Is this the beginning of a 2014 recession and the end of the fake stock bull run?

[LazyBoy]

Re: Is this the beginning of a 2014 recession and the end of the fake stock bull run?

So from a viewpoint of physical reality, this situation is completely sustainable.
It is only when we put on green eye shades and engage in accounting that we become convinced that the situation is unsustainable.
Numbers are piling up in ledgers. Graphs are going exponential.
Debt and interest are accelerating, and institutions are borrowing money to pay interest on prior loans.
Any sane person looking at the accounting ledgers would declare the situation unsustainable.

So how do we reconcile these two opposing views? I honestly have no answer, though I feel both points are true.

This essentially means that nobody has to go hungry or be homeless. But they will, because the law says that Finance has to be paid.


Warning, rant below.

Debt is a parasite. It takes a slice out of everything. I know almost no theology, but don't some religions (Judaism?) speak against charging interest? They may have had something there. I think we need to get rid of the concept of debt being common and acceptable.

It doesn't matter if I'm carrying zero debt. I'm still paying for it. Consider buying a loaf of bread from the corner store. How many businesses are in that supply chain?

• The store and it's corporate namesake.
• The bread truck driver.
• The local bakery and it's corporate namesake.
• Recurse for the bakery's suppliers.
• Recurse for corporate outsourcing -- ad agencies, HR, IT, etc.

How many of those have business loans to pay off? How many have commercial mortgages or landlords with commercial mortgages? How many pay their employees enough to pay a home mortgage, their credit cards and the debt slices when they buy a loaf of bread. My loaf of bread pays for that.

And that's before we get to the predatory stuff.


As someone who has lived within their means, the proposed solutions that reward the irresponsible (debt jubilee, etc.) piss me off. But what else is there? "Unsustainable" is the word. But at least make a structural change that stops it from happening again. I don't think we need to manage the growth of debt better. I think we need to mostly stomp it out.

(And if there's going to be a debt jubilee, please warn me so we can get a big, fat mortgage too.)

[BK]

Re: Is this the beginning of a 2014 recession and the end of the fake stock bull run?

Having debtors is very profitable for big banks because the Federal Government now hands out corporate income tax credits to organizations like Goldman Sachs.

Have you heard of the Goldman Sachs 10,0000 Small Businesses effort which is a financing business that is advertised as a educational program for entrepreneurs. The program allows Goldman to make capital available to a network of non-profits (which compete directly with for profit banks) and Goldman can accrue a reduction in their future corporate income taxes (because as we all know Goldman Sachs is struggling to survive in this economy and they really need to save some money on the Federal Income taxes.

Read: http://missoulian.com/news/local/gol...a4bcf887a.html
Then read the glowing description of the Goldman Sachs program by Babson : http://www.goldmansachs.com/citizens...ram-report.pdf

[Thailandnotes]

Re: Is this the beginning of a 2014 recession and the end of the fake stock bull run?

Here's a Times article on Goldman charity. The comments afterwards are sharp and well-aimed.

"Both 10,000 Women and 10,000 Small Businesses are featured prominently on Goldman’s Web site. Goldman has poured money into producing slick videos of graduates of the programs. Graduates of 10,000 Small Businesses were heavily vetted: the Goldman Sachs Foundation paid Kroll, the risk and security consultant, roughly $1 million in 2011 for background checks, according to public documents that charitable organizations must file.

The 10,000 Women program was a big participant in the Clinton Global Initiative conference in September, among other things hosting a panel moderated by Chelsea Clinton. The sponsorship didn’t come cheap. The program paid the Clinton Global Initiative $375,000, the Goldman spokesman said. In 2008, Gene Sperling, a well-known Democrat, received an $887,727 consulting fee for advice given to the 10,000 Women program. Goldman also gives money to The New York Times Neediest Cases Fund.

In dealing with the government, Goldman’s charitable record may be paying dividends. Mr. Blankfein, the C.E.O., was once a Washington whipping boy over his firm’s actions during the financial crisis; he now has an easier time on his visits there. But some Washington insiders think the charitable giving hasn’t done much for the firm’s reputation on Main Street."

http://dealbook.nytimes.com/2013/10/...ype=blogs&_r=0

Of course it's from Dealbook and we all know who's pulling strings there.

[lektrode]

Re: Is this the beginning of a 2014 recession and the end of the fake stock bull run?

This essentially means that nobody has to go hungry or be homeless. But they will, because the law says that Finance has to be paid.....
....
As someone who has lived within their means, the proposed solutions that reward the irresponsible (debt jubilee, etc.) piss me off. But what else is there? "Unsustainable" is the word. But at least make a structural change that stops it from happening again. I don't think we need to manage the growth of debt better. I think we need to mostly stomp it out.

(And if there's going to be a debt jubilee, please warn me so we can get a big, fat mortgage too.)

+2, too!

[don]

May We Always be Indebted to Our Betters

it’s all about balance

By Max Abelson
Jun 3, 2014

What’s ambitious about Jay Dweck’s bathroom isn’t the television by his whirlpool tub or the screen that will face his toilet and bidet. It isn’t the wide nook in his shower for a third TV and one more across from the sink, or his plan to have each turn on automatically when he’s nearby.

It’s that Dweck, a formerGoldman Sachs Group Inc. (GS) and Morgan Stanley (MS) executive, wants to sell fellow bankers on renovations like the one at his $4.8 million house an hour’s drive north of New York in Bedford Corners.

“I always have visions and dreams of things you can do, and this is a realization of something,” Dweck, 58, said near hisviolin-shaped pool, where about 5,600 fiber-optic cables light up like multicolored strings. “The idea is to improve quality of life using technology.”

The company he registered last month, Live Better Systems LLC, will have competition from Wall Street veterans working to make the good life better. In a year when Thomas Piketty’s book on swelling inequality sold out on Amazon.com, the former bankers don’t see their upgrades as indulgences for the pampered, according to interviews with half a dozen of them. They call them innovations that will spread.

“We’re launching this brand and launching this movement,” Paul Scialla said before a tour of the $50 million penthouse his company, Delos Living LLC, is selling with posture-boosting cork floors, purified air and antimicrobial coatings in New York’s East Village. “There’s so much attention focused on the environmental impact of buildings, and we didn’t think there was enough focus on the human.”

Vitamin Showers

Scialla, 40, was co-head of U.S. interest-rate products cash trading at Goldman Sachs last year when he and his twin brother Peter left the firm’s partnership pool to expand Delos. It’s bringing “curated environments that optimize health” to Las Vegas hotel suites, Philadelphia dorms and Los Angeles offices, according to a website that describes lighting built around circadian rhythms and Vitamin C-infused showers.

The two apartments the company has sold in its five-unit building on East 11th Street went to actor Leonardo DiCaprio and author Deepak Chopra, both Delos advisory-board members. Scialla said the company and affiliate International WELL Building Institute do more than house celebrities, and that he left Goldman Sachs when he envisioned the potential social benefits and financial rewards.

“If we can scale this and get this to as many people as we can through real estate, that’s a real big win,” he said, citing hospitals and affordable apartments as options, along with housing for Haitian orphans the company has pledged to build. “Anything with four walls and a roof can be infused with this thought.”

Dot Luxury

Last month, former Lehman Brothers Holdings Inc. vice president Monica Kirchner also cited mass appeal, or a version of it, after she began selling the first websites that end in .luxury instead of .com.

Kirchner, whose Beverly Hills, California-based Dot Luxury won an auction for rights to the domain, said her target audience spans “ultra-high net worth all the way into just your middle income.”

Her firm’s website skews to the former with a photograph of a grinning woman on a yacht. “Welcome to .Luxury,” a greeting below says. “We’ve been expecting you.”

Scarecrow Magnum

Other former bankers working on what they call boutique projects are more explicit about selling to their own kind.

Serge Marquie, who ran corporate equity derivatives at Goldman Sachs and left last year, said the firm he started with his wife, Sally Wilkinson, is selling rights to Napa Valley wines before they’re bottled to “bankers, hedge-fund guys.”

The company, E-Cep, offers contracts similar to Bordeaux futures that allow buyers to get U.S. wine at a preset price, like an $1,800 magnum of 2011 Scarecrowcabernet.

The wealth chronicled in Piketty’s best-seller “Capital in the Twenty-First Century” creates business opportunities, according to Wilkinson, a former UBS AG economist. The number of people with at least $100 million increased 62 percent globally to 37,104 compared with 2003, according to a March study by property broker Knight Frank LLP.

“There’s incredible inequality, but there’s also incredible demand at the high end of the market,” Wilkinson said. “That’s just a reality of the world we live in.”
She and Marquie described the business as a way for them to make an impact.

“Capital can be useless, or it can be very beneficial,” Marquie said. “And it is important that people who have the capital are making it as useful as possible.”

Stradivarius Pool

Dweck, a former head of equities strategies for Goldman Sachs, said innovating brings him happiness. The pool, inspired by a Stradivarius he once owned, has a hot tub as the violin chin rest and two thin koi ponds shaped like a bow. He wants to use programming skills he honed on Wall Street to coordinate underwater lights with music piped through speakers.

“Let’s say I play some violin piece,” he said, comparing the effect to Guitar Hero. “I can just make it so that it’s like the strings are being played in the appropriate place.”

Live Better Systems can aid others once he’s ready to work with clients at year’s end, Dweck said, even if they can’t afford a $1 million Stradivarius pool.

“Anything that shouldn’t require volitional thought should just happen by itself,” he said. “If we can automate it away, we should.”

Dweck’s plan is to program his televisions to turn on when triggered by motion sensors, microphones or wireless access points that connect to mobile phones.

He wants systems for heating, security, 24 TVs, 140 speakers and 90 automatic shades to learn the tastes and habits of their users.

‘Frivolous Things’

The renovation of his stone-and-shingle house -- whose reverse-osmosis filtration makes his shower water “like bottled water” even if it lacks the Delos vitamins -- will cost $3 million, he said. He estimates he’ll spend an additional $3 million fixing up grounds that include the pool, a baseball field, an outdoor kitchen and a movie screen.

“Lots of people have that money,” he said. “They’re willing to spend it on, to me, much more frivolous things.”

Last month, before the tour of the Delos penthouse, Scialla showed the Manhattan Meatpacking District loft he shares with his brother. It, too, features a television in the bathroom. There’s also a signed poster of Oliver Stone’s “Wall Street,” two pianos and Delos features including cork floors and blue-shaded lighting to boost morning energy.

Across from the kitchen’s industrial-size juicer and a shelf of wheatgrass were two bottles of Patron tequila.

“Well,” Scialla said, “it’s all about balance.”




To contact the reporter on this story: Max Abelson in New York atmabelson@bloomberg.net
To contact the editors responsible for this story: Peter Eichenbaum atpeichenbaum@bloomberg.net Robert Friedman, David Scheer

[Woodsman]

Re: May We Always be Indebted to Our Betters

“I can just make it so that it’s like the strings are being played in the appropriate place.”

Curiously, this perfectly encapsulates the "secret of their success."

[jneal3]

Re: Is this the beginning of a 2014 recession and the end of the fake stock bull run?

Today’s high levels of private and public debt are called unsustainable. That may not be true at all.
At the highest level, one can look at goods and services rather than look at money.
All the food we ate last year was grown last year, and we can grow it again next year.
All the medical services provided to everyone on earth last year can be provided again next year, all our doctors and nurses and pharmaceutical plants are available again next year.
All the clothing distributed last year was manufactured last year, and we can make those clothes again next year.
Everyone on the planet lived somewhere last year, and those houses still stand. We can all live in them again next year.

That seems generally true as far as the eye can see into the future.
So from a viewpoint of physical reality, this situation is completely sustainable.
It is only when we put on green eye shades and engage in accounting that we become convinced that the situation is unsustainable.
Numbers are piling up in ledgers. Graphs are going exponential.
Debt and interest are accelerating, and institutions are borrowing money to pay interest on prior loans.
Any sane person looking at the accounting ledgers would declare the situation unsustainable.

So how do we reconcile these two opposing views? I honestly have no answer, though I feel both points are true.

The heart of the issue of why our economy 'feels' sick, rather than how it looks from an abstract level, is that there is volatility in personally important things where there used to be much less of it (or at least it was less systemic) - the value of the money we each have in the bank, the value (and future value) of our homes, i.e. things we count on for security. Volatility implies instability in the system, and humans in general seek stability. No abstract economic indicators can make this feeling go away, as long as the govt is conducting such a vast and unprecedented experiment with the value of the script in our pockets.

[don]

Re: May We Always be Indebted to Our Betters

Curiously, this perfectly encapsulates the "secret of their success."

as they gather together, taking the waters, while practicing the art of strumming . . . .

[thriftyandboringinohio]

Re: Is this the beginning of a 2014 recession and the end of the fake stock bull run?

The heart of the issue of why our economy 'feels' sick, rather than how it looks from an abstract level, is that there is volatility in personally important things where there used to be much less of it (or at least it was less systemic) - the value of the money we each have in the bank, the value (and future value) of our homes, i.e. things we count on for security. Volatility implies instability in the system, and humans in general seek stability. No abstract economic indicators can make this feeling go away, as long as the govt is conducting such a vast and unprecedented experiment with the value of the script in our pockets.

+1

[LazyBoy]

Re: Is this the beginning of a 2014 recession and the end of the fake stock bull run?

Why does it take "5,600 fiber-optic cables" to simulate 4 strings?

It's like a science fiction movie -- and dystopia for the rest!

[jk]

Re: Is this the beginning of a 2014 recession and the end of the fake stock bull run?

this is supposed to be an attractive lifestyle? 4 tv's in the bathroom?

[mastergardener]

Re: Is this the beginning of a 2014 recession and the end of the fake stock bull run?

VIX closed at 11 today. How low can it conceivably go? Zero?

How risky is an investment in VIX at $11? I'm intrigued.

[verdo]

Re: Is this the beginning of a 2014 recession and the end of the fake stock bull run?

oh boy...


http://www.forbes.com/sites/samantha...cond-estimate/

U.S. GDP Dropped 2.9% In The First Quarter 2014, Down Sharply From Second Estimate

Comment Now Follow Comments

The latest data shows the U.S. economy contracted significantly more than previously estimated in the first quarter of this year.
On Wednesday, the Bureau of Economic Analysis released its third and final estimate of real gross domestic product for the first three months of 2014. The release showed output in the U.S. declining at an annual rate of 2.9%. This is relative to fourth quarter 2013, when real GDP grew 2.6%.
The final number is also down from BEA’s negative 1% second estimate released last month and even more sharply from its first estimate that showed GDP growing 0.1%. While this makes Q1 the economy’s worst since Q1 2009, the heart of the recession, economists were anticipating the further downward revision.
“The bad weather in much of the U.S. in early 2014 was a significant drag on the economy, disrupting production, construction, and shipments, and deterring home and auto sales,” wrote PNC Senior Economist Gus Faucher in a note out prior to the release. “But data show growth rebounding in the second quarter, with improvements in home and auto sales and residential construction.”
The major stock indices slipped into the red as the opening bell approached but quickly returned to positive territory. This seems to indicate that investors were also writing off the contraction as temporary.
In an interview following the release Stephen Auth, Chief Investment Officer at Federated Investors, called the revision “pretty incredible” but says that underlying trends have shown improvement that has simply been “masked” by the weather. He expects second quarter GDP growth to come in north of 4% and continual market gains.
The revision, BEA explained in a release, was largely due to a smaller than previously estimated increase in personal consumption and larger that previously estimated decline in exports. The 2.9% decrease in real GDP reflected the negative contribution from exports as well as declines in private inventory investment both residential and nonresidential fixed investment and lower local government spending. The rate was also negatively impacted by an increase in imports but partially offset by an increase in federal government spending (the first in a year and a half) and in personal consumption.
The price index for gross domestic purchases — which measures prices paid by U.S. residents — increased 1.3% in line with the prior estimate and compared to 1.5% growth in the fourth quarter. Real personal consumption expenditures increased by 1%, down sharply from the 3.1% second estimate and from the increase of 3.3% in the fourth quarter.


BEA — a division of the Department of Commerce – will release its advance estimate of Q2 GDP estimate on July 30.

[verdo]

Re: Is this the beginning of a 2014 recession and the end of the fake stock bull run?

double post

[Southernguy]

Re: Is this the beginning of a 2014 recession and the end of the fake stock bull run?

Really cold last winter over there...