nvm

[EnglishEdward]

Count two.

Count three.


The economy cannot grow much because it has run into energy supply limits.

And giving government money to all the gamblers (of other people's money)
who lost so that they can pay out the gamblers (of other people's money)
is having a previously unimaginable impact on genuine long term investment.

These gambling people simply refuse to invest long term unless they have:
(a) someone else's money i.e. government money (b) a guaranteed profit
and (c) opportunities to enrich themselves immediately on derivatives.

So the necessary massive investment needed in alternative energy is stalling.

 

[mrt144]

Count 4.

Why can't our government spend the way out of this? Global consequences, that's why.

 

[PiMan]

That's great! And how many of you are actual economists, not just hobbyist economists on a forum? I know I have no qualifications or professional experience in the economy.

 

[mrt144]

That's great! And how many of you are actual economists, not just hobbyist economists on a forum? I know I have no qualifications or professional experience in the economy.

How many "actual" economists accurately called a spade a spade during the bubble?

I'll do you one better...

How can you trust someone like Bernanke and Paulson on objective analysis and penetrating knowledge of the economy to be "right" when in 2007 they said Sub-Prime was "contained." Or that they called bottom before? And how about the Japanese...When did they actually hit bottom or all they still there?

I don't need to be an "actual" economist (I am studying economics as my major in college FWIW) to read a chart or table that is used as evidence of bottom to know that it's mostly second derivative backsliding BS.

 

[mrt144]

April 20th, 2007 – Paulson: "I don't see (subprime mortgage market troubles) imposing a serious problem. I think it's going to be largely contained." , "All the signs I look at" show "the housing market is at or near the bottom,"

May 17th, 2007 – Bernanke: “While rising delinquencies and foreclosures will continue to weigh heavily on the housing market this year, it will not cripple the U.S.”

October 15th, 2007 – Bernanke: "It is not the responsibility of the Federal Reserve - nor would it be appropriate - to protect lenders and investors from the consequences of their financial decisions."

May 7, 2008 – Paulson: 'The worst is likely to be behind us,”

July 20th, 2008 – Paulson: "it's a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation."

September 19th, 2008 - Bernanke: "most severe financial crisis" in the post-World War II era. Investment banks are seeing "tremendous runs on their cash," Bernanke said. "Without action, they will fail soon."

Only when . .. .. .. . really hit the fan did they go all "OMG THE SKY IS FALLING" and whip out the Treasuries Credit Card. And now, 8 months later we're to believe the worst is behind us when we heard that tune before? And now, we're supposed to think that unemployment is a lagging indicator now when unemployment feeds back into default issues on two of the most inflated bubbles, consumer credit and housing?

This recession isn't one of too much production and excess inventory then layoff and liquidation...it is much deeper than that and the deflation of credit and leverage is a long and painful process if you try to postpone it through toothless government action or even worse, government backstopping of otherwise failed institutions.

 

[PiMan]

Sounds to me like it is mostly Paulson and Bernanke who are idiots. Sucks that they were the ones with the power. In my own amateur way, I've been predicting a crash for about 5 years.

Perhaps I just have a poor perspective, since Australia has so far avoided a technical recession. I'm 20 years old and there has not been a recession here in my living memory.

 

[Mise]

I have to say I think those are fairly selective quotes... Even in 2006 there were concerns about the US housing market and subprime loans, and certainly by April 2007, the effects of those problems were already being felt, and scaring people. Paulson was and is an incumbent politician; his job is to prevent widespread panic, and put a positive outward spin on economic developments. Inwardly, in spite of Paulson's statements, I doubt he took the problems any less seriously than the journalists that reported them.

That's not to say that there weren't HUUUGE problems with the way the banking system up to 2006 and 2007 were handled by the Tresury and the Fed, though.

 

[Snorrius]

You are pretty much the only person I know who is still predicting that we haven't seen the bottom of this recession. Extended government spending is what rescued economies from the Great Depression, what's so different this time?

A lot of things, but the main think is that it was WW2 which ended Great Depression for US. Government spending is good if spent on good things, not just given to money and air traders.

And fundamental changes include most of the riskiest subprimes already absorbed by the banks.
Another fundamental change is confidence. Previously economists were saying that the worst was yet to come, which made it more likely; now economists are saying things are looking up, which makes a return to long term trends more likely.

The fundamental problem is that the whole model of economic growth which dominated since late 60s in US and later was exported to other countries is unsustainable and too ineffective in the long run.

The deficit is huge, but the US can afford it for a while yet. Any loss of trust in the US dollar as the major reserve currency will be replaced by trust in the Euro.

How is that a solution? New currency is not important. Loss of the trust to dollar will mean the end of the Treasury scheme, but which currency will take its place is another case.

Give me an estimate. This year? Next year? Ten years from now?

From half a year to two years. As you see, we will be able to testify if my prediction about Treasuries is right within foreseeable future.

 

[PiMan]

A lot of things, but the main think is that it was WW2 which ended Great Depression for US. Government spending is good if spent on good things, not just given to money and air traders.

The depression was over in the US by 1937 at the latest. In 1937 there was a second, much smaller recession, caused by New Deal spending ending too fast.

And how exactly is war good? What war does is move much production from essentials to war essentials. The general public see no benefit in war, and only a limited few companies see benefit in war.

The fundamental problem is that the whole model of economic growth which dominated since late 60s in US and later was exported to other countries is unsustainable and too ineffective in the long run.

If that were the case, then every economy that uses the US system would be in trouble, not just the ones where banks were investing heavily in subprimes and similar mortgages.
Last I checked, Australia, Poland and South Korea had all avoided a technical recession. The only three developed economies to do so and the biggest thing they have in common is well regulated banks.

How is that a solution? New currency is not important. Loss of the trust to dollar will mean the end of the Treasury scheme, but which currency will take its place is another case.

How so? The treasury existed before the US was the main reserve currency and it will continue to exist afterwards. Short of revolution or dissolution, I don't foresee the US treasury coming to a halt in any way.

From half a year to two years. As you see, we will be able to testify if my prediction about Treasuries is right within foreseeable future.

What happens to economies still avoiding recession? What happens to the emerging economic giants of India and China?

 

[mrt144]

Sounds to me like it is mostly Paulson and Bernanke who are idiots. Sucks that they were the ones with the power. In my own amateur way, I've been predicting a crash for about 5 years.

Perhaps I just have a poor perspective, since Australia has so far avoided a technical recession. I'm 20 years old and there has not been a recession here in my living memory.

Being Australian certainly has shielded you from the worst of the worst.

 

[Integral]

BREAKING: Stuff still getting worse, but less quickly

June 2009 Business Outlook Survey
Declines in the region's manufacturing sector were much less in evidence in June, according to results for this month's Business Outlook Survey. Indexes for general activity, new orders, and shipments showed notable improvement, suggesting recent declines have lessened dramatically. Indicative of ongoing weakness, however, firms reported sustained declines in employment and work hours this month. Most of the survey's broad indicators of future activity showed continued improvement, suggesting that the region's manufacturing executives are becoming more optimistic that a recovery in business will occur over the next six months.

Current Indicators Reflect Near Steady Levels of Activity
The survey's broadest measure of manufacturing conditions, the diffusion index of current activity, increased from -22.6 in May to -2.2 this month, its highest reading since September 2008 when the index was positive for one month (the index has been negative for 18 of the past 19 months, a span that corresponds to the current recession; see Chart). Firms are nearly evenly divided among those indicating increases (30 percent), decreases (32 percent), and no change (35 percent). The new orders and shipments indexes showed parallel increases this month, both rising 21 points, to -4.8 and 2.1, respectively. Although remaining negative, the survey's current inventory index rose for the third consecutive month, increasing 13 points; the index is now 40 points above its record low reading in March. The survey's indexes for delivery times and unfilled orders suggest continued weakness, however, with their negative readings showing little change from last month.

Firms continue to report employment losses and declines in work hours. The current employment index remained at a relatively weak -21.8, although it increased five points from May. Still, 31 percent of firms reported declines in employment this month; only 10 percent reported increases. The average workweek index weakened this month: It fell three points, to -26.6

Price Indexes Suggest Less Widespread Declines
Firms reported less widespread declines in the prices paid for inputs and the prices received for their own manufactured goods. Indexes for prices paid and prices received increased 10 points and 17 points, respectively, but still remain in negative territory. Eighteen percent of the firms reported paying lower prices for inputs (down from 24 percent last month). Only 5 percent reported paying higher prices this month. Over 22 percent of the firms reported receiving lower prices for their own manufactured goods; 6 percent reported receiving higher prices.

Six-Month Indicators Show Continued Improvement
Broad indicators of future activity showed significant improvement this month. The future general activity index remained positive for the sixth consecutive month and increased markedly from 47.5 in May to 60.1, its highest reading since September 2003 (see Chart). The index has now increased 71 points since its trough in December. The indexes for future new orders and shipments each improved 12 points this month. For the second consecutive month the percentage of firms expecting employment to increase over the next six months exceeded the percentage expecting declines (21 percent versus 8 percent). The future employment index improved three points. The future workweek index increased 24 points. Firms' forecast for future capital spending remains lackluster: The share of firms expecting higher capital spending over the next six months (21 percent) is nearly the same as the percentage expecting decreases (19 percent).

In special questions this month, firms were asked about the probability that they would relocate some or all of their operations out of the tri-state region over the next five years (see Special Questions). The average probability of relocating was 20.2 percent, a decline from 26.9 two years ago. The average probability of relocating all operations was 5.4 percent, which was unchanged from two years ago. Firms were also asked to rank the factors that were influencing them to leave the region. The two most important factors influencing the decision to leave were the cost of labor; and taxes, subsidies, or regulations.

Summary
According to respondents to the June survey, declines in the region's manufacturing sector diminished significantly this month. Indicators for general activity, new orders, and shipments are suggesting steadier levels of activity, in contrast with the series of continuous large declines suggested in previous surveys. Indicative of overall weakness, however, firms still reported declines in employment and the prices of manufactured products. A growing number of firms expect conditions to improve over the next six months, and for the second consecutive month, more firms expect to expand employment over the next six months.

GREEN SHOOTS BABY

 

[mrt144]

BREAKING: Stuff still getting worse, but less quickly



GREEN SHOOTS BABY

I guess actual goodness will be old growth Sequoias right?

 

[Snorrius]

The depression was over in the US by 1937 at the latest. In 1937 there was a second, much smaller recession, caused by New Deal spending ending too fast.
And how exactly is war good?

At those time US economy was akin to Chinese now: it produced a lot of staff, and sold a large share of it abroad. During Depression world trade plummeted, so a lot of people lost jobs etc. During World War II European industry was hit hard, so the road for USA to ensure its industry growth, create new jobs etc was granted. Economically USA was the main winner of WW2.

What war does is move much production from essentials to war essentials. The general public see no benefit in war, and only a limited few companies see benefit in war.

It does not applicable in this case, because they produced a lot of war essentials for export, and it does not important what is produced if it sold abroad.

If that were the case, then every economy that uses the US system would be in trouble, not just the ones where banks were investing heavily in subprimes and similar mortgages.

You've got this right. The whole world will be hit pretty hard.

How so? The treasury existed before the US was the main reserve currency and it will continue to exist afterwards. Short of revolution or dissolution, I don't foresee the US treasury coming to a halt in any way.

Well, obviously US government can try to sell their treasuries until second coming, but if there are no buyers in the world for them, it de-facto means that treasuries scheme collapsed.

What happens to economies still avoiding recession? What happens to the emerging economic giants of India and China?

I would what will happen with all the world if current finance system fall apart? You can find some clues in the fall of SU when economy ties between former republic were severed abruptly. In short - nothing good, though China has obviously better prospects than India.

 

[Theige]

Sounds to me like it is mostly Paulson and Bernanke who are idiots. Sucks that they were the ones with the power. In my own amateur way, I've been predicting a crash for about 5 years.

What makes Bernanke and Paulson idiots? They helped prevent the recession from really becoming bad, and possibly becoming a depression. They massively reworked the financial sector, working extensively with the private sector to find solutions to tough problems. I don't think you could have asked for better.

The fundamental problem is that the whole model of economic growth which dominated since late 60s in US and later was exported to other countries is unsustainable and too ineffective in the long run.

How is that a solution? New currency is not important. Loss of the trust to dollar will mean the end of the Treasury scheme, but which currency will take its place is another case.

Let me guess, a Soviet model of economic growth is more sustainable and effective in the long run?

Treasuries are not a scheme. People want to own treasuries, so we provide them, and benefit substantially. And there is no question which currency would replace the dollar. The Euro will reach parity with the dollar in terms of a reserve currency, and will probably surpass it.

And the dollar will only collapse if the US gov't collapses. And I don't see that happening anytime soon.

 

[PiMan]

It does not applicable in this case, because they produced a lot of war essentials for export, and it does not important what is produced if it sold abroad.

Most of it was not sold, it was just consumed by US soldiers and the war effort in general.

You've got this right. The whole world will be hit pretty hard.

If we were actually looking at the collapse of the current financial system, then Australia, Poland and South Korea would be in trouble right now. But as said, last I heard, these are three economies saying afloat.

I would what will happen with all the world if current finance system fall apart? You can find some clues in the fall of SU when economy ties between former republic were severed abruptly. In short - nothing good, though China has obviously better prospects than India.

When you make predictions, do you do it with the bias of expecting the system to fail, or do you make at least some sort of attempt to remain neutral?

 

[Snorrius]

Let me guess, a Soviet model of economic growth is more sustainable and effective in the long run?

Soviet model has its advantages and disadvantages. It allowed to allocate resources fast for idustrializing country, for create megaprojects which only could be handle with the help of the state, for rapid industrializing of the country, for creating and providing jobs to people etc. The main problems were is inability of central planning to cope with consumer needs, lack of the modernizing, low adaptability for changing conditions in the world etc. Soviet economy should have been gradually reformed somewhere in 70s to avoid crash but Soviet leaders unfortunately were too short-sighted.

It is funny, but the root of current American troubles are also goes to the 70s when US started to downsize its industry in favour of imaginary economy. Those who blame Bernanke etc are not right. The choice was made much earlier.

Of course, there some very good points in Soviet economy which should be carefully examined by economists when the time for devising new paradigm will come. This Depression will be so hard that the American blend of capitalism may be condemned by sane nations.

Treasuries are not a scheme. People want to own treasuries, so we provide them, and benefit substantially.

Well, the proble is when people do not want treasuries anymore. Consequences will be very similar to usual route of 'Ponzi schemes', that's why I used this wording.

And there is no question which currency would replace the dollar. The Euro will reach parity with the dollar in terms of a reserve currency, and will probably surpass it.

I do not see any reasons why Euro is to be more trusted than dollar. It is based on much more fragile foundation.

And the dollar will only collapse if the US gov't collapses. And I don't see that happening anytime soon.

Why do you think the collapse of the government is the only possible reason for collapse of the fiat currency? It does not makes sense.

 

[Theige]

Soviet model has its advantages and disadvantages. It allowed to allocate resources fast for idustrializing country, for create megaprojects which only could be handle with the help of the state, for rapid industrializing of the country, for creating and providing jobs to people etc. The main problems were is inability of central planning to cope with consumer needs, lack of the modernizing, low adaptability for changing conditions in the world etc. Soviet economy should have been gradually reformed somewhere in 70s to avoid crash but Soviet leaders unfortunately were too short-sighted.

I pretty much agree

It is funny, but the root of current American troubles are also goes to the 70s when US started to downsize its industry in favour of imaginary economy. Those who blame Bernanke etc are not right. The choice was made much earlier.

I pretty much disagree, our industries were facing incredible pressure from newly industrializing nations abroad, and mainstream economic thought shows that propping up declining industries is a waste of resources.

Of course, there some very good points in Soviet economy which should be carefully examined by economists when the time for devising new paradigm will come. This Depression will be so hard that the American blend of capitalism may be condemned by sane nations.

Calling the current economic climate a depression is premature, you know this.

Well, the proble is when people do not want treasuries anymore. Consequences will be very similar to usual route of 'Ponzi schemes', that's why I used this wording.

There is nothing about US treasuries that makes them a ponzi scheme.

I do not see any reasons why Euro is to be more trusted than dollar. It is based on much more fragile foundation.

The foundation for the EU is broader, larger population, less debt, more diversified economies.

Why do you think the collapse of the government is the only possible reason for collapse of the fiat currency? It does not makes sense.

A sudden collapse won't happen is what I'm saying. A slow relative decline is far more likely. Relative because the rest of the world is catching up in development, as is expected and desired by most.

 

[potatokiosk]

It is funny, but the root of current American troubles are also goes to the 70s when US started to downsize its industry in favour of imaginary economy. Those who blame Bernanke etc are not right. The choice was made much earlier.

What is an "imaginary economy"?

 

[PiMan]

What is an "imaginary economy"?

He uses this term to refer to a services based economy. He believes that because goods aren't exchanged, only money is, that it is unsustainable and not a real economy.

 

[Whomp]

David Rosenberg of Gluskin Sheff in Canada has the economist's dozen of rules to remember.

Rosie's rules to remember:

1) In order for an economic forecast to be relevant, it must be combined with a market call.

2) Never be a slave to the data – they are no substitute for astute observation of the big picture.

3) The consensus rarely gets it right and almost always errs on the side of optimism – except at the bottom.

4) Fall in love with your partner, not your forecast.

5) No two cycles are ever the same.

6) Never hide behind your model.

7) Always seek out corroborating evidence.

8) Have respect for what the markets are telling you.

9) Be constantly aware with your forecast horizon – many clients live in the short run.

10) Of all the market forecasters, Mr. Bond gets it right most often. (Mr. Bond = bond market)

11) Highlight the risks to your forecasts.

12) Get the US consumer right and everything else will take care of itself.

13) Expansions are more fun than recessions

I'm willing to corroborate my evidence, offer my view of Mr. Bond, talk about the consumer and make a market call but this is probably not the place.

If you think it's worthy of another thread let me know since I'm always interested in conflicting views. I'm more in love with my partner than my forecast...