By plant, I mean an insider who's job is to spread sunshine where darkness presides. The economy is on the brink of the biggest recession since late 70's and he's still trying to convince us all is well. Can he be sincere? I like you Norm. Your never rude and always professional. I still think its very possible you work for BBT and are either full of it or deliberately trying to sway public opinion.
"consider yourself enlightened."
Per Standard and Poors, 2009 operating earnings and dividend payments for the s&p 500 were $60.80 and $22.31 respectively.
With a p/e of 123, your chart implies that s&p 500 earnings were around $5. Earnings were definitely down in 2009 from their prior peak by maybe 25% but they were definitely not down 90% plus as your chart implies. Your chart perhaps includes massive writedowns of goodwill and intangibles and restructurings which makes the data meaningless.
I am not enlightened by your chart. What I have concluded is that your mind set is common among investors. Lack of fact drives fear resulting in bad investment decisions over the long term.
"In 2009 the PE average on the SnP 500 got over 100 as there was no E. You need a chart?"
S&P 500 dropped to around 700 in 2009 so Inlet says that S&P 500 earnings dropped to $7 and rebounded to $95 in 2011. News to me. Please enlighten me and show me the data.
Evidently unlike you I don't spend a lot of time poring over Government #s. I just try and get the big picture right and consider the monthly #s mostly noise. I may take a look 2 or 3 times a year, but believe because of all the revisions it is better to let the numbers age a bit before including them into my big picture.
Sorry if I confused you - but the "aussie's" chart is a total of personal and corporate debt (including mortgage debt of around 13 trillion). Unless there is a reason to ignore corporate and mortgage debt I will go with the aussie's chart. Like I said earlier personal debt is slightly more than GDP of around $14 trillion.
Throw in the Federal govt's debt and you are near 360% of GDP. This does not include something over $100 trillion in Social Security and Medicare future obligations. Throw in state and local government debt and you are well over 400% of GDP (probably close to 500%).
I looked at Mortgage debt 2008 vs latest 2011 data and you can see the impact on that from all the foreclosures. It appears to me that possibly 50% of any personal debt reduction is possibly from reduction in mortgage debt due to foreclosures.
Try and spin it any way you want the USA has a terrible debt problem and there is no way the government or the FED can fix it. The system has to be cleansed - and that is going to take years.
BTW - this is my OPTIMISTIC outlook.
The chart you showed, consumer debt to gdp peaked at 300%. So the chart implies that consumer debt is about $45 trillion. The Federal Reserve reports consumer debt at $2.4 trillion at 6/30/2011. Entire loans outstanding for the entire US banking system only total $6.7 trillion.
So who do you believe? Some guy from Australia who says US consumer debt peaked at $45 Trillion or the Federal Reserve System who says it's 5% of that amount? My money is on the Fed. Apparently, you place great faith in the aussie.
Regarding Japan, the nikkei 225 had a p/e close to 100 in 1990 when their market tanked. Our p/e has averaged around 15 or so. Currently, it's around 12 times earnings.
Look I don't mean to be overly critical but come on now, Inlet, you need to be able to differentiate reality from baloney.
As to deflation - it is about more than housing prices.
I personally have lost more in interest income since 2008 than the decline in my house (using 2008 levels as a benchmark). Deflation is also about the return on your riskless investments. And the FED has told us this will continue for another two years (at least).
So yes deflation will continue - the FED has told you so as they take your money with exceedingly low interest rates.
A picture is worth a 1000 words (of course with deflation that may be 500 words now - so here is 2 pictures):
I find it hard to look at these pictures and not believe we are following the same path as Japan.
Sorry I was wrong about consumer debt to GDP - it is 260%+ of GDP (not even close to GDP) and a chart shows that the decline (after years of parabolic rise) is marginal:
You wanted a longer view, I am giving you a longer view - not just recent data points. You are right the trend is clear.
As to deflation - after 50-60 years of piling debt on top of debt a cleansing will not happen within a few months or even a couple of years, but it will take many years. After over 20 years Japan has still not resolved their issues and the Great Depression took a long time and a lot of deflation to cure the excesses of the past.
I stand firmly behind my statements because history tells us what is likely to happen. It may not repeat exactly, but it sure as hell will rhyme.