That familiar feeling of déjà vu is hanging in the air. Last year at this time, we were told the economy was bouncing back. Just like this year. So it wasn't surprising when Gluskin Sheff economist David Rosenberg tried to insert a little Reality into the discussion because he's done that in the past. So far, his track record is pretty good (as is mine).
LET'S GET REAL
We are constantly being told how much better the economy is doing. It's incredible what the January employment report did to people's perceptions of the macro landscape. It's as if we were just transported to the mentality that prevailed this time last year. Below we chart out the YoY trend in core capex orders on a quarterly basis ... the pace has slowed now for six quarters in a row. [not shown]
Maybe the economy seems to be doing better because we have all adjusted our expectations so radically after being disappointed for so long — I mean — take 2011 as an example. A year that would normally see 5% real GDP growth for this stage of the cycle came in at a woeful 1.7%. This, despite a $3 trillion Fed balance sheet (triple its normal size), zero percent policy rates now for three years and now going on year number four of $1 trillion-plus fiscal deficits.
Based on all this stimulus, if this were a normal post-recession recovery, GDP growth would be 8% right now, not sub-2!
RISKS LOOMING BIG TIME
... I remain amazed at how the consensus economics community is so certain the U.S. economy has suddenly hit escape velocity ... again! The economy is on major duty life-support and yet the recession, we are told, ended nearly three years ago. And the best the economy can do is a trailing GDP trend of 1.7%. Go figure.
Yes, go figure. Rosenberg goes on to outline some of those risks, which include $4 gasoline this spring. And speaking of the risks of high gasoline prices, the Iran sabre-rattling appears to be gaining "traction" if that's the right word for a never-ending propaganda blitz designed to convince us that the Mullahs (and their puppet Mahmud Ahmadinejad) are so eager to nuke the Jews that they will risk the vaporization of Persia. This, despite the fact that Iran is enriching uranium but is not working on The Bomb. We know this from no less an authority than Leon Panetta, who was quoted on Fuck Face The Nation in January.
U.S. Defense Secretary Leon Panetta let slip on Sunday the big open secret that Washington war hawks don’t want widely known: Iran is not developing nuclear weapons...
“I think the pressure of the sanctions, the diplomatic pressures from everywhere, Europe, the United States, elsewhere, it’s working to put pressure on them,” Panetta explained on Sunday.
“To make them understand that they cannot continue to do what they’re doing. Are they trying to develop a nuclear weapon? No. But we know that they’re trying to develop a nuclear capability, and that’s what concerns us. And our red line to Iran is, do not develop a nuclear weapon. That’s a red line for us.”
Should we worry about what might happen? According to some Israeli reports, we should.
Israel’s whole body politic — politicians, media, influential public figures and public at large — is now leaning into a war with Iran. Defense Secretary Leon Panetta’s recently reported opinion that Israel would likely strike between April and June is shared, give or take a month or two, by countless others.
Between April and June? That should really boost those springtime gasoline prices!
At least we don't have to worry about peak oil anymore. Citigroup has told us so, thanks to production in the Bakken shale. But we already knew that. No less an authority than Peter Orszag alleviated our concerns on this point earlier this month. Whew, that's a relief! I even wrote a few articles about peak oil over the last 7 years. So the news is not all bad
But we've been here before, we've been here so many times in fact, that separate instances of war-mongering propaganda (or peak oil quashing) all blend together in common memory. To be sure, the Iranians are doing their best to provoke a missile strike, which should give us a pause about their motivations. You've probably heard that the big winner of the Iraq War was ... Iran!
Been here, done that, what's next? Risks are piling up as they always do (and always will) in the post-meltdown world. Even if we think the world is really fucked-up now—and it certainly is—it's also good to remember that the world could be way more fucked up. We could be Greece (video below). But it's still early in 2012. We're only 48 days in. Plenty of time left!
Have a good weekend. I'll post the biweekly Saturday oil report tomorrow.
Bonus Video — Have you ever heard Nigel Farage lecture the European parliament? If not, you've missed a real treat. And since we're talking about risk today, let's listen to what Mr. Farage has to say about what's happening in Greece.
Israel has done the dirty work in the Middle East for Anglo-American empire for six decades. Israel is a militarist, police-state client serving the interests of the militarist-imperialist American, British, Canadian, Australian, and European rentier oligarchs. The Israeli citizens are pawns on the geopolitical chessboard of oil empire. We co-opt or invade and occupy in order to contain Iran, China, and Russia, using Israel's intelligence and military apparatus as a formidable weapon against the enemies of oil empire.
The business of empire is war, and war is good business. War is politics by other means, economics is politics, and war is economics is politics.
Therefore, monetary, fiscal, social, economic, tax, and foreign policies are inextricably entangled with never-ending imperial war and the necessity of funding the global superstructure of war.
Virtually every segment of American society is now subservient to, or is subject to a net incremental cost from, maintaining Anglo-American oil empire, costing the US $1 trillion a year or 10% of the private US GDP and equivalent to nearly 20% of private wages.
And there is not a bloody thing any of us can do about it.
Posted by: Timetraveler_2047 | 02/17/2012 at 08:21 PM