I remain convinced at this juncture that unless...

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I remain convinced at this juncture that unless something major changes in actual employment and personal income over the next three months that retail will be absolute disaster come this holiday season, and that will put the spike in the heart of those claiming “green shoots”, along with the collapse in both autos and home sales given the expiration of both “Cash for Clunkers” and the $8,000 home-buyer credit.

Both have pulled forward demand and attempted to continue the Ponzi debt-accumulation bubble of claimed “economic gains.” Neither of these programs, however, has or will produce durable changes in economic activity.

As I have pointed out repeatedly history on this point is clear: You can pull forward demand with such programs, but you cannot create true economic progress. The “Drive America” 2001 0% financing bubble urged by the Bush Administration arguably caused the failure of both Chrysler and GM by pulling forward demand and conning both firms into producing cars at a twenty million unit annual run-rate. This in turn created a need to allow 100%, 120%, even 150% “rollover” financing which took the place of 0% interest once that expired, which created monstrous embedded and inevitable losses for these firms when the consumer hit the wall on ability to pay.

If we had learned ANYTHING from the 2001-2006 debt bubble it should have been that such “programs” make the inevitable collapse WORSE.

But we learned nothing - absolutely nothing - from the mess, and indeed are instead trying to once again replicate the stupidity of 2001-2003!

It won’t and can’t work folks.

Fasten your seatbelts: The road ahead has a NASTY dip just around the corner and while there are 60 of you on this bus there is only one door, five parachutes, and the Goldman Sachs guys up front near that door are not wearing knapsacks.

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Karl Denninger | Market-Ticker (via poortaste)

Source poortaste