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The best way to predict a double dip recession is to invent it

Which is exactly what the rentiers who own our political system have decided to do. George Soros in Der Spiegel:

[I]f a double-dip recession was in doubt a few weeks ago, it is less in doubt now, because financial markets [rentiers*] have a very safe way of predicting the future. They cause it. And the markets have decided that America is going to see a recession, particularly after the recent downgrade of the US by the rating agency Standard & Poor's.**

Hey. Poor Obama, you've almost got to pity the man; Big Money has had his nuts in a jar for a long time. And now they're going to smash the jar.

What a shame.

NOTE * Since "the market" is rigged.

NOTE ** Not that Soros would talk his book.

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Submitted by Hugh on

Soros is a successful financial pirate. He is not much of a macroeconomist or political scientist. Many of us would argue that what we are seeing is not a W type recession but an L shaped depression. The flawed Obama stimulus has run out and other stimulus measures, such as the cut in the payroll tax, have been negated by high commodities prices. The stock market has been goosed since early 2009 by cheap money from the Fed, but the underlying fundamentals in the real economy have been deteriorating throughout. The kleptocrats own a bigger share of the pie than they did before the meltdown and they openly control the political agenda. We never had recovery even a shortlived one, just a blip in the downward spiral and lots and lots of MSM propaganda. The kleptocrats don't have to invent the next recession because the first one never went away. Nor are they worried about the next crash. As the meltdown demonstrated, while everyone else came off worse because of it, the kleptocrats, of which Soros is certainly one, came out stronger. As I often say the kleptocrats motto is Loot to a crash and then loot the crash.

The S&P downgrade was just political grandstanding and theater by one kleptocratic faction. It was most likely stage setting for entitlement slashing by the Super Cat Food Committee. The recent tantrums on Wall Street markets, markets which are 90% owned by the rich and rigged via dark pools, insider information, and high frequency trading, were more likely a ploy to wheedle out a third round of quantitative easing from the Fed.

Soros is just repeating the conventional Washington narrative but with tweaks. Because he is a billionaire, anything he says will be taken as immensely insightful even when it's not.

Submitted by lambert on

... for ready reference, hint hint.

I'd call it more like |/| like an L with the bottom bar curved. Things got a bit better for me, at least, there for awhile, and I know of some others. But as far as long term trends, I'm absolutely in agreement.

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Submitted by okanogen on

Yes, it was jobless, to this point at least, but there really was a measurable recovery from the freefall in 2008-2009*. It is/was real. If it had been allowed to continue, jobs would have come back. I can gauge this by our own business experience, as well as by discussions with our bankers, accountants and all of my other business contacts in various industries. Let's not let our politics obscure our description of reality.

This latest depression you could say mortally-wounded our economy. I know many, many, many businesses which imploded. If you had the cash to buy business equipment of any kind, from office furniture to factories, you could buy at less than scrap value. In fact, my contacts in the machine tool business said Chinese companies were buying all the scrap machinery they could and shipping it back. They were the only people buying.

The companies left standing have pretty much gnawed their own flesh to the bone just to survive, and were for the most part, the toughest of the bunch. They retooled their operations to run on next to nothing. They cut staffing (hence "jobless") to cut overhead to match their capacity as exactly as possible to reduced demand. They put off replacement of aging equipment, and have done as little as they can get away with in reinvestment in their operations. This means they can't respond quickly if demand for their services picks up. It also means that they have cut as far as they can go. The next step is total liquidation.**

But even the tough can die. The last year and a half or so has been like a light rain falling on a person dying of thirst. Just enough to sustain, but not enough to completely replenish. A second depression, or even just recession, and you can stick a fork in our entire society. We are toast. There is no margin for error, no muscle left to cut out and eat.

* We should have a shorthand for what just happened/is happening. We had WWI and WWII and even WWIII. Maybe we had DI (Great Depression I - the depression to end all depressions) and now are in DII.

** But even in a depression, some of the strong will grow stronger. For example, I just read in my recent issue of ASCE's Civil Engineer magazine that there has been an unprecedented amount of mergers and acquisitions in the engineering-construction sector. Billion dollar companies buying xxx-million dollar companies, xxx-million dollar companies buying million dollar companies. Just like in the last recession in the 80's saw acquisitions, then layoffs.

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Submitted by okanogen on

Sometimes the rain doesn't reach the ground.

Another phenomenon is that most of the small businesses I know have had to dramatically lower prices. When you do that, you make less on what few jobs there are, making it even harder to recover. Plus, once you drop prices, it is very, very difficult to raise them again. Basically you are hitting your boss up for a raise each time. So while we may have the same quantity of jobs as four years ago, and the projects may be the same size as four years ago, we are making 30-40% less per job. A typical business tries to make 30-40% profit to survive, so every business in my industry has had to figure out how to cut their expenses in half or more to survive.

Imagine the ripple effect of that, especially businesses whose primary expense is labor, like the service economy we have so proudly constructed as our only economic engine.

Submitted by Hugh on

A jobless recovery is a contradiction in terms. Your "would have" is like the saying if "wishes were horses, beggars would ride". It didn't happen. There was no recovery.

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Submitted by okanogen on

Do you see the color "blue" the same way I do? We can go round and round. But the definition is "A period of increasing business activity signaling the end of a recession."

Certainly one person's recovery is another persons deep depression, depending on whether they are, or are not, employed. For my portion, our business doubled in volume (though not profit), after seeing a halving of volume in the previous year, and I was able to hire two more people on a quasi-permanent basis after laying off two. For them, the recession was over, until the economy goes into another depression.... For them (again), if there is another "period of decreasing business activity" it will be a double-dip of a depression.

I'm not interested in the political question of whether or not the "light rain" we saw over the last year or so was an anemic recovery or a figment of my imagination, because I assure you that it was so vitally important to me and everyone associated with me that it wasn't an academic question we weren't sure about.