{"id":16922,"date":"2016-01-26T14:12:51","date_gmt":"2016-01-26T19:12:51","guid":{"rendered":"http:\/\/olduvai.ca\/?p=16922"},"modified":"2016-01-26T14:13:50","modified_gmt":"2016-01-26T19:13:50","slug":"why-dip-buyers-will-get-clobbered-the-us-economy-isnt-doing-just-fine","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=16922","title":{"rendered":"Why Dip Buyers Will Get Clobbered: The US Economy Isn\u2019t Doing \u201cJust Fine\u201d"},"content":{"rendered":"
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Why Dip Buyers Will Get Clobbered: The US Economy Isn\u2019t Doing \u201cJust Fine\u201d<\/a><\/h3>\n

As of\u00a0June 2008 no Wall Street banking\u00a0house was predicting a recession,\u00a0yet by then the Great Recession\u2014\u2013the worst economic downturn since the 1930s\u2014\u2013\u00a0was already six months old, as per\u00a0the NBER\u2019s subsequent official reckoning.<\/p>\n<\/header>\n

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Actually, it was already\u00a0several years old if you concede that the phony housing boom of 2005-2007 was generating merely\u00a0transient\u00a0\u201cstatistical\u201d GDP, not permanent gains in main street wealth.\u00a0Even the movie houses now\u00a0showing \u201cThe Big Short\u201d have some pretty palpable\u00a0reminders on that point\u2014\u2014not the least being the strip club dancer who owned 5 residential\u00a0properties, with two\u00a0adjustable\u00a0rate mortgages on each.<\/p>\n

In fact, by then main street America was crawling with strippers. That is, equity strippers who were repeatedly doing \u201ccash out\u201d refinancings in order to generate between $20,000 and $100,000 or more of mortgage\u00a0proceeds to spend on vacations, cars, man caves, aspirational leather goods,\u00a0shoes\u00a0and apparel, among much else.<\/p>\n

At the peak in 2006-2007, upwards of 10% of personal consumption expenditures were accounted for by MEW (mortgage equity withdrawal). The utter unsustainability of that kind of Potemkin prosperity goes without saying, but the point here is that it was no deep dark secret buried in the economic entrails.<\/p>\n

In fact, Chairman Greenspan went\u00a0to great lengths to publicize the facts of MEW on an up-to-date basis. But he wasn\u2019t trying to warn that the end was near.\u00a0Unaccountably, he and his Wall Street acolytes concluded that the US economy had become virtually\u00a0recession proof because of the extra firepower being accorded to household consumption by MEW!<\/p>\n

\"MEWQ42014\"<\/a><\/p>\n

In short, the\u00a0economic booby trap of MEW was hiding in plain sight and so was the Great Recession. Yet\u00a0there was nothing at all unusual about the 2008 recession call miss.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Why Dip Buyers Will Get Clobbered: The US Economy Isn\u2019t Doing \u201cJust Fine\u201d As of\u00a0June 2008 no Wall Street banking\u00a0house was predicting a recession,\u00a0yet by then the Great Recession\u2014\u2013the worst economic downturn since the 1930s\u2014\u2013\u00a0was already six months old, as per\u00a0the NBER\u2019s subsequent official reckoning. Actually, it was already\u00a0several years old if you concede that […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[5979,2120,303,305,353,11966,11965,11251,841,860],"class_list":["post-16922","post","type-post","status-publish","format-standard","hentry","category-economics","tag-contracorner","tag-david-stockman","tag-fed","tag-federal-reserve","tag-gdp","tag-nber","tag-personal-consumption","tag-the-big-short","tag-us-economy","tag-wall-street"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16922","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=16922"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16922\/revisions"}],"predecessor-version":[{"id":16924,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16922\/revisions\/16924"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=16922"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=16922"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=16922"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}