ragerunner

You're totally missing what I'm saying. The family's business IS the United States economy. This analogy doesn't make sense to people who have heard their whole lives that private and public sector activity is fundamentally different. The 'family business' is the US government. Not all the US businesses and their incomes. The real difference with the simplified examples was two main things: - the ability to print money - and the ability to collect and raise taxes.

But, the 'family business' doesn't have access to the full GDP. They currently only have access to $2.3 trillion of the $14 trillion GDP. That would be like saying that family business A has the right to all the other income of all the other businesses in town, thus they have no financial issues. You are correct if the FEDs decide to take all of Apple's money and Googles money, and Boeings money, etc. Then the FEDs are no long in a financial hole. So are you expecting a notice (if not massive) tax increase in the near future in an effort to capture more of the GDP?

S&P Downgrades Fannie and Freddie Credit Ratings, Other Agencies Tied to U.S. Debt "Standard & Poor's downgraded the credit ratings of mortgage giants Fannie Mae and Freddie Mac Monday, expanding on its decision to downgrade U.S. debt in a market-roiling set of announcements." Read more: http://www.foxnews.com/politics/2011/08/08/sp-downgrades-fannie-freddie-credit-ratings/#ixzz1USLfTla0 Why? Because they are losing billions every month and its not getting better. Fannie Mae to ask US Treasury for $5bn "Along with Freddie Mac, Fannie, which received nearly $100bn from the Treasury to stay afloat during the financial crisis, owns or guarantees about half of all mortgages in the US - nearly 31m home loans worth more than $5 trillion. Along with other federal agencies, they backed nearly 90pc of new mortgages over the past year. In the second quarter ended June 30, Fannie Mae lost $5.18bn, or 90 cents per share. That compares with a loss of $3.13bn, or 55 cents per share, a year earlier." http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8684094/Fannie-Mae-to-ask-US-Treasury-for-5bn.html

Are suggesting Warren Buffet should also chill out? Or the European Central Bank? Or CEOs of U.S. investment houses on Bloomberg and CNBC this morning who chided S&P too? S&P was reactionary and panicky, just like the stock market is being today. The underlying fundamentals of the economy are stable. Not robust, but not decrepit either. Everyone has the right to their opinion. I personally don't believe our governments underlying fundamentals are stable enough to warrent a AAA rating. Not when we are spending more than $1 trillion+ more than what we take in each year. As far as some of those people, Warren Buffet received billions from the taxpayer bailouts for wall street (posted in this thread many pages ago), ECB is moving closer and closer to the edge of either losing members or falling apart, so both of them have a lot to lose. I can find a lot of main stream articles saying that S&P was right on the money with this move. U.S. income: $2,381,000,000,000 Federal budget: $3,552,000,000,000 New debt: $ 1,171,000,000,000 National debt: $14,078,000,000,000 Recent budget cut: $ 38,500,000,000 http://en.wikipedia.org/wiki/2010_United_States_federal_budget#Total_receipts I saw this put another way today, as a family's budget. Family income: $23,810 Family budget: $35,520 New debt per year: $11,710 Credit card debt: $140,780 Recent budget cut: $385

To bad the old thread isn't still available. This statement is very eerily like the statement(s) made after Lehman Brother's collapsed. I have read in the last few days that European banks are not willing to lend to each other creating another liquidity 'freeze up'. Look for several 'liquidity' easing events over the next few weeks. This will probably settle the markets, at least for a little while. G20: Committed to take coordinated initiatives "HONG KONG (MarketWatch) -- Finance ministers and central bank governors at the Group of 20 industrialized and developing nations on Monday said they were committed to take "all necessary initiatives in a coordinated way" to support financial stability and to foster stronger economic growth. Without detailing specifics, the G20 officials said they will remain in close contact and "cooperate as necessary" in the coming weeks to ensure stability and liquidity in the financial markets. The statement comes amid fears of economic fallout from Standard & Poor's downgrade of U.S. credit ratings and ongoing worries over the euro zone debt crisis. The Group of Seven developed nations had also said Sunday that it was ready to respond as needed to take coordinated action, including to ensure liquidity and support financial market functioning and economic growth." http://www.marketwatch.com/story/g20-committed-to-take-coordinated-initiatives-2011-08-08-345560

Somebody needs his diaper changed and a warm bottle. This kind of stuff just makes us look like a spoiled kid throwing a fit. Our debt and debt obligations clearly are more than we can ever hope to pay. So we got downgraded. I am sure the brass at S&P are going to take a lot of heat now and in the future for this action. Here is a thought for Timmy boy, maybe we deserved the downgrade? Geithner keeps heat on S&P Treasury chief slams rating agency, decides to stay in his post “S&P has shown really terrible judgment and they’ve handled themselves very poorly,” Geithner said in an interview with NBC/CNBC. “And they’ve shown a stunning lack of knowledge about basic U.S. fiscal budget math. And I think they drew exactly the wrong conclusion from this budget agreement,” Geithner said." http://www.marketwatch.com/story/geithner-to-stay-on-as-us-treasury-chief-2011-08-07-1556320

Agreed for the US. I think the real concern is coming out of Europe this time around. If Italy or Spain start having a Greece moment than the ripple effect becomes the concern. I think a lot of the stock market sell off right now is more European focused than US data focused. Time wise I think the 'battle' over Spain and Italy will be a lengthy, drawn out event. Even longer than Greece or Portugal. I don't see this as an overnight collapse or an overnight fix. There is a lot of volatility coming for the world markets and economy over the next year or two. (With potential wild swings in both directions.) I think big business is letting us know their concern over the potential for long drawn out volatility, through their hording of cash.

While its better than last month I think these two points show the amount of unemployed people went up in July not down. We need 125,000 just to absord new incoming workforce, so there is a negative 8,000 and then 200,000 more unemployed people gave up or no long can collect unemployment. This makes a lot of since once you realize we are running abut 400,000 new people a week going onto the unemployment list. In a normal economy were there is a balance between all these numbers the report would be more valuable, but during these economic times it captures a distorted picture of what is actually going on, at least on Main Street. U.S. economy gains 117,000 jobs in July Private sector adds 154,000; unemployment rate falls to 9.1% "The rate of hiring in July wasn’t even enough to absorb the natural increase in the labor force, which requires about 125,000 new jobs a month." "With jobs in scarce supply, nearly 200,000 workers dropped out of the labor force last month. The percentage of people considered part of the labor force who actually have jobs fell to 58.1%, the lowest level in 28 years." http://www.marketwatch.com/story/us-economy-gains-117000-jobs-in-july-2011-08-05?pagenumber=1 This growing unemployment is show in the BLS data. In June there were 22.312 million people unemployed in the US. In July there were 22.408 million people unemployed in the US and increase of almost 100,000 new unemployed people. http://www.bls.gov/news.release/empsit.t12.htm

While some of this is about our ugly economic data, there is plenty of concern coming out of Europe right now. - Spain just canceled their Aug 18th auction. - Italy may remove itself for all auctions for the rest of the year. - Italian prosecutor just seized Moody and S&P documents (as if it is their fault they have to much debt and can't pay it off). - Italian and Portugese bonds are in a sell off right now. Basically Italy and Spain are closing in on being the next Greece or Ireland. These actions may help kick the can down the road but it will not change the underlining issues, to much debt, not enough growth and in Spain's case the mother of all housing bubbles that have busted.

The currency war is really starting to heat up. US intervenes to keep its currency rates low, then Japan responses, then the Euro responses, China refuses to let their currency be valued correctly, now the Swiss Franc is in play. With the noticeable international slowdown in the manufacturing sectors, there is less and less demand for goods to be sold, which is increasing the need to keep a currency low, to make your country's goods competitive on shrinking world market. Yen, euro plunge on Japan intervention, ECB Spanish and Italian debt back under scrutiny, adding to worries "NEW YORK (MarketWatch) — The U.S. dollar surged the most since September against Japan’s yen Thursday, rallying after Tokyo authorities intervened and the nation’s central bank stepped up its monetary easing. The euro also fell further against the dollar in early U.S. trading after European Central Bank chief Jean-Claude Trichet said it would conduct more cash operations to provide liquidity to banks." http://www.marketwatch.com/story/yen-slides-after-japan-intervenes-to-curb-its-rise-2011-08-03 Swiss central bank battles to halt franc’s rise ‘Massively overvalued’ franc hurts economy, SNB says; euro surges “Effective immediately, the [swiss National Bank] is aiming for a three-month Libor as close to zero as possible,” the central bank said in a statement." http://www.marketwatch.com/story/swiss-central-bank-battles-to-halt-francs-rise-2011-08-03 Can they go lower than zero? If not then what is next for everyone. Protectism, higher tariffs?

Sorry I let you down. I live in the west and I am two hours behind you on the east coast. I usually don't post until around 11:00 your time or so. But thanks for posting the info about all the newly unemployed people in America. I am sure after they went to the unemployment office is was off to Disney World after they stopped for a new car to drive to Florida in. This should juice the economy so I have less 'gloomy' news to report in the future.

I think 400,000 people needing to apply for unemployment last week is gloomy enough.

QE3 where are you? Rate of service-sector growth slows in July New orders fall to lowest level in almost two years "WASHINGTON (MarketWatch) — Growth in service-sector businesses in areas such as retail, health care and banking slowed in July, dovetailing with a spate of data showing a weaker U.S. economy, according to a survey of senior executives." http://www.marketwatch.com/story/rate-of-service-sector-growth-slows-in-july-2011-08-03 Job cuts surge 60% to 16-month high "WASHINGTON (MarketWatch) -- The number of announced job cuts surged 60% to a 16-month high of 66,414 in July, according to the consultancy Challenger, Gray & Christmas. Merck & Co., Borders, Cisco Systems, Lockheed Martin and Boston Scientific accounted for 57% of the total, or 38,100 positions. "What may be most worrisome about the July surge is that the heaviest layoffs occurred in industries that, until now, have enjoyed relatively low job-cut levels, including pharmaceuticals, computer and retail," said John A. Challenger, chief executive officer of Challenger, Gray & Christmas." http://www.marketwatch.com/story/job-cuts-surge-60-to-16-month-high-2011-08-03

The EU doesn't have the resources to bail both of these out, if they end up needing it. Plus, I don't think the German's have the political will power to even try. Italy, Spain feel heat as debt crisis is reignited Global growth worries put pressure on officials as turmoil increases "A combination of growth worries and risk aversion sent Italian and Spanish bond yields soaring to euro-era highs on Tuesday, freshly reigniting fears the euro-zone’s debt crisis could engulf two of the major economies in Europe." “The potential negative impact on U.S. growth resulting from the debt-ceiling accord built on signs of weakness across factories around the world and served as a catalyst to [focus] attention back on to the plight of peripheral euro-zone economies,” said Andrew Wilkinson, market strategist at Interactive Brokers in Greenwich, Conn." http://www.marketwatch.com/story/italy-spain-feel-heat-as-debt-crisis-is-reignited-2011-08-02

Add in the shipping data that has been coming out and its becoming clear a noticeable slowdown in the economy is taking shape. How deep this becomes or how long it will last is now becoming the question. The ISM is a major leading indicator gauge. ISM manufacturing gauge falls to two-year low "The Institute for Supply Management’s manufacturing gauge in July dropped 4.4 points to 50.9%, the worst reading since July 2009 and barely staying above the 50% no-change line." "The new orders index fell into contractionary territory for the first time since June 2009, and indexes for prices and employment in particular saw big drops. The prices index has dropped a stunning 26.5 points over the past three months. The employment gauge fell 6.4 points to 53.5%." "Similar gauges released across the globe pointed to deteriorating if not contracting conditions." http://www.marketwatch.com/story/ism-manufacturing-gauge-falls-to-two-year-low-2011-08-01 China manufacturing activity shrinks in July: HSBC "HONG KONG (MarketWatch) — China’s manufacturing activity contracted slightly in July, signaling a deterioration in the operating environment at the nation’s factories, as tighter monetary conditions weighed further on the sector, according to data released Monday by HSBC." http://www.marketwatch.com/story/china-manufacturing-activity-shrinks-in-july-hsbc-2011-07-31

Items not included in core inflation anymore are gas and food since they are such minor items to our society.

This confuses me. Regardless of how we calculate GDP, there still has to be a constant, no? Meaning, if you define a recession in traditional terms, how can using a different calculation for GDP mean that we are in a recession now when GDP is still rising month over month (albeit veeeeery slowly). Forgive my ignorance in economics. Back in the 80s they decided to change that calculation. From the Shadowstats site. "The SGS-Alternate GDP reflects the inflation-adjusted, or real, year-to-year GDP change, adjusted for distortions in government inflation usage and methodological changes that have resulted in a built-in upside bias to official reporting."

The 'shadowstats' chart shows discrepancies even before the early 90's. I'd be interested to understand better the 'distortions in government inflation usage' that the chart has been adjusted for. My fault, It was the unemployment stats that got altered in the mid 90s and GDP back in the 80s. Needless to say both were adjusted to have a 'happier' result.

Quick side note. If we were still calculating GDP like we did back before the early 90s GDP would have been negative since 2004. Meaning that we would have been in a recession for 6 years straight ,which is probably pretty close to what main street has been feeling overall. http://www.shadowstats.com/alternate_data/gross-domestic-product-charts

Don't be surprised if future revisions to these numbers don't turn both of them negative or right at it. This is the same thing they did before the 'great recession' was official. The GDP numbers just kept being revised downward until they couldn't hide it anymore. Add in that this upcoming quarter has already started with a July that has data worse than previous months. Layoffs are starting to pick up again and leading indicators are starting to show some significant downward movement over previous months. Add in the inflation during these quarters and we are back in recession levels. GDP grows slender 1.3% in second quarter "Gross domestic product expanded at a paltry 1.3% annual rate in the second quarter, the Commerce Department said Friday, below the 1.6% growth rate that economists anticipated." "The new data on the inflation- and seasonally-adjusted value of all goods and services produced in the United States showed the economy barely grew at all in the January-to-March quarter, rising just 0.4% from the initially reported 1.9% improvement. At the same time, the government said the recession proved to be deeper than initially projected." http://www.marketwatch.com/story/gdp-grows-slender-13-in-second-quarter-2011-07-29

Container-Ship Plunge Signals U.S. Slowdown: Freight Markets "Plunging rates for chartering container vessels that carry sneakers, furniture and flat-screen TVs may signal a U.S. consumer slowdown and losses for shipping lines in what is traditionally their busiest time of the year. Fees for hiring vessels have fallen 9.3 percent since the end of April, according to the Howe Robinson Container Index, which tracks charter rates for a range of vessels. Last year, the index surged 56 percent in the period, as lines added ships on demand from U.S. and European retailers restocking for the back-to-school and holiday shopping periods. “The troubling part is that charter rates are falling in the peak season,” said Johnson Leung, head of regional transport at Jefferies Group Inc. in Hong Kong. “Sentiment among consumers and retailers isn’t very strong.” http://www.bloomberg.com/news/2011-07-27/container-vessel-rates-plunge-signaling-slowdown-in-u-s-freight-markets.html A general observation. Yesterday the new IKEA in Denver opened. This is one of the largest IKEAs in the US. My wife loves IKEA and so we went on opening day. While it had large crowds, there really never was the long traffic lines, like and IKEA opening got a few years ago, or big lines to check out. They had a good crowd, but it was no way near what was being project for massive traffic congestion etc.

More job cuts coming to Wall Street Commentary: Slowing business means fewer jobs in the long term "HSBC Inc. and Credit Suisse are reportedly considering 10,000 and 2,000 job cuts respectively. In HSBC’s case, the cuts would come in its retail bank and in Credit Suisse’s case more than 4% of the workforce would be cut because trading revenue has slumped." "The moves follow similar announcements at Goldman Sachs Group Inc., 700 jobs at Barclays and UBS, where a plan to expand Wall Street operations has been put on hold." "It isn’t a stretch to think that employment could fall to 2003 levels, meaning another 50,000 job cuts." http://www.marketwatch.com/story/more-job-cuts-coming-to-wall-street-2011-07-28 Boston Scientific to Reduce Staff by up to 1400 "The company announced a global restructuring program to eliminate unnecessary administrative positions and automate some production work. The company expects to shed between 1,200 and 1,400 employees by the end of 2013 through layoffs and attrition. Boston Scientific expects the cuts to save between $225 million and $275 million annually, some of which will be invested in other areas of the company. The company didn't specify which divisions would be cut. The announcement came one day after Boston Scientific unveiled plans to expand operations in China, including the hire of up to 1,000 new employees." http://abcnews.go.com/Business/wireStory?id=14177984

Growth slows as labor markets ‘soft’: Beige Book "The Beige Book, which is based on information collected on or before July 15, said growth has slowed in the majority of districts, particularly those nearest the Atlantic seaboard, with the Minneapolis district hurt by the now-concluded state government shutdown. That represents a slightly worse result than the June 8 Beige Book, when seven districts grew at a steady pace. And it confirms economic data showing limp growth from April to June. The Commerce Department on Friday will report second-quarter gross domestic product, and economists polled by MarketWatch expect a limp 1.6% growth rate, worse than the 1.9% rate of the first quarter." http://www.marketwatch.com/story/growth-slows-as-labor-markets-soft-beige-book-2011-07-27-149390?dist=countdown

U.S. durable-goods orders fall 2.1% in June "It was the second large drop in the past three months for durable-goods orders, raising fears that manufacturing is running out of steam after leading a tepid recovery over the past two years. Without a strong manufacturing sector, it is hard to see how forecasts of a strong second-half recovery can be realized." http://www.marketwatch.com/story/us-durable-goods-orders-fall-21-in-june-2011-07-27

..yes, but the GDP has not been contracting...yet. Here are the GDP stats, by quarter: 2009 1: (5.5) 2: ( .7) 3: 2.2 4: 1.8 2010 1: 2.7 2: 1.7 3: 2.6 4: 3.1 2011 1: 1.9 ...these are the final stats. So, it looks like we left recession in the 3rd quarter of 2009 (first quarter of positive GDP growth in this time series). Apparently prelimnary GPD numbers are due this week for 2nd quarter 2011. I wasn't trying to say we are currently in a defined recession. But, what has become apparent is Wall Street profits are not translating into growth for America's Main Street. In the past the connection between to two was more pronounced. As CincyDad posted in the past, when you take into account inflation, population growth etc. we really are not growing as a nation, we may actually be loosing some ground again. The IMF general considers a country with a GDP of 3% or less in a recessionary system. Jeffery, Your post and data that you provide are very helpful in this thread and are appreciated.