Wednesday, January 11, 2012

Morning Update/ Market Thread 1/11 - Big Picture Edition…

Good Morning,

Equity futures are lower this morning, with the dollar regaining the past two days losses, the Euro resuming dive trajectory, bonds higher, oil lower, gold & silver mixed, and most food commodities lower.

The only data of the day comes from the immoral, hypocritical, narcissistic shysters at the Mortgage Banker’s Association. In complete complicity, here’s Econosayanythingtokeepmakingabuck:
After three weeks of very steep declines, the purchase index jumped 8.1 percent in the January 6 week. Despite the jump, the four-week average is down 2 percent and signals moderation for housing sales which had been picking up through November and October. The refinancing index rose 3.3 percent with the four-week average down 0.5 percent. Rates mostly edged higher in the week with the average 30-year conforming loan (under $417,500) up four tenths to 4.11 percent. Watch for comments on the housing sector this afternoon in the Beige Book.

Whatever, can’t wait until these types of criminals cash in their karma value miles.

With so little meaningful, much less real, data out there, let’s stay focused on the big picture and let the little noise makers and central banking minions make their noise…

In yesterday’s Daily Thread commenter “SeattleBruce” posted a chart from Shadowstats showing a comparison of the official GDP versus the Shadowstats estimate using data the way it used to be collected. Ignoring the fact that GDP is grossly overstated for several other reasons, at least John Williams recreates statistics that are comparable to the past. In this case he uses real deflators based on inflation data calculated the way it was pre-Clinton era.

But what I want you to notice in the chart is not the absolute values, no, what strikes me is the trend which is clear:

Two trends actually. One trend is that over the long time frame the government reported data is diverging further from measurements that are closer to reality – this trend is seen across the spectrum of reports and is not surprising. More significantly, the primary trend is down and the more correct data is trending down at a steeper angle. This, I believe, clearly shows the effects of Macroeconomic Debt Saturation. The effect is the same effect as the fall of Velocity, and that found on the Diminishing Returns of Debt chart.

GDP measurements first measure in dollars, then use a “deflator” to make those measurements “real,” that is to correct for inflation. But compared to the supply of money, the corrections are puny to say the least – the reason is that in our current narcissistic run economy, money is debt. Thus the disconnect between the money supply and “growth…” Below is a chart of M1, compare that trajectory to the GDP trajectories above:


So we don’t really have REAL “growth,” we have money creation which is really debt creation, that’s why the money trajectories are so high and must go higher… the debt strangles the real economy, and the creation of more debt as a “stimulus” only works to strangle it further.

There’s only one way to return to a truly productive economy, and that is to create sovereign money without debt wrongly owed to private individuals.

What remains of the “markets” is technically diverging from reality – there are several indicators in divergence, typically found at tops. Buyers beware.

I, Nathan Martin, no longer consent to the lies.