The Fog of Economic Crisis - Part I: Will the real Real Economy please stand up - Eric Janszen

[newnewthing]

Re: The Fog of Economic Crisis - Part I: Will the real Real Economy please stand up - Eric Janszen

Just an awesome piece. This provides detail that explains a lot I've noticed but hadn't quantified. This is the sort of thing one hopes to see discussed in the broader body politic but that may be asking too much. Way too much. Once can only hope some influential folk are paying attention.

[jk]

Re: The Fog of Economic Crisis - Part I: Will the real Real Economy please stand up - Eric Janszen

http://www.itulip.com/forums/showpos...0&postcount=10

Remember this post? And what Dr. Michael Hudson said?

i remember that nightmarish post quite well. i wasn't consciously referring to it, but obviously the image of the parasite and host was out there before i used it.

[Chris Coles]

Re: The Fog of Economic Crisis - Part I: Will the real Real Economy please stand up - Eric Janszen

The analysis of the PCE Goods versus Retail Sales graph is a Masterstroke. Pure Genius.

[jk]

Re: The Fog of Economic Crisis - Part I: Will the real Real Economy please stand up - Eric Janszen

What confuses me is that Non-durable Goods has fully recovered. Not even the greatest Bear can deny this as being significantly positive. If the economy were truly sick then this number should correlate with the continued 20 percent decline of Durable Goods.

Also, the components of Services does not seem to have changed and have always included "economic rent." Not discounting the government spending and stimulus(some have made a case that this has had a 50 percent effect on recent GDP numbers), I don't see a collapsing economy here.

i wonder how much of non-durable goods is energy consumption? e.g. the price of gasoline is up substantially compared to a year ago.
http://charts3.barchart.com/chart.as...=BSTK&evnt=adv
paying more for gas and oil isn't what i'd call recovery, but has to show up in the consumption numbers as "growth."

[Mega]

Re: The Fog of Economic Crisis - Part I: Will the real Real Economy please stand up - Eric Janszen

He always stops writing just as it starts to get inter..
Mike

[c1ue]

Re: The Fog of Economic Crisis - Part I: Will the real Real Economy please stand up - Eric Janszen

What confuses me is that Non-durable Goods has fully recovered. Not even the greatest Bear can deny this as being significantly positive. If the economy were truly sick then this number should correlate with the continued 20 percent decline of Durable Goods.

Also, the components of Services does not seem to have changed and have always included "economic rent." Not discounting the government spending and stimulus(some have made a case that this has had a 50 percent effect on recent GDP numbers), I don't see a collapsing economy here.

The point of the post to my understanding is that the Durable/Non-durable goods numbers no longer cover just the purchase of the goods themselves, but also covers the interest and other FIRE costs associated with the purchase of said goods. This would likely, for example, cover ongoing credit card balances associated with goods purchases.

A prime example of how this might work would be the auto loan: so long as the loan is outstanding, the 'purchase' is generating interest income (i.e. consumption). But in reality no actual economic activity going forward is being generated outside of perhaps a loan servicer. In fact economic activity will fall as the loan comes due and the underlying principal, the car, is 'unexpectedly' discovered to be worth far less than the outstanding loan amount.

Thus it is entirely possible that the amount of purchases have fallen, but the overall spending has recovered as banks, credit cards, etc reap higher fees, interest income, and penalties. These - rather than being a separate category - are lumped in with the physical/service goods.

Seems nice but the real economy cannot survive via higher FIRE bloodsucking, nor will jobs be created/sustained.

[WDCRob]

Re: The Fog of Economic Crisis - Part I: Will the real Real Economy please stand up - Eric Janszen

Very focused and understandable - one of the tightest pieces you guys have produced IMO. Thank you.

[Quincy K]

Re: The Fog of Economic Crisis - Part I: Will the real Real Economy please stand up - Eric Janszen

What confuses me is that Non-durable Goods has fully recovered. Not even the greatest Bear can deny this as being significantly positive. If the economy were truly sick then this number should correlate with the continued 20 percent decline of Durable Goods.

Also, the components of Services does not seem to have changed and have always included "economic rent." Not discounting the government spending and stimulus(some have made a case that this has had a 50 percent effect on recent GDP numbers), I don't see a collapsing economy here.

[jpatter666]

Re: The Fog of Economic Crisis - Part I: Will the real Real Economy please stand up - Eric Janszen

Remember this post? And what Dr. Michael Hudson said?

Hey c1ue, link doesn't seem to work?

[c1ue]

Re: The Fog of Economic Crisis - Part I: Will the real Real Economy please stand up - Eric Janszen

real insight, thank you, but unfortunately a depressing one: the only thing that continues to grow is the fire sector. the parasite/cancer lives on, while its host continues to weaken.

http://www.itulip.com/forums/showpos...0&postcount=10

Remember this post? And what Dr. Michael Hudson said?

[jk]

Re: The Fog of Economic Crisis - Part I: Will the real Real Economy please stand up - Eric Janszen

real insight, thank you, but unfortunately a depressing one: the only thing that continues to grow is the fire sector. the parasite/cancer lives on, while its host continues to weaken.

[oddlots]

Re: The Fog of Economic Crisis - Part I: Will the real Real Economy please stand up - Eric Janszen

Outstanding. This is the kind of analysis that got me hooked here years back.

There's a ton of analysis that looks at arguments from a kind of a priori stance. Most of the arguments that tend to get me exercised fall into this category: ideological musings. (I would argue they have their place, and also that I don't know what that place is.)

There's a ton of analysis that looks at economic data but never get much below the surface. Much of the guff in the MSM falls into this category (what will the U3 numbers be, the revisions, etc.... blah, blah blah.)

Pulling apart the PCE figures is a brilliant idea and a demonstration of the maturity and depth of thinking that underpins the itulip project. Ditto the look at energy usage and rail traffic as a proxy for overall, "real" activity.

Thanks. Very helpful antidote to my own self-distracting political obsessions and the vacuous chatter of cheerleaders.

You'll make an adult of me yet.

[porter]

Re: The Fog of Economic Crisis - Part I: Will the real Real Economy please stand up - Eric Janszen

So does this mean the FIRE economy is here to stay?

[slippery]

Re: The Fog of Economic Crisis - Part I: Will the real Real Economy please stand up - Eric Janszen

Great analysis of PCE components. Thanks.

[we_are_toast]

Re: The Fog of Economic Crisis - Part I: Will the real Real Economy please stand up - Eric Janszen

Excellent piece, one of the best.

Exposing PCE is a very nice piece of economic investigative journalism. That's the good news. The bad news is it was one of the indicators iTulip recommended to watch. We are running out of reliable measuring sticks to use to measure what's happening in the economy.

I sure don't like the term "Great Recession". This still feels like we are in the beginning of a long process that is going to get much worse and will only make us wish for the recessions of the past.