We feel it appropriate to help distribute Karl’s video response to the currently in vogue effort of the government-subsidized media to discredit those AMERICANS who question current government policy and who suspect that the economy will get worse before it gets better:

Dennis “The Recession is Over” Kneale tries to shout down Karl Denninger when Karl soundly argues that Government spending , along with the BEA’s revisions, are the main reason for the GDP growth NOT being reported at around -5.0%.  We don’t thnk Dennis was very successful…He winds up falling back on the fact that the S&P is up as “proof” that the GDP report is accurate…  What do you think?

(ht The Big Big Bet)

Karl Denninger at Market Ticker, based on his on assessment, is hitting 13 of 25 economic predictions he made for 2009, with half a year to go for more of his predictions to come true.  Since he’s shooting pretty good…what else is he predicting?  It gets pretty gloomy:

At some point reality must be faced, and we may as well do it now while we still have civil order.  Those politicians, numbering nearly all of them from both parties, who argue that this can be “avoided” or that we can “support housing (and/or asset) prices” need to be run out of town on a rail.

There is no way to prevent the unwinding of leverage when the carrying costs exceed income and the more debt we as a society take on in trying to do so the worse things will get in the end, as we are simply adding to the pile of defaults that must occur.

I am quickly running out of possible scenarios to prevent a severe deflationary depression from taking place.  By “severe” I mean 20%+ U3 unemployment, GDP contraction of at least 25%, and a possible loss of federal funding capacity leading to the immediate destruction of Medicare, Medicaid and Social Security, a 50% reduction of defense spending and near-complete-elimination of all other Federal Programs due to a “sudden stop” in the ability to fund Treasury issuance.  Yes, it could get that bad, and it could happen a lot faster than you think.

I wish there was good news – “green shoots” – that I could honestly find and report.  There are not.  There is only more obfuscation and fraud, which I have and will continue to chronicle here in The Ticker, not so much in the belief that government gives a damn, but rather so that historians have it available later and, if the collapse I believe is possible does materialize, the angry proletariat with pitchfork and torch will know where to properly direct their wrath.

Government needs to lock up the psychopaths that have run the asylum for the last 20 years and let adults into the room to rationally discuss the inevitable and how to best deal with it.  They’re refusing now, just as they did when Bush was President.  This is not a partisan debate – even having lost badly in November the Republicans are wasting time with the same old canards about “Tax and Spend” instead of attacking the problem at the root: fraudulent credit issuance, much of which they championed and enabled themselves.

Swamp Report agrees that the government is a big cause of our problem and an even bigger reason why it’s getting worse.  The current despotic government needs major overhaul before many more of Karl Denninger’s predictions come true…

CNBC’s Dennis Kneale declared the recession to be over…

then lambasted “cowardly anonymous bloggers” for jeering his declaration:

Karl Denninger, a not-so-anonymous blogger, calls Dennis an idiot, then:

OK, now on to the facts – your idiotic and utterly unsupportable “the recession is over” call.

There are two types of recessions, if you happen to know more about economics than you knew about options a year ago, when you were caught asking on the air “what’s the VIX?”

The types of recessions are inventory driven recessions, the most common, and credit driven recessions.

The last material credit driven recession was in the 1930s.  We called it the “The Great Depression.”

Recessions cannot end until the conditions that caused the recession are removed from the economy.  This is elementary logic and obvious to anyone with an IQ larger than their shoe size.

This is not about what I believe Dennis, this is about mathematical facts.  Real GDP has taken a 4.83% contraction already from consumers alone – now add into this the pass-through effects on manufacturing and service output from unemployment and the numbers are even worse.  It matters not what the government cooks up – what matters is what people actually do.

Finally, on your so-called “Golden Cross”; for it to be valid the 200MA and 50MA must be rising.  The 200MA is falling; ergo, it is a false signal.  Go look at some charts; this indicator is no better than a coin toss if the second condition, which you conveniently omitted, is absent.  Better yet, talk to a market technician that knows his butt from a hole in the ground.  I do a nightly technical video available on my forum and pointed this out several days ago.

We reckon the “debate” between government-subsidized CNBC and the “cowardly bloggers” will continue for some time, but we wonder how long the recession has to continue before CNBC must admit that it was wrong and throw poor Dennis under the bus…If we still have over 10% unemployment this time next year, can the recession still be spun as “over”… as of… now?  The clock is ticking.