# GDP growth 3.3% annually? Up from 1.9%? Right…

### GDP cries foul!

When the numbers emerged today I was shocked. After my initial amazement sunk in I started to wonder what was “really” going on here…

My eighth grade science teacher (yes 8th grade was a long time ago) managed to prove through statistics that I and everyone else in the class didn’t exist. Fishy indeed! If I didn’t exist according to statistics, but was still sitting in the classroom with the other student and the teacher himself then one of two things were completely incorrect. One might have been an illusion (think The Matrix)… Well, we know it was the stats because I’m sitting at my computer writing this entry.

So, if we can prove something doesn’t exist through statistics, which are really just a mathematical representation of data, can we manipulate our results through statistics?

I highly doubt that the GDP is actually positive. Take a look at shadowstats.com, which undoes as much of the governmental massaging of the numbers as possible. At the moment we are actually at about a 9% annualized rate of inflation, and GDP is negative. Wait, GDP was just shown to be 3.3% annualized… again what does this all mean?

### What recession?

We aren’t in a recession or at least that is the official figure. Of course we aren’t because to be in a recession requires two consecutive quarters of negative growth. Remember: We are in an election year! Interestingly according to shadowstats.com, we have had a negative GD since 2004.

I’m just skimming the surface and attempting to draw to your attention that what you see isn’t necessarily what you get. We are in a recession, and have been in a recession for quite some time now. However, the government wants us to believe that everything is okay, and that the economy will recover. My fear is that all this manipulation will lead to an even larger bust.

Look around you… are you seeing more for-sale signs of homes, more for-lease signs around town, people shopping less, more concerned about their jobs, etc…? These are not signs of economic growth, but fear.

### So what?

Let’s make a prediction as these are always fun. If I’m right I get to stroke my ego a bit, and if I’m wrong… well I’m wrong.

The manipulation will continue as long as possible, but the market will prevail. Once it realizes the degree of major contraction in growth and productivity people’s sentiment will further shift as it is starting to now. Spending will dry up, credit won’t be lent, defaults will further, housing will keep falling, the US stock markets will free-fall, the dollar will resume its decline, and gold, silver, and commodities will eventually resume their bull market. Wow that is a mouthful. Might I be wrong…? Of course! If I could predict the future I would own an island and call it Gauntlett.

### The election…

I’m going to go as far as to say that our markets are severely manipulated NOT by speculators, but by various government officials and policy. Going into the election with a perceived strong economy will give the incumbent’s party an edge that just might help them stay in office. We will know in November. After November the Fed won’t need to have such a loose monetary policy and might start to think about inflation and raise interest rates if the market doesn’t demand it sooner due to the risk of inflation to your savings and purchasing power. (Note: I didn’t say higher prices because what is really happening is your dollars are becoming worth less as more are put into circulation by the Fed.)

# India and China

I’m going to start a section on India and China, which I will eventually turn into its own section. For now this is mainly my mental vomit.

So, the Shanghai stock market is down about 60% for the year, China is seeing factory closures, and what will the gov’t do? If they keep money cheap China will see what we are seeing. However, to compare China’s situation to ours is foolish. We are the largest debtor nation in the world and China the largest creditor. Regardless of the depth and length of their recession the eventually outcome will be massive growth. India will be another to keep an eye on. If I were Jim Rogers I would probably buy now and hold on through thick and thin. Also, looking at my previous post I’d be a bit contrarian and buy now. However, given the global outlook, which seems to be weakening I’m going to hold off.

However, I do plan to diversify into the Yuan. From a debt analysis I’d rather have my money in Chinese Yuan than US dollars. EverBank looks to be a decent option, and the easiest at the moment shy of opening an account in China.

Any ideas here will be appreciated!

So, why is it that when we come across a investment idea that we wait until a confirmation to act? We act after a major move, get it when everyone else already has and act like sheep. Have you ever said to yourself – “I knew that was going to happen”. Sure we all have had moments of genius, and done nothing about them.

When an idea or potential action is at its infancy we hesitate for a variety of reasons. For me personally it is the fear that I might be wrong. Well, there are things to safeguard against such fears such as stop-loss orders, options, hedges, etc… Staying paralyzed does us no good as the opportunity will pass as quickly as it came.

Jumping onto the boat or making a trade late in the game might sound like a good idea. However, one must carefully evaluate if that is true. After a major move is your initial idea still valid? Has the environment changed? What is your time horizon?

Instead our ego jumps into the picture and says don’t be left behind, or I was right then so I’m still right. Then once you are in and want to be right about the direction you choose you hope and prey, but alas it is going against you. First a couple points, and then a few more. You are almost to your stop-loss (assuming you placed one) and decide to move it down a bit more. You know you need to keep it in place, but your ego jumps in again and says you were right so hold on.

Well, the more I read and also the more I understand myself the above isn’t fantasy, but a harsh reality. We all like to be right and love to feed our ego’s. If your ego is still running full-ahead (remember Titanic) – if you are saying “what ego?” or “I don’t know what you are talking about” then I recommend reading the following:

I read it and it is a start to get my ego in check, and emotions out of the markets. If you are able to see that your ego is acting on your behalf you are one step closer to knowing your strengths and weaknesses.

# The Fed’s publications

Who knew?  So, the Federal Reserve publishes all sorts of information that is free.  Yes, you can actually get soemthing for free.  Oh wait a minute of course there is a catch… You pay for it through taxes and inflation.  Guess we are back to the old saying that nothing is free.  Anyways I just ordered a bunch of publications to peruse.

Check it out here: Fed Publications