Nothing To See Here

GDP declined over the fourth quarter of 2012 at an 0.1% annual rate. The spin machine is in overdrive, but reality is in the process of biting. $312 billion of new debt – government deficit spending – in the quarter was unable to deliver any growth. And the stock market is up, presumably on the prospect of further Fed craziness and government spending.

Here’s the spin:

It’s “the best-looking contraction in U.S. GDP you’ll ever see,” Paul Ashworth, chief U.S. economist for Capital Economics said in a research note. “The drag from defense spending and inventories is a one-off. The rest of the report is all encouraging.”

Yes, and this is a good-looking pig:

Don’t be fooled, or encouraged, this is serious. It means that the whole QE  program is a failure, regardless of a bit of defense spending more or less, because it has failed to “encourage” the private economy, leaving growth in government spending the only source of growth. And that government spending comes at the cost of increased borrowing. As soon as debt grows faster than GDP, you are done, it is just a matter of time. And the US is done.

The biggest joke is Amazon, which turned in very poor results overnight but is up 7% as I write, the short squeezers being busy, no doubt.

Edit: The word from the Fed is in. It’s the weather. Oh please.

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