Wednesday, July 07, 2010

May Turned To Crap

Once again, flat supply, economic stimulus and rising crude prices led to a criticality.

After months of great and wonderful news about the recovering economy that wasn't, our great cheerleaders have had to once again, admit that their crap does stink.

Sorry Bernie, but the world of economics does follow the physical world. It doesn't lead. It doesn't set the trends. The physical world offers up opportunities and crisis, and the world of economics reacts to them like a kitten going after a length of string.

We're coming back around in the cycle. This downturn has only just begun. It will start nailing the banks, and we'll be talking bailouts again as we get into Fall. the stress tests gearing up in Europe are a sure sign that our continually sinking recovery that wasn't, is going to starting swirling around the bowl again.

When I predicted a downturn in May all those months ago, I was only sure that it would be a criticality. I couldn't be sure that the PPT wouldn't be able to print money fast enough to keep the markets inflated. As we see from the DOW in the chart below, they couldn't seem to do it. But then, how else can the banks do any profit taking if they aren't pulling money out at higher prices than they pay in?

I certainly didn't predict the disaster in the Gulf. But chaos theory tells us that statistically speaking these events must happen. It's of course, human nature to relax standards until something breaks. We become complacent over time. We become comfortable with cost cutting. We keep cutting corners. Then one day, hell explodes in our faces.

It's how we do things. It's how we'll continue to do things. It's what we are.



Addendum:

I expect October to be a bleak month in the economics scene. Oil production will continue to decline. The market may rally some between now and then, but it will not be sustainable. Jobs and businesses will be lost at a faster rate. When October hits, the business news will be very bearish. The markets will suffer. More criticalities will occur.

Come this Fall, the White House will be in a panic. More bailouts and stimulation for rich people will ensue. While dolphins and whales continue die in the Gulf, Obama will fight with all of his might to save the Great White Males. The 'No Billionaire Left Behind' policies will be putting on a head of steam, even as the rest of the US economy disappears down U-Bend under the toilet seat.

5 Comments:

At 2:41 PM, Blogger edgar said...

Hello Weaseldog,

Totally agree. Tax changes and election uncertainty will be a headwinds to the market. Declining real estate prices will hit the smaller banks, the large banks having access to infinite backing. The states and cities will eiether get bailed out or will be up chit creek without a paddle. If people haven't panicked yet, now would be a good time.

Best

 
At 3:15 PM, Blogger Dave Dubya said...

The financial cartel is a mobster's dream. They own most of the poiticians and write their own de-regulation.

They are like a con man who's mark is so stupid he falls for the same con over and over.

Here we go again.

 
At 11:10 AM, Blogger Bukko Canukko said...

I'm wondering whether the heat wave will blow the electric power grid the way it did (how many years ago? I can't be bothered to look) and that will set off the freak-out that's too big to cover up. As you said, when a system is under too much stress, chaos tends to happen hat's too powerful to stage-manage.

Meanwhile, it's hot (in British Columbia terms) and sunny for five days in a row (predicted) and we've got water/hydroelectric power. I still like Australia better as a country and Aussies more as a people, but this was not a bad choice for my wife to have made...

 
At 4:01 PM, Anonymous Anonymous said...

before it disappears, this link:




on the oil spill... lab report!!!

 
At 4:05 PM, Anonymous Anonymous said...

trying once again

lab report on the oil spill:

zerohedge.com/print/163086

 

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