US ECONOMY - At Stall Speed Before Payroll Tax Holiday Not Renewed

Major Realignment Of The Markets BofAML's David Woo via ZH

Moment of truth for US consumers

The prevailing optimism towards US consumers reflects the view that rising home prices will offset the impact of fiscal tightening. We have argued that whether this will turn out to be the case will depend critically on what happens to consumer confidence. Michigan consumer expectations fell in April to the lowest level since the fiscal cliff crisis. Furthermore, with the household saving rate having fallen to just 2.6% in February - the lowest level since December 2007 - household consumption could be more vulnerable than usual to any sudden confidence shock.

In our view, the market continues to underestimate the headwinds associated with the implementation of the sequester. Our US economist team estimate that this will amount to about $50bn worth of fiscal tightening over the next six months. If we were to assume that this will primarily take the form of reduced wages/salaries of government employees and contractors and that most of the hit will occur in Q2, this could result in a very dramatic shock to household income (Chart 10).

DURABLE GOODS - New Factory Orders

The year over year change in durable goods ex transports (aka Boeing's fully cancelable orders for flaming lithium- battery powered paperweights aircraft). All we say is we are so grateful for $160 billion in central bank QE each month (soon to rise to $200 billion once Goldman's Mark Carney spreads his tentacles in the Bank of England).

CAPITAL EXPENDITURE - Continuing to Rollover

March Durable Goods Implode, Plunge -5.7%; CapEx Recovery Put On Indefinite Hiatus 04-24-13 Zero Hedge

So much for the great American CapEx recovery. Moments ago the Census department released the March Durable Goods report, thanks to which one can lay to rest any hope of a recovery in the US economy, with the headline number printing an absolutely abysmal -5.7%, an epic swing from the +5.7% (revised lower of course to 4.3%) in February, and confirming the recovery is dead and buried. This was the biggest miss in headline data and the biggest drop since August, and the second worst since January 2009.

Although we are confident the propaganda spin is just waiting to be unleashed: after all it is possible that March weather was both too hot and too cold, thereby making the number completely irrelevant - after all it is always the inclement weather's fault when the economy does not act as predicted by some economist's DSGE model of reality and stuff.

This headline number was obviously a huge miss to expectations of -3%, with the misses spreading to all sub headline categories too: Durables ex-transportation was down -1.4%, on expectations of a 0.5% rise, (previous revised from -0.5% to -1.7%). And so much for CapEx with Cap Goods nondefense ex aircraft up just 0.2% (0.3% exp) with the previous revised from -2.7% to -4.8%, while the nondefense orders shipped ex air missed expectations of a 0.8% rise, printing at 0.3%, and the February data revised from 1.9% to 1.2%. In brief, horrifying economic data however one looks at it, and proof that the great CapEx recovery never existed to begin with. So much for 3% Q1 GDP, which is about to be revised by everyone lower across the board.

Finally, if this economic collapse validation doesn't send the S&P limit up, nothing will.

The only two charts needed to show what is really going on in terms of capex and generally spending on core capex:

Orders:

Shipments:

CRONY CAPITALISM -A destructive and distorted government protection racket

Farm Supports and Social Welfare 05-24-13 James Hall BATR.ORG

SECURITY-SURVEILLANCE COMPLEX - Vice rules over Virtue as America Remains Long on Indifference and Short on Indignation.

America, Long On Indifference, Short On Indignation 04-23-13 Via Ben Tanosburn of Tanosburn.com via ZH

A friend who teaches history in one of the area’s community colleges cynically told me a dozen years ago, shortly after the September 11 attack, that the upcoming writing of American history would be done not by historians, but by economists.  He contended that American military spending had brought the Soviet empire to its knees a generation before, now (in 2001) Osama bin Laden was lighting what he called the “slow wick-fuse” that would have the US implode as the ruling empire within a couple of decades.

My young friend then proceeded to draw economic curves on the un-rationed napkins made available with our overpriced Starbucks coffee.  His extrapolation of expenditures for components and subcomponents of the GDP might have appeared pessimistic then, but there was unquestionable rationality in his overall treatment.  Fear-triggered added government expenditures, whether via National Defense or some new domestic super-agency, would end up impoverishing the country; and, as he put it, “if fear expenditures don’t bury us, healthcare costs will.”  And all this history in front of us, we both agreed, was happening because of our blatant civic indifference to how our nation was being governed; or, rather, how the people had forfeited their duty to govern themselves.

The Boston Marathon terror incident made me revisit that extended coffee break with my friend, and what has happened in the twelve years hence.  We now have Homeland Security “defending” us – from little, other than fear – at a total budget authority which approaches $60 billion annually.  Two wars and more than a trillion dollars later, we have raised our chances for fear possibly ten, maybe even a hundred-fold… something which will eventually mature in terror to be perpetrated by those who’ll try to avenge the long line of victims the US has left behind in its imperial quest.

And added to the grievous vice of our indifference is our lack of indignation in watching ourselves being marched to the slaughter house and not showing an ounce of courage, a legitimate cry of indignation.  It became evident, if only in the economic arena, when the Occupy Movement made an attempt to pinpoint blame for the nation’s economic ills.  Indignation never materialized… indifference quickly suffocating the cries of a few.  As for any questioning by Americans of the seeds which grow terror; that will never happen while the empire continues waving its flags from hundreds of enclaves all over the world.  Unfortunately, most Americans find pride in that, not indignation.  

Anton Chekhov in his Gooseberries could just as easily have been writing about life a century later in this America of ours:

“I look at this life and see the arrogance and the idleness of the strong, the ignorance and bestiality of the weak, the horrible poverty everywhere, overcrowding, drunkenness, hypocrisy, falsehood. . . . Meanwhile in all the houses, all the streets, there is peace; out of fifty thousand people who live in our town there is not one to kick against it all. Think of the people who go to the market for food: during the day they eat; at night they sleep, talk nonsense, marry, grow old, piously follow their dead to the cemetery; one never sees or hears those who suffer, and all the horror of life goes on somewhere behind the scenes. Everything is quiet, peaceful, and against it all there is only the silent protest of statistics…”

So much for indignation, the silent protest of statistics!  Whether Chekhov’s town of 50,000 or today’s US of 315+ million people, we are all immersed in our selfish little lives proudly displaying what could be society’s worst vice: indifference… indifference to “all the horror of life [that] goes on somewhere behind the scenes.”

Indifference has historically been accepted by multiple cultures and religions as a vice.  Isn’t it about time, in an era where democracy appears to be slowly gaining ground, that we successfully battle such vice with its corresponding virtue: indignation?  After all, indignation is not just anger, but righteous anger at people or situations that are truly offensive or unjust to the better nature of humankind.

As we look at the arrogance of the strong, and the ignorance of the weak, we can’t help but recognize that at least for now... vice rules over virtue and our country will continue to remain long on indifference and short on indignation.  And that’s not a prescription to cure us from terrorism... or, what’s even worse, the fear of terrorism.

JAPAN - Little Physical or Mechanical reason for the BOJ’s easing program to work.

Japan's Inflation Propaganda And Why The BoJ Better Hope It's Not Successful 04-20-13 Nomura's Richard Koo via ZH

The existing (and ongoing) massive expansion of base money into the banking systems of the US, England, and Japan is without precedent. As Nomura's Richard Koo notes, at 16x statutory reserves, the liquidity 'should' have led to unprecedented inflation rates of 1,600% in the US, 970% in the UK, and 480% in Japan.

However, it has not, yet. In short, Koo continues, businesses and households in these economies have stopped borrowing money even though interest rates have fallen to zero. And with no one borrowing money and many actually paying down debt, the money multiplier has turned negative at the margin - because of the severe damage caused to balance sheets when the bubble collapse drove asset prices lower while leaving debts intact (so-called balance-sheet-recession).

This suggests that there is little physical or mechanical reason for the BOJ’s easing program to work. But the program could also have a psychological impact - and Japanese media is on an 'inflation' full-court press currently. The risk here is that not only borrowers but also lenders will start to believe the lies. No financial institutions anticipating inflation could ever lend money at current interest rates. No actual damage will be done as long as the easing program remains ineffective. But once it starts to affect psychology, the BOJ needs to quickly reverse the policy and bring the monetary base back to 'normal'. If the policy reversal is delayed, the Japanese economy (and inflation) could spiral out of control.

Via Richard Koo, Nomura,

The Money Multiplier... and inflation...

Before Mr. Kuroda was appointed BOJ governor, base money supplied by the Fed under quantitative easing amounted to 16.0x statutory reserves. The corresponding multiples for other central banks were 9.7x for the BOE, 4.8x for the BOJ, and 3.8x for the ECB. If the money multiplier were functioning properly, the money supply would therefore be 16 times larger than it currently is in the US, 9.7 times larger in the UK, 4.8 times larger in Japan, and 3.8 times larger in the eurozone.

If such an expansion in money supply actually took place in a short time, it would normally entail a similar increase in prices, leading to unprecedented inflation rates of 1,600% in the US, 970% in the UK, and 480% in Japan. The reason why this has not happened will be discussed in detail below.

In short, however, businesses and households in these economies have stopped borrowing money even though interest rates have fallen to zero. And with no one borrowing money and many actually paying down debt, the money multiplier has turned negative at the margin.

US and UK have 'not' been a success...

Central bank officials in the US and the UK claim quantitative easing has been a success because it prevented a Japan-like deflation. But, the rate of Japanese wage growth four to five years after the bubble collapsed was roughly equal to the levels now being observed in the US.

Because...

Common to all of these countries is the fact that businesses and households are saving in spite of zero interest rates. They are doing so because of the severe damage caused to balance sheets when the bubble collapse drove asset prices lower while leaving debts intact. Private savings are running at 8.8% of GDP in Japan, while the corresponding figures are 7.0% for the US, 3.3% for the UK, 8.1% for Spain, 8.6% for Ireland, 7.0% for Portugal, and 4.4% for Italy.

The fact that businesses and households in these economies are responding to zero interest rates by saving money rather than borrowing and spending aggressively clearly suggests that lending - and hence the money supply - will not expand no matter how much base money the central bank supplies.

Growth in private credit has been severely depressed. Even in the US, where conditions are said to be relatively healthy, private credit has yet to recover to pre-Lehman levels.

Quantitative easing - whether in Japan, the US, or the UK - cannot directly stimulate the economy or raise the rate of inflation so long as businesses and households refuse to borrow money and spend it.

But still the central bankers try...

Mr. Kuroda and other reflationists would probably argue that the newly announced easing program differs fundamentally from the incremental approach taken thus far because it marks a “new dimension” in aggressiveness. This is correct in one respect and wrong in another. Although Mr. Kuroda argues that the announcement of the current program has had a much greater impact than past announcements, this hypothesis has already been tested overseas, and the medium and long-term results do not support his conclusion.

Ignoring the reality that...

Clearly, the issue is not how aggressively or quickly the central bank eases, but rather the extent of the damage to private sector balance sheets caused by the bubble collapse. These experiences also underline the fact that a great deal of time is needed for businesses and households to repair their balance sheets.

and the empirical proof that...

The limited impact of the bold monetary actions undertaken by the Fed and the BOE suggests we should not expect much from the BOJ’s plan in the medium term in spite of its aggressiveness.

Unintended consequences...

Perhaps more important was why Japan’s interest rates were so low.

Essentially, the private sector had stopped borrowing money because of balance sheet problems, the subsequent debt trauma, and a shortage of domestic investment opportunities.

With no private-sector borrowers, Japanese banks selling JGBs yielding 0.6% to the BOJ may find themselves forced to reinvest the proceeds in JGBs given the lack of alternatives. If the replacement bond is likely to yield only 0.4%, the correct option is to continue holding the bond yielding 0.6%.

In that sense, quantitative easing in Japan has already reached its limits.

And QE may have run its course...

But the fact that businesses and households in both countries are now refusing to borrow in spite of zero interest rates suggests the impact of lower long-term rates may have spent itself

Because...

The underlying cause of a balance sheet recession is a decline in - and ultimate disappearance of - private demand for funds due to a critical shortage of borrowers.

Yet the quantitative easing policies adopted by central banks in the major economies are all designed to increase the number of lenders...

When the problem stems from the lack of willing borrowers, the central bank’s emergence as a new lender is hardly going to improve the situation.

If anything, new lending by the central bank will further weaken private sector financial institutions already hurt by excessive competition.

An objective analysis of the BOJ’s easing program in light of other countries’ experiences with quantitative easing suggests investors would be wise to rein in their expectations. There is no reason why the money multiplier should turn positive when private demand for funds is nonexistent despite zero interest rates.

The discussion above suggests that there is little physical or mechanical reason for the BOJ’s easing program to work. But the program could also have a psychological impact...

One notorious minister of propaganda is reported to have said that “people will believe a lie if it is repeated often enough.”

In today’s Japan the media—and especially the omnipresent variety shows on TV—cannot stop talking about inflation. These commentators are completely unaware that the money multiplier in Japan is negative at the margin even though rates have fallen to zero. They are simply repeating the simplistic view that aggressive easing by the BOJ will eventually generate inflation.

Hearing this from morning to night will cause some people to start worrying about inflation even though there is no way the BOJ’s policies can directly create inflation. If they start to anticipate higher prices and modify their behavior accordingly, inflation could become a reality.

Moreover, the Japanese media has a tendency to move all at once and in the same direction, causing the lie to be repeated even more frequently. It would therefore not come as a surprise if many people changed their behavior in expectation of future inflation.

The problem is - what if the people start to believe...

The risk here is that not only borrowers but also lenders will start to believe the lies. No financial institutions anticipating inflation could ever lend money at current interest rates. A financial institution that suddenly saw inflation on the horizon could not continue holding 10-year government bonds that yield 0.6%. The resulting rush to sell could trigger a crash in the JGB market, inflicting heavy damage on domestic financial institutions.

The question is how the Kuroda BOJ would respond to such a crash. If it began buying more JGBs, the monetary base would expand, stoking inflation concerns at a time when private demand for funds was already recovering and the money multiplier had turned positive at the margin.

But if the BOJ sold its JGB holdings in an attempt to quell inflation concerns, bonds would drop further, blowing a large hole in the balance sheets of financial institutions and the government.

By that time the monetary base could easily have grown to, say, 15 times statutory reserves. In that case the money supply would continue growing, causing inflation to spiral out of control, unless the central bank reduced the monetary base to about 1/15th of its current level.

I suspect that the BOJ would employ all the tools at its disposal to achieve this, including a sizable increase in the statutory reserve ratio, but all of those measures would serve to push rates higher, resulting in large losses for the BOJ and other JGBs investors.

Which could rapidly lead to...

If the government bond market crashed, losses on the BOJ’s JGB portfolio would be subtracted from the money it transferred to the national treasury, adding to the fiscal deficit. And if the portfolio was large enough at the time of the crash, it could even raise doubts about the viability of the Bank’s balance sheet.

The inflation fears and the talk of large losses at the central bank could then undermine confidence in the Japanese currency. Japan’s national debt now stands at 240% of GDP, domestic industry is being hollowed out, the population is aging and shrinking amid falling birthrates, and even the trade balance has fallen into deficit.

The chief reason why people continue to use the yen in spite of these bleak fundamentals is that the BOJ has earned their trust with its anti-inflationary actions.

If the BOJ recklessly stokes inflation, triggering a crash in the JGB market and heavy losses on the Bank’s bond portfolio, public confidence in both the currency and the central bank could evaporate overnight.

And don't rely on 80 year old 'proof' since it is different this time...

Mr. Kuroda’s methods have frequently been compared to those of the 1930s-era finance minister Korekiyo Takahashi, who championed a successful policy of BOJ underwriting of government debt issues. But Japanese people in those days could not move money freely overseas. The authorities today need to be especially careful inasmuch as almost anyone can move funds abroad with a telephone call or a few clicks on a computer screen.

Be careful what you wish for...

No actual damage will be done as long as the easing program remains ineffective. But once it starts to affect psychology, the BOJ needs to quickly reverse the policy and bring the monetary base back to a level more in line with the value of statutory reserves.

If the policy reversal is delayed, the Japanese economy could spiral out of control at a time when base money equal to many times statutory reserves is sloshing around in the market.

Moreover, the act of scaling back the monetary base must be carefully calibrated so as to minimize damage to the JGB market. The BOJ, Ministry of Finance, and Financial Services Agency should also have contingency plans in place in the event that easing triggers a crash in the yen or the bond market.

Full article below...

US MACRO - Seasonal Correlation

The Mystery Of The "Spring Swoon" Revealed 04-23-13 Zero Hedge

For the last few years, the US equity market has soared through Q4 and into Q1 and macro-economic indications have trended with them in a virtuous circle 'confirming' that this time it's different and recovery is 'on'. Then just as investors get all bulled up, convinced by the market's all-knowing-efficiency that the old normal is back and growth is returning, macro-economic data starts to disappoint expectations. This is initially shrugged off - "it's a transitory dip", "the market sees through this temporary weakness", "where else are you going to put your money?" - and the stock buying continues through the Winter. But there comes a time, when the divergence from economic reality grows too wide and the 'faith' that the market knows best starts to fade; and sure enough, each time, the market drops back rapidly to reality. What is the common denominator for this winter surge?

Simple - massive global central bank bailouts/injections in the months just before winter that levitate the market (and psychologically create 'hope' that is then extrapolated into future economic expectations which then after a one- to two-quarter lag, leads to disappointment as real economic data can't match the market's implied reality).

2010-11...

2011-12...

2012-13...

So while heretofore taboo topics such as seasonal adjustments have been put forward to explain this mysterious cyclical deterioration between the winter and spring season for three years in a row; it seems the answer is far simpler and more practical to our new normal reality - a Central Bank induced hope that floods from market to real economic hopes, is 'priced in' by analysts, then fails to live up to the reality simply because it was never a real trend anyway - that leaves the economists all looking at their Birinyi's rulers and wondering if once again, the extrapolators-in-chief are wrong...

Print, Rinse, Repeat...

US PORT TRAFFIC - A Slowing Trend Showing in US Consumption

LA area Port Traffic decreases year-over-year in March 04-17-13 Calculated Risk

Container traffic gives us an idea about the volume of goods being exported and imported - and possibly some hints about the trade report for March since LA area ports handle about 40% of the nation's container port traffic.

The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).

To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average.

On a rolling 12 month basis, inbound traffic was up 2% in March, and outbound traffic down slightly, compared to the rolling 12 months ending in February.

In general, inbound traffic has been increasing slightly recently, and outbound traffic has been mostly moving sideways.

The 2nd graph is the monthly data (with a strong seasonal pattern for imports).

Usually imports peak in the July to October period as retailers import goods for the Christmas holiday, and then decline sharply and bottom in February or March. 

Sometimes the sharp seasonal decline happens in February, sometimes in March depending on the timing of the Chinese New Year. This year the sharp seasonal decline happened in March.

My guess is this suggests a decrease in the trade deficit with Asia for March. 

US RAIL TRAFFFIC - Trending Lower

Rail Traffic Continues to Trend Lower 04-19-13 Pragmatic Capitalist

Recent rail trends have weakened substantially from very strong levels earlier this year.  The latest weekly reading came in at 3.3% year over year, but continues a trend of low single digit readings.  This latest data brings the 12 week average to 4.4%.  That’s still a healthy level, but well off the March high of 3.6%.  In this environment I guess any growth is good growth so this has to go down as a moderate positive for the economy even though the trend is negative.

Here’s more via AAR:

The Association of American Railroads (AAR) reported mixed traffic for the week ending April 13, 2013, with total U.S. weekly carloads of 275,675 carloads, down 0.6 percent compared with the same week last year. Intermodal volume for the week totaled 241,987 units, up 3.3 percent compared with the same week last year. Total U.S. traffic for the week was 517,662 carloads and intermodal units, up 1.2 percent compared with the same week last year.

Four of the 10 carload commodity groups posted increases compared with the same week in 2012, including petroleum and petroleum products, up 51.2 percent, and motor vehicles and parts, up 10.9 percent. Commodities showing a decrease included metallic ores, down 13.8 percent, and grain, down 12.1 percent.

For the first 15 weeks of 2013, U.S. railroads reported cumulative volume of 4,127,296 carloads, down 2.4 percent from the same point last year, and 3,558,668 intermodal units, up 4.9 percent from last year. Total U.S. traffic for the first 15 weeks of 2013 was 7,685,964 carloads and intermodal units, up 0.8 percent from last year.

Chart via Orcam Investment Research:

HOTEL OCCUPANCY - Back to Pre-Recession Levels

Hotels: Occupancy Rate tracking pre-recession levels 04-19-13 Calculated Risk

US BUDGET - As Represented and Spun for the Public

President Obama's Entire Budget In One Chart 04-10-13 BI

BIG GOVERNMENT - A Budget That Institutionalizes Big Government

President Obama's Predictable Budget: More Spending, More Tax Increases 04-19-13 Peter Ferrara, Contributor , FORBES

US GDP - Growth Through Manipulation

• US economy gets a Hollywood makeover
• BEA revision preview
• US fiscal hawk warns on excessive debt
• Gavyn Davies Great Recession and Not-So-Great Recovery

US GDP Will Be Revised Higher By $500 Billion Following Addition Of "Intangibles" To Economy 04-21-13 Zero Hedge

Those who have been following the US debt to GDP ratio now that the US officially does not have a debt ceiling indefinitely, may have had the occasional panic attack seeing how this country's leverage ratio is rapidly approaching that of a Troika case study of a PIIG in complete failure. And at 107% debt/GDP no explanations are necessary. Luckily, the official gatekeepers of America's economic growth (with decimal point precision), the Bureau of Economic Analysis have a plan on how to make the US economy, which is now growing at an abysmal 1.5% annualized pace, or about 5 times slower than US debt growing at 7.5% annually, catch up: magically make up a number out of thin air, and add it to the total. And it literally is out of thin air: according to the FT the addition will constitute of a one-time addition of intangibles, amounting to 3% of total US GDP, or more than the size of Belgium at $500 billion, to the US economy.

From FT:

The US economy will officially become 3 per cent bigger in July as part of a shake-up that will see government statistics take into account 21st century components such as film royalties and spending on research and development.

Billions of dollars of intangible assets will enter the gross domestic product of the world’s largest economy in a revision aimed at capturing the changing nature of US output.

Brent Moulton, who manages the national accounts at the Bureau of Economic Analysis, told the Financial Times that the update was the biggest since computer software was added to the accounts in 1999.

“We are carrying these major changes all the way back in time – which for us means to 1929 – so we are essentially rewriting economic history,” said Mr Moulton.

What exactly will constitute GDP growth going forward? In a word, intangibles: films, books, magazines and iTunes songs.

“We’re capitalising research and development and also this category referred to as entertainment, literary and artistic originals, which would be things like motion picture originals, long-lasting television programmes, books and sound recordings,” said Mr Moulton.

At present, R&D counts as a cost of doing business, so the final output of Apple iPads is included in GDP but the research done to create them is not. R&D will now count as an investment, adding a bit more than 2 per cent to the measured size of the economy.

Nothing like adding intangibles in the fluid, ever-changing definition of what constitutes an economy.

Naturally, the only reason for this artificial "boost" to the US economy which apparently can be any old arbitrary number agreed upon by a few accountants, and which always goes up post revision, never down, is to make US debt/GDP under 100% once again, if only very briefly. Surely a few months later something else can be "added" to GDP making the US economy appear better than it is once more.

Finally, all of the above is a distraction for idiots.

As most people should know by know (this logically excludes economists), the only factor leading to economic "growth" is the expansion of liabilities of the financial system, whereby new credit (in a healthy environment, not one centrally-planned by several Princeton real-world rejects, where the central bank is forced to create all credit expansion with money that never leaves the banks and the capital markets closed loop) creates new money, creates demand for products and services, and circulates in the economy.

This can be seen in the chart below which shows the nearly perfect correlation between total bank liabilities in the US, as per the Fed's Flow Of Funds report, and total US GDP.

Bottom line: the BEA can capitalize air consumption if it thinks it will make US GDP soar, but unless new credit and bank liabilities are created not due to forced supply but demand, and unless the private financial sector is finally willing to start lending money (which for the entire duration of QE it has not) US growth will stall and then proceed to decline.

Case in point: total US commerical bank loans are still lower than they were the day Lehman filed.

In other words, all the GDP "growth" since the Lehman failure has come on the back of money "created" by the Fed.

And there are still those who think the Fed will ever unwind...

TOO BIG TO GOVERN (TBTG) - Bloated Government Crowds Out Private Investment

100 Years Of Government's Takeover Of The Economy 04-20-13 Zero Hedge

The ever-encroaching 'might' of the government - or perhaps, put another way, the ever-decreasing need to be gainfully employed or productive...

SURPRISE INDEX - Negative Annual Cyclical Pattern Occurs Again

The Citi Economic Surprise Index Just Went Negative... 04-16-13 BI

CONSUMER SENTIMENT - Americans Feel They Are In A Recession

Consumers around the world grappled with increasing economic concerns  Nielsen Q4 Consumer Confidence Report

US FISCAL - Taxes and Spending

Show These Charts To Anyone Who Thinks Debt, Spending, And Taxes Are At All Time Highs 04-22-13 BI

INFLATION - 10Y Inflation Breakeven Disconnected from Markets

An Ominous Market Indicator Appears To Be Confirming The Dreaded Third Top 04-22-13 BI

CANARIES - A Major Contrarian Warning Signal

HUSSMAN: The Cover Of The Latest Barron's Is A Screaming Call To Sell 04-23-13 BI

STANDARD OF LIVING - More than Americans Disposable Income Being Crushed

America: #1 In Fear, Stress, Anger, Divorce, Obesity, Anti-Depressants, Etc. 04-23-13 Michael Snyder of The Economic Collapse blog via ZH

The United States is a deeply unhappy place.  We are a nation that is absolutely consumed by fear, stress, anger and depression.  It isn't just our economy that is falling apart - the very fabric of society is starting to come apart at the seams and it is because of what is happening to us on the inside.  The facts and statistics that I am going to share with you in this article are quite startling.  They are clear evidence that America is a nation that is an advanced state of decline.

We are overwhelmed by fear, stress and anxiety, and much of the time the ways that we choose to deal with those emotions lead to some very self-destructive behaviors.  Americans have experienced a standard of living far beyond the wildest dreams of most societies throughout human history, and yet we are an absolutely miserable people.  Why is this?  Why is America #1 in so many negative categories?  Why are we constantly looking for ways to escape the pain of our own lives?  Why are our families falling apart?  There is vast material wealth all around us.  So why can't we be happy?

Just look around you.  Are most of the people around you teeming with happiness and joy?  Sadly, the truth is that most Americans are terribly stressed out.  Yeah, many of them may be able to manage to come up with a smile when they greet you, but most of the time they are consumed by internal struggles that are eating away at them like cancer.

So why is this happening?  Is modern life structured in a way that is fundamentally unhealthy?

Below I have posted a short excerpt from a message that one of Charles Hugh Smith's readers named Kenneth Daigle recently sent to him.  I think that it does a good job of describing the incredible stress that many people contend with on a daily basis...

Think about how our culture is now structured for the average adult: STRESS, everywhere you look--commuting in horrible traffic, as you want to scream in frustration--money stress, to pay rent/house note, tuition, utilities, gas, insurances, vacations, cable bill, rising food costs, and on and on and on--stress from family problems, divorce, delinquency, drugs, crime, infidelity, keeping up with the Jones, etc.

People have too high an expectation of what they should have out of life, and get overly stressed over it all. How does all of this manifest itself? A prescription drug culture (Zoloft, Xanax, etc.) that tricks people into thinking a pill will knock back the stress, when these drugs, in my opinion, only make things worse.

I am hearing more and more that people just want to drop out from it all, as they are reaching a breaking point, and have decided less income and dependency on entitlements will reduce their stress, and is not so humiliating, so giving up working becomes more acceptable, to KEEP ONE’S SANITY.

I know I am correct, from the feedback I hear every day, and the financial media does not see this like I hear it every day. People don't want to admit that they are too weak to deal with stress, so the financial pundits are not aware of this critical factor because they don't talk to Joe Sixpack.

Most Americans live lives of "quiet desperation" that are punctuated by moments of great crisis.  We spend our prime years working for others (making them rich) in order to pay off debts that we have foolishly accumulated (thus making the banks even wealthier).  When most Americans reach the end of their lives, they look back and wonder what they actually accomplished.

James Altucher published an incredible article the other day entitled "Why Do People Hate Their Jobs?"  It did a great job of describing what life is like for the modern worker in America.  The following are a few of the reasons that he says people tend to hate their jobs...

• -Jobs are modern-day slavery. We are paid just enough to live and not more. You are punished if you ask for more.
• -We are often verbally abused on the job and we take it because we think it’s normal that people would yell at us.
• -The government gets up to 50% of your paycheck and then 10-20% of that goes to kill people on other parts of the planet, including our own children.
• -From 7am to 7pm you are either A) going to work, B) at work, or C) coming back from work. Hence, the times when you can be most creative are garbage-compacted into your cubicle.
• -When you are paranoid at a job, you are probably correct. THEY are, in fact, talking about you and backstabbing you right now.
• -You realize that all the dollars you spent on degrees to get you a job that will make you happy were completely wasted. You were scammed but you can’t let the next generation know how stupid you were so now you become part of perpetuating the scam.
• -Your spouse is tired of hearing about your job after six months. And you couldn’t care less about hers. Ten years later you wake up next to a total stranger. 40 years later you die next to one.
• -When you were a kid you liked to draw, and read, and run, and laugh, and play, and imagine a magical world. You’re never going to do any of that again.
• -Over time everyone is getting fired and being replaced by younger, cheaper, more temporary, more robotic, versions of you. You see this but are afraid to do anything about it.

And of course when we get home from work there is even more stress.  In America today, we are witnessing a breakdown of the family unlike anything we have ever seen before.  The United States leads the world in divorce and in single person households.  We are having an increasingly difficult time relating to one another, and many of us drown our sorrows in our addictions.  We are addicted to pills, to alcohol, to food, to entertainment, to sex, to gambling, to shopping and to anything else that will make us feel good and forget about our problems for a while.

The following is a collection of facts and statistics that prove that America is being absolutely consumed by fear, stress, anger and depression...

• -Suicide has now actually surpassed car accidents as the number one cause of "injury death" in the United States.
• -More U.S. soldiers killed themselves than were killed in combat last year.
• -As I mentioned in another article, Americans will spend more than 280 billion dollars on prescription drugs during 2013.
• -Nearly one out of every four women in the United States are taking antidepressants.
• -The percentage of women taking antidepressants in the U.S. is higher than in any other country in the world.
• -In 2010, the average teen in the U.S. was taking 1.2 central nervous system drugs.  Those are the kinds of drugs which treat conditions such as ADHD and depression.
• -Children in the United States are three times more likely to be prescribed antidepressants as children in Europe are.
• -According to a recent article by David Kupelian, "one-third of the nation’s employees suffer chronic debilitating stress, and more than half of all 'millennials' (18 to 33 year olds) experience a level of stress that keeps them awake at night, including large numbers diagnosed with depression or anxiety disorder."
• -Tens of millions of Americans use alcohol and drugs to numb the pain that they are experiencing.  In the United States today, there are about 28 million Americans with a drinking problem and about 22 million Americans use illegal drugs.
• -More people have been diagnosed with mental disorders in America than anywhere else on earth.
• -There are also tens of millions of Americans that try to deal with anxiety and stress by eating.  Of all the major industrialized nations, America is the most obese.  Mexico is #2.
• -Back in 1962, only 13 percent of all Americans were obese.  Today, approximately 36 percent of all Americans are obese.
• -Many people try to escape from the pain of reality by getting lost in entertainment.  Incredibly, the United States is tied with the UK for the highest average number of hours spent watching television each week.
• -The United States has the highest divorce rate in the world by a good margin.
• -The United States has the highest percentage of one person households on the entire planet.
• -According to the Pew Research Center, only 51 percent of all American adults are currently married.  Back in 1960, 72 percent of all adults in the United States were married.
• -At this point, approximately one out of every three children in America lives in a home without a father.
• -For women under the age of 30 living in the United States today, more than half of all babies are being born out of wedlock.
• -The United States has the highest child abuse death rate in the developed world.
• -In the United States today, it is estimated that one out of every four girls is sexually abused before they become adults.
• -The United States has the highest teen pregnancy rate in the world by a very wide margin.
• -The United States produces more pornography than any other nation in the world.
• -If you can believe it, there are 20 million new STD infections in the United States every single year.
• -The U.S. has the highest STD infection rate in the entire industrialized world.
• -It is estimated that about one out of every six Americans between the ages of 14 and 49 have genital herpes.
• -Sadly, one out of every four teen girls in the U.S. has at least one sexually transmitted disease.
• -The United States leads the world in eating disorder deaths.
• -Nobody in the world gets more plastic surgery done than Americans do.
• -Americans spend more time sitting in traffic than anyone else in the world.
• -America has the highest incarceration rate and the largest total prison population in the entire world by a very wide margin.

Fear is one of the primary things that motivates the American people, and that is a very powerful weapon that can be used against us.

As I wrote about yesterday, those that commit acts of terror want to get attention and they want to create fear.

And that is exactly what the Boston Marathon bombing accomplished.  It captured the attention of the nation for days on end, and it absolutely paralyzed the entire Boston area with fear.

When we allow ourselves to be terrorized, we actually encourage more terror attacks.  When we give terrorists what they want, it just encourages more psychos to commit acts of terror.  If you don't believe me, just check out the following links that I found posted on The Drudge Report on Monday...

*"3 Alabama hospitals evacuated after bomb threats"*

*"Connecticut Courthouse Evacuated After Bomb Threat"*

*"South Hills Village Evacuated After Bomb Threat"*

*"Rock Island neighborhood evacuated after bomb threat"*

*"Bomb threat forces evacuation of Seabreeze office building"*

The appropriate response to a terror attack is to refuse to be terrorized.  Yes, we should also work to expose and punish the individuals, organizations and governments that are behind terror.  But we should also not let terror change how we live our lives, and we should definitely not allow terror to be used as an excuse to rip our liberties and freedoms away.

Sadly, as Ron Paul has detailed, some of our politicians are already calling for "tighter security" in the aftermath of the Boston Marathon bombing...

Sadly, I expect this week’s tragic attacks in Boston to be used to justify new restrictions on liberty. Within 48 hours of the attack in Boston, at least one Congressman was calling for increased use of surveillance cameras to expand the government’s ability to monitor our actions, while another Senator called for a federal law mandating background checks before Americans can buy “explosive powder.”

I would not be surprised if the Transportation Security Administration uses this tragedy to claim new authority to “screen” Americans before they can attend sporting or other public events. The Boston attack may also be used as another justification for creating a National ID Card tied to a federal database with “biometric” information. The only thing that will stop them is if the American people rediscover the wisdom of Benjamin Franklin that you cannot achieve security by allowing government to take their liberties.

But no matter how much liberty and freedom we give up, we will never be 100% safe.  Bad people are always going to do bad things, and unfortunately we are probably going to see some pretty nightmarish things in the years ahead as the world becomes even more unstable.

If we allow the bad guys to get us so frightened that we throw out the U.S. Constitution and abandon our liberties and our freedoms, then we are the ones who lose.

Yes, the years ahead are going to be tough.  The economic collapse is going to accelerate greatly, there will be tremendous natural disasters, there will be war in the Middle East and there will be other problems that we cannot even conceive of right now.  At the same time, the American people will continue to become even angrier and even more frustrated.  According to a recent Pew Research survey, the percentage of Americans with a favorable view of the federal government is now at an all-time low.  As the economy crumbles, there will likely be great civil unrest as people demand solutions.  Unfortunately, our problems took decades to develop and they will not be solved overnight even if we did have good people in office.

So why am I saying all of this? And why am I constantly warning about the coming economic collapse? Is it because I want to create fear ? No, just the opposite of that. I am a watchman on the wall. In ancient times, a watchman would warn the people when the enemy was approaching.

When you receive the warning, there are a few different ways that you can respond to it...

#1 You can become consumed with fear and run away from the enemy.  Unfortunately, cowards never get the victory in the end.

#2 You can dismiss the warning and pretend that the enemy is not approaching.  But then when the enemy comes you will be completely unprepared.

#3 You can do everything possible to get prepared to face the enemy that is coming with strength and courage.

And that is how I would encourage all of you to approach the coming economic collapse and the other great problems that we will soon be experiencing as a nation.

Do not be afraid. Instead, be strong and courageous and prepare well for the storms that are coming.