Double Dip Recession Talk Bustin’ Out All Over

I’ve been quite mystified at all of this “double dip” recession talk, even though I suppose it beats the “V shaped recovery” talk. Both presuppose that we had a recovery underway, the real sort, not the type that is mainly the artifact of inventory restocking, halting and sometimes covert stimulus, (like hiring unprecedented numbers of Census workers, cash for clunkers and home purchase tax credits to induce consumers to accelerate investments) and a weaker dollar than has since gone in the reverse direction.

While employment is a lagging indicator, you need to have a realistic prospect of meaningful hiring to talk of recovery. Small business was pretty much the only engine of job growth in the last expansion. Small businesses are now credit starved and suffering, and their prospects seem unlikely to turn in a meaningful fashion anytime soon.

And these concerns were operative before the sucking sound of deflation coming out of Europe had become a major part of the mix.

Some sightings of the new caution include Marketwatch:

The unexpected decline in May’s retail sales has many economists questioning the strength and durability of the nascent recovery…it was pretty much across the board — even if you exclude autos.

On the surface, this seems at odds with consumers’ attitudes. The latest survey of consumer sentiment shows a better-than-expected gain.

However, by historical comparisons, consumer moods are still fairly dour. And at any rate, these consumer surveys are not a good predictor of how much people actually spend….consumers are increasingly reluctant to open their wallets…They tend to frequent big-box stores and other discount outlets — and only when these merchants run big sales.

This hunkering down extends to consumers in all income brackets.

Another cheery report comes from BNP Paribas (hat tip reader Scott):

“I see quite a lot of market participants who talk about economic figures and corporate figures still being strong, which are, to a large extent, rational arguments,” he [Philippe Gijsels, the head of research at BNP Paribas] said.

“The only problem with these figures is that they give a rear view mirror perspective. They give us a valuable inside about the past, but fail to answer the question how much the economies in the US and even more so in Europe will slow down in the second half of the year and going into 2011,” Gijsels said.

What of those who say valuations are cheap? He has less sympathy for this argument.

“If we compare the price earnings valuations with the recent past, markets look attractive. However, when we look at stock market history, we see that valuations follow a regime switching pattern. A P/E of 15 can be the average for 15 years and it can drop to an average 8 for the next 15 years,” he said.

“Unfortunately you never know in what regime you are investing. And if people start to use bond yield/earnings yield arguments as an argument to buy this market, I invite them to look at this indicator in Japan over the last 20 years.”

David Rosenberg of Gluskin Sheff, who despite his generally dour outlook did get bullish for a short while, is back to being downbeat:

The smoothed ECRI leading economic index fell in the opening week in June for the fifth week in a row and now down in nine of the past ten. The index, went from +0.3% to -3.5%, the weakest it has been in a year. After predicting the V-shaped recovery we got briefly in the inventory-led GDP data when the index soared off the bottom in late 2008, at -3.5%, we can safely say that this barometer is now signalling an 80% chance of a double-dip recession. It is one thing to slip to or fractionally below the zero line, but a -3.5% reading has only sent off two head-fakes in the past, while accurately foreshadowing seven recessions — with a three month lag. Keep your eye on the -10 threshold, for at that level, the economy has gone into recession … only 100% of the time (42 years of data)

It would be nice for this to be over, but the history of severe financial crisis is that that recovery is longer in the making than in a normal recession, and tends to be weak in the absence of cleaning up bank balance sheets. Yet the aggressive “green shoots” boosterism and other forms of cheerleading by the officialdom plus optimistic interpretations of data were persuasive for a while.

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  1. Dude

    You mean, a recovery isn’t a recovery if it’s jobless? If the US Administration is hapless, and the US Congress, who will lead the global economy out of the Greater Depression? Policy makers seem intent on protecting lender’s interests, to the undoing of all.

    1. Yves Smith Post author

      That is my decidedly not widely shared view. Headline unemployment pushin’ 10%, more meaningful measures getting within haling distance of 20%, you are smoking dope if you talk “recovery” without a meaningful change in those numbers. I don’t consider a wee bounce off the bottom (technical improvement) worthy of the name “recovery”.

      1. psychohistorian

        While I agree with your sentiments I cringed at your association of pot smoking with bad decisions. Where is the science that says alcohol drinkers or maybe even consumers of religion make better decisions than pot smokers?

        Maybe if some of these people smoked pot they would make better decisions.

        1. senecal

          Psycho…: great point, however, where is your evidence that they DONT smoke dope or drink? Logically, they must, since they spend all day sailing into the wind of reality. It’s exhausting to do that day after day.

        2. Yves Smith Post author

          I think of “smoking dope” as connoting something much stronger than pot. Heroin (more broadly, opium) and meth, for instance, can all be smoked.

        3. Valissa

          When I was a young professional, the worldly ambitious achiever types mostly preferred cocaine. Probably not much different today… perhaps cocaine and cartels are a natural combo :)

  2. Russell1200

    It is not just the balance sheet issues.

    Mush like the 1920s (mass production manufacturing), there were large productivity gains in the market that caused an increase in capacity while at the same time decreasing the number of people needed for any given task: both the opening up of the Chinese economy (capacity increase) and advances in communications-computer networking play their part.

    If you have deflation, you are going to try and get more efficient with you ever increasingly valuable dollars (money units), rather than simply bring in more capacity. In a boom period a lot of the capacity will have been brought in in a hurry so there often is room for this improvement. So the productivity issue has some of its own flip side negatives.

    So you have not only a massive overbuild in capacity, but everyone trying to work their way out of it by getting more efficient with what they have. If it were not for a bubble having built up the bump in the road into a mountain, the inventory cycle would help you get past it.

  3. Dude

    So, are we stuck behind the mountain? It’s been stated we must understand the root cause of the illness, before finding a cure. However, even after finding a cure, there must be the political will carry it out. If global stagnation is the illness, the cure must be global leadership. The US will have lost it’s leadership position, but will undoubtedly play a large role in leading any recovery. The real question becomes, is the US able to be a leader? Certainly not this congress, or this administration, who are as much of the problem, rather than the solution. How bad must it get before someone with enough authority stands up to assume leadership of a recovery. How much suffering? There is no question of the cause, if one is God fearing. The only real recovery will be a godly one, and not one of the princes of this world, of which we have seen enough already.

    1. aet

      Yeah…just like the Christians helped Rome “recover”…
      Religious rule has shown itself many times to be disastrous.

      1. aet

        Indeed, a large part of today’s problems are attributable to the return of religious warfare.

        Now who would want such a thing, and why?

      1. DownSouth


        I’m always amazed at the intense derision that religious-based comments elicit, given that our so-called “secular” ideologies have proven to be equally as disastrous.

        Michael Allen Gillespie argues in The Theological Origins of Modernity that religion really didn’t go away in our ostensibly secular world:

        What actually occurs in the course of modernity is…not simply the erasure or disappearance of God but the transference of his attributes, essential powers, and capacities to other entities or realms of being. The so-called process of disenchantment is thus also a process of reenchantment in and through which both man and nature are infused with a number of attributes or powers previously ascribed to God. To put the matter more starkly, in the face of the long drawn out death of God, science can provide a coherent account of the whole only by making man or nature or both in some sense divine.

        And this is nowhere more evident than in the field of economics, as Gillespie goes on to explain:

        Divine or at least quasi-divine powers reemerge although always in disguise. Nature is an embodied rational will; the social world is governed by an “invisible hand” that almost miraculously produces a rational distribution of goods and services; and history is the progressive development of humanity toward perfection.

        Of course ascribing divine virtues to humans and to nature has proved disastrous. Gillespie again explains:

        The Terror was…the first modern example of the danger in ascribing divine attributes to human beings. A transcendent God could perhaps always will in a truly general or universal manner, as Arnauld and later Malebranche maintained, but finite human beings could not, and the demand that they do so inevitably ended in tragedy.

        The atrocities and body counts committed in the name of putative secular ideologies—-fascism, communism, capitalism—-are far, far greater than those ever committed in the name of religious ideologies.

        Dude is correct in that capitalism, and indeed the entire modernist project, is now in crisis.

        Looking forward, I certainly do not know what the solution is. But those who live in glass houses shouldn’t cast stones.

        1. i on the ball patriot

          “Looking forward, I certainly do not know what the solution is.”

          Focus on the common enemy, the wealthy ruling elite, who manufacture differences and amplify differences so as to deflect from their wealth and to divide and control. They have co-opted all that is good by wearing it on their sleeves and then use all of that good to divide and conquer. Don’t swallow the bait! Redirect your anger from all of their propagandist divisiveness to their selfish machinations and corruptly gained wealth. Stop hating each other, we have all been snowed and used, focus on the wealthy elite scum who have now bought the neocon elite Full Spectrum Dominance plan which includes dominance over us all.

          The co-options and differences will fall away when exposed.

          Deception is the strongest political force on the planet.

        2. jdmckay

          I’m always amazed at the intense derision that religious-based comments elicit,(…)

          I’m amazed at your amazement!!! :)

          Personally, I’d hold up your quotes from Gillespie as example: his explanation gives backward explanation for current conditions, but no solution. And his explanations are (IMO) far to abstract to be useful.

          What does “disappearance of God” mean?

          Last decade was the most religiously dominated of my 50+ years on the planet: all over TV, fully engrained in politics right along w/a Christian Fundamentalist Cowboy savant president. Huge % of most read political pundits over this time… god this and god that all the time.

          Or perhaps Gillespie sees his described “transference” from god to these impostors, or maybe something else?

          To me, this is not only an uninteresting suggestion, it’s an entirely irrelevant one. Where in this screed is lieing, utter lack of integrity, not to mention willful deception (Enron, BP news management, Iraq invasion justification lies, and subsequent lies about everything afterwards… )… where has our fundamentalist religious foot stompers been on all this?

          Or maybe we need to wait until god taps them on the shoulder and says: “hey dudes, ease up on the lieing thing already?”

          Most of the fundies I know have Rush on 24/7, are led by Fox & Palin (etc.), and really don’t have a clue what’s going on in the world… none. If she would come down again and refresh human’s memory, I think God would disown (if she hasn’t already) most of vocal/influential crown claiming her mantle.

          There… how’s that for a nice, neutral, non-confrontational early morning discussion lead in? :)

          (ducking for cover from flying bibbles)

          1. DownSouth


            I don’t deny that much (could we say most?) of modern-day American religion is as you characterize it, and that these pathological religious sects have greatly contributed to our problems.

            But my point is that our secular ideologies have failed just as spectacularly, and that I am at a loss as to what the way out of the jungle is.

            I believe the two greatest material challenges we currently face are energy and the degradation of the biosphere. I believe that science holds viable solutions to these problems. But the reasons that we are not pursuing these solutions are due to human failure.

            You’ve hung out enough here on NC to know what we’re up against. As Hannah Arendt put it, “no reality and no common sense could penetrate the minds” of these people, and the ideologies they embrace are not religious, they are secular.

            How do you bring them around to the belief, as Gillespie put it, that the “project initiated by Descartes and Hobbes” of a “faith or self-confidence that an enlightened humanity can discover a ground for an apodictic or at least an effectual truth, and that this truth will provide the foundation for an unprecedented human flourishing”?

          2. NOTaREALmerican

            There wasn’t an increase in Godliness in the last 50 years.

            However, the country’s favorite Deity DID shift his attention from rewarding hard work on earth with a guaranteed stint in heaven; but he’s now obsessed about sex and punishing the fornicating harlots here on earth. Perhaps, if the liberals (socialist, progressives, whatever) can re-capture the Deity and change his focus back to rewarding hard work again things will improve (you’re going to have to get him away from those porn sites tho).

            All you need is a good story, people will believe anything.

        3. Mickey Marzick in Akron, Ohio


          If it’s merely a question of body count I can’t argue and won’t, but two of the three – fascism and capitalism – never dispensed with religion, but merely claimed to be carrying out God’s work on earth. In place of God the market is now sovereign or has pretensions of such sovereignty.

          But back the other day you suggested that God, the nation-state, and the market had all failed. Inasmuch as “our version” each is a key pillar – a holy trinity, if you will – of what distinguishes the West from the rest, could it be that what we are witnessing is a crisis in Western Civilization. Its values and central tenets are on trial in a box of our own making and the verdict is uncertain.

          Perhaps the two “black swans” of God were the Holocaust and Stalin’s Gulag… The financial crisis and the GOM oil spill are the “black swans” of the market… and perhaps the failure of the nation-state to deal with either will be its “black swans”. Collectively all three will be the swan song of the West as it disintegrates into a neofeudal corporate world order of fiefdoms and manors dispersed across the globe.

          The statistical probability that all three would have taken place in the relativley short span of 90 years [1920-2010] seems very remote. But that they have does not diminish their importance in this context as this is not merely a crisis of capitalism. The current distemper runs much deeper. Is it mere coincidence that Greece is in the eye of the storm? Would you agree or not?

          1. DownSouth

            Mickey Marzick in Akron, Ohio,

            That’s exactly what I’m saying, that is that we are experiencing a “crisis in Western Civilization.”

            As Daniel Yanelovich put it:

            Powerful culture always breed a specific outlook, a world view, a general philosophy—-what the French call mentalité and Germans call Weltanschauung. Commonly, scholars refer to the dominant world view of the West since the eighteenth century as modernism. Among modernism’s principal features are its emphasis on market values and other manifestations of individual choice, secularism, a concept of instrumental rationality, democracy as a political system, and a culture characterized by individualism, diversity, and pluralism in values and forms of cultural expression.
            –Daniel Yankelovich, Coming to Public Judgment

            Do you see a single one of the “principal features” Yankelovich cites that is not in crisis or under assault?

            My belief is that this is the second major crisis of Western Civilization, and that Stalin’s Gulag and the Holocaust were part and parcel of the first major crisis. It was Nietzsche who foresaw and heralded the first major crisis in modernism.

          2. Valissa

            For your amusement… perhaps the ancient thunder & lightning gods still have some power after all ;)

            6-Story Jesus Statue in Ohio Struck by Lightning
            A six-story-tall statue of Jesus Christ with his arms raised along a highway was struck by lightning in a thunderstorm Monday night and burned to the ground, police said.

          3. Dude

            Right between Rome and Jerusalem. No coincidence. GFC, GSC, and EMC will pale in comparison to armeggedon, which is precisely the end game where the current crises may play out. What remains is choosing sides. I, for one, choose the side of godliness and righteousness. You can keep your secular humanism, and be judged apart from the law.

        4. kyria derision

          This isn’t a crisis of capitalism. Capitalism continues to be what it always was. This is a crisis of governance. Holy rolling got us here, we don’t need more of it.

        5. Doug Terpstra

          “The atrocities and body counts committed in the name of putative secular ideologies—-fascism, communism, capitalism—-are far, far greater than those ever committed in the name of religious ideologies.”

          That’s debatable. Casualty totals of The Inquisition and the Crusades may not have been as high so far (due only to lower “kill ratios), but our current “conflicts” (begun as “infinite justice”) are arguably a clash of religions, and the death toll is ongoing. And today’s Churchian Armageddon Lobby, collaborating with Zionist messianists, and may change that calculus exponentially with ungodly new “kill ratios” . Netanyahu and other Israelis even discuss the “Sampson Option” when their paranoia reaches critical mass—taking out the Philistines, Goyim and themselves by nuking the global temple.

          In pushing for a new war in Iran, which looks more imminent daily, a quasi-religious chickenhawk recently argued with me, “Anyone who has the bomb AND believes that the Return of the 12th Imam must be preceded by massive apocalyptic violence is someone who must be stopped. Period. I agree with John Bolton that it’s way too late for sanctions to work. What does that leave us with? Guess. So I’m a war-monger – as if there is any real alternative.”

          With minimal cut-and-paste, I replied, “I imagine Persian clerics are now saying something like: ‘Anyone who believes that the Return of Jesus Christ or the advent of the Jewish Messiah must be preceded by massive apocalyptic violence is someone who must be stopped. Period… What does that leave us with?…as if there is any real alternative.”

    2. Mickey Marzick in Akron, Ohio

      Another willing penitent!

      Bless me Father for I have sinned, doing only what I was told to do – consume.

      God says to Abraham kill me a son… Lloyd Blankfein says God’s work now requires your children’s children…

      With God on our side…

      Is there a historical pattern here?

  4. Ignim Brites

    Business Insider has a story indicating FICA tax receipts are down yoy from 2009. If this is legitimate, then I don’t see how it is possible to speak of a recovery. Even accepting that employment is a lagging indicator it would be surprising to see continuing declines in a recovery. To me this suggests that much of the employment decline has been in undocumented workers and is still not accurately captured in BLS data. This would be consistent with a collapse in commercial real estate construction which I believe is continuing.

    1. NOTaREALmerican

      It does seem that tax receipts are the only reliable indicator of the economy.

      After-all, there’s nothing certain except death and taxes (neither is which are seasonally adjusted).

    2. Chris T

      Since this is YoY, there simply needs to be fewer jobs now than there were in June 2009. It tells us nothing about job trends right now, just that the net number of jobs fell between June 2009 and now.

  5. i on the ball patriot

    (A long slow suck)

    The bubble days are waning,
    The vacuum days are here,
    The new world order,
    Now vacuums up with fear,

    They bubbled up the masses,
    Now they suck them all away,
    A vacuum is a bubble,
    On roids the other way,

    You can not call it deflation,
    These are not the days of old,
    The tell is all around you,
    The rich are buying gold,

    If you want to have your freedom,
    Stop eating the divisive pies,
    Focus on the rich man,
    Who feeds you all the lies,

    His propaganda enslaves you,
    You must strip it all away,
    Consolidate your power,
    And freedom will rule the day,

    There are only ten thousand pharaohs,
    And over six billion slaves,
    All you have to do,
    Is dig ten thousand graves …

    No balls! No brains! No freedom!

    Deception is the strongest political force on the planet.

    1. Mickey Marzick in Akron, Ohio

      “His propaganda enslaves you,
      You must strip it all away,
      Consolidate your power,
      And freedom will rule the day,”

      Indefatigable and unwavering… that you are! But some of it is a replay…

      In stripping it all away, every concept/construct of the ruling ideology has to be deconstructed, subjected to ruthless analysis/criticism, and exposed for what it is, BEFORE a viable alternative can be provided, right? Otherwise, the slaves will “believe” in their slavery mistaking it for freedom. Or the ideological VACUUM of which you speak results in merely another form of oppression because the former slaves now have to be subjected to a new slavery that they don’t fully understand. This is not to legitimate discussion for the mere sake of discussion, losing sight of the real goal in the process, but to “unmask” the ruling paradigm for what it is – CONTROL – destruction of the “inner cop”. Remember that one from a previous exchange?

      Pointing out the “anomalies” in the ruling paradigm, short of a deus ex machina, is the only way for an individual to strip away the “inner cop” on his or her way to liberation. And I’m not talking “nirvana” here… Forty years into it and the monolith is beginning to show severe signs of stress, cracking in the seabed and its market counterpart, the financial superstructure. Much like the Deep Horizon Oil Platform, its burning visual imagery and subsequent collapse is illustrative. But after it sank into the GOM, the only reminder that it was ever there was the oil slick… We have to find something more viable to put in its place other than this oil slick… which is merely a waste of precious energy.

      Deception may be the greatest force on the planet, but if you never expose the many facets of this deception, the deceived aren’t likely to see the deception. Plato’s Allegory of the Cave comes to mind… That is our task in this historical process! Deem this retort a criticism if you will but your message is often lost because it offers no solutions and comes off as another rant, like many of mine. We can and must do better, even if our impatience get’s the better of us.


      1. Raging Debate

        Ben Franklin, Thomas Paine and the printing press to educate the masses was the correct strategy of liberation. Liberation comes in these three stages: Truth, Freedom and finally Justice. They are also the cornerstone concepts of a Republic.

        Each of us by merely commenting on forums such as this one are contributing to the Truth portion of the process. What is far more powerful is to take a couple of moments and forward articles and discussions to friends.

        Rockefeller doesn’t want the Internet now and recently stated that he considered it a mistake. Well too bad. Shutting it off or censoring it now wakes up the people. Not doing it means the people do the truth-telling job. Evolution continues and the information will continue finding its targets. Evolution (what some of us consider God’s law) cannot be stopped.

      2. i on the ball patriot


        Sorry I am not resonating with you. Some get me, some don’t.

        We didn’t get fucked up all at once.

        We won’t get unfucked up all at once.

        The path to a better society will be difficult. It is a multifaceted path and made more complex by the fact that we are all as individuals on different parts of the trail of greater perception, and many of us, ARE severely impeded from advancing on that trail by our inner cops that have been provided by the man.

        I am surprised you think I offer no solutions. I suggest a reread — and your rants are full of solutions, some quite inspirational, don’t sell yourself so short.

        When the student is ready the master appears.

        Deception is the strongest political force on the planet.

        1. Mickey Marzick in Akron, Ohio

          It’s not that you don’t resonate with me… Nor do you need to apologize. Why? That’s ridiculous as we’re both on the same page, if not always the same sentence in the same paragraph. But should we be? It isn’t healthy… and gets pretty damn boring.

          But not all rich and wealthy people are EVIL. It’s an oversimplification of reality which I’m certain you’re aware of. When you use terms like rich and wealthy are your referring to the 10% who actually make the decisions or the entire group? I suspect you mean the former – the true believers. But there clearly is a difference. Moreover, as your poetry indicates, its the slaves who have to be convinced of their oppression – not the oppressors.

          Continue to develop your talent for cutting through the bullshit and pay me no mind. We don’t need to convert the “saints” but rather those who aspire to join but are reluctant. If you lose your audience in the first sentence, however, it’s not likely they’ll hear anything else of value that you might have to say. Let’s leave it at that…

          1. i on the ball patriot

            Mickey Marzick in Akron, Ohio says: “But not all rich and wealthy people are EVIL. It’s an oversimplification of reality which I’m certain you’re aware of. When you use terms like rich and wealthy are your referring to the 10% who actually make the decisions or the entire group? I suspect you mean the former – the true believers. But there clearly is a difference. Moreover, as your poetry indicates, its the slaves who have to be convinced of their oppression – not the oppressors.”

            ALL rich and wealthy people are immoral in the sense that they have taken far more of life’s pie than they deserve as their share is premised on a very tilted corrupt playing field. They can not have achieved what they have and not know that. And, simplifying is what it is all about, life is frittered away with complexity and detail.

            When I use terms like rich and wealthy (and ruling elite) I refer to both groups, the top 10% (I would put it at much, much less, and call it the super wealthy) and then the remaining wealthy. I differentiate thus; the very small old money group, more influential in terms of total wealth and control, are the control oriented Perniciously Greedy — who have bought the neocon Full Spectrum Dominance plan of a ruler and ruled world with the ruled in perpetual conflict with each other — and the plain old Vanilla Greedy folks, who are still focused on profit and the good old days and are presently getting their clocks cleaned. They will fall with the masses unless they wake up and regain control. I appeal to them to get smart quickly. They actually have more resources than the masses to restore the recent past status quo, not that I am fond of the past status quo but it is far preferable to where we are heading. Soros seems to be on the right track but is still speaking Orwellian doublespeak bullshit in the hopes that he can be persuasive (like all of the assholes that send endless remedial plans to their ‘elected representatives’)and does not want to risk his own good game being exposed. I’m here to tell you the Perniciously Greedy, like their political shills, are not listening.

            Concurrent with that, yes, I appeal to the ‘slaves’, many who ARE unaware of the deceptions involved in their oppressions — most all — to wake the fuck up and stop fighting with each other in these intentionally contrived conflicts and focus on the wealthy ruling elite who are paying their butt sucking media and political minions to produce these conflicts. You are what you’ve been through, but now and the future are up to you!

            If I am in replay mode often that is also by design. One of the problems with blogs is that many good ideas sink into the archives and discussions and ideas fade along with them. So, getting a message through requires repetition, alternation and progression. It is like selling cars, the sales pitch is held constant as new buyers are in and out of the market all the time. You hope to plant seeds that will ultimately lead to a sale when the buyer is ready to purchase (the master appears). An alternative would be a blog/web site that presents a summary of your best ideas for continual reference and dissemination. I would like to see NC do something along that line and I am working on a web site of my own to discuss my own personal ideology Fairism.

            Keep hammering!

            Deception is the strongest political force on the planet.

    2. craazyman

      I’m just trying to figure out if this is sung softly to melodius and impeccably refined violin music, like Blake’s Songs of Innocence and Experience, or if it’s a mad grunge-like wailing scream with electronic guitars and amps. Could go either way. :)

  6. flow5

    The US began another economic contraction in May. However, the Central Bank hasn’t recognized this downswing. Again, without countervailing stimulus, US economic activity will cascade sharply throughout the entire 4th qtr

  7. flow5

    Contrary to economic theory, & Nobel laureate Dr. Milton Friedman, monetary lags are not “long & variable”. The lags for monetary flows (MVt), i.e., the proxies for (1) real-growth, and for (2) inflation indices, are historically, always, fixed in length. However the lag for nominal gDp (the FED’s target??), varies widely.

    The double dip has already started. But for it to continue it will have to be “validated”. No extra stimulus.

    1. aet

      Don’t you mean: “No extra stimulus …until it is too late”?

      The use of the word ‘extra’ implies that what was distributed was sufficient: what evidence have you for that assumption?

      1. aet

        Perhaps you should have used the word “further”: for I think that “extra” word reveals some prejudice on this issue.

  8. sherparick1

    I notice that America did not cover the reaction in Germany to Merkel’s austerity package. Unlike us Americans, where the only the elite riots and protests (Tea Party!), the common people in Germany realize that ultimately fear and desire for social order will cause the elites to treat the rest of society with some consideration. Americans use to do this quite regularly to, back when they had strong social organizations both in countryside among farmers and and in cities, such as unions and political clubs. But 60 years of TV and the spread of suburbia has I think rendered most people apathatic and disconnected. Rage turns inward or upon the percieved lessers (Blacks, Browns, Gays) in societies. So we have folks like Senator John Kyl stating we can’t spend money on unemployed and to maintain education, fire, and police protection services, but we have plenty of money to eliminate the estate tax. Obviously, Senator Kyl has no fear that a group of citizens might surround him at some point and introduce him to the concept of “tar and feathered” as Hawthorne described in “My Kinsman Major Molineaux.”

  9. sherparick1

    I expect that we will find that Goldman Sachs in an earlier incarnation just sucked Mars dry, with the assistance of BP.

    I was watching Worldwide Exchange this morning and the British twit on the show was complaining that BP has been unfairly vilified about Gulf oil spill compared with Goldman Sachs (vampire squid?), AIG, or Exxon (whose name is still mud, but has learned that being a large Oil Company means never having to say you are sorry!) It is amazing that this pity party the economic and conservative elite in Britain are having about BP.

  10. Tom Hickey

    Double-dip or second leg down in GFC? I’d say the latter. The GFC involves the resolution of a long financial cycle, not an ordinary business cycle. This is comparable to the Great Depression, and this is really GDII, as shown, e.g., by long-term unemployment and underemployment. These are depression stats, not recession.

    What is required at the end of a long financial cycle is a resetting. This requires that the bad debt be wrung out of the system. They can be done either gradually over time (stagnation, Japanification) or quickly through liquidation (debt deflation). Which is will be is not yet clear, but it will be one of the other. Talk of recovery before the debt is wrung out is wishful thinking.

    The US is awash with liquidity, interest rates are at the lower bound, business are flush with cash, and no one is investing. Why? Aggregate demand looks to be in the tank until the dodgy debt clears and that’s not in sight. No one is going to invest in this kind of environment.

    If government doesn’t pick up the slack through more deficit expenditure that targets demand, then the US is headed for GDII. Even with more stimulus, it is still going to take time to wring out the dodgy debt. We aren’t gong back to 2007 anytime soon. In fact, it is looking more like 1937.

  11. Adam

    Tom Hickey has it right. The problem with the neoclassicals in charge (including the likes of Keynesians like Krugman) is that they still do not notice debt.

    The Austrians don’t notice unemployment and demand.

    Only the Post-Keynsian Minskyian analysis is on the right tract about the economy.

    The Debt is Structural not Cyclical.

  12. Jackrabbit

    I think Timmay and the administration have convinced themselves that they economy only lacks “confidence.” They jump on any positive signal. And over time, it seems, that has become a political necessity as well.

    Now, as people fall off the employment rolls, the headline employment number seems likely to fall going into the fall elections. I’m sure they desperately want to tell voters: “We SAVED the economy from collapse, we REFORMED the banks, and our economy is RECOVERING.”

    (Most readers of this blog probably have a different view: they GAVE the banks trillions of direct and indirect support – including allowing them to cook the books; they often stood against real reform or failed to support it; and the economy is on the brink of turning down – if it has not already.)

  13. NOTaREALmerican

    Re: The latest survey of consumer sentiment shows a better-than-expected gain.

    A ponzi scam is a confidence game. And humans are naturally optimistic.

    The perfect match.

  14. lalaland

    “Yet the aggressive “green shoots” boosterism and other forms of cheerleading by the officialdom plus optimistic interpretations of data were persuasive for a while.”]

    Any cheerleading the government did pales in comparison to the private sector – who has been calling a V shaped recovery, who keeps claiming the s&p is undervalued, the goverment? sheesh.

  15. Hugh

    Reality is a bitch and every so often these economists and market analysts who see recovery around the corner run into it. What surprises me is not so much that they do this but that they still have jobs. I haven’t made a cent off of being right in my predictions over the events of the last few years, but these guys not only are well paid they make careers out of being wrong. It’s a great gig if you can get it. And on those few occasions where they stumble into the truth, either it doesn’t stick or they act like they were the first to discover it even though people like us were talking about it for a year or more. I remember seeing this back in the months following the housing bubble burst in August 2007. Every month or so, there would be a fresh round of stories about how the crisis was over, how the markets had already factored in the losses from subprimes, and how everything was set to get back to normal. Then there would be another jolt, a pause, followed by a fresh round of upbeat stories. It was really annoying. Because if you are trying to be intellectually honest, you have to look at their arguments, re-evaluate your own, and even when you are sure their stuff doesn’t add up, there is always that time of doubt where you wonder if somehow they are seeing something that you aren’t.

    Still there are a few things I have learned out of all this. First, the fundamentals don’t lie, but most economists and anaylsts do. Second, there will be no recovery until the fundamentals improve and this isn’t happening. Third, there can be no recovery until the financial system is reformed, and this isn’t happening. Fourth, our elites are too corrupt to get us to recovery but they are just greedy enough to get us to depression.

    1. Valissa

      Hugh, your first two points sound very sensible and I certainly agree with the 4th… about your 3rd point I’m not so sure. From my reading of history it’s not clear that the elites so directly control financial systems as to be able to “reform” them in some sort of straightforward top-down way. I think that is an idealistic pipe dream! From my perspective financial systems are complex, dynamic and intertwined with culture, business and gov’t in multiple different ways… plus financial systems evolve over time in midst of numerous historical and modern trends. The elites are not monolithic though it is often convenient to talk about them simplistically as if they were. Among the elites are factions with different power agendas and different beliefs about money and finance like every other group. If reform is going to happen, it will be piecemeal and chaotic… not organized and well thought out in the way economists fantasize.

      Perhaps someone will answer a question for me. Why do the economists dismiss price inflation? That makes about as much sense to me as dismissing “externalities.” Apparently it is a sign of economic ignorance not to realize that monetary inflation is what is “important” not price inflation. Another sign that economics was created for and by the elites, since the average person only really cares about price inflation (and I include myself here). Prices of all kinds of goods and services needed for daily life are getting VERY obviously higher and higher… so pardon my somewhat economically ignorant point of view, but perhaps that is part of why it seems consumer spending is up.

  16. Y4

    We let our real estate inflate the same way Japan allowed their real estate to inflate. Whether it was by accident or on purpose doesn’t really matter. What happened to Japan for doing that will happen to us. Why would anyone think we will get a different result from the one Japan got? How you answer this question for yourself may help to clarify the pills, powder,and booze vs pot conundrum?

  17. Rod

    I am a management consultant and based upon what I am seeing at my clients I think we are in a recovery.

    My clients are making REAL profits, they have already started hiring and are posting for new jobs even more aggressively, the projects they want us to work on are ALL growth related.

    A credit crises in Europe could derail us – but from what I am seeing from real companies that design, manufacture and sell real goods (i.e., not finance companies) we are definitely in a recovery.

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