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To: patron_anejo_por_favor who wrote (233532)	4/4/2003 1:53:21 PM
From: ild	Respond to of 436258

Date: Fri Apr 04 2003 13:23 trotsky (AlexG) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved well, i can explain why GDP is a useless statistic. for instance, it counts government expenditures as a contribution to economic output - while in reality they are just wasteful, a cost of business. also, US GDP is vastly overstated due to statistical trickeries like chain-weighting and hedonic indexing. it is really hard to imagine a more useless statistic. BLS's employment stats aren't much better - they fail to account for lost 'consulting jobs' for instance, and long term unemployed people simply stop being counted at all. we do in fact not know what the REAL unemployment rate is. however, the profit implosion at US corporations can be easily verified and compared to previous experiences. and the fact remains that it is the worst profits decline since '30-'32. profits are THE most important economic variable. the stock and bond markets merely reflect the reality that those profits have disappeared. of course it's true that stocks went way too high in the bubble, but this doesn't change the fact that the global deflation in stock market values ( $40 TRILLION and counting ) has no equal in the past century except the 1930's experience. and there's very good reason to believe that things will get a whole lot worse in the economy as a whole ( the never-ending 'soft patch' so far ) , as the debt bubble that has built alongside the asset bubble is far from reconciled. in spite of the fact that corporate defaults have broken ALL previous records by a huge margin for 2 years in a row in '01 and '02, the debt mountain as a whole has for the first time in a recession continued to expand at exponential rates. oh yes, those record defaults and the biggest rate cutting spree in the Fed's history are also signs that everything's well, right? i don't expect the soup kitchens either, but i won't rule them out completely. we'll have to wait and see. as for the stock and bond markets predictive abilities, well, when the stock market goes down by 20 or 30% it usually signals merely a temporary downturn that often doesn't meet the 'official' definition of recession. but you can rest assured that when stock markets plunge between 50 and 90% as they have done over the past 3 years they are signalling that something very serious is happening. the malinvetment orgy of the 1990's clearly can only be compared to its 1920's predecessor or the 1980's in Japan. and since Japan is the best representation we have for a modern-day depression, we can very likely look forward to something similar. muddling through compared to the 30's, but interminably so, as government and central bank intervention drags the downturn out ( it is already doing so ) . note btw. that the profit warnings from corporations continue unabated, the unemployment claims just made a new high for the move, and both manufacturing and services ISM just reported falling back into contraction - exactly as has happened in Japan post bubble. you get a quarter or two of inventory related expansion, and then fall right back into recession again. we will see just HOW bad it gets,l but i would guess much worse than most people expect.