Blog of Drewry Morris - l'Esprit Ouvert: GDP up 3.2% in 3rd Quarter

...and we still have $589 trillion worth of derivatives in the market - that ticking time bomb that set off the first collapse. Structurally the financial system is still the same recipe for disaster as it was a year ago. We just prolonged the meltdown, and it is going to come. Why is our GDP up? Well to be honest, I would be astounded if it wasn't after the trillions and trillions the Fed has been pumping into the economy. But like a little puff of air to keep a balloon up, the trend is still downward and it is going to crash once all the air is gone (or worthless in our case).

RGDP is calculated from 4 components, Consumer Spending, Investment, Net Exports and Government Spending (RGDP = Y = C + I + G + NX). Well we know that C is down, and so is I. NX has been negative for decades, so how is it possible that the GDP is up? Well its that enormous G (government spending). When you have to rely on your government to keep GDP up, you've got a SERIOUS problem with your economy. And I thought we were screwed when C was the only thing keeping our economy moving (70% based for a while now). Now that 70% is likely to go down, and government spending could easily reach 40 or even 50% of our GDP. I fear that we may even reach 100% one day.

Do not believe the hype about the "recovery" it's all phony and not based on real economics!

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GDP up 3.2% in 3rd Quarter

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