my former associates in Washington. When he inquired about me, he said the response was, “Poor Craig, if he hadn’t turned critic, he would be worth tens of millions of dollars like us.”

I replied that my former associates were undoubtedly correct. My acquaintance said that he hadn’t realized that he was having lunch with a bunch of prostitutes.

The incentive to speak the truth and the reward for doing so are very weak. And not just for a writer, but also for academics and experts who can make far more money by lying than by telling the truth. How else would we have got GMOs, jobs offshoring, the “unitary executive,” and a deregulated financial system? It is a very lucrative career to testify as an expert in civil lawsuits. It is part of America’s romance with the lie that experts purchased by the opposing sides in a lawsuit battle it out as gladiators seeking the jury’s thumbs-up.

And look at Congress. The two members of the House who stood up for the Constitution and truth in government will soon be gone. Ron Paul is stepping down, and Dennis Kucinich was redistricted out of his seat. As for the Senate, these thoughtful personages recently voted 90-1 to declare war on Iran, as the sole dissenter, Rand Paul, pointed out. The Senate is very much aware, although only a few will publicly admit it, that the US has been totally frustrated and held to a standoff, if not a defeat, in Afghanistan and is unable to subdue the Taliban. Despite this, the Senate wants a war with Iran, a war which could easily turn out to be even less successful. Obviously, the Senate not only lies to the public but also to itself.

http://www.paulcraigroberts.org/2012/09/27/a-culture-delusion/

[No savings, no income, no buying power]

A Lost Decade for Savers
“I guess I’m old fashioned, but I continue to find it astonishing that the Bernanke Federal Reserve believes it is within its mandate to incite risk-taking from our savers,” says Doug Noland of Federated Investors, one of the authors behind the Credit Bubble Bulletin that for years warned of the hazards of an over-indebted economy. He fears that just as risk was mispriced when too many Americans bought homes and consumed past their means, the Fed-induced hunt for yield is pushing people to bid up all manner of debt instruments past their true value. Stay on the sidelines with your savings, and you lose.

http://www.businessweek.com/articles/2012-09-26/a-lost-decade-for-savers