(Source: Visual Economics)

What do you think about some of these healthcare costs? Share your thoughts in the comment section below or click here to stop by our new Forum.

This year is shaping up to be a better year, tradewise, than 2009. But you wouldn’t know it by looking at today’s jobless claims.

The latest data from the US Census Bureau show a bullish picture for exports and a strengthening economic position at home when compared to January 2009 data. Seems like US manufacturers are getting more aggressive now that domestic demand can’t carry the load alone.

According to the latest U.S. International Trade report:

“In January, the goods and services deficit increased $0.4 billion from January 2009. Exports were up $18.7 billion, or 15.1 percent, and imports were up $19.1 billion, or 11.9 percent.”

The numbers reflect across the board increases from 2009 in exports for Industrial Supplies/Materials ($7.0 billion), Automotive ($3.4 billion), Consumer Goods ($2.1 billion), Foods/Feeds/Beverages ($1.7 billion), Capital Goods ($1.6 billion), and Other Goods ($0.4 billion) ─ all bullish signs for US industries.

Services exports also increased, from $2.7 billion in January 2009 to January 2010.

As the charts indicate, although exports showed a slight decline in the month of January (0.3 percent), imports fell even more (1.7 percent). Stronger net exports contribute to a rosier GDP and a smaller the trade deficit is bullish for the dollar.

The bad news is that we aren’t seeing any corresponding strength in employment as jobless claims remain high with no relief in sight. Thus, US companies will continue to attack foreign markets in the quest for revenue growth.

The AP has reported that violence broke out in Greece during a “Crisis Rally” of 50,000 people in Athens. The rally consisted of Greek citizens who are not happy with the prospective government cutbacks needed to fix their economy.

Seriously? This is like receiving free gifts, then biting the hand that feeds once the gift-giver must stop giving.

This weekend in Business Week I read an excellent overview of the Greek-Germany issue. Basically, Germany and Greece are using the same model the US and China have used to create a trading relationship based on artificial demand.

In the case of Greece, Germany has lent them tons of money to help create a stable economy (i.e., a dependable customer for Germany’s finely tuned export machine). In classic irresponsible fashion, the Greek government has used this money for projects and programs which lose more money than they make. Now, Greece’s debt-to-GDP level has skyrocketed to double-digit levels which are completely unsustainable.

Should we feel bad for the Greeks or Germans? Without Germany’s money, Greek citizens would not have had the projects or programs they now do not want to forfeit. Do they have a genuine grievance with the financial repo man?

As US citizens, we can relate to the Greeks. We have borrowed heavily from the Chinese (and others) to inflate our standard of living. Now, we are transferring the burden of our choices to the younger and future generations of US citizens. We are taking the pain. It’s not tasty, but it’s the meal we set on the table.

How would the world react if tens of thousands of US citizens took to the streets of the US in violent protest to the financial reckoning to which we fully subscribed? The Greeks are acting like heroin addicts on Intervention who go kicking and screaming to rehab. Yes, withdrawal hurts. But at some point it’s time to sober up from the long and zany trip on which debt addicts have been for far too long.

I was in Greece last year. I love Greece. I look forward to returning. The people were friendly and the culture embraces a zest for life. Like us in the US, I hope the Greeks can look in the mirror and start to realize they are not victims — they are the willing other half of an unhealthy symbiotic relationship.

What are your thoughts on the Greek protests and global debt issues? Share your thoughts in the comment section below or click here to join the discussion in our new Forum.

Here are direct links to our favorite articles which we think you should highly consider reading.

Without further ado, jump on board the Bullet Train …

GDP Minus Inventory Restocking is Flat by Prieur du Plessis at Investment Postcards

Market Sentiment Overview for the Week by Babak at Trader’s Narrative

The Sick Men Of Europe: The Definitive Guide To The European Crisis by at Zero Hedge

How Politics Caused Fiscal Disaster by David Stockman at Minyanville

Long/Short Hedge Funds: Lowest Net Long Exposure Since May 2009 by Jay at Market Folly

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Tyler Durden at Zero Hedge submits the best new country block on the block: “With every Tom, Dick and Harry convinced they can take on Goldman’s Jim O’Neill and come up with a wittier, edgier, Gen Y/Z BRIC equivalent, Zero Hedge has decided to join the fray. We present the STUPIDs: Spain, Turkey, UK, Portgual, Italy and Dubai.

We admit that while the BRICs and some the other more ridiculous sounding acronyms we have seen out there recently are a gauge into various countries’ pent up “growth” potential, the STUPID index is merely a countdown to the inevitable sovereign debt implsion that so far has been postponed due to cash printers working on overdrive 24/7. And to make it simple for the armchair acronym specialists, since the index is in CDS, the chart will go up… but not on the pervasive permabullish sentiment.” (Source: Zero Hedge)

Michael Panzner is author of Financial Armageddon.

While most eyes were focused on the better-than-expected gross domestic product data for last year’s fourth quarter, this week’s report from the Commerce Department’s Bureau of Economic Analysis also included details on U.S. personal income.

Along with wages and salaries, dividends and interest income, this category includes personal current transfer receipts, which the BEA defines as “income payments to persons for which no current services are performed and net insurance settlements.” That is, government social benefits (and, to a very minor extent, net transfers received from businesses).

As you can see from the following graph, while the relationship between personal income and GDP has not changed all that much over the course of the past six decades, the share of income accounted for by transfer payments has jumped more than 200 percent.

The latest data also confirms that the financial crisis has played a major role in boosting Americans’ dependence — for lack of a better word — on government largesse, with the run-up over the past two years accounting for around a quarter of the relative increase since 1947.

With an ever-greater share of Americans receiving some sort of financial assistance from the government, the obvious question is how — or whether — this shift will affect the political landscape, especially when it comes to making tough choices about social programs, in particular, and public finances, in general.

If and when policymakers decide, for example, that the time is right to rein in spending and cut back on public sector borrowing, will the political will be there to see those efforts through? Or, as cynics might suggest, is a financial crash landing the only real “exit strategy” that is on the table right now?

I guess we’ll find out soon enough.

Michael Panzner is also the author of the acclaimed book:

If you are in the ring of fire, you qualify for Dante’s circles of nation-state hell. (Source: The Big Picture)

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This is a guest post by Marla Singer at Zero Hedge.

We probably can’t get more relevant commentary on today’s absolutely massive downward GDP revision than that penned today by Goldman Sachs’ Edward F. McKelvey:

This was a much larger than normal revision for the third pass on a given quarter, knocking what once was a fairly robust 3.5% bounce down to a mediocre 2.2% (from 2.8% prior to this revision). All sectors except the trade balance — a focal point of last month’s  downgrade — saw some downward revision. Revisions were particularly deep in business investment — to -5.9% from -4.1%, worth two tenths of the revision –  and in inventories (also worth nearly two tenths).

That would be those sectors that should, one would think, be among the easiest to count in the first place, especially on the second try.

Goldman is being very kind here.  Goldman started off the day with this from GS Breakfast Bytes:

GDP for Q3 (third estimate)… not much change, though risks lie to the downside.  GS: +2.8%; median forecast (of 73): +2.8%, ranging from +2.5% to +3.7%; last (Q3 second estimate) +2.8%.  The third cut on a given quarter does not usually produce much of a  change in the growth estimate. In this  case, the risks against our assumption of no change lie to the downside, reflecting large downward revisions to construction spending for August and September.  Like many others, we do not  see a meaningful probability of changes in the +0.5% estimate for the GDP price  index or the +1.3% figure for the core PCE price index.  (Emphasis ours).

It is difficult to get a more direct sense for how much mind share government bailouts (and government figures) have managed to command.  That even the most pessimistic member of the “consensus” (n=73) managed to overshoot the mark by nearly 14% and the average sailed full speed into a 27% pop-up should remind us of three things:

1. The Bureau of Economic Analysis of the United States Department of Commerce has ceased to be (if it ever was) a reliable outlet for economic data.  (Be this the result of misfeasance or malfeasance depends on the reader’s propensity to credit conspiracy theory).
2. That what passes for the professional prognosticator class these days is pathologically incapable of realistic appraisal.
3. That the largest single expression of a Keynesian “injection” in the history of Keynesians or injections (or the planet) struggled to create even the most anemic growth.  Net the double counting of stimulus funds it seems difficult to imagine even a remotely encouraging (or positive) “growth” figure could be tortured out of the economic realities that would be so plain if one but looked out the window to forecast them.

If it isn’t clear to everyone by this time that the United States remains firmly in the grips of a massive “shadow recession,” then we can only credit this ignorance with some unshakable and deeply rooted form of denial or a seriously reckless case of willful blindness.  Either way, we would like to commend the current powers that be for their tour de force performance in establishing themselves firmly both as the most masterful of bullshit artists to occupy the beltway (and that’s saying something) and simply the most economically inept (and expensive) team ever to hold national office.  The risk adjusted returns on this particular ruling clique would make the pre-dollarization Zimbabwe carry trade look attractive.

If there is a silver lining to be found here it is probably that this little experiment might finally drive a splintered wooden stake through the heart of John Maynard Keynes’ ghost (or at least irradiate Paul Krugman’s ravings to within 50 rads of his professional life).

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In 2008, I closely commented on the demise of Lehman Brothers and the hidden cancers on other balance sheets. At the time, the fraudulent real estate bubble found a poster child in Lehman investment McAllister Ranch: a three square mile development in which Lehman dropped a quarter billion dollars of loans … and the mega-community became a ghost town.

Now, a few weeks from the modern space odyssey 2010, video is surfacing that even more costly and extravagant real estate developments in China are following the Lehman model (which was probably 486 Excel sheets built by a 24-year old working 110 hours a week). Welcome to the real, yet imaginary, city of Ordos:

Ordos is a hyper modern city, full of brand new glass walled residential and commercial buildings, yet devoid of inhabitants. In its attempt to present a “growing” economy, and to “invest” its $585 billion stimulus into anything and everything, courtesy of comparable idiocy on the other side of the Pacific, China’s communist party is now ruling over ghost towns. One wonders just how many such “efficient” projects sustain China’s magical 8% growth. (Source: Zero Hedge)

So, there you have it. An entire generation has grown up and been conditioned to believe economics is the fundamental nature of reality, yet the proof continues to mount that economics is simply a wealth shifting game which does not solely enhance civilizations or lives. If the Chinese government eventually pulls a Lehman, the next chapter of history will be messy.

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