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Thursday, January 31, 2013

Stagnation

The story of the week that seems to be getting LESS discussion than I would have expected is the fact last quarter our economy (GNP) fell 0.1% (official figures, released yesterday I believe), a very small amount but a decline nonetheless.  This has lowered the 2012 growth figure to some 2.2% for the year.

I am no expert in economic data, but if the above two numbers are even CLOSE to being true, then 2012 had a decline in REAL (adjusted for inflation) decline...  In fact, this whole recovery since early 2009 has been among the weakest recoveries EVER in modern history.  Further, the general trend among economic recoveries after recessions is that the recovery tends to be stronger if the recession preceding it was bad.  This recovery is clearly an exception.

(I leave aside the issue as to whether or not the official figures are wrong, or manipulated numbers.)

***

In fact, this decline of 0.1% may herald more bad news to come soon.  This January, paychecks now have shrunk some $700 (per year, on average) because the full Social Security tax is being levied, after a two year tax break.  Obamacare taxes have just come into effect as well.  And, of course, the extra taxes levied upon the rich.

The main point I make here is that there is a high risk that the current quarter (January - March 2013) may show a drop in GNP as well.  If that does happen, by definition we are back into recession.

The "Green Shoots" we heard so much about may now wither again.  Whether they were real or not.

***

I see "Stagnation" elsewhere, not only in the economy and financial markets but in many other places and in my own life.  Following up on economic and financial matters I note:

-- Treasury bond interest rates (long-term) are at some 2.0% now (higher)
-- The price of gold has been locked into a trading range ($1600 - $1680)
-- Europe and China show stagnant economies (at best, probably in recession)
-- Peru has stepped in to weaken it currency (joining the rest of the world)
-- The Arab world is convulsing, the "Arab Spring" is not as rosy as we thought
-- Almost everyone I know is cutting spending and becoming more cautious

About the ONLY thing that IS rocking-and-rolling seems to be the stock market, stocks have been on a tear lately, due to QE...?  The chart of the S&P 500 (see last my last post) is at a triple-top...

We are becoming more cautious, it looks like we will NOT go to Italy this year (which we enjoy so much).  Why?  The euro is now almost $1.37, it has become hard to justify spending that much money...

I note that at financial forums I visit (especially Zero Hedge, but others too) that many people are becoming disillusioned with their personal economic circumstances.  ZH just had an article about union members learning that their taxes have gone up (and so learning that the Obama Tax Hikes) are not just affecting "the rich" (fuzzily defined as those making some $250,000 / year or more).

Ameru there in Peru is selling fairly well, but is stagnant vs. 2012 (admittedly 2012 was an excellent year).

I have heard some "buzz" that TPTB (The Powers That Be) are using wedge issues now (gun control, gay marriage, "global warming", class envy) to hide the current poor performance in the economy...  If this is true, then "Shame On Them" for not doing the right thing, by not telling the truth and by not working to get America back on track...

***

I wondered earlier today:

"Is stagnation contagious?"

If so, perhaps contagious stagnation might help explain why I have been slow to make progress lately in OTHER issues...  Yet, I am happy to report that I have had a mental "boot in the ass" to again get productive.  Maybe if stagnation is contagious, well then perhaps increased individual productivity may be as well.  Might each of us be able to help lift our whole country out of its rut?

So, I am back to work again, hoping to leave my own personal slow period behind (at least for now).  There is a lot to do, a lot to think about, a lot to write about.  I have another idea or two I wish to explore re Taleb's new book Antifragile.  With luck, soon I will have a contest here that will be fun and very unusual.  And in my own life, Step Four and Step Five beckon...

***

2013 promises to be an interesting year.  My hunch is that the relative lack of news and movement is nearing an end, and that things are about to get very interesting again, the calm before the storm.  In the words of the still unidentified "FOA":

"We will watch together, yes?"


3 comments:

  1. "Step Four and Step Five beckon..."
    Meaning?

    ReplyDelete
  2. "Shame On Them" for not doing the right thing, by not telling the truth and by not working to get America back on track..."

    Alas, there is no longer any shame related to anything to do with the pesky 99%, and I'm sure many of them believe we are incapable of dealing with the 'truth'.

    ReplyDelete
  3. Robert
    I am a follower of the blog and I am Michael dV on Fofoa.
    Do you have info on getting gold into S America? I have friends from Bolivia (originally from Chile but grew up in Sucre) now in the USA. We have talked about eventually settling in Chile.
    This is all very early in the process and nothing has been decided but I know Simon Black of Sovereign Man has a place in Chile and I think it is the only SA country I would consider. I've climbed in Argentina x4 and have traveled in several other countries. Chile seems the only one I'd trust except maybe Uruguay.
    If we did decide to make the move I'd like as much first hand info I can get.
    At this point selling and re-buying is a possibility but later that might not work.
    I believe fofoa is right in there being a coming revaluation of gold to a much higher price.
    I'd like to have some out of country, a cheaply (but safely) as possible.
    thanks
    Mike (mec13x@gmailxxxxdotcom

    ReplyDelete