While this isnt bad in the long run. It makes for a terrible christmas.

Karl says:

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To those who have said that "the recession ended this summer", how do you make that case when the consumer is not spending? When credit continues to contract even with programs like cash-for-clunkers?

Karl, isn't the government replacing the consumer as the main spender? With all the massive debt and Ben's QE, I am afraid that this game can continue a while longer. After all, GDP measures total spending, not who spends, and by that measures they can certainly claim that the recession is over.

That it happened alongside C4C is what blows my mind.

The government was indeed responsible for the ENTIRE improvement in GDP between first and second quarters.

Nonetheless, this does not indicate the end of a recession. Government can dump an infinite (within their ability to borrow) money into the economy but if it does not produce actual private activity forward all you've done is **** into the wind.

Nonetheless, this does not indicate the end of a recession. Government can dump an infinite (within their ability to borrow) money into the economy but if it does not produce actual private activity forward all you've done is **** all over everyone into the wind.

Fixed it for ya GEN

Karl, I hear you brother. But does the private activity really count for anything at this point?

This economy is no longer about innovation, sacrifice, building factories and real wealth, and most of all the old American way.

It's all about the illusion of being rich, and the stock market does a fabulous job of that. I think Ben & Co realized this a while ago. The people in the "wind" (middle class) are immaterial at this point.

Reza: I agree. Without the "Rule of Law" being administered uniformally and transparently, it's all an allusion. Lying is so pervasive that it's become the "truth". That's my issue with all the discussion of Fiat Currency, our economy, debt levels, etc, etc. around here.....all meaningless banter if the rule of law is not applied, and administered HONESTLY. Without that underlying foundation the rest of it is bologna.

Reza30 and Knobcreek.....I could not agree more. Seems like this "disaster", like so many other "disasters" that already occurred or are soon to occur.....just do not make a bit of difference in share prices individually or indexes collectively. UP seems to be the only way to move with today being just another almost endless example. I keep reading here that "this, that or the other" will "end badly" but the markets sure do not seem to know, care or barely pause. Now we have "earnings" upon us and with the continued games, will probably be another "reason" to push the indexes even higher. When will it end? What on earth could cause it to end? Why do we even try to educate ourselves with the alternate reality that we see? Simply amazing......

Awesome. Can we go ahead and say that all the govt spending without stimulating the economy is just like adding extra leverage to flat investment?

That is great. Leveraging the future of our children. Seriously when the **** does the rebellion start?

The peak was July 2008, 2.581 Trillion. Or $23,257 for every US household (111 million), $16,763 for every civilian worker (154 million).

From there, we have contracted to summer of 2007 levels - minus $118.8 Billion. $1,071 per household, $772 per worker.

Not nearly enough. Where do we end?

2004 levels are 271 Billion away. Meaning we're not even 1/3 through the decline.

9/01 levels are 649 Billion away. That would require each household shedding an additional $5,852 in consumer debt, to get to $16,765. I would believe that. I would even believe more.

That's a lot of negative GDP, even by my lazy math.

12 Bil ? peanuts, when u think in terms of 800 Bil bailout Or the current Dollar-printing by Ben

ask GS which received more than that in just one quarter from Tax payers.

"The real economy is effectively dead."

Or what was perceived to be the real economy.

Let's tie it with last weeks reported Sept unemployment. I believe the reported number was 263,000 lost jobs. Let's really low ball a number and say each person made $20,000 a year.

Grade school math says that = $5,260,000,000 in lost annual wages. That is a lot of demand that has vanished. The actual number is obviously higher. As W. Axl Rose once sang, Welcome to the Jungle.

I see improving numbers. Down 19B in July, and only 12B in August. Rally on.

So the consumer spending is dramatically reduced
It appears that the government spending will soon begin decreasing as well, as interest in treasuries declines
GDP has to come down significantly with these 2 factors

We are nearing spending/debt:GDP levels reached during WII, but with two important differences: the money invested during WWII went towards both destroying our competition's mfg capability while at the same time building ours out to state-of-the-art standards.

Today, while comparable spending/debt:GDP levels are being reached, and which technically do contribute to GDP, they are merely transfer payments that only work quarter to quarter. While it took us 50-60 years to run down the investments made during WWII, the day printing stops, the party immediately comes to an end.

Since they aren't going to do anything about addressing the fundamental problems, it's time to consider business opportunities to fill the gap when the SHTF.

Asimov:

Exactly right! That was a down $12B figure for August simultaneously with C4C...

C4C = 691,000 vehicles with .gov contributing an avg. of nearly $4,167 each or $2.88B. Let's say, *extremely* conservative back-of-the-envelope, each consumer added just $20,000 of consumer debt to take on these new vehicles since they tended to be smaller vehicles...and 75% of them were purchased in August (the program only really got rolling on about July 24 or so and used up about $750M in the first week;

So 691,000 x 75% of the C4C sales in August x $20,000 = $10.365B of pulled forward consumer debt.

Thus: The REAL "ongoing" August drop in Consumer Credit was the reported $12B August figure PLUS $10.36B to net out C4C, or $22.36B - or WORSE than JULY!!!

The deterioration is accelerating...

ARe we seeing any evidence that the federal government is picking up the slack in consumer spending?

What about infrastructure projects, are they picking up? Gov was supposed to kick that into high gear within the second half of the year.

Hmmm...one of KD's fav. sites, the Slosh Report says approx. $23B less sloshing as of tomorrow....

Gen: Is that enough of a draw down to be concerned about?

Lucky - wasn't it near 30 Bil last year just before the market crashed?!

The Fed has been pushing CONsumption debt.

"<i>If we all join hands and go buy a new SUV, everything will be all right,</i>" - Bob McTeer, Dallas Fed governor

"<i>What we dearly want is for Americans to spend like Americans – to do the patriotic thing and go out and spend,</i>" - Bill McDonough, head of the New York Fed, October '01.

Ever wonder why?

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does not produce actual private activity forward all you've done is **** into the wind.

After actually doing this once.....I can tell you...It is very messy and quite embarassing.

Kwl88: I don't recall the exact figure then - I'll try to search around here and see if I can find a post with that info; I can tell you that it's the largest since August 1, which is as far back as I've gotten the site to go...

Kuhio,

I have been giving some thought to your comment "it's time to consider business opportunities to fill the gap when the SHTF". I see this event causing a return to an agrarian society with much more emphasis on local production, delivery, and consumption. Do you feel the same way or do you see a different outcome?

Equalitarian

"return to an agrarian society"

Funny you mention that because I was arguing earlier that this might be the case. I came to this mainly because I could see no way for the US to return to manufacturing.