Regardless of the brainless optimism evoked by Yellen’s say-nothing speech yesterday, the signals before and after she spoke suggest that the Fed’s new nickname – the Federal Open Mouth Committee – is well deserved.

The economic goforit optimists are about to be hoist by their own petard of “the data simply doesn’t support this” whenever the bourses show some unease. The data doesn’t support the optimists who see green shoots – and it won’t be long before the markets catch on. The Slog aggregates the evidence for the case that Bears are about to sh*t in the buds.

  1. Quite how I missed this yesterday I don’t know, but I’ve just caught up with the Atlanta FED’s GDP predictions for the US…which are usually on the ball. During the first few weeks of 2016 – even while the markets were ‘volatile’ – the average growth forecast for US GDP was between two and three per cent. Six days ago, the Atlanta slashed their forecast to 1.4%. Four days later, they slaughtered it AGAIN to 0.6%.
  2. Towards the close yesterday, Boombust TV was searching round for new euphemisms, eventually settling on ‘slowdown’, and the Dow dropped 1.9%.
  3. Following some atrocious industrial output numbers, both the Japanese markets fell 1.5% overnight.
  4. If you’re a fan of the Elliott Wave analysis system (and I am – see earlier Slogposts on classic correction territory) then you won’t be happy with the current signals. Robert Prechter is widely respected on Wall Street as The Man when it comes to the Elliott Wave principle. He opines, “the stock market is at high risk of a sharp collapse. Near term, we’re prepared to see the Dow make one more high. But it doesn’t have to happen.” In particular he cites “extreme optimism for over two years” and “a dramatic lessening in the number of stock participants” in recent rallies. We are also seeing suspiciously low volumes….a point stressed by Bloomberg TV yesterday. (Hat-tip to NTMarkets for pointing all this up.)
  5. Brazil (Latin America’s biggest economy) is experiencing its worst recession ever. It stalled in 2014, shrank 3.8% last year and now faces a similar contraction this year. Unemployment rose to 9.5% last week, wages fell 2.4%, one in five young Brazilians is out of work, and the situation isn’t helped by either the US Fed’s rate rise, or a  crippling political crisis. The President Dilma Rousseff faces impeachment, there are widening corruption scandals surrounding the state oil company and multiple retailers, and the country’s biggest commodity, coffee, has just suffered a $5 price cut. The situation is not helped by a strong presence of Portuguese owned concerns, and two giant French supermarket chains – Intermarché and Casino – both of whom are in trouble there.
  6. France itself continues to muddle along, but the signs of universal discounting simply cannot be ignored. New stock in hardware stores and Spring fashion clothing are on offer at 50% off. At last, the Government has had to admit that France’s economic growth “will lag behind most of the eurozone” in 2016, yet somehow sees a growth for the year at 1.2%. It will do well to manage half of that.
  7. Saudi Arabia ran a whopping $98billion budget deficit last year, which isn’t forecast to drop much this year. I don’t think it will drop at all, and may well rise – for I’m convinced we’re about the see another lower level for oil. The Saudis have had to introduce VAT for the first time, cut social welfare, and sell off some industries to the private sector. Plus, of course, it’s engaged in an expensive war in Yemen…which, oddly, isn’t included in the cost numbers – always a bad sign.
  8. Admitting that the Chinese economy is at “a critical juncture”, the Bank of China then proceeded to come out with some delightful woffle about what happens next:


And so let us now steel ourselves to our task, structure those gear-shifts and change the impetus drive so that we finally zig-zag around the bumps, arrriving at last in the sunny uplands where we exchange growth for development, and turn that 86% of Chinese currently at or below subsistence level into sophisticated service consumers in one mighty Five Year Plan.

The PBOC is predicting a 6.5% growth rate this year, which it will – emphatically – miss. One immediate reason is the strengthening Yuan and weakening Dollar. Also, over 90% of Chinese exports go to the US, Europe and Brics…none of whom are having any luck with consumer stimulation, because the consumers aren’t for stimulating: they have credit to pay off, falling PDIs to spend, and are nervous about future job prospects…along with political issues ranging from Brexit to Trump-stopping. The Asian Development Bank has cut Chinese growth expectation over the last six months by an average of 0.7% a month, and this trend continues.

8. But what of my own dear old corporacratic State of neo-Fascist England? Well, you can tell from the drubbing Little Osborne got after his Zen Budget* earlier this month that things are going predictably pear-shaped for the Bullingdon Boy. I posted from November 2014 until May 2015 to insist that the Chancellor was in a race against time to have the election over before his 0/10 1st year maths paper came to be marked by Thatcher’s Memorial Headmistress, The Institute for Financial Studies. This is now proving to be true: in its latest outlook paper, the IFS gave him a terrible mauling on the state of the public finances, but then being a monetarist madhouse, one wouldn’t really expect anything else. The real problem Porgey Pudding and Pie faces is that the economy is in an even worse state of making stuff/financialservices/food growing imbalance than the one he inherited from McAspergers.

Yesterday, The CBI/PwC financial services survey showed the core crown jewels of banking and investment management had seen the sharpest drop in confidence about the future, while the Office for Budget Responsibility, has once again flagged problems of weak productivity in the UK. A Treasury official recently confided that he and his colleagues “were unable to fathom why” this might be. In two words, “low wages” lads. In another two words, “no benefits”. How nice and warm it must be in the hermetically sealed bubble.


And finally, Globalist nutcase Richard Haas has just said that we (who, me?) need “to reNATOise Europe”….or as he pronounced it, “Yerp”. A few minutes later, he referred to Donald Trump as “an economic nationalist” – surely the best case ever of a brass neck calling out a wooden head.

Haas obviously feels we need a little more vallativverdee. In order to make more of that, I invite you to read….

Last night at The Slog: When globalism is really US hegemonism

* Zen virtual reality predates the digital version by some 2,800 years. Thus, in Zen Archery, you have only the bow. You twang the bow, and imagine the arrow landing exactly where you wanted it to. In Zen Bullingdon Budgets, you have only a Red Box. You open it, and pick out imaginary export and tax incomes, and imaginary consumers able to make £30 less per week go even further. The Nazarene chose loaves and fishes as his medium: his is the only known instance of the idea actually working. Allegedly.


  1. And the FTSE is up 1.5%. The worse the economy gets, the lower the FED and other central banks cut interest rates (there’s a long, long way to go) and, hey presto, asset prices go throught the roof.

    And they can continue to do this….well, forever. Or until such time as, at least, a sizeable minority decide it’s time to take things into their own hands and civil disobedience (at best) ensues. But the average schmo is that dumb and that disinterested that it simply isn’t going to happen.

    Your error, John, is to still be using the word ‘markets’. There are no markets when one side can print…and print….and print.


  2. In Monopoly your assets are only worth what the losers can pay,they have raided every box of monopoly games to get their hands on that money,but still nothing improves (and they believe its because they don’t have enough) they have to have full control which is impossible! and however much control they gain isn’t sustainable!


  3. Crash 2 or 200? Mr. Ward has been telling us all that the world will be ceasing to exist in its present iteration for some years now, yet as far as I can see in my neck of the woods (South Africa) things are pretty much biz as usual with supermarkets humming, new cars aplenty and most of the population well fed and clothed. Plus, the Johannesburg Stock Market is looking a robustly healthy shade of green> 30-3-2016.
    When I think of it, had I been acting on Mr. Ward’s the-sky-is-falling financial acumen I would have been severely out of pocket with my retirement nest egg by now in March 2016.

    Liked by 1 person

  4. ‘marked by Thatcher’s Memorial Headmistress, The Institute for Financial Studies.’

    JW, should this not be The Institute for Fiscal Studies?


  5. @David Bawden

    A shiny turd is a wonderful thing. Yes, you can admire your own reflection in it for a while, but it’s worth remembering that you will end up looking like sh*t. Recent advances in excrement refinishing have allowed the shine to last a little longer, but many of us have come to suspect that what lies beneath these few miasmic microns has approximately the same value as a broken sewage works. Put simply: the financial system as it is currently being operated is unsustainable and unfeasibly overvalued. Good luck with your notional gains but don’t polish too hard, and don’t forget to look at the wider reality from time to time!

    Liked by 2 people

  6. In brief: 43,060 THCs (Trans National Corporations) analysed in a peer reviewed paper.
    A core of 147 TNCs control 40% of economic value of world’s TNCs, & control themselves.
    3/4 of this core of 147 are financial intermediaries: they make nothing, they shuffle money.


  7. @David Bawden. Indeed, the debt-fuelled good times can roll forever more …. just print, and manipulate.

    Why didn’t they think about that in 1929, I wonder? I guess that they just weren’t as smart as those who presume to rule us these days.


  8. John, I disagree that the reason for poor productivity is “low wages”.
    I would suggest that the real reason is the high cost of living. Inflate wages and we become uncompetitive and the jobs simply go abroad. The cost of living has to come down and that means a drastic reduction in the single biggest expense that the majority of the population have – putting a roof over one’s head. Be it rent or mortgage, the high cost of housing in the UK is crippling the economy. It affects everything from business premises to the price of your groceries.

    Until that single issue is resolved I don’t see how the UK can recover. No-one has any money left over from their monthly paycheck to spend on comsumer items. Just look at B&Q and other DIY stores. The only people putting up shelves these days are the BTL parasites.


  9. @Nick Riley, Yes, indeed it was and, by that time, Germany had already provided a working example of hyperinflation.

    My sarcasm isn’t as sharp as it used to be :-)


  10. Office for Budget Responsibility, has once again flagged problems of weak productivity in the UK. A Treasury official recently confided that he and his colleagues “were unable to fathom why” this might be.

    Think of poor productivity this way: most of the car manufacturing in the UK is assembly. In the case of the Japanese firms, all the high-end stuff is made in Japan and exported to Europe to be assembled. All the Brits do is put it together – which is where the problem lies.

    Because you can hire and fire Brits at will. You can’t do that in Europe with their tight regulations, which means they need a different strategy. With Brits being so easy to dispose of, it means assembly lines can be turned on and off at the flick of a director’s hand. Markets slow, Brits get laid off. Markets grow, Brits get taken on.

    But only as assemblers: only the screwdriver work. You can’t improve productivity by any significant margin if all the workers are doing is bolting bits together and plugging in the little black boxes the Japanese make at home.

    Improving productivity usually means bringing in more machinery, and that means training people. With the UK regulatory system as it stands, it’s not really worth training someone who you might lay off in a couple of months time. That is what is done in places like Munich and Stuttgart, where productivity means big investment in Festo’s robots… and the people to drive them. Because it’s darned hard to sack a worker in Germany, so once they’re taken on, it’s worth investing in them.

    In Britain, there’s no point. And because of Britain’s consistently poor regulations for workers, thus will it remain.

    Liked by 1 person

  11. To stimulate an economy requires fiscal investment. One method is to increase the minimum wage, the other is Govt investment in infrastructure/public works to create employment. The proviso is to utilise home materials and labour during construction, to spread the benefits thru’ out the economy.
    Utilising Chinese investment and French design skills and material to build Hinckley Point Nuclear station is of no value to the British economy ,but a fiscal drag on debt repayments to China. Economics 101 has by-passed George Osborne.
    The present situation of workers, is that there is little surplus money left after paying rent or mortgage debts. The cream of productive labour is sliced off by servicing debt, ultimately to the banking system.
    Karl Marx and his Theory of Surplus Value explained this over 150 years ago.


  12. Gemma
    Madam,your posting concerning British car workers is one I have read many times. We know that you must have a history in this area.
    May I set the record straight – and by the way it is not true that agency workers from eu are laid on and off daily. For one thing they are too unqualified. Most parts are British made with a 72% local content being typical.
    But my point is that one reason that the German banks have nearly bankrupted eurozone is because surplus production continues until hectares and hectares of British docklands, industrial estates, brownfield zones and even football pitches are used to store the rusting hulks of german machines that no one wants until they are either sent back to germany for recycling or just plain scrapped. Rightly so, since the Korean quality surpasses german and is taking the lead in sales of the mid range with guarantees to astonish.


  13. It is hard to remember the old normal.
    Before 2008, we had the “wealth creators” that liked to keep all the rewards from their efforts and pass as little as possible down to employees.

    They were the cause of the boom and they deserved their rewards.

    Markets followed the activity and success of the “wealth creators”.

    After 2008, the easy profits disappeared and so did the “wealth creators”.

    Central Banks had to step into the vacuum and start printing money.

    The markets gradually lost touch with the real economy and started to follow the new “wealth creators”, the Central Banks.

    Later on bad news from the real economy became good news for the markets as the Central Banks would be engaging in new stimulus.

    The markets are now devoid of all reality are inversely proportional to the real economy.

    What was the point of it all again?


  14. UK productivity can never be increased by good margin. The obese curse of modern Britain. Life is so relaxed today, money so easy to come by, social media distractions and the like……god help us we never have to haul ourselves off our sofas away from the tv agin to prepare a real meal at the table for all the family .


  15. Troll Warning!!

    John’s little tranny’s back, and the poor lamb just didn’t get the attention he needed from his mummy….

    … if only boys would stand up for themselves, speak for themselves instead of wearing their sister’s clothes.

    I wouldn’t mind the poor boy’s thoughts then… stand up for yourself, little boy!!


  16. Where is the wealth creation that will keep Britain (or the rest of Europe, or the USA) afloat? England went from the feudal system of the Middle Ages through the Industrial Revolution and the acquisition of the British Empire to be a centre of wealth and industrial production by 1900. Then came the rise of Germany, WW1, the Great Depression of the 1930s, WW2, the rise of the USA and resurrection of Europe’s industries, the loss of the British Empire, and the rise of China and other previously 3rd-world economies under international trade agreements and “globalization”. Individual rights and prosperity for the common people had risen as labour became a more valuable commodity under the demand for workers in the Industrial Revolution, and became scarce from the immense wastage of manpower in WW1 and WW2. The rise of union power and democratic political power in the common people pushed governments to institute social benefit programs and decrease income disparity between the rich and the working class. But history saw once-thriving industrial bases such as Clyde shipbuilding, British steel-making, and coal mining deteriorate and close, while housing estates proliferated and the dole became the norm for many. Government deficit financing and debt growth became the public finance norm.
    Great Britain could no longer afford the British navy that once ruled the waves. The USA took over as the leading world power, using Britain as a subservient ally in the Cold War and as a useful dupe in USA control of Europe and in foreign military adventures in the Middle East and Africa (as seen lately in Libya). The heads of government in Britain have prostrated themselves to the USA in return for a seat at the table somewhere just above the salt, to maintain their delusion that Britain remains a World Power and leading force in world politics.
    Meanwhile, the delusion continued in the popular mindset that social benefit and pension programs were sacrosanct, and that GDP would increase forever at a rate sufficient to allow governments to cover the costs of perpetual deficits and debt increases while there would always be sufficient excess of wealth production to allow capital gains from passive “investment” of capital to give healthy returns (returns high enough to keep pension funds and the moneyed classes in the green and ahead of inflation).
    A more jaundiced view of Britain is that it, like most of the democracies, has been bankrupt since the 1960s and has maintained an illusion of prosperity only through increasing debt and the importation of money from abroad (as evidenced now by the bubble in property values in London). The only economic sector in Britain that now has a pulse is the financial manipulation and international money laundering pustule known as London City, which is being carefully kept from inspection and regulation by the British government.
    Meanwhile, the peoples of Europe are being steadily pushed back into Serf status by the banks and governments who steadily bail out their cronies by pledging the public purse as collateral to cover for the bad bets made by bankers and politicians.
    Individuals hark back to their memories of more prosperous days by calling for rearranging the deck chairs on the sinking ship. They call for such things as increases in union power, greater employment security rights for employees, more subsidies for uncompetitive industries, more investment in public infrastructure, more social spending, “green” programs, carbon taxes, etc., etc. None of these deal with the core problem – the lack of wealth production and lack of international competitiveness in British industries. North Sea oil and gas production helped Britain’s economy for a while, but has nearly run out. Oil and gas from clay beds may provide a new crutch for a while. “Green” energy programs survive only through subsidies from the public purse, and carbon taxes and other measures designed to combat the ogre of “climate change” have added expenses to already struggling industries, with the latest victims being the British steel plants now being abandoned by Tata as irredeemable money-losers. Nowhere is there any sign of industrial renewal or other means of wealth production in Britain.
    The slide of the common people back into financial serfdom continues.

    Liked by 2 people

  17. That’s funny David
    I’ve been taking my own advice since 2009 and my pension is still 11% higher than it would have been as a stocks Bull. I’ve been taking my own forex advice since moving to France in 2012, and gains on that have allowed me to renovate 2 houses instead of one. Although to be fair, shorting oil at the right moment helped….oh, and making 100% profit from being in gold not stocks in 2013 helped quite a bit too.
    You are correct in just one respect: getting the timing of Crash2 wrong: it should’ve happened in 2011; as a result of yet more can-kicking since then, the additional money in circulation will blow a hole in something, but it won’t be anything I own. I have never said that the world would end in this or any other iteration.
    As for SA, it is the most beautiful country in the world bar none. But in France, we have no Zuma antics, the cops don’t stop your car and demand money, there are no informal townships, there is no ecoli in the water, my house has never been ramrodded and we have an employment GDP productivity that makes yours look laughable.
    Good luck for when gold is banned from private sale.


  18. John
    you are the bullshit King
    give us a rest from your personal achievement lies. You boast looking in the rear view mirror.
    Tell us what’s ahead if you wish, but make it right son, not wrong again yawn.
    You are an ideas man, plain and simple. Your ‘achievements’ – squilch


  19. Dear Coy Rich

    You certainly have two achievements I can’t match:

    1. Obsessive masochism
    2. IP addresses

    Anyway ‘son’, another one bites the dust…


  20. “You are an ideas man” Quite a compliment, rather thought that was why we evolved to have flushing toilets & bog role, Now that was a grand bit of thinking.

    Do I detect a little green eyed monster there… A touch of the “Look at me, look at me”?… It’s hard, I know, when the revered & much vaunted “Confidence” turns out to be the empty belief of “Blind Faith”. Well I suppose you don’t realise something needs fixing until you can see it’s broken. I know it’s not fair,& not your fault, but stop blaming others for the bit your missing, & help look for it, it might help all of us.


  21. The problem with economic and comparing things to say 1929 is that the world has changed 1000 pct since then . European countries despite 10 years of recession ( bar Germany and Nordics) are still wealthy : unemployed can live with their parents and not go hungry , or parents can live with their children if their pensions are not enough . Look at Spain .. the economy is catastrophic : 26 per cent unemployment , 50 per cent plus for 18 – 24 year olds . And yet Spain hasn’t been economic’ news ‘ for 5 years . This paradigm shift is crucial : it is possible that Europe has no growth for the next 15 years and stock markets could stagnate , or even drop : The past 8 years have shown that real economy and stocks are just not correlated .
    The companies i have worked for in France are so over-staffed that they could sack 20 pct of the workforce for the same turnover ie if economy falters bottom line will be OK but unemployment will rise . This is the case for France currently . And it will only get worse .
    Long story short : ecomoies cabn flatline for next 200 years and stocks won’ t necessarily collapse . The only thing that can cause major disruption is the day investors take on the Central Banks and call their bluff . So far , investors are playing the Central Banks’ game .
    PS 2013 was a bull year for stocks .


  22. Riccy-oh your going to die! that’s right,oh you want to know when! when you take your last breath? predicting economic collapses are no different!


  23. I am officially joining Brexit.

    Britain is better off outside the EU.

    The following is a quote from Ambrose’s latest article (cited below):

    What we know is that the British government has for the last three years been blocking efforts by the EU to equip itself with the sort of anti-dumping weaponry used by Washington to confront China.

    The EU trade directorate has been rendered toothless by a British veto. So much for the canard that the UK has no influence in Brussels.

    “The British are sacrificing an entire European industry to say thank you to China for signing up to the nuclear power project at Hinkley Point, and pretending it is about free trade,” said one official in Brussels bitterly.

    Yet the British are always pointing fingers at Germany and France for doing precisely what the British have done themselves – it’s a bit like starting a war because Germany invaded Poland in 1939. Oh, but that’s different, Britain was invading India, Africa and places of no account… and we make the rules, not you. So don’t imagine you can start doing what we do, just because you have a leader backed to the hilt by corrupt Anglo-Saxon money!

    So, Britain, you can destroy your own steel industry in the way you destroyed your coal industry thirty years ago, and you can do it for yourself. It’ll make it harder for the UK based banks to square the economic figures, but fraud in London is a growing industry. It needs to be!

    Come on, chaps, pack your bags and go home.


  24. John, it’s rational enough to predict a Crash2 but I don’t personally expect there will be any kind of identifable Crash2 moment, as we had with Lehmans in 2008. We are in a permanent slow fudgey suffocating mire with Governments unable to direct investment or protect wage earners, too scared and corrupted to stop liars and snakes in international fake money schemes leeching all the QE there has been + getting ever more devious at cashing in mark ups on valueless deals; and dead central banks without any policy levers left to pull.
    – There is no reason why this is likely to change, there is no shock or stop event on the horizon. Expect more of the same for the remainder of your lifetime and decades beyond. There is not going to be a Crash2 as such. A renaissance of decent personal/family incomes and security, and a good productive collaborative international economy … (which will only stick for 15 – 25 years as in the past) … is possible but I wouldn’t think much before the end of the century. It would take a few more paras for me to give my thoughts / reasons for how it will come about. It will take a realisation that the 10,000 or so snakes enriching themselves in the sludge are irrelevant and we have to go round them and get on with productive creativity. I am a words and communication campaigns person, not an ‘economics’ person. I learnt economics very quickly when I was parachuted in to HMT at the start of 2009, with a brief to create & co-ordinate x-govt information and advertising/pr/messages/explanations on the crash and set up the short-lived Economy Communications Centre, against the wishes of Nick McPherson. I learnt that economics is whatever you say it is, and that who says it, their values, decency, honesty, integrity, is what decides whether it’s good for most people all in all.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s