Thursday, November 19, 2009 certain treasury bills traded at a premium to discount, meaning the interest rate was negative on them. This isn't a sign of an improving economy, but instead a total lack of demand for cash to make economic transactions and an extreme aversion to risk in the market place. All the same, the game of running commodity prices along with rallying stock markets defy the picture shown in the treasury markets. Add to the fact that t-bills are some of the most shorted assets in the world can only mean the other side of the trade is massive.
I watch repeatedly as stories of massive budget shortfalls in tax revenues in states and localities which reflect roughly 10% declines are fronted by stories that the economy grew by 3.5% in the third quarter. Which one is it, as retail sales and economic activity show up in tax revenues as fast as they show up in economic growth. Asian reports, one of the most recent being China great 10% while its exports dropped in the 15% range don't wash. Retail sales are up while sales tax receipts are down. Also, there is a massive reduction and payoff of consumer credit going on at this time, which implies that the retail sales figures are a hoax. Job losses are 500,000 a week while there are 6 people looking for every potential job available. In the past, there were twice as many job vacancies and close to 200,000 fewer layoffs weekly which implies to me that the story that the economy is only losing about 180,000 jobs a month is a boldfaced lie.
Mish Shedlock posts charts from time to time which show that prior to the 1991 recession, unemployment rallied with the end of a recession, while afterwards unemployment kept increasing. What this means is they understate unemployment when the recession is occuring and then overstate growth when it comes to an end. Clearly we have recoveries that are nothing more than downsizing procedures to add to corporate profits while employment suffers. Also, there is some kind of statistics that are twisted to show a recovery is occuring when one hasn't started.
Currently talk is turning to the double dip idea. From what I can gather, there hasn't been a recovery, else after nearly 2 years job losses wouldn't still be exceeding any seen for the first year of the recession. Instead, employers would be holding onto workers if new orders were rolling in. It costs money to lay off and rehire workers, so why get rid of them a mere few weeks or months before you need more help?
News about this recession has been cooked from the start. It was a year old before they declared it and proponents of a healthy economy kept preaching we might miss a recession all the way to the point that we had an almost total collapse of the economy. Then, out of the blue in late 2008, recession was reported to have started in December 2007. The bulls then proposed that recessions only last x months and this one was already over. Next we had the Obama stimulus which was designed to stop unemployment at 8%, as recovery was already in sight. 8% became road kill for the stimulus and the bank stress test. All of this is forgotten as the banks are now in a pile of rubble while people wonder why they aren't lending and why they are paying huge bonuses. in the meantime, Obama is claiming all the jobs he saved (for $700 billion one could have hired a new US army along with a new arms business and $700 billion was enough to pay 14 million people $50,000 a year)
More than anything, I am amazed and stunned at the dishonesty and blatant crookedness of the American system. There aren't any dictatorships on earth as dishonest as what we have going here today. Reports come out of strange options trades on Bear Stearns prior to failure on deep out of the money puts with 9 days left to expiration that netted $270 million and the SEC says they have no clue. The SEC can find a transaction that size easier in an 8 hour day than the average person with 20/20 vision can find the moon in the sky once a year in the high desert. So can the Fed as transactions that size aren't that easy to miss. Next we have former Goldman CEO's at the Fed front running news about AIG (the NY Fed, which he was a part of) making Goldman whole in the default swaps, making the trades nearly 6 months ahead of the release of the news. These aren't mailroom employees getting a tip, but rich pigs that can't get enough and have probably never made over a few thousand honest dollars in their lives. It is like the ship is going down, so lets loot the safe and get the first lifeboat.
I don't believe the economy is doing as well as they state, neither do I believe we will have a double dip recovery because I don't buy what has happened as a recovery. Double dip implies that what they did worked or we went back down because we quit doing what they were doing. It is a lie that is meant to allow for more theft and a transfer of liabilities from the few to the many. In the meantime, we have Goldman and the hedge funds throwing stock back and forth between themselves hoping to excite the poor idiots that have been busted by them already. We will get the bill for Goldman and the hedges or they will totally collapse.