Chris Martenson

This blog post is an example of the daily writing I do for enrolled members in the In Session forum area.  I wanted to get this one out to everyone because it deserves to be widely read and discussed.  If you are interested in reading and discussing news in real-time, I invite you to consider enrolling.

GDP:  More fuzzy numbers

The GDP report was released this morning and it was a compendium of incomprehensible and illogical numbers and, worse, it is just plain wrong.

Of course, since so much rides on an accurate assessment of our true economic state of affairs, it behooves us to make sense of it as best we can, understanding that the GDP report is less than perfect and riddled with difficult-to-rationalize statistical manipulations and quirky additions.

For example, the imputed value of "owner occupied housing" is a non-cash ‘addition’ to GDP meant to capture the value that people derive from their houses, due to the fact that they own them and do not pay rent to themselves in order to live there.  If this does not make sense to you, that means you are normal.

So we gamely march off into the most current GDP report, which came out this morning (Friday, July 31, 2009), mostly to expose just how wrong it is.

I originally wrote about this unpleasant fact back in 2006 in a Martenson Report entitled The United States Is Insolvent.  And today, unfortunately, the situation has only deteriorated. I want to revisit that topic because there is really nothing more onerous to the future prosperity of a country than going bankrupt. If you care about the future prosperity of the US, you need to understand this situation.

Yesterday, my jaw literally dropped when I read this statement made by Vice President Joe Biden:

From a recent In Session post:

This week, the big news is the trouble brewing at CIT group.  If you don’t know them, they are a large financial services firm, mainly providing loans and financing to mid-sized companies.

Their business model involves lending at one rate, then selling the loans to the market at a slightly lower rate and pocketing the difference.  Something like a bank, but they do not leverage their loans off of deposits.  Of course, I am simplifying the business model of a very large and diversified company.  Suffice it to say that the way the securitization market has been operating, and with the cost of capital climbing the way it has, their business model has gone to heaven.  It has shuffled off the mortal coil. 

At any rate, things have not looked good for a while.  This is one of the more horrid-looking charts you will ever see…