Quote of the Day: 'Psychological Recession'
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"Las Vegas Sands Says U.S. in a 'Psychological Recession'."
Imagine that: Executives who make their living on Americans' reliably reckless financial decisions are saying that people are too bummed out to gamble.
-Michael Santoli
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Had that been all, then nothing more would need to be said. Unfortunately, Mike kept going -- and went far astray:
Easy as it is to ridicule these efforts at uncredentialed economic psychoanalysis, there is something to the point that the prevailing consumer mood seems a good deal more dour than the known and measured economic conditions would suggest. (emphasis added)
That's a bit of a weasely hedge. Does Santoli recognize that these "measured economic conditions" are farcical?
The public certainly doesn't buy into them. Mike mentions this in his very next paragraph, but somehow misses the significance of what he cites:
Consider that the University of Michigan's consumer confidence gauge recently hit depths only registered before in 1980, at the time of double-digit interest rates and a triple-digit Dow. The NFIB's Small Business Optimism measure has plunged well below any prior low in its 12-year history.
This is not a very complex conundrum. We have two data series, and they are in direct controversy with each other. You only need to select which one you believe is more accurately describing the economic environment: The official data, or the public.
No compromise: Its either one or the other.
If you believe that inflation has been (at least until recently) contained, and that unemployment has been modest, and that growth was robust, well then, you are in the same camp as Phil Gramm, Amity Shlaes, Gerry Bowyers, Larry Kudlow and the Las Vegas Sands. The stock market -- still less than a year, and less than 20%, from all time highs -- is in this camp also. All of you therefore believe that the economy is mostly fine, and the public are a bunch of whiny bitches.
Or, you might suspect that something fishy is going on. That the public simply does not get this negative for no damned good reason, that we do not see sentiment levels down to 28 years lows on a whim. That much of the recent economic progress has been illusory, dependent upon credit, easy money, and reckless risk taking. That the official data has been monkeyed around with enough over the past decades that it simply fails to do what it purports to do.
Which do you pick -- the public or the official data?
Choose your sides . . . in this debate, there is no middle ground.
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Previously:
Whining US CEOs: Economy is "Dismal" (July 2008)
http://bigpicture.typepad.com/comments/2008/07/us-ceos-economy.html
Who is Right: Professionals or the Populace ? (June 2008)
http://bigpicture.typepad.com/comments/2008/06/whose-right-pro.html
Amity Shlaes Does Not Know What a Recession Is (July 2008)
http://bigpicture.typepad.com/comments/2008/07/amity-shlaes-do.html
Source:
The Psychological Recession
Michael Santoli
Barron's August 25, 2008
http://online.barrons.com/article/SB121944484431164987.html
Saturday, August 23, 2008 | 10:35 AM | Permalink
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Comments
Funny, I was reading this article when you posted it BR.
and the article says...
"...We now have the rare condition where typically emotional, volatile and short-term-focused Wall Street has somewhat more equanimity than the stereotypically level-headed Main Street set."
???
I am losing my equanimity when I read this line.
Talk about a bunch of wall street mafias (GS, JPM, Mad Money) using slow summer Friday to manipualte the market (sell gold, oil, use an unnamed source in Koria about a Lehman Buyout interest) -- in tandem with snakes at Treasury/Fed -- and mark things higher!
How pathetic mass market psychology has become that you have the potential of the biggest lenders/HFs in the world (FNM, FRE) being nationalized in a couple of weeks and marketss end the week on a positive note.
Or put it other way: the markets are now nationalized and hence wall street is more equanimous.
Or wall street is indeed short-term focused and emotional and there is no respect for fundamentals
Posted by: Nihilism | Aug 23, 2008 10:59:19 AM
Barry, I am going to Vegas in a couple of weeks and I intend to donate heavily to the cause..
Seriously, the locals there often kick back their paychecks and I wonder how many of them HELOCED their homes in 05 and 06 and put that back in to the "local economy." That goes for us Californians too.
Anyway, you can always count on Vegas to overbuild in any up economy and if you have been their lately you know that this time was no exception.
Posted by: Rich Shinnick | Aug 23, 2008 11:15:31 AM
I wish my psychological would receed
Posted by: DavidB | Aug 23, 2008 11:28:28 AM
Not only a psychological recession for Vegas hotels...
In an earlier post a question was asked of Barry what he thought of the future in commercial real estate...didn't see his answer but this might be of help..
http://www.chicagotribune.com/business/chi-fri-brf2-hotels-aug22,0,7344785.story
Not talking about malls here..
Bruce in Tennessee
Posted by: Bruce | Aug 23, 2008 11:56:46 AM
I guess the phony government CPI and GDP stats are going to keep being published and taken seriously by the main stream press as they are now constituted until some high profile personage loudly declares that the BLS has no clothes on. I wish I knew who that will be.
Posted by: Dr. Waterbury | Aug 23, 2008 12:37:39 PM
The average Americans paycheck is lower now than it was in 2000. That's the poll there interested in and it aint going up!
Posted by: Pat | Aug 23, 2008 12:43:18 PM
Maybe Santoli should invest an hour watching the next airing of Bill Moyer's PBS show last night which took a look at the current state of the (so called) middle class in Denver as the Democrats (or should I say Republican-lites) prepare to open their convention there.
He might find it interesting to see what real reporters do. You know, talk to real people; that sort of thing.
Posted by: Al Czervic | Aug 23, 2008 12:52:24 PM
Damned "Whiners" caused another bank to collapse.
"Aug. 23 (Bloomberg) -- Columbian Bank and Trust Co. of Topeka, Kansas, was closed by U.S. regulators, the nation's ninth bank to collapse this year amid bad real-estate loans and writedowns stemming from a drop in home prices."
Obviously, these banks are simply not reading the right data points or they would still be in business.
Posted by: Winston Munn | Aug 23, 2008 1:01:30 PM
Sheldon Adleson is a GOP genuflector who's made a huge bet with the public company he runs on the whims of the Chinese dictators with regard to providing travel documents to Macau.
How those newly tightened restrictions are devastating his revenue numbers isn't psychological, and his Grammism is obsfucating this. In psychology that's called it 'Projection.'
His and other Grammanistas' warped psychological picture is this: Bush gave us tax cuts for the rich therefore the economy MUST be doing great.
This neurosis is best seen in the big-lie GOP media message "We must re-authorize the Bush tax cuts since the economy is doing so well."
Posted by: VennData | Aug 23, 2008 1:02:54 PM
Here’s the skinny, we’ve all been burned by blatant lies and rumors. The Lehman rumor today was the most obvious. What I’m proposing is a Tickerforum Class Action Fund. We all know that these asshats are not going to be prosecuted criminally, so what we need to do is hit them where it hurts.
Here’s what we need.
1) A Bright young Attorney looking to make a name for themselves.
2) Cash to pay them while they’re hammering out multiple Class Action Lawsuits
3) Documented Injured parties.
I’m ponying up $100.00 this evening for it. That’s a lot for me right now, but this is something I believe in. I honestly believe this is the only way we can get the markets to a level playing field again.
If anyone knows of an attorney or law student willing to get involved, please post. If you can provide a donation for the legal fund, that will work too.
If we can make this work, we can make a difference.
http://market-ticker.denninger.net/archi....
Posted by: Support FedUpUsa | Aug 23, 2008 1:07:37 PM
A few anecdotal items from Cape Cod:
Last year, ATM daily withdrawals at local bank branch were $9k, this year $11k - people maxed out on credit cards, have to spend cash?
Local Post Office - last year was busy all afternoon, this year dead. Staff was cut from 4 to 3.
High-end Bed and Breakfasts - bookings down, cancellations because "we just can't afford it this year".
Medium-end and low-end (is there such a thing on the Cape) restaurants, shops, and accommodation doing fairly well. People are more price-conscious. Those with low(er) cost of operations will survive.
Posted by: Mind | Aug 23, 2008 1:12:14 PM
No question that the economy is in worse shape than the official government numbers would suggest. But at the same time, I think that if the public believes that the economy is as bad as it was in 1980, then the public is wrong.
The obvious explanation for sentiment being as bad as it was in 1980 is simply that BY COMPARISON with the recent stretch (2003-2006), the economy isn’t looking so good. But in comparing a “snapshot” of the economy today with a “snapshot” of the economy in 1980, the economic data (whether the real data or the government data) is considerably better now than back then.
Posted by: DL | Aug 23, 2008 1:31:30 PM
I. While the US gov't encourages people to "shop" - spend, spend spend, without any regard for the future, the Chinese gov't may be restricting ability of Chinese to waste cash and maybe even (oh, no, what an evil thing to do!) encourage them to save $$$ instead! Too bad for Sheldon, Steve, and the rest...
II. take a sample of 1000 US residents. for 900+ of them, the real earened income is lower than 9 years ago; stock holdings are lower than 9 years ago; for those who bought a house in the last 4-5 years, it's now worth less than what they've paid for it. So, the incomes are lower, the "wealth" has been deminished. Now compare gas prices, food prices, health insurance prices today and 9 years ago. Anyone wants to gamble more?
III. Of course, of that 1000 people sample there's probably 95 out there there who are GOOG engineers, and oil field workers, and maybe lucky house "flippers" who are a lot better off than before, but they're too smart or too busy to gamble...
IV. And finally there are the remaining 5, among tham scam-artists (Mozillo), idiots with golden parashtes (Stan O'Neill, Chuck Prince), and speculators of all kinds (Goldman, Renaissance Fund, Boone) and investment bankers - who are probably 10x better off than 10 eyars ago (thanks to the low rates, easy credit, crazy speculative bubbles.) Will they "carry" the economy?
Posted by: b_thunder | Aug 23, 2008 1:41:36 PM
The numbers are hedonic crap. What we need is to simplify.
Add college graduates of last 30 yrs then divide by good paying
jobs that last longer than 2 yrs.
Posted by: John Thompson | Aug 23, 2008 1:42:53 PM
do not wait for help from european consumers ; the french cafés and restaurants have just announced today a shock : july and its tourism was bad of 10 to 20 % ...
Posted by: thomas | Aug 23, 2008 1:45:31 PM
"I think that if the public believes that the economy is as bad as it was in 1980, then the public is wrong."
I disagree. I did fine in 1980 and this decade has truly been the lost decade. Worst economy of my lifetime, period.
Health care and retirement security were fine, today they do not exist and have been stolen.
Posted by: me | Aug 23, 2008 1:45:42 PM
The mood of the public has been (over) elevated from participating in the single largest financial bubble in the history of humanity. Anything less than bubbly will have the public feeling bummed out. Things will continue to get worse and the public is going to get depressed.
We need to solve this symptom immediately. Our government needs to develop a taxpayer funded program to dispense anti-depressants to all people residing in the USA. Voila! Symptom solved. (Never mind the new problems created.)
Posted by: Steven | Aug 23, 2008 2:13:20 PM
What the cadre of sunny perma-bulls STILL to understand is that most Americans who had been living on easy credit are getting the sense of reality slapped on them in a big way that the party is OVER until incomes rise again for the rank in file.
The reason they fail to understand this is because most of them don't know or hang around with the average American, so they think everything is just fine because everyone "they know" is doing just fine. They're simply out of touch and dare I say "ELITIST"?
Posted by: Jeff M. | Aug 23, 2008 2:15:32 PM
VennData:
Glad to know I was correct in thinking that Adelson owns the Sands. The GOP does what Adelson wants. He's the money behind Freedom's Watch(Altough it seems to be faring poorly because Adelson is too controlling for the wingnut welfarians he employs there). The Republicans are going to get their butts kicked this November if the Democrats run on the economy and the Republicans have no one to blame but themselves.
Posted by: Joe Klein's conscience | Aug 23, 2008 3:35:29 PM
Well my business of 30 plus years is stinking up the joint. I just got my property taxes on various properties and they went up by 30 plus percent.Combined with utilities going parabolic and incresed user fees everywhere I can see why people are retrenching. These guys sounds as delusional as our politicians on their ivory hill.
Posted by: moonoverseattle | Aug 23, 2008 3:48:48 PM
Mystical healing is needed, now more than ever. Keith Busby is available.
Posted by: Michael Fowke | Aug 23, 2008 4:52:50 PM
If the Fed is not effectively managing liquidity, regulating banks to ensure their solvency and the adequate availability of credit to businesses and consumers, I am not sure the Fed is functioning as a central bank.
I do know Ben and his friends will enjoy some good food and fine conversation in Jackson Hole.
Peter Morici is a professor at the University of Maryland School of Business and former Chief Economist at the U.S. International Trade Commission.
This guy gets it; I.E. When you aren't in the driver's seat you are out of control.
Science fiction writers have been postulating since the sixties that the world of the "future" would be run by corporations while a facade of democratic government was what the people saw. Some of these books were pro and some con on the "rule by corporation" theme. Well, it's here, folks. It's not just the lack of money that has people down; it's the obvious impotence of our political leaders. Wind-bagging it just doesn't cut it for people anymore. People can take bullshit for a long time but then they come to a place where they'd rather fight than continue business as usual. This is where we're at. The corporations are spinning faster than a hard disk but the people aren't buying it. The crumbs from the table (stimulus package) are perceived as an insult, not a balm.
If only the greed of those on top could get tempered by prudence, we might save our country from poverty, slavery and anarchy. We'll see.
The question is: If the powerful, wealthy 1% who have the most to gain by living in a healthy, vigorous economy with high employment, adequate safety nets and well cared infrastructure don't give a damn about our country, why should we?
Posted by: AGG | Aug 23, 2008 5:16:41 PM
SIGNS OF HARD TIMES
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Example: If you currently have 10,000 Rollover Minutes and you change to the Nation 700 with Rollover plan, you can only carry over 700 of your current Rollover Minutes to your new rate plan,
and will have relinquished 9,300 minutes.
Do you want to continue with your rate plan change? If you submit, you agree to relinquish your excess rollover minutes.
Posted by: Brer Jacob | Aug 23, 2008 5:19:26 PM
Much of the government "data" we get is massaged and manipulated to give the illusion of prosperity. Nothing is more important to those in power than to retain power. Who're you going to believe; our data or your lying eyes? Unfortunately for them, people are beginning to figure out that all is not as they have been led to believe.
Posted by: SteveC | Aug 23, 2008 5:27:22 PM
Steven:
"In its study, the U.S. Centers for Disease Control and Prevention looked at 2.4 billion drugs prescribed in visits to doctors and hospitals in 2005. Of those, 118 million were for antidepressants.
Between 1995 and 2002, the most recent year for which statistics are available, the use of these drugs rose 48 percent, the CDC reported." (about 7% per year.)
In other words, as of today more than 214M prescriptions are written every year in the US for anti-depressants and mood elevators.
"The number of American adults is about 230 million" NYTimes, 2008 BuLaborStats
Then at any basketball game you attend,
the guy to your left is on happy pills,
the guy on your right is on happy pills,
the guy in front of you is on happy pills, and the poor slob behind you is holding a home-made shank, talking in his head with his imaginary friends when to plunge it into your back to stop your shape-shifting.
Then add to happy prescriptions, the Red KoolAid you get for free on the Hallibani James Jones Memorial Happy Neo's Network.
Posted by: Brer Bear | Aug 23, 2008 5:39:54 PM
