To an economist, the economy can bear no recession. In times of heavy central bank activity, an economy can never be in recession. Those appear to be the only dynamic factors that drive economic interpretation in the mainstream. And they become circular in the trap of just these kinds of circumstances – the economy looks like it might fall into recession, therefore a central bank acts, meaning the economy will avoid recession; thus there will never be recession. It requires that both the central bank will identify the recession correctly and then invent and apply the requisite “acts.”

It was never really that simple to begin with, but what happens, like now, when central banks remain in the act (monetary policy, we are told, remains “highly accommodative”) but the economy appears more and more like recession? The result is increasing nonsense and absurdity. Such as:

But Deutsche Bank AG Chief International Economist Torsten Slok has some counter intuitive advice for his most pessimistic clients: Buy.

“I frequently hear clients express very negative comments about the U.S. economic outlook, including the statement that that economy is already in a recession,” he wrote. “The irony is that if you have the view that things are really bad at the moment and we are currently in a recession, then it is actually a good idea to buy risky assets today.”

If there is “blood in the streets”, etc. The problem with that saying is that nobody ever tells you how much blood must be in the streets to actualize those sentiments; even if there appears a lot of carnage there might still be room for a lot more. In fact, this happens far more than you think. For economists, they will first tell you that such blood-letting is impossible before being forced to admit it’s there only to suggest there will be no more.

That makes past denial relevant as if in court admissibility of prior bad acts. In Mr. Slok’s case, you can go back to the summer of 2014 when he suggested that stocks would go up until there was recession (ironically, the title of that post in 2014 was Deutsche Bank Economist: ‘Buy Equities’):

I believe the stock market will continue to go up until we get a recession. And we are nowhere near entering a recession. Recessions happen because of a bubble bursting in capex (as we saw on 2000) or because of a bubble bursting in consumption (as in 2008) or when monetary policy is too tight, i.e. when the fed funds rate is well above its neutral level. None of this is happening at the moment. If anything, we are seeing too little capex and consumption.