I’ve been tearing through the GDP data, trying to get a handle on the actual contraction and growth reflected within. It is, to say the least, an ugly, somewhat quirky report for the quarter.

The consensus was (once again) too bullish. Why do they call it the dismal science if most practitioners are consistently over-optimistic?

Here are some of the highlights:

• Consensus estimates were way too high — Wall Street economists forecast a drop of -4.6% versus -6.1% actual data;

• GDP has fallen three consecutive Qs, something that hasn’t happened in since Q3 1974 through Q1 1975; (WSJ)

• These 2 consecutive quarters of minus 6% contraction is the worst 6 month span for the economy since 1957-58; (Bloomberg)

• The economy has fallen 2.6% over the past 4Qs, the biggest year-over-year decline since 1982. (Marketwatch)

• All investment-related segments of the economy showed significant weakness; we surmise that  lot of this weakness is credit crisis related;

• Real exports of goods and services decreased 30%;

• Residential building declined 38% — the deepest drop in the cycle so far.

• Commercial construction fell 44.2% in 1Q –the largest quarterly decline ever recorded (data goes back to the 1940s).

• Capex investment fell 33.8%, the 5th Q decline in a row, and the deepest decline to date.

GDP would have been even worse, if it wasn’t for how fast imports have plummeted; They are falling faster than exports, perversely creating a appearance of relative improvement . . .

There were some positives in the report — not quite greenshoots, but signs of slowing contraction:

•  Price indicators suggested inflationary pressures rose in first-quarter 2009, easing fears of deflation.  (WSJ)

• Companies trimmed stockpiles at a $103.7 billion annual rate last quarter, the biggest drop since records began in 1947 (Bloomberg)

• Purchases of durable goods rose 9.4% in Q1, after plummeting 22.1% in Q4 ’08;

• Consumer spending climbed at a 2.2% annual pace in Q1 — the most in two years.

Assorted charts after the jump . . .


via BEA



via Jake at Economopic



via Barron’s Econoday




PDF of full release


Category: Data Analysis, Economy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

96 Responses to “GDP Falls 6.1%”

  1. edhopper says:

    How is the market higher on this news? What are they drinking on Wall Street?

  2. franklin411 says:

    Because the GDP is old news…everyone knows the economy was horrid from Jan-March. Consumption is going up, though. Could this be a trend? IE–Have people cut back so severely on consumption in 2H 2008 that they really have no choice but to consume now? You can only defer your spending for so long.

    Also, none of this data includes the effects of the Economic Recovery and Reinvestment Act or the Fed’s expansion of the money supply. So there’s good reason to read this as a turn in the data towards the upside.

    Tell Jake to get a better font!

  3. Mannwich says:

    And the market is a rocket ship to the moon this morning. What’s the logic behind that? That it was so bad we’ll likely get a big boost upward the second quarter (meaning demand will have been so pent up, it will be quick recovery)? I just don’t see it happening in my neck of the woods but what do I know anymore? Apparently not much.

  4. Mannwich says:

    @franklin: The employment picture, housing and CRE are NOT old news. They’re still unfolding. Me-thinks it’s crazy to be so sanguine about these factors.

  5. tranchefoot says:

    I think the market is betting that the worse the news, the more likely the fed will continue with QE- the market is betting on inflation and dollar weakness. Look at USO and OIH and tech.

  6. cttfinder says:

    It’s really quite amusing to read the comments here…so many of you act like you know more than the rest of us.

  7. HCF says:

    > You can only defer your spending for so long.

    That is true, so long as you are solvent and have income. Otherwise, you can pretty much push off all non-essentials indefinitely. While what goes up must come down, the opposite is not true. A malaise can last for much longer than of us expect.

    I think the markets are up today because many will argue that the the data is “backwards looking.” That is true, but it highlights the fact that the data is not so uniformly happy as many want to advertise it as.

    GDP (unrevised) of -6.1% is not much an improvement over -6.3% in Q4. Housing is still falling fast (yippee, the 2nd derivative is better!). Unemployment is going up. Leading indicators such as Baltic Dry Index and copper prices are faltering. Two of three major U.S. car companies are close to failing and two of the largest banks are alive only because of the largesse of the taxpayer.

    I’m not saying the apocalypse, just that the likeliness of a ‘V’ recovery is low and that it takes TIME and actual good economic policies to get out of this.


  8. Mike in Nola says:

    Anyone watching Darling’s news conference on the Web? Link on the CNBC site. It seems that Britain still has some real reporters. A few are cross examining him, including one who asked him to just answer the question. One just now told him that the public “will notice the evasiveness of that answer.” Wish someone over here would hire them.

    We are all wasting our time in the short run looking at numbers. The rubes are buying until some more badness hits.

  9. Mannwich says:

    @cttfinder: LOL. You’re right. Most of us don’t know shit. What I do know is the employment picture (and housing here in my area) is NOT improving. I can comment on that, right?

  10. Mike in Nola says:

    Sorry, he’s appearing before a parliamentary panel. Maybe we should hire some of their MP”s. :)

  11. cttfinder says:

    Mannwich – you can comment on that of course with full disclosure of where that it is and the recognition that you’re seeing a small piece of a large puzzle.

  12. franklin411 says:

    Don’t forget that recent comments in many companies’ conference calls indicated that orders were better than expected and seemed to be stabilizing.

    I don’t think anyone really expects a V-recovery, but the tone is increasingly shifting from “when will we stop falling?” to “when will we start growing again?” Big difference.

    And don’t forget that the Economic Recovery and Reinvestment Act will keep many unemployed people consuming at a higher rate than they normally would, because it extends unemployment insurance coverage. That spending hasn’t really begun to hit the economy yet.

  13. rob says:

    cttfinder: Through discussion comes the discovery of the truth… The one that puts his money where his opinions reside, I’ll saddle up him with compared to someone with no horse in the race.

    This just seems to be one final push to the resistance level trying to form a reverse head and shoulders. I don’t follow TA, but I don’t turn a blind eye to it either. Me thinks it is just an attempt to flush out shorts. I’m short, but have little in that realm. GovBenment will come out today with some new fighting acronym at the expense of future generations. I don’t see an ending up day IMO.

  14. Mannwich says:

    @cttfinder: Sure, I recognize that. I live in the Twin Cities, by the way. We’re lucky to have a diversified industry base here but the employment situation is still very grim overall. Am also noticing that homes in my neighborhood are languishing on the market for longer in the key spring selling season than they used to. This area used to be pretty bullet-proof and homes would go quickly. Not anymore. Just about all the higher end homes that I spy (and pay attention to these things) have been on the market for well over a year. If these homes don’t sell by beginning of summer, they likely wont’ sell until next spring at the earliest unless prices are slashed dramatically.

  15. Mannwich says:

    @rob: And, yes, I do have a horse in the race and have put my money where my opinions are. It’s not working right now but I’m sticking to my guns until I see real proof that I might be wrong.

  16. Mike in Nola says:

    Mannwich: Now you know what Barry feels like when he appears on CNBC. To paraphrase The Borg: Logic is useless.

  17. Todd says:

    I don’t see any improvement to inventory in the 2nd quarter. Ford is not going to replace GM’s shutdown in producing inventory. There will be a big draw down in Auto inventory when GM doesn’t produce any new vehicles for 9 weeks. You can argue that inventory draw downs would be even worse if the Auto’s hadn’t been producing.

    We’ll still be looking at a 5-6% drop for 2nd quarter.

  18. tranchefoot says:

    My comment is obviously a hypothesis, not a statement. It began with, “I think…”. What’s wrong with that?

  19. Mannwich says:

    @Mike in Nola: Yep, and apparently the prevailing attitude for many is that we commoners can’t speak to anything related to these issues because we just aren’t smart enough by golly. That’s pretty funny, since many of us accurately predicted this mess while the “best & brightest” (Ben, Larry, Tim, et al X 1,000) apparently didn’t see it coming at all or if they did, acted like they didn’t (not sure which I prefer). However, since they’re in the inner circle of our oligarchy, they’re somehow STILL better equipped to speak on these issues. It seems too many here and everywhere think like that (hello otto). Quite sad.

  20. Mannwich says:

    @tranchefoot: You’re just a commoner who should keep his mouth shut and opinions to yourself. You don’t know anything and neither do I.

  21. rob says:

    @Manwich… Yeap, thank God it is all contained now! Whew, I feel better with the experts on the case. Nothing to see here, move along…

  22. leftback says:

    I suspect that cttfinder is a member of the class that “knows best” so we should probably just defer. I am sure he/she is used to being deferred to, so we shouldn’t upset him/her at all, because he/she is clearly our better.

    Well, having been born on the wrong side of the tracks – and the other side of the ocean – my opinion is worthless, but I wanted to remind everyone that FOMC day is often a two-sided tape. Buy the anticipation, sell the reality.

  23. DL says:

    Too bad for the bulls that GDP wasn’t down 10%. Then the Dow would be up 500.

  24. hopeImwrong says:

    Seems like buyers are still in control of this market. No evidence of sellers taking control yet. Tight stops are required for all short positions. Trying to catch the cusp of a move is high risk.

    Long positions are basically long in the tooth. Taking some profits is a prudent course of action. Levels of stops are based on your own risk tolerance and cost basis, but I wouldn’t give this market too much room if I was long.

    Most bearish possibility is a bull trap, possibly a run to S&P 901-910 and a long down leg after that.
    Most bullish is a correction of this move to 777-790, and a reversal to the upside.

    It’s not clear what the market will do next, but risk it high for bulls and bears.

  25. call me ahab says:

    let’s not forget the upgrade of the banks- it’s all clear sailing

  26. Mannwich says:

    How exactly did consumer spending rise by that rate? It does not compute unless people are just saying “screw it” and banging their credit cards again, as well as spending tax return money. I’m not buying it. Maybe I should jack up all of my credit cards and finally carry a balance like the bad old days of my 20′s? The way this is headed, nobody’s going to pay any of it back anyway. Might as well take a few vacations, buy a new car, get that new house addition of been wanting. Isn’t that what the feds want us to do right now?

  27. kansascitypothole says:

    This is shaping up to be a very interesting month of May (options exp May 16). If California crumbled into the sea today, the market would be celebrating all the new beachfront property in nevada.

  28. Super-Anon says:

    How is the market higher on this news? What are they drinking on Wall Street?

    With a fiat currency there is no limit to how high the markets will go if the government wants them to.

    Of course such markets will become economically useless, but that hasn’t stopped us so far.

  29. MRegan says:

    There are many people in the US with deeply flawed interpretative faculties.

    Earnings: As I have tried to puzzle out the markets’ willingness (in some cases) to grant a multiple expansion to certain stocks (I recommend taking a good look at SHW and contrast current PPS on ttm P/E with their 2009 outlook), it seems to me that there has been a decision to build a temporary multiple expansion bridge in hopes of an earnings recovery on the horizon (or its mirage). In this which someone provided back in mid April, the authors argue for the first appearance of improved risk perception and better pricing action:
    Form the third para of Section 5
    “It means that bank assets are being fairly priced at valuations that
    sum to less than bank liabilities.”

    From the last para of Section 5
    “Investors in these assets are setting prices in the secondary market that reflect both the high
    expected losses of the securities and the highly systematic nature of these expected losses. And
    while the pricing of these securities is dramatically di¤erent from the way it was a year or two ago,
    this is because it was wrong then, not now. E¤orts to restart this market are focused on resuming
    the flawed pricing of the past, when there was no charge for risk and investors relied on the accuracy
    of ratings. Investors have learned from their mistakes and now seem to be pricing these securities
    in accordance with their true risks.”

    Improved pricing restores confidence and turns the future from being a huge cloud of unknowing into something that could possibly be mapped. We are left with the apparent conundrum of impossible bank earnings. To wit, as investors we do not know what the real Q4 and Q1 losses were at the majors. But we do have more reason to ‘believe’ the numbers coming out of the non-financial sectors.

    Cloud of Unknowing:

    there ya go cttrider, that’s for you.

  30. Todd says:

    Well this could be the break out, nearing 875.

    I’d still like to see a 5% swing either way.

  31. catman says:

    Mannwich – Im just across the river and my neighbors house that had been on the market for 15 months just sold. I am seeing more sold signs. People are lowering their prices – apparently reality is setting in. The rank and file of this site were right on top of the market decline last year, but currently may be fighting the last war. I doubt the landlord, for example, has much in the line of short positions. The really big money, not to be confused with the smart money, really doesnt have much use for your average bear market.

  32. Transor Z says:

    If the GDP was “old news,” consensus wouldn’t have been off by 25+%… (-4.7 vs -6.1)

    How can a PCE gain of 1.5 annualized after consecutive down quarters of -2.75 and -2.99 be anything but equivocal at best?

  33. Mannwich says:

    @catman: I hear you. You might be right but I think this is a giant head fake until employment numbers are at least not getting worse. Those folks who are buying now could be buying early thinking that housing is a great deal given the dips and the government subsidized interest rates. I think they’re wrong but what do I know? If we were willing to move now, I would love to sell my place to anyone who wants it and would gladly take the freedom to rent again for a while.

  34. HCF says:

    >the tone is increasingly shifting from “when will we stop falling?” to “when will we start growing again?”

    I agree the tone is shifting, and while sentiment is important and self-perpetuating, any sustained upward economic movement has to be accompanied by improving fundamentals, not merely fundamentals getting worse at a slower rate.

    As for the Economic Recovery and Reinvestment Act, it is true that it will help the unemployed with a longer benefit period, but those without jobs tend to spend money on groceries and essentials. They don’t (and shouldn’t) be buying new house, new cars, big screen TVs, etc.


  35. Paul S says:

    Hey cttfinder. My architecture firm has laid off over 50% of the office since September, more are coming this summer, and I got a 10% paycut beginning last week.
    The same is true all around the world in our dozen other offices located in Asia, Europe, and North and South America.
    This I know.

  36. batmando says:

    Consumer Purchases up 1st quarter….?
    Let’s see, in February I popped for a big honker LCD marked way down by HH Gregg to compete with Circuit City on the weekend that CC’s liquidation sales began. Won’t be buying another TV for 15 years or so, certainly not in 2Q-4Q ’09
    In March, I shopped Macy’s multiple, chain discount sale (25% off + 20% off + 15% off previously marked down inventory) buying a CK suit and accessories, regular retail near $700, total cost <$200. Won’t be buying a suit again anytime soon.
    Bought a couple of used Hondas last year that should last me and my daughter for 5 – 8 years.
    Kinda doubt Gregg or Macy’s will be bringing their inventories back up to ’08 levels and Honda won’t be ramping production up.
    Socking away 38% of gross pay to the 401(k) in cash and bond funds.
    Not looking for a consumer-led recovery anytime soon.

  37. Onlooker from Troy says:

    So I see now. It’s more of don’t bother me with the facts, I’m busy hoping here.

    The lengths this market is going to ignore all negative data as backwards looking is truly amazing. It has taken a big giant blind leap in hopes that it will land on something solid (as it always does in bear market rallies, of course). I just can’t take that leap. The facts really do have relevance and they are predictive of a huge smoking hole ahead.

  38. leftback says:

    In early March the market had been declining for so long that people forgot that it can go up as well.
    Now the market has been going up for seven weeks and people forget that it can go down too.

    Most humans are wired to think about what is immediately in front of them and not over-strategize.
    The antelope is in front of you, so it’s time to think about dinner. But there is a lion behind the bush.

  39. “…so many of you act like you know more than the rest of us.”

    Huh? How about this: There are some really smart people that read and contribute comments to TBP. If their intellect makes you feel small, whose fault is that?

    I rather prefer to read a blog where I might know some things and others would know some things and we all might thereby benefit. If you want to get smarter on a topic, you have to hang out with people that are smarter on it than you.

  40. hopeImwrong says:

    Mystery or Inflation? Why are risk asset (stocks, etc) prices rising?

    Is it just a matter of giving companies with huge “trading” operations (e.i. BANKS) billions of printed money? Is this just inflation in the area of assets the “banks” are prone to purchase?

    If the same amount of bailout money had gone to consumers, would food, energy, and housing be going up (at least relatively to what is happening now) while the stock market tanked?

    The “banks’” bailout money is going somewhere, and it’s not going to loans. The retail investor, though interested, is not really participating much. Volume is low. The marginal buying by gov’t sponsored banks is enough to squeeze the shorts and lift the market? Or at least keep it going sideways?

    Without a catalyst (not just “news”), neutral to up could be the direction. If bailout money doesn’t increase for banks this month, we could see the market turn.

    This is a theory. Not sure if it holds water. But I think the shorts are fighting the bailout dollars (not because they are fixing anything, only because it is giving the biggest traders capitol). It allows market traders to keep the game going.

  41. 10 cc says:

    Well..I did buy some new underwear last quarter. Pretty much had to though. Thought about “going commando” but it’s just not for me.

  42. The big news today is the Fed announcement. Yesterday 10 year treasuries broke 3% yield and30 years were threatening 4%. Today they sit at 2.98% and 3.91% respectively. I expect the Fed to announce a further allocation of $300 billion to purchase treasuries or a route of treasuries is in order.

    The stock market is a sideshow compared to the government bond market. If it gets away from Bernanke it’s game over for the economy and the stock market.

  43. primordial_ooze says:

    @franklin411 – Have you ever been laid-off and getting about $400/week (the max rate)?
    I have twice. To expect that people will start spending more because they are getting
    their unemployment benefits extended is unrealistic. They can pay the rent or mortgage,
    that is about it.

  44. Bruce in Tn says:

    Well, if you shift debt, business or individual, to the backs of the taxpayer….I suppose government feels that they have time to reduce that debt in an orderly fashion…but I would also think that means that the same government would decrease the size of government (because of the heightened expense) and raise taxes…now how likely is government to reduce itself in size…?

    It looks like the 10 year is going to stay above 3%…interesting..

  45. Pool Shark says:

    Can’t speak for the rest of the country, but here in “Khaleeforneea” the loss of government jobs hasn’t even hit yet. Last year, the number of state employees actually increased 1.3%. No such luck this year. Both the state and our county’s budget cycle begins July 1st. Our county board just announced that the earlier requested 15% cuts across the board in each county department won’t be enough.

    Even a 15% budget cut is projected to result in staff losses of over 25% (because civil service rules require newer employees be laid-off first, and they earn far less than more senior employees).

    Starting in July, there will be a bloodbath of public layoffs.

    Right now, California’s 11% unemployment rate is looking pretty low…

  46. Bruce in Tn says:


    Agree with your point, and if I were Chinese, I would think that yields, with this kind of equity action, will only be going up, which wouldn’t be good for treasuries I already own…

    I would love to be a fly on the wall at the central bank of the PRC….

  47. Bruce in Tn says:

    My brother, who designs blade servers for (now) Oracle, is here a few days in East Tennessee…we’ve had a wonderful time talking about tech and California, and everything (my undergraduate major was EE)…when they leave I’ll share some of what we “solved”….

  48. Here’s what I found out today
    Cattle hides have dropped from a high of $75usd to $20usd,
    Due to lack of demand by their largest customer.
    Automobile manufacturers.
    And their second and third largest customers,
    Furniture manufacturers and shoe manufacturers, respectively.

  49. leftback says:

    OLB is right. Govies are THE critical asset class here, and they have to keep the 1-yr under 3% to be able to keep this thing stable for a few more months. Once the 10-yr escapes from the box, it will be a bloodbath.

    Just cannot see that happening here. Bernanke has worked extremely hard on this and whether you agree with him or not he is a determined and resourceful individual. They will continue to buy Treasuries.

  50. karen says:

    Today’s Pfenning was excellent. http://www.dailypfennig.com

    I suggest everyone read it.


    EDITOR: Is there a permalink to this?

    Tomorrow this will be pointing to something else

  51. Onlooker from Troy says:

    Denninger’s take on the GDP number:


    Looks like he has some problems with it. :) And my thought about one last splurge on the credit cards while not paying the mortgage has come to him as well.

  52. Mannwich says:

    @Onlooker: I think others are having similar thoughts about their credit cards. Might as well max them out while you can!

  53. Foghorn,

    that’s amazing, no?

    makes you want to start a Tannery..

    to the point, have you tried to buy Leather?

    the spread between prices paid to Producers, and prices paid by ‘consumers’ has gaped open over the last 9-12 months
    see the cocoa chart on the fron page: http://www.foodbusinessnews.net/
    for starters..

  54. Onlooker from Troy says:

    Pathetic isn’t it Mannwich? Makes this feel all the more like a great party just before going over the next cliff.

  55. Mannwich
    Ya’ll might want to check out the ‘new’ bankruptcy rules before ya go slap happy.
    Can you say homeless?

  56. Mannwich says:

    @Foghorn: I was obviously kidding. Even if I wasn’t, my conscience wouldn’t allow me to go there.

    @karen: Good one. Thanks for sharing. I’ve been slowly accumulating TIPS and GDX for my longer term (whatever “longer term” means) portfolio.

  57. centiare says:

    @Mannwich – Relax bro; 411 is just demonstrating how to parody Cramer.

    @Tranchefoot – Looks like we have a winner. If every major country engages in QE, what’s the net effect? The Dow could go to 20k, debt would become more manageable relative to (nominal) income and we’d have a new floor in which to re-lever.

    The only losers would be savers, but those trend older, so not why go for a two-fer to eliminate a large body of useless eaters? First wipe out their savings/pensions, then tell them there’s no money for medical care. Problem solved.

  58. Mannwich says:

    @centiare: Do you love (or even like) your parents? I do, so I’m not sure I’d want to see that. I hope you’re not being serious.

  59. Hoffer
    The whole mess makes me want to upchuck,
    maybe I’ve got beaner flu or hini flu,
    just don’t upset the pigs and call it swine flu.

    Yeah, that’s the ticket
    pull a Hunt Brother deal with leather
    instead of silver

    More seriously,
    I could see beef prices increasing in about 18 months or so,
    Due to dwindling supply.
    Pork should have some good bargains in the next month or so.
    Clip and save.

  60. Jeff,

    there are whole schools of thought dedicated to that type of thinking, see:

    “A Texas scientist advocates killing nine-tenths of the world’s population by an airborne Ebola virus, writes John Ballantyne.

    An award-winning Texas scientist was given a standing ovation after he advocated the extermination of 90 per cent of the Earth’s population by an airborne Ebola virus.

    The University of Texas evolutionary ecologist, Dr Eric R. Pianka, was addressing the 109th meeting of the Texas Academy of Science at Lamar University in Beaumont, Texas, in early March, after the academy had named him 2006 Distinguished Texas Scientist.

    Present at Pianka’s speech was Forrest M. Mim III, a popular science writer and editor of the bi-weekly journal, The Citizen Scientist. He reported:

    “Something curious occurred a minute before Pianka began speaking. An official of the Academy approached a video camera operator at the front of the auditorium and engaged him in animated conversation. The camera operator did not look pleased as he pointed the lens of the big camera to the ceiling and slowly walked away.

    “This curious incident came to mind a few minutes later when Professor Pianka began his speech by explaining that the general public is not yet ready to hear what he was about to tell us. Because of many years of experience as a writer and editor, Pianka’s strange introduction and the TV camera incident raised a red flag in my mind … I grabbed a notepad …” (“Meeting Doctor Doom”, The Citizen Scientist, March 31, 2006).

    Pianka began his speech by condemning anthropocentrism, or the idea that the human race occupies a privileged position in nature. He exclaimed, “We’re no better than bacteria!”

    He argued that the sharp increase in the human population since the onset of industrialisation was destroying the planet. He warned that Earth would not survive unless its human population was reduced to a tenth of its present number.

    He then offered drastic solutions, accompanying his remarks with a slide depicting the Four Horsemen of the Apocalypse.

    War and famine were insufficient for solving global overpopulation, he explained. Instead, disease was far more efficient and swift. At this point, Pianka displayed a slide showing rows of human skulls.

    AIDS took too long to kill people off, he explained. His preferred method of exterminating over five billion human beings was via airborne Ebola (Ebola Reston), because it is both highly lethal and kills its victims in days rather than years.

    However, as Mim observed: “Professor Pianka did not mention that Ebola victims die a slow and torturous death as the virus initiates a cascade of biological calamities inside the victim that eventually liquefy the internal organs.

    “After praising the Ebola virus for its efficiency at killing, Pianka paused, leaned over the lectern, looked at us and carefully said, ‘We’ve got airborne 90 percent mortality in humans. Killing humans. Think about that.’ ”

    After he finished his address, the audience burst into applause…”


    you just can’t make this stuff up..

  61. Mike in Nola says:

    Bernanke will do whatever he has to to keep the 10 year rate low in order to try to reinflate the credit bubble. That means buying 100′s of billions in treasuries for many quarters to come, unless things get so bad that they appear as a safe haven again, which may happen in a few months.

    Of course, he is killing savers and older people who reliy on CD’s. But it’s not America’s role to save. We to get out there and spend, spend, spend.

    In the end it is all pointless because the worldwide deliveraging is greater than even he. Once he falls off the tiger, we will have another crash. But, he is one of the hubristic cognescenti who know better than we little people that 2+2 does not equal 4. He is an Economist.

  62. hopeImwrong says:

    Really looks like the market will break higher today or tomorrow. Bull trap coming?

  63. hopeImwrong says:

    The FED knows the economy is deteriorating. They are not watching the stock market (which is only making the PROs wealthier at this point; no Joe six pack). They will continue to throw whatever ammo they can at this crisis. Yes, it is still a crisis, and the FED knows it.

  64. rob says:

    @ mark: DAMN!!! No comment other than that…

  65. leftback says:

    The pain trade here is obviously for the market to break higher, squeeze out the remaining shorts and then crash.

  66. Foghorn,

    re: Beef Prices, people don’t realize that the Round Roast, on sale for U$D 1.49/lb., is actually Bellwether Bessie, of the breeding stock.

    on Tanneries: see this beautiful example of greenwashing http://findarticles.com/p/articles/mi_m0EIN/is_2009_Jan_14/ai_n31189163/

  67. Mannwich says:

    @Hoffer: What’s scary to me is what kind of people would give this guy a standing ovation? I would have loved to have been a fly on the wall at that speech. Wow.

  68. buermann says:

    @Hoffer: That’s a BS story spread by a bunch of creationists who don’t understand the difference between a prediction and a deathwish.

  69. hopeImwrong says:

    @Mannwich – What kind of people is right? What else do they believe in?

  70. Quite the quandary ol’ Ben finds himself in: When things are bad, he doesn’t need to buy treasuries to push rates down, but wants to anyway to push money out the door. When things turn up, he still has to shovel money out the door to keep the treasuries from crashing.

    Now which of his two options, buy treasuries or buy treasuries, is apt to lead to inflation?

  71. hopeImwrong says:

    @lb 12:26. Roger that. 10-4

  72. hopeImwrong says:

    @Curmudgeon. What I can’t figure out, given Ben’s two options, which will he choose? Thus, the market will go up again.

  73. I second that, DAMN

    The next time ya’ll hang with the hoi polloi,
    be sure to snoop around and look for the
    New + Improved Ebola Protection Kit.

    On old Bessie,
    There’s that and also the RAID on small producers by the mega-nationals.
    RAID = Real Animal I.D.
    interestingly enough, if you’ve got over 5000 head,
    you don’t have to play.

  74. franklin411 says:

    Regarding your Denninger post: This one is quite easy to utterly destroy. Mr. Denninger offers no evidence to prove his assertion that sales tax receipts are collapsing. A quick google search results in a WSJ article from April 10, 2009 that is likely the “rock” on which he builds his argument. Guess what? The article states that sales tax receipts indeed collapsed…in Q4 2008. Wow….Denninger’s a goddamn genius, huh?


  75. Transor Z says:


    Pianka looks like a Peak Oil guy also. ;)


    Looks like Western Guilt has morphed into species guilt.

    Here’s one of Time’s best inventions of 2006, the CrustaStun, which electrocutes lobsters in a few seconds rather than have them endure that horrible two-minute boil:


    Some types seem to have an easier time imagining human kids getting Ebola and bleeding out than watching a yummy, succulent arthropod thrash around in a pot for a bit before yielding up its tender butter-soaked… mmmmmmmm!

  76. hopeImwrong says:


    Can you give me a reference for info on RAID? I’m very interested in how the big producers are trying to crush the smaller guys.

  77. buermann,

    this: ““I don’t mean any ill will toward humanity,” says Pianka, “but I do think that we need to decrease our population in order to live more sustainably on this Earth.” is from the t.u. link, above.

    the situation is deeper than you describe, has little to do w/ “creationists”, more to do with these ideas being actively promulgated.

    see: “”Responding to these very questions, Pianka said, “Good terrorists would be taking [Ebola Reston and Ebola Zaire] so that they had microbes they could let loose on the Earth that would kill 90 percent of people.””[18]”

    and: “Doomsday: UT prof says death is imminent

    By Jamie Mobley
    The Gazette-Enterprise

    Published April 2, 2006

    AUSTIN — A University of Texas professor says the Earth would be better off with 90 percent of the human population dead.

    “Every one of you who gets to survive has to bury nine,” Eric Pianka cautioned students and guests at St. Edward’s University on Friday. Pianka’s words are part of what he calls his “doomsday talk” — a 45-minute presentation outlining humanity’s ecological misdeeds and Pianka’s predictions about how nature, or perhaps humans themselves, will exterminate all but a fraction of civilization.”
    guess what, that sh*t beyond inflammatory, if Jamie Mobley was making s**** up, he’d have been sued.

    no? what happens instead? media whitewash attempts and prominent Wikipedia apologia..riight! “it’s the ‘creationists’!..

  78. franklin411 says:

    Such an event would be horrible–no doubt. But for the survivors, I would think that there would be benefits. We could ensconce a select group of individuals chosen for their intellectual, technical and leadership abilities for the duration of the plague. We would also require a suitable number of young, virile women capable of repopulating the Earth. Naturally, these women would have to be selected based on their sexual appeal, since they would need to stimulate the men to reproduce as often as possible. I would think with a ratio of 10 women to every man, we could return to the present gross national product within, say 20 years.

  79. hopeImwrong,

    see: NAIS http://animalid.aphis.usda.gov/nais/

    and: As far back as the 1980s, industry groups and technology companies were developing plans for an electronic national animal identification system that was to apply to all species. In 2002, an industry trade group called the National Institute for Animal Agriculture, or NIAA, declared the animal identification was a “problem” and sought the government’s involvement.

    The U.S. Department of Agriculture (USDA) is currently in the process of implementing the National Animal Identification System (NAIS) through the States. NAIS is designed to identify all livestock animals and poultry and track their movements. When the program is fully implemented, the USDA claims that the NAIS will be able to identify all premises on which animals and poultry are located, and all animals that have had contact with a disease of concern, within 48 hours of discovery.

    The USDA recently described NAIS as “one of the largest systematic changes ever faced by the livestock industry.” Despite the scope of the proposed program, the government has not conducted any scientific studies or epidemiological models to analyze the design or effectiveness of the NAIS, nor has the agency performed a cost-benefit analysis. Rather, the USDA has relied on generalized statements that NAIS is necessary to protect the United States against an outbreak of animal disease and that it will help the export market.

    Although the USDA repeatedly states that NAIS is “voluntary” at the federal level, it is encouraging mandatory state programs through grants. The USDA’s stated goal is 100% participation by January 2009. The USDA continues to provide grants to the states, and the state cooperative agreements include meeting performance goals. As a result, several states have adopted, or are proposing to adopt, mandatory laws and regulations. Other states have used coercive methods and data mining to increase participation in so-called voluntary programs.

    The NAIS is to be implemented in three stages. Since no truly voluntary program has 100% participation, to reach the USDA’s goal of 48-hour traceback of every animal, each stage would ultimately need to be mandatory:

    1. Premises registration:

  80. buermann says:

    It’s amazing that a bunch of bears could so un-self-consciously accuse this fellow of advocating genocide when he’s clearly just arguing that it’s inevitable that population is going to crash after a thousand year bull. I mean, this sounds like it was written from a madlib of TBP comments:


    And the guys alleging he was advocating genocide are all from the Discovery Institute. Ecologists have been warning about over-population for half a century and the creationists over there don’t like it when scientists make injunctions against the instructions in holy books. Gotta keep multiplying or god gets angry, so they try to get a guy who says we need to stop multiplying strung up by Homeland Security on terrorism related charges.

  81. Transor Z says:


    “We should allow the millions of other denizens of this Earth some space to live — they evolved here just as we did and have a right to this planet, too. ”

    I, for one, am a FIERCE advocate of clam rights. For too long anthropocentrism has created as sense of entitlement that clams exist for our pleasure, to be steamed, stuffed, chopped into delicious New England chowder or sprinkled on top of pasta with red or white sauce.

    This is a CLAMLAMITY! Stop the clam genocide!

  82. hopeImwrong says:

    Thanks Mark. More bad news.

  83. buermann says:

    @Transor Z: Well, there won’t be any clam chowder to eat if there was a clam genocide, would there?

  84. muckdog says:

    How much of the falling imports was the decrease in energy imports?

  85. buermann
    re, depopulation.
    You go first, I’ll be right behind.
    And we just castigated Jim Jones for his noble endeavor.
    What idiots we are.

  86. Besides, we don’t need no steenking virus,
    We have NUKES.
    Rah Rah Sisboombah
    Go Team Go!!

  87. rww says:

    Rosenberg at Zero Hedge on today’s GDP: http://zerohedge.blogspot.com/

  88. Todd in SM says:

    looking at the Real GDP chart my first thought was: “well, the central bank did a fine job of moderating and leveling growth in the past decade.” what a crock of s! More and more it seems that all attempts at economic planning are folly.

  89. Transor Z says:

    True, but my group is opposed to humans eating clams or harming them in any way. At the Institute for Clam Communication we are attempting to prove that clams have thoughts, feelings and a complex language and culture that predates humans by millions of years. Here is more information about the Clam Genocide. [CAUTION: GRAPHIC IMAGES]


    We believe that the fact that markets are up 2.5% on the announcement that GDP was down [an uncorrected] 6.1% in Q1 is proof that humans are self-destructing and completely insane. We have no problem with humans, we just think it would be best if ~90% of them were to die as soon as possible for the betterment of the Earth.

  90. Pat G. says:

    “Why do they call it the dismal science if most practitioners are consistently over-optimistic?”

    That’s easy. That’s called propaganda. Notice how they’ve low-balled the stock estimates so that pretty much everyone is beating them when they report? Where would the stock markets now be if they’d been estimating a 6% GDP loss this quarter all along. Especially, following another quarter featuring a 6% loss in GDP. The market is rallying today because with back to back quarterly losses of 6% in GDP all the ass clowns are saying; “the worst is in”, “we’ve bottomed out”, “we’ve turned the corner”. The markets are all about perception not reality.

  91. Bruce in Tn says:

    I think I heard some idea about genocide , but only for holders of GM debt…of course I could have it wrong…

  92. Simon says:

    @ f411 Denninger is not a genius he just appears to be when compared to mainstream media economic commentators. He is a highly intelligent, highly concerned but somewhat socially compromised good citizen. If only we had more. Thank goodness for the internet.

  93. primordial_ooze says:

    @ buermann – I thought all the creationists where the same people waiting for the
    “Rapture”, so they are getting the hell out of here and leaving the rest of us.
    Maybe the “Rapture” is what you feel as your brains liquifies!

  94. CTB says:

    The 6% GDP drop is probably healthy, when you consider that 70% of GDP comes from consumer spending and consumers were saving 0%. The fact that it’s not falling off a cliff is good. But, in general I’m bearish — this will unfold over a very long time.