I don’t believe GDP is nearly as important as most econ types do, but the chart below is interesting nonetheless.
When measured on a per capita basis, cumulative GDP growth since the start of the recession in ’08 is extremely disappointing. Especially when you consider all the measures which were supposedly designed to boost growth.
QE1, QE2, TARP, ZIRP, stimulus (think Solyndra & Fisker, not roads & bridges). Failure & wealth transfer have resulted.
Perhaps the most economically impactful “stimulus” enacted so far is the payroll tax cut. Social Security payroll tax deductions were temporarily reduced from 6.2% to 4.2% in 2011. Although there will be bickering, for now it seems like the tax cut will be extended indefinitely (ignore the unsustainable long-term nature of it all, if you can).
Some economists venture to guess that the payroll tax cut (2% less taxes on all wages/salaries below a certain threshold) will contribute 1-1.5% to annual GDP as long as it remains in place.
So picture the chart to the left, without a big chunk of the recent upturn. Now picture it if properly adjusted for inflation. It’s not a pretty picture.
Conclusion: any economist that says we’re not currently in a recession/depression is trying to sell you something.
In this interview via Reuters, Mr. Rogers talks about his desire to short treasuries (eventually), which he says will be “one of the great shorts of our time”. Also discusses why he’s currently long the dollar, and why the world needs a “controlled disaster” before something much more volatile inevitably occurs.
I know. I’ll try to come up with a better one. Feel free to throw your own out there.
Seriously though, I’m actually quite optimistic these days. At least these issues are getting more attention, which means a resolution is that much closer. Definitely not selling my PMs yet, not even close. But I’m starting to think about how long the printing is likely to go on (no, it won’t be Japan, IMO).
And I’m not extremely bearish on stocks, either. I have some shorts, but for the most part it’s just really hard with the Fed gone wild/FR. Simpler/safer options like buying gold, silver, foreign-bonds. All just my opinion, talk to a pro, all that stuff. But the dollar? Yeah, very bearish on that. How could you not be? Wish I could buy yuan easily.
