From now on, just take one dip and end it!

Well, the economy appears to be in recession. In other words, we are double dipping and that is like sticking your whole face in the bowl.

The U.S. economy posted a stunning drop of 0.1 percent in the fourth quarter, defying expectations for slow growth and possibly providing incentive for more Federal Reserve stimulus.

The economy shrank from October through December for the first time since the recession ended, hurt by the biggest cut in defense spending in 40 years, fewer exports and sluggish growth in company stockpiles.

The Commerce Department said Wednesday that the economy contracted at an annual rate of 0.1 percent in the fourth quarter. That’s a sharp slowdown from the 3.1 percent growth rate in the July-September quarter.

Now we know why the FED is pumping so hard. Still, as recessions go, this one isn’t as bad as it could be. Witness…

q4_gdp2

That’s the card the Democrats will play: It isn’t as bad as it could be. Still, even the positive numbers look pretty anemic.

However you spin it, a recession is a recession and this is Obama’s recession, isn’t it?

Rick Santelli says we are now Europe.

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12 Responses to From now on, just take one dip and end it!

  1. Roy Ryder says:

    Q4 2012 is where the contraction hits. I’m willing to bet the bulk of the contraction struck in the latter half, say, after November 6. This is the US reaping the whirlwind of the decision to re-elect Obama. The Dems will say that it’s a one-off, but I can tell you that this is no one-off. This is the new norm. Embrace the Suck.

  2. Z says:

    On a lighter note, I appreciate the Seinfeld reference. Something reminds me of a Seinfeld episode nearly every day.

  3. notamobster says:

    You people seem to forget that Preezy was handed a soup sandwich of an economy from George Bush. He still has work to do and needed another 4 years to make it happen. This is clearly Bush’s fault.

  4. RJ says:

    not that I understood the total implications of it but I heard on the radio this morning the bond markets are starting to suffer, and smarter folks than me are moving money away from bonds because of negative returns and rising interest rates.

    I can’t think that is any way good news, but I dont know crap about financial markets.

    RD? any thoughts ?

    • R.D. Walker says:

      Hmmmm… depends on the bonds. You know that Greek bonds are paying 18%. Lot of risk there. As things start to turn to shit, treasury bond rates would normally increase.

      Normally… You have heard me say that inflation is inevitable in the long run. I still believe that. The thing is, in the long run, we are all dead.

      If….

      a) The economy is entering a swoon, and…

      b) the Fed doesn’t pump fast enough, and…

      c) interest rates are falling to the effective negative zone…

      It would seem to indicate that short run deflation is a real possibility. During deflationary periods, cash is king. Of course bank failures are rampant.

      I wish I could tell you what is going to happen. The situation is volatile. We have been in a relative state of equilibrium for some time but it isn’t an easy equilibrium. There are tremendous forces working to knock us into the ditch. I just honestly can’t tell which ditch it will be.

      • RJ says:

        I think the fed has been balancing a bowling ball on the tip of a que stick while drinking vodka and printing money for so long they actually think it will never end.
        Something has got to give and it ain’t gonna be pretty.
        I’d wager the real inflation index over the last 4 yrs is in the 8-9% range, prices are through the roof on most everything.
        I think the only reason the stock market is still ok is the massive amounts of cash being printed.
        If certain states weren’t generating growth and jobs It’d be a lot worse, the problem is 3 or 4 mules pulling on a 20 mule team wagon cant keep it up forever. IMHO

        • R.D. Walker says:

          Yeah, the monetary situation has been like a tug-of-war between two 40 mule teams. The flag in the middle may not be moving much, but it doesn’t mean that all is peaceful and easy. It could suddenly go either direction… radically.

      • notamobster says:

        RD – did you see that post I made about the relative decay rate of unsterilized FED action? We’re coming up on the “no longer effective” date of QE4 (04FEB+/-) – thus, all the talk of indefinite pumping or finding a way out.

        Deflation is a strong short-term possibility, depending upon which way the FED turns the wheel, but eventually they’re going to realize that they have to allow the laws of economics to work, as suppressing them only makes things worse.

        When/if they allow interest rates to rise…

        On bond markets, they are suffering because the FED is printing money from thin air. Interest rates are being artificially forced to remain at or near zero. People are making a killing in the fools market (stocks). Look at the DJIA – 14,000! Bonds are more of a long-term, safe-haven investment.

        On top of that, state & local governments are weak. Their inability to pay their debts is increasing by the day. Eventually, these borrowers will find that they no longer have creditors who are willing to fund their shenanigans. When that happens (possibly around the time the FED decides to raise interest rates), they will be forced to pay exorbitant amounts of interest to fund their outstanding liabilities.

        Very strong pressures being applied on all sides, in all sectors. Tenuous situation we find ourselves in, for sure.

        • R.D. Walker says:

          I should think that printing money would drive up interest rates. If you are going to be just printing money, you are going to have to pay me a hell of a lot more interest to get me to buy a bond. Lenders lose their asses in inflationary periods unless interest rates are very high.

          • notamobster says:

            Absolutely.

            They’re increasing the money in circulation (M3) every month. This year (FY) alone, they will print the entire deficit! <— As unsterilized money in the economy. When they stop forcing interest rates down, there will be a reckoning.

            My “when/if” comment above is wholly dependent upon them making the better choice in time. The FED is always (historically) a day late.

            • notamobster says:

              BTW – Since 2006, the FED no longer uses M3 for inflation metrics. Not only that, but they don’t even track it anymore. SHOCKER!

              Kinda like not including food or fuel in the inflation indices. How about no longer counting the number of unemployed who have given up looking for work? That makes the unemployment picture look much better.

              When the .gov doesn’t like the numbers, they just change the metrics.

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