The Fed's QE Programs Are Working So Well: Economy Contracts In 4th Quarter

[FaninAma]

http://finance.yahoo.com/news/us-economy-shrinks-0-1-133115372.html?bcmt_s=m#ugccmt-container

Take away government deficit spending and it would look even worse. I wonder why they try to use the excuse of decreased military spending when total government spending is higher than it's ever been. Is that a tacit admission that the Keynesian policy of drowning the country in entitlement spending doesn't stimulate the economy very much?

This is pretty bad news boys and girls. I suspect, however, that the Fed and the Wall Street Banks/Investment houses will still try to protect thier line in the sand which would be pumping up the stock markets. By rights the Dow should be at 8000 or lower if it weren't so manipulated.

[Bourbon St Sooner]

QE's done its job. The market bubble is inflated. The rich get richer. The middle class gets squeezed. Notice as oil approaches $100/bbl again as the dollar sinks.

[KantoSooner]

[URL] Is that a tacit admission that the Keynesian policy of drowing the country in entitlement spending doesn't stimulate the economy very much?

Yes, that's exactly what it is.

[sappstuf]

We are 4 years into the "recovery".. What do you expect from Obama.. Miracles?

[sappstuf]

So who does Obama blame for this? Bush or Foxnews?

[FaninAma]

So who does Obama blame for this? Bush or Foxnews?

So far it appears to be Bush judging from the comments about the article. I guess ol' GW is going to be a punching bag for the democrats for all their failures for the forseeable future.

It does appear as if we will see a bit of deflation in the near future.

Once again, debt consolidation is a natural part of the economic cycle. Bernanke and the Keynesians have tampered with these natural cycles and have, IMHO, made the situation much worse.

[pphilfran]

QE1 I can probably buy into...QE2/3 were a waste....they should have used QE2 to slowly wean us off....

[FaninAma]

QE1 I can probably buy into...QE2/3 were a waste....they should have used QE2 to slowly wean us off....

You do realize the implications of this economy going into a contraction despite heavy doses of government spending and central bank spending.

I had initially thought we would get the inflation desired by the Fed but now I am leaning the other way. These numbers really suprised me.

[Bourbon St Sooner]

I love how the media spin is that the economy shrank because Defense spending shrank. Never mind the fact that overall gov't outlays were up according to the Treasury. They keynesians are chafing.

http://www.fms.treas.gov/mts/mts.pdf

[sappstuf]

So far it appears to be Bush judging from the comments about the article. I guess ol' GW is going to be a punching bag for the democrats for all their failures fior the forseeable future.

It does appear as if we will see a bit of deflation in the near future.

Once again, debt consolidation is a natural part of the economic cycle. Bernanke and the Keynesians have tampered with these natural cycles and have, IMHO, made the situation much worse.

About time.. The Dems should have started blaming Bush years ago.

/sarc

[KantoSooner]

We've got to cut back on our spending and sooner or later will be forced to, no matter who's in the white house or controls congress. Sooner would be better, but it's coming one way or the other.
And that will push the US econ into a slump of some duration.
Europe's a basket case.
Then it gets scary. Brazil is doing well, but can't pull the world by itself. India is doing okay-ish, but they, too, are an auxilliary motor at this time.
Japan is schlerotic, run by a group of corrupt senior citizens who don't understand why the old mercantilist crap doesn't work anymore and are reduced to pounding the control panel like frustrated Orangutans.
So, it's over to you China. If someone is going to fire up the global economy, it's your turn to shine. What's that you say? Your banks are all basically running without books and no one knows how much money there is or where it is? Yikes. You say that your industrial complex is way too dependent on exports and there is no way domestic demand can support the installed production base (or, worse, the vulnerable factory worker class) and now people are starting to recognize that you've mortgaged your very air, land and water for two decades of rapid growth? And that you're looking at a housing bubble that makes California look like dour Presbyterian investing? As in some parts of Shanghai are as much as 99% over 'market'?
Just how well will we endure a major recession in China?
Tighten your seat belts, it's almost here.

[FaninAma]

I love how the media spin is that the economy shrank because Defense spending shrank. Never mind the fact that overall gov't outlays were up according to the Treasury. They keynesians are chafing.

http://www.fms.treas.gov/mts/mts.pdf

How are the Democrats going to argue now for more military spending cuts? I think it is a bogus claim and that military spending needs to be reigned in just like every other government program but now the politicians in DC will be crapping their pants about cutting any kind of spending.

Add this little drama to the fact that Japan is igniting a currency war and things should start getting interesting in the next 6 to 9 months.

[cleller]

One the one hand, a decrease in gov't spending caused the economy to shrink some--that's bad
A increase in payroll taxes is causing consumer spending to decrease--that's OK.

The Peter-Paul system at play. Somehow the govt spending the money is always preferable to the people who earn it doing the spending.

[FaninAma]

We've got to cut back on our spending and sooner or later will be forced to, no matter who's in the white house or controls congress. Sooner would be better, but it's coming one way or the other.
And that will push the US econ into a slump of some duration.
Europe's a basket case.
Then it gets scary. Brazil is doing well, but can't pull the world by itself. India is doing okay-ish, but they, too, are an auxilliary motor at this time.
Japan is schlerotic, run by a group of corrupt senior citizens who don't understand why the old mercantilist crap doesn't work anymore and are reduced to pounding the control panel like frustrated Orangutans.
So, it's over to you China. If someone is going to fire up the global economy, it's your turn to shine. What's that you say? Your banks are all basically running without books and no one knows how much money there is or where it is? Yikes. You say that your industrial complex is way too dependent on exports and there is no way domestic demand can support the installed production base (or, worse, the vulnerable factory worker class) and now people are starting to recognize that you've mortgaged your very air, land and water for two decades of rapid growth? And that you're looking at a housing bubble that makes California look like dour Presbyterian investing? As in some parts of Shanghai are as much as 99% over 'market'?
Just how well will we endure a major recession in China?
Tighten your seat belts, it's almost here.

I agree 100%. A far as China is concerned I am very dubious of their glowing growth numbers for their economy because outside analysts who are very knowledgable about the Chinese economy state that their use and production of electricity and other energy consumption has fallen which is an indicator their economy is slowing significantly. Also, exactly who are they selling to? Europe and the US who have contracting or moribund economies? Japan who is trying to crater it's currency in hopes of increasing exports? Emerging markets who are actually competing with China for the US and European markets?

They can blow smoke as much as they want but the rosey pictures being pumped out by Wall Street analysts just don't jive.

[pphilfran]

I agree 100%. A far as China is concerned I am very dubious of their glowing growth numbers for their economy because outside analysts who are very knowledgable about the Chinese economy state that their use and production of electricity and other energy consumption has fallen which is an indicator their economy is slowing significantly. Also, exactly who are they selling to? Europe and the US who have contracting or moribund economies? Japan who is trying to crater it's currency in hopes of increasing exports? Emerging markets who are actually competing with China for the US and European markets?

They can blow smoke as much as they want but the rosey pictures being pumped out by Wall Street analysts just don't jive.
Energy usage hasn't fallen but it's rate of growth has slowed...

[LakeRat]

Are we in the middle of a new recession? If we delcline this qtr, we are in another recession. Is my understanding correct?

[pphilfran]

Two negative quarters in a row is a rule of thumb method...

[cleller]

I agree 100%. A far as China is concerned I am very dubious of their glowing growth numbers for their economy because outside analysts who are very knowledgable about the Chinese economy state that their use and production of electricity and other energy consumption has fallen which is an indicator their economy is slowing significantly. Also, exactly who are they selling to? Europe and the US who have contracting or moribund economies? Japan who is trying to crater it's currency in hopes of increasing exports? Emerging markets who are actually competing with China for the US and European markets?

They can blow smoke as much as they want but the rosey pictures being pumped out by Wall Street analysts just don't jive.

Even Caterpillar got taken by the Chinese. They bought an equipment builder there, only to find out the books were a fraudulent mess. Today I see the air is so polluted in Beijing and northern China it could kill you. Quite a place.

[diverdog]

You do realize the implications of this economy going into a contraction despite heavy doses of government spending and central bank spending.

I had initially thought we would get the inflation desired by the Fed but now I am leaning the other way. These numbers really suprised me.

one quarter does not make a trend. Our economist think 2.0%-2.5% growth this year. They think Europe will see a very slight growth in GDP.

[FaninAma]

one quarter does not make a trend. Our economist think 2.0%-2.5% growth this year. They think Europe will see a very slight growth in GDP.
We'll see. They were also projecting over 2% for the last quarter. Great Britain just turned in a negative 0.3%.

[diverdog]

We'll see. They were also projecting over 2% for the last quarter. Great Britain just turned in a negative 0.3%.

The contraction was explainable.

[FaninAma]

The contraction was explainable.
I'm sure it was. It's what politicians and beaurocrats do best.

[sappstuf]

The contraction was explainable.

Yeah, we've heard.

http://1389blog.com/pix/Bush_Fault.gif

It gets old.

[diverdog]

Yeah, we've heard.

http://1389blog.com/pix/Bush_Fault.gif

It gets old.

Funny but not what I was thinking. We did exactly what you guys wanted..cut spending and this happened.

[REDREX]

Funny but not what I was thinking. We did exactly what you guys wanted..cut spending and this happened.--How much spending was cut?----Almost none, Gov't spending will not spur the economy for very long

[sappstuf]

Funny but not what I was thinking. We did exactly what you guys wanted..cut spending and this happened.

How long do you plan to keep trillion dollar plus annual deficits? If 4 years didn't solve the problem then it probably isn't going to.

[XingTheRubicon]

they never really answer that question ^^^^^^^^^^^^^^

[sappstuf]

Funny but not what I was thinking. We did exactly what you guys wanted..cut spending and this happened.

It is like this guy is responding directly to you..


An interesting theory. Except that while the BEA says defense spending declined in Q4, overall federal spending was up $31 billion compared with Q4 2011 and up $98 billion compared with Q3 2012, according to monthly spending reports out of the Treasury Department.

So maybe it’s the lack of adequate stimulus?

Perhaps, but only if you ignore the Fed’s massive ongoing pump-priming efforts, and the fact that the deficit in Q4 alone topped $292 billion — nearly double the deficit for all of 2007.

The lack of good excuses might explain why Obama and Co. are so desperate to put a positive spin on the numbers.

Democratic Party communications director Brad Woodhouse actually tweeted that this was “the best-looking contraction in U.S. GDP you’ll ever see.”

That’s one way of looking at it.

Another is that slow to non-existent growth has become the new normal thanks to Obama’s growth-choking policies, with the economy consistently underperforming expectations.

[FaninAma]

Sap, to a progressive that is tough love and a hard-hearted spending cut.

[pphilfran]

How long do you plan to keep trillion dollar plus annual deficits? If 4 years didn't solve the problem then it probably isn't going to.


If we latch onto another recession then trillion dollar deficits are guaranteed...

We are going to make all of these friggin cuts...lose the economy...get killed on unemployment...get killed on revenue...get killed on mandatory benefits to the unemployed...and we will still have a trillion dollar annual deficit..

I don't understand why many of you don't understand this simple fact...We cannot afford a recession..a recession will nearly doom us...

[LakeRat]

Funny but not what I was thinking. We did exactly what you guys wanted..cut spending and this happened.

We have different definitions of cutting. They spent more in 2012 than in 2011, more in 2011 than in 2010. What you mean is, we didn't spend 10% more than the prior year? Help me understand how the federal budget was cut over prior year?

[Curly Bill]

If we latch onto another recession then trillion dollar deficits are guaranteed...

We are going to make all of these friggin cuts...lose the economy...get killed on unemployment...get killed on revenue...get killed on mandatory benefits to the unemployed...and we will still have a trillion dollar annual deficit..

I don't understand why many of you don't understand this simple fact...We cannot afford a recession..a recession will nearly doom us...

Let's go ahead and let the sh*t hit the fan sooner than later then! Let it happen now and we can put it down as happening on Obammy's watch.

[pphilfran]

Just so I pizz everyone off...I disagree with DD...I think we are on the edge of a another recession....

Growth last quarter sucked...it would have sucked even with the reduced military spending...now we have sucked out 2% of income in higher income and payroll taxes...and that 2% of income is probably close to 3 or 4% of discretionary income...and that is going to give a body blow to the economy...and if we want to go for the knockout we can make some heavy spending cuts and end this fight in the 6th....

[pphilfran]

Let's go ahead and let the sh*t hit the fan sooner than later then! Let it happen now and we can put it down as happening on Obammy's watch.

It is still salvageable...it won't be easy or cheap...but it will be a hell of a lot easier and cheaper then heavy downgrades or, God forbid, a default....

[Curly Bill]

It is still salvageable...it won't be easy or cheap...but it will be a hell of a lot easier and cheaper then heavy downgrades or, God forbid, a default....

In this case you know that means we, and by "we" I mean the idiots running this country, won't do it.

[LakeRat]

It is still salvageable...it won't be easy or cheap...but it will be a hell of a lot easier and cheaper then heavy downgrades or, God forbid, a default....

Who is going to give up their pay check? Military, SSI, Disability, medicare, medicaid, tax refunds to "low" income peops . . .

You can't generate enough revenues from Millionaires and Billionaires. When does China/Japan have to cut us off?

How would you fix the trillion dollar deficit?

[sappstuf]

Just so I pizz everyone off...I disagree with DD...I think we are on the edge of a another recession....

Growth last quarter sucked...it would have sucked even with the reduced military spending...now we have sucked out 2% of income in higher income and payroll taxes...and that 2% of income is probably close to 3 or 4% of discretionary income...and that is going to give a body blow to the economy...and if we want to go for the knockout we can make some heavy spending cuts and end this fight in the 6th....

Well at least we would be finished with the worst recovery in our nation's history...

[okie52]

Well at least we would be finished with the worst recovery in our nation's history...

LOL

[pphilfran]

Well at least we would be finished with the worst recovery in our nation's history...


lol

[pphilfran]

Who is going to give up their pay check? Military, SSI, Disability, medicare, medicaid, tax refunds to "low" income peops . . .

You can't generate enough revenues from Millionaires and Billionaires. When does China/Japan have to cut us off?

How would you fix the trillion dollar deficit?

1. We must have 4% growth...without 4% growth we won't see any significant reduction in unemployment..we will not have the revenue needed to survive over the long term...without this we will never be able to cut enough to get our deficit/debt under control...at current GDP growth levels we must do nothing to slow it any further...

2. Raise SS and Medicare age limits...slowly over time...won't do chit for today's budget but it does help further down the road
3. I would be shutting down some overseas military bases...bring em home and house em here...at least the spending will be in the US and not Bum **** Egypt...
4. I would freeze spending at current levels..inflation will slowly help us out...as that debt servicing number climbs higher other areas will need to be cut to keep spending at x trillions...

[LakeRat]

1. We must have 4% growth...without 4% growth we won't see any significant reduction in unemployment..we will not have the revenue needed to survive over the long term...without this we will never be able to cut enough to get our deficit/debt under control...at current GDP growth levels we must do nothing to slow it any further...

2. Raise SS and Medicare age limits...slowly over time...won't do chit for today's budget but it does help further down the road
3. I would be shutting down some overseas military bases...bring em home and house em here...at least the spending will be in the US and not Bum **** Egypt...
4. I would freeze spending at current levels..inflation will slowly help us out...as that debt servicing number climbs higher other areas will need to be cut to keep spending at x trillions...

1. 4% growth wont happen as long as unemployment stays as high as it is. To achieve that you would have to cut unemployment benifits at 3 months.
2. I am game here. Should be a permanent increase to be set with actuarial tables of top 5 life insurance companies.
3. I am game here. And then cut them out and don't resign them.
4. This would be a huge spending cut. I thought you were against spending cuts.

I assume you understand that when they discuss spending cuts, it is taking this years 1 million dollar in 2012 to 1.1 million dollars vs. 1.2 million dollars in 2013.