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Spin Cycle Set to "High"

Friday, May 1, 2009, 4:58 PM

The economic news these days can be readily parsed into two separate types: increasingly positive “survey” data and increasingly worse “real” data.

I recently wrote about the flaws in the survey reports, so I won’t spend more time here discussing why these reports are best taken with a very large grain of salt.

First, the survey data that was released today:

U.S. Economy: Manufacturing, Confidence Reach Seven-Month Highs

May 1 (Bloomberg) -- U.S. manufacturing and consumer confidence last month unexpectedly jumped to their highest levels since the credit crisis intensified in September, indicating the economy is on the mend.

The Institute for Supply Management’s factory index rose to 40.1 from 36.3 in March; readings less than 50 signal a contraction. The Reuters/University of Michigan final index of consumer sentiment jumped by the most in more than two years, climbing to 65.1.

Well, that all sounds pretty good. When asked about it, consumers and manufacturing representatives both came out sounding positive about things.

One of my chief observations about the consumer confidence (or “ConCon”) report is that it is extremely well correlated with both gasoline prices and the stock market. In this regard, saying that stocks are heading up because consumer confidence is rising is circular reasoning at its finest so it really wouldn’t be very helpful or explanatory to say that stocks went up because consumer confidence went up, because the opposite is often true. That doesn’t stop the headline writers however, like this one: “Jump in Consumer Confidence Gives Boost to Stocks.”

One of the things I especially enjoy about the “spin cycle” is when its operators have a tough time deciding how to spin the news. Here’s a particularly humorous example that flitted across the wire feeds yesterday – pay careful attention to the displayed times:

7:55AM ET CURRENCIES: Dollar Pressured As Recovery Hopes Rise

9:54AM ET CURRENCIES: Dollar Gains As Recovery Hopes Rise

If you watch these things long enough you will find yourself tuning them out and then chuckling at them.

Meanwhile, the real data, involving things like sales of autos and mortgage foreclosures, continued to trundle lower, or even set records, indicating that the spring thaw in the survey data deserves to be viewed with a healthy dose of skepticism:

Chrysler U.S. Sales Fall 48%; Toyota Trails Estimates

GM’s sales dropped 34 percent, and Honda Motor Co. declined 25 percent, also better than analysts’ projections. Ford slumped 32 percent, Toyota tumbled 42 percent and Nissan decreased 38 percent.

The results mean that the U.S. market contracted for an 18th consecutive month. While consumer confidence rebounded, April ended with Chrysler filing for court protection and U.S. officials warning of health risks from the swine flu outbreak.

When even Toyota and Honda are having a tough time, it’s rough out there. While I am sure there’s a bottom out there somewhere, I am growing weary of the constant attempts to spin one out of survey data without regard to what the actual data is still saying.

Here’s another bit of actual data that runs counter to the notion of imminent improvement.

Foreclosure filings in record jump

Servicers initiated foreclosure proceedings against 290,000 mortgage borrowers, a jump of nearly 20% from February's 243,000, and the highest monthly total since the coalition began tracking data in mid-2007. Starts have risen by more than a third since January.

I don’t think we’ll hit bottom until the housing correction has run its full course, regardless of how many green shoots are spotted along the way. The data above may not be as bad as reported, because I don’t see that they’ve adjusted for the fact that February is a shorter month than March. Still, the number of foreclosures is heading up, not down.

Speaking of housing, here’s an odd pair of news stories out of the most indebted and underwater state in the union: California. The first describes a direct incentive from the state (which is beyond broke) to build more houses, and the second describes how a glut of houses is dragging down the housing market.

You just can’t make this stuff up.

Tax Credit Gives California Builders a Lift

California's hard-hit home builders say they're pouring more foundations and hiring more workers this spring, partly because of a state tax credit of as much as $10,000 for buyers of new homes.

Now, less than two months after the new-home credit became available, some lawmakers in California's financially strapped government are proposing to eliminate the $100 million limit on the total amount of credits that home buyers can tap.

  

Deepening woes for the Imperial Valley

Reporting from El Centro, Calif. -- The Imperial Valley is accustomed to the spectral look of failure: Houses around the Salton Sea have been abandoned for decades; the Planters Hotel in Brawley stood empty for years before it was destroyed by fire; Main Street in El Centro, the Imperial County seat, remains stubbornly vacancy-pocked.

But even by historical standards, the latest bust in the region's cycle of hardship and hope has been profound.

Never-completed subdivisions resemble movie lots waiting for a picture set in a typical Southern California suburb. Men who had found high-paying jobs building homes are back in the fields -- if they can find work at all.

I guess we can file that pair of articles under "Your Government At Work." 

My advice is to enjoy the positive effects of the spin cycle for as long as they last.  Spring is here, the weather is beautiful, and it's worth enjoying, so get out there and have fun.

I'll be right here monitoring the sausage factory spin machine so that you don't have to.

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13 Comments

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Spin Cycle Set to “High”

 Hello Chris:

Once again - super perspective. Thanks.

TimesAwasting's picture
TimesAwasting
Status: Silver Member (Offline)
Joined: Oct 13 2008
Posts: 100
Re: Spin Cycle Set to “High”

Ditto!

It's like they're suffering from an addiction... they just can't help themselves, they cannot tell the truth!

SagerXX's picture
SagerXX
Status: Diamond Member (Offline)
Joined: Feb 11 2009
Posts: 2236
Re: Spin Cycle Set to “High”
Pat Carney wrote:

It's like they're suffering from an addiction... they just can't help themselves, they cannot tell the truth!

The world is gyrating so wildly -- we're so far out of the range of the 'normal' -- that it seems like a lot of these folks just don't know which way is up, how to frame reality anymore.

I'd sort of feel sorry for them -- lost and clueless in the coming new world -- but really they should consider it their job to get at the FACTS instead of just reading/parroting whatever anybody pushes in front of them.

Viva -- Sager

JAG's picture
JAG
Status: Diamond Member (Offline)
Joined: Oct 26 2008
Posts: 2492
Re: Spin Cycle Set to “High”

 Thanks Dr. Martenson. Your the lone voice of reason in a country that is devoid of reasoning and common sense. Come Fall, everyone will be saying "What happened? Why is the market plunging? I thought the recession was over !"

Thank you for protecting us from our own human nature.

jpitre's picture
jpitre
Status: Gold Member (Offline)
Joined: Mar 3 2009
Posts: 366
Re: Spin Cycle Set to “High”

Truth is a hard thing to find these days. Seems like everyone has some spin to further their own agenda rather than just say what is on their mind as truthfully as possible. I'm thankful to have found Chris and a few other places of sanity to support and expand on my own instincts. I can't help but feel like I've slipped into some alter reality when I hear that California is encouraging more construction in the face of the oversupplied housing crisis/crash while at the same time banks are tearing down new model homes.

 In his book, "The Great Turning", David Korten explains that our War of Independence started as a rebellion against corporate monopoly & British taxes -- with the law being little more than a means for the few to abuse and exploit the many.  (page 180) I wonder if we are about confront similar issues again?

I suppose the good thing may be is that this lack of reality gives some of us some extra time to prepare for when it really hits the fan. I know it is taking my wife & I more time than we thought is would to make our required changes -- and we've been at it for 3 years now.

Jim

Nichoman's picture
Nichoman
Status: Gold Member (Offline)
Joined: Nov 1 2008
Posts: 422
Re: Spin Cycle Set to “High”
JAG wrote:

 Thanks Dr. Martenson. Your the lone voice of reason in a country that is devoid of reasoning and common sense. Come Fall, everyone will be saying "What happened? Why is the market plunging? I thought the recession was over !"

Thank you for protecting us from our own human nature.

JAG...

Respectively differ CM is only voice of reason, there are many, many others out there.  You may not have meant it the way I interpret it.  If your looking for other sources...please ask.

 

Nichoman

Broadspectrum's picture
Broadspectrum
Status: Bronze Member (Offline)
Joined: Mar 14 2009
Posts: 90
Re: Spin Cycle Set to “High”

Hi All,

What Nichoman said is true.  We are or can become even more voices of REASON!!  Dr. Martenson has done a magnificent job of BEING one of the voices, if not one of the best voices, and providing us with the hard data that is needed to help others understand (if they'd only listen).  Yes, there are others.  But we need more of US.

Since being directed to this website by another one of those voices, Carolyn Baker,  http://carolynbaker.net/site/content/view/1079/1/   back in Oct., '08, I have been heavily promoting it.  I have asked hundreds of persons that I personally know to take the Crash Course.  I don't know how many have completed it but those that have told me so have raved about it.  Some others have sheepishly admitted to not yet "finding the time".  I hope you all like my use of that adverb.  Ha ha.

Anyway, another voice that many of us have heard and have hopefully learned so much from, is the voice of Michael Ruppert.  He has a new book that just came out today."A Presidential Energy Policy".   I would like for you to take a few minutes to consider his plan for forcing the issue even further into MSM.  I quote from at the bottom of his blog of 4/30/09.  http://www.mikeruppert.blogspot.com/

'A PRESIDENTIAL ENERGY POLICY" -- LAUNCH UPDATE AND GOOD NEWS!

Look, this hasn't been easy for any of the great people involved in making this book happen with the quality we have achieved. Some very serious money, talent and work was put in by some high-performers who had to learn a lot of new skills and play out-of-position. We believe we will break the old publishing paradigm and blaze some new trails. On May 1 "A Presidential Energy Policy" will go on sale at Amazon around the world, all at once. This is the first time Amazon has ever taken a brand-new book from inception for a launch. Amazon will also be the exclusive distributor for Kindle and all electronic versions of the book. I think I can safely say that there are many out there who "get it" and who are praying for this book to rocket. A revised book announcement with new details is up at rubiconworks.com and all of the cover buttons at FTW and here on the blog will go hot to rubiconworks on May 1; and from there straight to Amazon. Our pre-sale helped us shake out a lot of bugs and I again express thanks to New World Digital for their responsiveness.

OK, this is it -- May 1. Day after tomorrow we find out if the world is listening and how hard. With every passing day, breaking the NY Times list becomes more and more important. I'm relieved because all the prep work is done and I think -- on our end -- we all did a great job in bringing the book to life. Thanks to everyone, for the effort, the great reviews and the dedication you showed. It's up to the movement now to give this book legs and life.

MCR'

This is Broadspectrum again.  So the idea is to get the book to #1 place and then hopefully the requests for interviews come in and another of OUR voices will be heard.  We will TELL THE PEOPLE through joint effort using all the tools in our tool box.  Thank you for helping and understanding.  If you can afford it buy the book or more than one.  Doing so is a promotion of ourselves.
 

SamLinder's picture
SamLinder
Status: Diamond Member (Offline)
Joined: Jul 10 2008
Posts: 1499
Re: Spin Cycle Set to “High”

Another excerpt from: http://www.mikeruppert.blogspot.com/

I must confess that I find his "very mysterious cluster of murders, suicides and accidental deaths of 14 world-class microbiologists in a very short period right after 9-11." and "gene-specific ... biowarfare" insinuations to be a bit much!

Now I must choose my words very carefully. -- I also cannot ignore the brilliant work done by many at FTW into the very mysterious cluster of murders, suicides and accidental deaths of 14 world-class microbiologists in a very short period right after 9-11. All of them were working on viral disease projects which FTW firmly established were consistent with the pursuit of a gene-specific bioweapon (e.g. race-specific). Our stories were "picked up" by the The Toronto Star (although the editor had to write me an apology email for not citing FTW) and The New York Times wrote a 7,500-word monstrosity trying explain that all these dead scientists were really an accident. Perhaps the most famous of these bizarre deaths was that of Dr. Don Wiley in Memphis. Wiley was la creme de la creme of microbiologists and I have saved an academic abstract showing that he was specializing in swine flu and DNA recombination. Same with the very famous "suicide" (murder) of Dr. David Kelly in the UK that happened around the time the British government dug up victims of the 1918 Spanish flu to get the DNA so that an extinct disease could be brought back to life.

I must emphasize that all this proves nothing except for the fact that the current outbreak bears watching closely. Personally, I believe that it is our job to do everything possible to prove that there is no possible biowarfare involvement here; not to mention a gene-specific one. The fastest way to rule that out is to see Caucasians falling right along with people of color. No one has yet explained why the U.S. cases have resulted in only one fatality (a 23 month-old Mexican boy) although I have heard the question asked many times on the air. "How come no one's dying in America? They have Tamiflu in Mexico."

There's yet another distinct reason why this is catastrophic. I have been pretty clear that protectionism was both an inevitable and imminent stage of collapse. This outbreak has opened the door for a protectionist panic. If the pandemic takes center stage then all bets are off. Russia has already banned all American meat products. China is pondering similar restrictions. Forget the science... this kind of reaction (logical or otherwise) has been a part of human nature since we became human. Fear is the most-powerful control mechanism this unevolved species has ever discovered. NAFTA is dead, just like globalization. And my message to Americans who want to ban food imports from Mexico... be careful what you pray for.

RussB's picture
RussB
Status: Silver Member (Offline)
Joined: Dec 9 2008
Posts: 101
Re: Spin Cycle Set to “High”

Those wire feeds are hilarious. I've long chuckled at such blurbs explaining day-to-day oil price fluctuations, when you could probably just as easily select at random any headline from any realm of the news and have just as good a chance at explaining it.

As for the California building situation, it's another example of something which is not being emphasized enough. Rational people are clear enough by now that the shell-gamers and ponzi schemers of the FIRE sector are just entrenched feudal parasites who only lobby and bribe but produce no value.

By now, when there have already been far too many residential structures built, and too much farmland destroyed, and too much land locked up in the gulag of suburbia (which land will have to be reclaimed for farming), and water resources overtaxed and degraded, we must become clear that the housebuilders also constitute a reactionary, non-value producing feudal entrenchment propped up only through government and socially engineered corruption.

Any large developer should be seen in the same way as AIG or BofA. This is more difficult because these companies seem to provide more real-work jobs. But by now building yet more subdivision structures is simply an example of Keynes' paying someone to dig a hole and then fill it back up.

If society wants to create/prop up jobs through creating makework, it should still be able to find far more constructive and rational ways (e.g. hiring for energy efficiency retrofits which "the market" wouldn't currently support) than trying to prop up zombie sprawl, which has so many horrible social and environmental effects beyond its economic insanity. 

VeganDB12's picture
VeganDB12
Status: Platinum Member (Offline)
Joined: Jul 18 2008
Posts: 740
Re: Spin Cycle Set to “High”

Chris-thank you as always!  Speaking of sausages, I am sure all that pork will find its way somewhere if Russia and China won't buy it.....anyway, cooking knocks out most viruses; these protectionist policies don't make sense to me from a health standpoint, they seem more like a punishment.   Thank you for monitoring these issues, you have a good heart and clear vision IMHO.

Sam-I think one of the reasons the fatality rates here in the U.S are so low is because we are blanketing all the flu contacts with Tamiflu which possibly can reduce the complication/fatality rate as it has for Avian Flu cases across the world.  It is not clear to me that Mexico had been able to do that for their citizens.  However, that is just an opinion; from the sausage factory to the pickle factory....I find it unsettling to think that the gov or anyone else would assasinate so many scientists but it is QUITE a coincidence that so many bioweapons researchers have met untimely deaths.  Maybe it is a bad time to be a government worker doing the dirty work-like the mental health professionals who "helped out" at Guantanamo and Abu Ghraib and the bioweapons researchers who apparently died to keep state secrets-hopefully (dare I use that word?) we will learn more as time goes on.

 

Off for some tofu sausage......and to take a more positive attitude and enjoy things a bit more while Spring is here.

Regards

Denise

formerly known as Denszcz (Denise easier to remember....)

 

jhelge's picture
jhelge
Status: Bronze Member (Offline)
Joined: Jan 7 2009
Posts: 43
Re: Spin Cycle Set to “High”
RussB wrote:

Those wire feeds are hilarious. I've long chuckled at such blurbs explaining day-to-day oil price fluctuations, when you could probably just as easily select at random any headline from any realm of the news and have just as good a chance at explaining it.

As for the California building situation, it's another example of something which is not being emphasized enough. Rational people are clear enough by now that the shell-gamers and ponzi schemers of the FIRE sector are just entrenched feudal parasites who only lobby and bribe but produce no value.

By now, when there have already been far too many residential structures built, and too much farmland destroyed, and too much land locked up in the gulag of suburbia (which land will have to be reclaimed for farming), and water resources overtaxed and degraded, we must become clear that the housebuilders also constitute a reactionary, non-value producing feudal entrenchment propped up only through government and socially engineered corruption.

Any large developer should be seen in the same way as AIG or BofA. This is more difficult because these companies seem to provide more real-work jobs. But by now building yet more subdivision structures is simply an example of Keynes' paying someone to dig a hole and then fill it back up.

If society wants to create/prop up jobs through creating makework, it should still be able to find far more constructive and rational ways (e.g. hiring for energy efficiency retrofits which "the market" wouldn't currently support) than trying to prop up zombie sprawl, which has so many horrible social and environmental effects beyond its economic insanity. 

RussB,

You stated the building situation so elequently. Almost no politicians see the opportunity the economic situation presents to wipe out valueless costs like housing developement. As someone who has been looking for a house for a little while now, I pretty much don't consider houses built in the last ten years. They have been among the most inefficient, landscape ruining monstrosities that I have ever seen. Every time I read 'cathedral ceiling' I read 'energy wasting'. Yet nearly ALL of them have it in my area. And don't get me started on their materials.

This is just another instance of our "leaders" trying to reinflate the bubble and keep the oil party going. I really hope we can wake them up to the reality of the consequences of this attempt. If we do not get our act straight, all of this phony posturing will make any attempt to solve the big problems we face herculean.

joemanc's picture
joemanc
Status: Martenson Brigade Member (Offline)
Joined: Aug 16 2008
Posts: 834
Re: Spin Cycle Set to “High”

Thanks Chris for an update on the facts. After attending Lowesville, I almost went into relapse this week after hearing all of this positive spin being throw out. Whew, what a relief!

To back up what you have written about this week on a local level, here's one story in my state of CT about sales tax revenue down 24% in April:

Quote:

She said that sales taxes were down 24 percent; corporate taxes, 22 percent; taxes on oil companies decreased 64 percent, real-estate conveyance taxes declined by 52 percent and casino revenue fell 17 percent.

http://www.connpost.com/ci_12272546

Here's another more startling story, nearly 300,00 resident and businesses in CT are behind on their electric utility payments:

Quote:

On Friday, the day a winter moratorium on shutting off power to the poor ended, United Illuminating Co. and Connecticut Light & Power Co. had more than 292,000 customers who were more than 60 days late in paying their bills. No city in the history of Connecticut has ever had a population that large. Last year there were about 218,000 accounts 60 days or more behind.

http://www.connpost.com/ci_12276060

That is a startling, if not stunning statistic. There's some 3.5 million people in CT. CT is one of, if not the wealthiest states in the U.S., and yet, a very sizeable amount of people are behind on their electric bills. Green shoots? Signs of optimisim? Where?

mpelchat's picture
mpelchat
Status: Silver Member (Offline)
Joined: Sep 10 2008
Posts: 214
Re: Spin Cycle Set to “High”

Hello guys,

It seems simple to me, if it is in the mainstream news, posted on mainstream websites like Yahoo, MSN, etc or if it has American Idiot, Dancing with the has beens or any other "reality" TV on the front page than it is no more than something to keep the public busy and hides the fact of real problems.

Our world media has become no more than magicians and entertainers or at least there cover stories and top stories have become that.  You need to go way deeper even in WSJ to get decent information these days.

Thank goodness our general public does not except slavery and killing or we would have gladiators like in Roman times.

 

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