Dr. Doom Has Some Good News
From the Atlantic:
Nouriel Roubini, the New York University economist who accurately forecast the bursting of the housing bubble and the resulting economic contraction, has become famous for his pessimism—he has been the gloomiest of the doomsayers. Which is what makes his current outlook surprising: Roubini believes that the Obama administration’s policy makers—and especially the much-maligned Tim Geithner—have gotten a lot right. Pitfalls may still abound, but he is now projecting an end to the recession, and he sees growth ahead.
Dr. Doom Has Some Good News
Image: Bruce Gilden/Magnum Photos
On March 28, 2007, Federal Reserve Chairman Ben Bernanke appeared before the congressional Joint Economic Committee to discuss trends in the U.S. economy. Everyone was concerned about the “substantial correction in the housing market,” he noted in his prepared remarks. Fortunately, “the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained.” Better still, “the weakness in housing and in some parts of manufacturing does not appear to have spilled over to any significant extent to other sectors of the economy.” On that day, the Dow Jones industrial average was above 12,000, the S&P 500 was above 1,400, and the U.S. unemployment rate was 4.4 percent.
That assurance looks bad in retrospect, as do many of Bernanke’s claims through the rest of the year: that the real-estate crisis was working itself out and that its problems would likely remain “niche” issues. If experts can be this wrong—within two years, unemployment had nearly doubled, and financial markets had lost roughly half their value—what good is their expertise? And of course it wasn’t just Bernanke, though presumably he had the most authoritative data to draw on. Through the markets’ rise to their peak late in 2007 and for many months into their precipitous fall, the dominant voices from the government, financial journalism, and the business and financial establishment under- rather than overplayed the scope of the current disaster.
With the celebrated exception of Nouriel Roubini, an economist from the Stern School of Business of New York University. At just the time Bernanke was testifying about the “contained” real-estate problem, Roubini was publishing a paper arguing that the depressed housing market was nowhere near its bottom, that its contraction would be the worst in many decades, and that its effects would likely hurt every part of the economy. In September 2006, with markets everywhere still on the rise, he told a seminar at the International Monetary Fund’s headquarters that the U.S. consumer was just about to “burn out,” and that this would mean a U.S. recession followed by a global “hard landing.” An economist who delivered a response dismissed this as “forecasting by analogy.” The IMF’s in-house newsletter covered Roubini’s talk as a curiosity, under the headline “Meet Dr. Doom.”
Roubini is thus enjoying his moment as the Man Who Was Right, a position no one occupies forever but which he is entitled to for now. As markets have collapsed, the demand for his views and predictions has soared. He travels constantly, and late this spring I met him in Hong Kong to ask what he was worried about next.
Roubini, who is 50, has a tousled look, from his curly black hair to his rumpled clothing. The initial impression he gave was of total physical exhaustion. When he spoke, at mid-afternoon in Hong Kong, he would scrunch his eyes closed tight, as if forcing himself awake, and shove his suit jacket sleeves and shirt sleeves high up from his wrists to his forearms in the same effort.
You often see this paralyzing fatigue in people who’ve recently made the flight to Asia. What was unusual in Roubini’s case is that even with eyes closed he kept emitting high-speed and complex answers, which proved on transcription to consist of well-formed sentences and logical sequences. They were delivered in an accent that is what you might imagine from someone who spent his first 20-plus years in Turkey, Iran, Israel, and Italy before going to the United States as a graduate student at Harvard. In a few cases, I later realized, the polish of his responses was because he was reciting passages from papers he had written, as if from an invisible teleprompter. But mostly he seemed to be drawing on data points and implications that were so much on his mind they could be processed and expressed even when the rest of him was spent.
The conversation was surprising in three ways: for the relatively high grades Roubini gave Treasury Secretary Timothy Geithner, generally the least-praised member of the Obama economic team; for the overall support (with one significant exception) he expressed for the administration’s response to the economic crisis; and for his willingness to look far enough beyond today’s disaster to speculate about the problems a recovery might bring. He was also full of advice about China’s reaction to the world financial crisis, including the suggestion that its options are narrower than its leaders may grasp.
Roubini’s compliments for Geithner were in the context of the intellectual and policy history of how the crash had developed and why its effects have been so severe. The dot-com and larger tech-industry crash of 2000 eliminated a tremendous amount of stock-market wealth. During the panicky sell-off of 1987, nearly a quarter of the New York Stock Exchange’s total value was lost in one day. By comparison, defaults on subprime mortgages would seem more limited in their capacity to harm the economy. Why, then, had so much gone so deeply wrong?
Roubini said that the difference was partly “debt versus equity.” That is, a loss of stock-market value is damaging, but defaults on loans, which put banks themselves in trouble, had a “multiplier” effect: “When there’s a credit crunch, for every dollar of capital the financial institution loses, the contraction of credit has to be 10 times bigger.” This was the process at work last fall, when banks that were concerned about their own survival cut off working capital to everyone else.
The more important difference between this crash and others, Roubini said, was that the speculative bubble involved so much more of the economy than the term “subprime” could suggest. “It was subprime, it was near-prime, it was prime mortgages,” he said, warming up to rattle off a long list. “It was home-equity-loan lines. It was commercial real estate, it was credit cards, it was auto loans.” The list was just getting started, and he used it to emphasize that almost every form of borrowing had been taken beyond reasonable limits, and that most forms of asset had been bid unreasonably high. And not just in the United States: “People talk about the American subprime problem, but there were housing bubbles in the U.K., in Spain, in Ireland, in Iceland, in a large part of emerging Europe, like the Baltics all the way to Hungary and the Balkans,” and most parts of the world. “That’s why the transmission and the effects have been so severe. It was not just the U.S., and not just ‘subprime.’ It was excesses that led to the risk of a tipping point in many different economies.”
Roubini’s case against Ben Bernanke and his predecessor Alan Greenspan is that they kept interest rates too low for too long—and downplayed the significance of the bubble they helped create. “They kept on arguing that this was a minor housing slump, and this housing slump was going to bottom out,” he said. “They kept repeating this mantra that the subprime problem was a ‘niche’ and ‘contained’ problem.” These were serious analytic errors, he said, of a sort that is common near the end of a bubble. “Bernanke should have known better, but it’s not really about him. It’s in everybody’s interest to let the bubble go on. Instead of the wisdom of the crowd, we got the madness of the crowd.
“So when the proverbial stuff hit the fan in the summer of 2007, [the Fed and the Bush administration] were initially taken by surprise,” he concluded. “Their analysis had been wrong. And they didn’t understand the severity of what was to come. And all along, their policy was two steps behind the curve.” He was much more respectful of the judgment that Timothy Geithner showed.
“You know, when Geithner became president of the New York Fed [late in 2003], the first eight speeches he gave were about systemic risk,” he said. (Most were about the way the growing complexity and interconnectedness of financial systems made it harder to know the real degree of risk the entire financial network was exposed to, and how far regulation was lagging behind the quickly changing realities. Most read well in retrospect.) Behind this difference in tone, according to Roubini, was a deeper contrast in belief about what the government could or should do when it saw a financial bubble beginning to form.
About the response once a bubble collapses, most economists are in agreement. Central banks around the world have been lowering interest rates to near zero and pumping new money into their economies. But could they have done anything to forestall the need to? According to Roubini:
“Bernanke, like Greenspan, had this wrong attitude toward asset bubbles. The official philosophy of the Fed was: on the way up with a bubble, you do nothing. You don’t try to prick it or contain it. Their argument was, How do I really know it’s a bubble? And even if I tried to ‘prick’ a bubble delicately, it would be like performing neurosurgery with a sledgehammer.”
The damage done in these boom-and-bust cycles, Roubini says, is greater than politicians and the media usually acknowledge. Stock-market averages eventually recover, as all buy-and-hold investors now keep telling themselves. (Except in Japan, where the main stock index stood near 39,000 in the late 1980s and is around 9,000 today.) But that doesn’t take into account the damage done to the real economy by the swings up and down. “These asset bubbles are increasingly frequent, increasingly dangerous, increasingly virulent, and increasingly costly,” he said. After the housing bubble of the 1980s came the S&L crisis and the recession of 1991. After the tech bubble of the 1990s came the recession of 2001. “Most likely $10 trillion in household wealth [not just housing value but investments and other assets] has been destroyed in this latest crash. Millions of people have lost their jobs. We will probably add $7 trillion to our public debt. Eventually that debt must be serviced, and that may hamper growth.”
Was there any alternative? Yes, if central bankers had taken a “more symmetric approach” to bubbles, trying to control them as they emerged and not just coping with the consequences after they burst. Geithner, he says, was one of those who saw the danger: “While Ben Bernanke was talking about a ‘global savings glut’ as the source of imbalances, Geithner was talking about America’s excesses and deficits. Like the Bank of England and the Bank for International Settlements, he was warning at the New York Fed that we had to be more nuanced in the approach of how you deal with asset bubbles.”
The disagreements about proper bubble management are of more than historical interest, Roubini argues, because he sees the beginnings of another bubble already in view. He was more supportive on the whole than I would have expected about the Obama administration’s financial plans. “I have to give them credit that, less than a month after they came to power, they had achieved three major policy successes,” he said. These were passing the $800 billion stimulus plan, the mortgage-relief plan to reduce foreclosures, and the “toxic asset” plan to help banks clear bad loans from their books. He said that the initial version of the bank-rescue plan was “botched, because it was rushed,” but that the later version was better. “On each of these things, you can criticize specific elements,” he said. “But they did the big things, and those are the main parameters of what is a constructive policy response. For now, you have to deal with the problem you are facing. All in all I think the policy is going in the right direction.”
But someday, the emergency will be over. Then the side effects of today’s deficits-be-damned efforts to spend money and loosen credit will become “the problem you are facing.” Roubini has been tart about the things public officials should have known and the dangers they should have foreseen three or four years ago. What, I asked him, are the decisions of 2009 that we will be regretting in 2012?
For the only time in our conversation, he sat without responding for a measurable interval. “The regrets could be many,” he began. Uh-oh , I thought. “Even the best policies sometimes have unintended consequences.” He then itemized three.
The first involved banks. Like Paul Krugman and others, Roubini had been warning that many banks were weaker than they seemed. Rather than trying to nurse them along, he said, the government should move straightaway to nationalization: “I’m concerned that we’re not going to deal with the bank problem as we should,” he said. “Some banks are insolvent. To prevent them becoming zombie banks, the government should take the problem by the horns and, on a temporary basis, nationalize them. Take over these banks, clean them up, and then sell them back to the private sector. Not doing that is one mistake we may make and regret.”
Next, “monetizing the debt.” This sounds similar to the complaint that the government is spending too much now and will regret it later on, which was the main Republican argument against the stimulus plans. Roubini’s concern is different, and mainly involves the delicate process of turning off the extraordinary stimulus measures now being turned on full force.
“The Fed is now embarked on a policy in which they are in effect directly monetizing about half of the budget deficit,” he said. The public debt is going up, and the federal government is covering about half of that total by printing new money and sending it to banks. “In the short run,” he said, “that monetization is not inflationary.” Banks are holding much of the money themselves; “they’re not relending it, so that money is not going anywhere and becoming inflationary.”
But at some point—Roubini’s guess is 2011—the recession will end. Banks will want to lend the money; people and businesses will want to borrow and spend it. Then it will be time for what Roubini calls “the exit strategy, of mopping up that liquidity”—pulling some of the money back out of circulation, so it doesn’t just bid up house prices and stock values in a new bubble. And that will be “very, very tricky indeed.”
He mentioned cautionary recent examples. The last time the Fed tried to manage this “mopping up” process was after the recovery from the 2001 recession. To minimize the economic impact of the 9/11 attacks, following immediately on the dot-com crash, Alan Greenspan quickly lowered the benchmark interest rate from 3.5 percent, reaching 1 percent in 2003. By 2004 a full recovery was under way, and Greenspan began raising rates at what he called a “measured pace”—25 basis points, or one-fourth of 1 percent, every six weeks. “That implied it would take two and a half years until they normalized the rate,” Roubini said. “And that was one of the important sources of trouble, because at that point money was too cheap for a long time, and it really fed the bubble in the housing base.” So the lesson would be, when a recovery begins, get rates back to normal, faster.
“But that is very tricky,” he continued, “because if you do it too fast, when the economy is not recovered in a robust way, you might end up like Japan and slump back into a recession. But, of course, if you do it too slowly, then you risk creating either inflation or another asset bubble.” The great difficulty of making these fine distinctions is part of the “brain surgery with a sledgehammer” argument against attempting to intervene at all.
In Roubini’s view, there is no choice but to intervene. “We have to do what’s necessary to avoid a real depression,” he said. But he added that it is not too soon to lay plans for avoiding the consequences of too much money flowing rather than too little.
Roubini had recently been in China and met officials there. We talked about the bind that the world economic slowdown had created for China’s leadership—not despite but because of its huge trade surpluses and foreign-currency holdings. Many Chinese commentators have blamed American overborrowing and excess for dragging them into a recession. But even they realize that the very excess of American demand has created a market for Chinese exports. Chinese leaders would love to be less dependent on American customers; they hate having so many of their nation’s foreign assets tied up in U.S. dollars and subject to the volatility of American stock exchanges. But for the moment, they’re more worried about keeping Chinese exporters in business. To do that, they want to prevent their currency from rising. And for reasons laid out in detail in a previous article (“The $1.4 Trillion Question,” January/February 2008 Atlantic), the mechanics of finance require them to keep buying U.S. dollars and entrusting their savings to the United States. “I don’t think even the Chinese authorities have fully internalized the contradictions of their position,” Roubini said.
I agree. But I can report that for these past six months, virtually every economic conference I’ve heard of in China and every special supplement in a Chinese business publication has been devoted to the changes the country would have to make in order to reduce its vulnerabilities.
I asked Roubini whether, similarly, American authorities and the U.S. public appreciated the contradictions in their own position. He answered by returning to the damage caused by boom-and-bust cycles and the need to find a different path.
“We’ve been growing through a period of time of repeated big bubbles,” he said. “We’ve had a model of ‘growth’ based on overconsumption and lack of savings. And now that model has broken down, because we borrowed too much. We’ve had a model of growth in which over the last 15 or 20 years, too much human capital went into finance rather than more-productive activities. It was a growth model where we overinvested in the most unproductive form of capital, meaning housing. And we have also been in a growth model that has been based on bubbles. The only time we are growing fast enough is when there’s a big bubble.
“The question is, can the U.S. grow in a non-bubble way?” He asked the question rhetorically, so I turned it back on him. Can it?
“I think we have to …” He paused. “You know, the potential for our future growth is going to be lower, because of the excesses we’ve had. Sustainable growth may mean investing slowly in infrastructures for the future, and rebuilding our human capital. Renewable resources. Maybe nanotechnology? We don’t know what it’s going to be. There are parts of the economy we can expect to lead to a more sustainable and less bubble-like growth. But it’s going to be a challenge to find a new growth model. It’s not going to be simple.” I took this not as pessimism but as realism.
135 Responses to “Dr. Doom Has Some Good News”
Guest • June 25th, 2009 at 9:26 am
fatty and skinny went to bed.fatty rolled over and skinny was dead.
Guest • June 25th, 2009 at 9:35 am
first ?!
Softwarengineer • June 25th, 2009 at 9:52 am
NANOTECHNOLOGY HAS NO CURRENT APPLICATIONAnd if it did and it replaced a good portion of the globalism’s tooling industrial base overseas using outdated old fashion reversed engineering technologies; I can imagine it would be like facing a cornered globalist rat, snarling with sharp teeth, “don’t you dare replace me”.Nope, the only short-term hope we have in America to get “jobs” back and a sustained recovery is take back the industrial base from the rat.Even fixing our infrastructure is short-term local government jobs [its no industrial base] and limited to what we dare borrow from the fed’s empty cash can, without potentially bankrupting America if/when interest rates sky-rocket. Sound horribly risky without an industrial base tax base first [taxing to death what's left working is even more ludicrous], as IRS revenue is already down 44% for 2008 [2009 will be far worse] and critically needs a boost right now. Not in ten years or so.Continuing to borrow from Social Security and Medicare/Medicaid revenue is even worse suicide.
Mark • June 25th, 2009 at 10:19 am
Sustainable growth may mean investing slowly in infrastructures for the future, and rebuilding our human capital. Renewable resources. Maybe nanotechnology? We don’t know what it’s going to be. There are parts of the economy we can expect to lead to a more sustainable and less bubble-like growth. But it’s going to be a challenge to find a new growth model. It’s not going to be simple.”The REASON it’s not simple is because it’s NOT possible!Sheesh! If you cannot find the right answer then you’ve got to ask whether you are asking the right question!Once again, I challenge Roubini and others to state what “sustainable growth” means. Reminds me of the ridiculous notion of “achieving success” in Iraq (when there has NEVER been a real definition of what “success” means)!Mark
Mark • June 25th, 2009 at 10:25 am
And all new technologies tend to require less and less people in their production.Mark
Mark • June 25th, 2009 at 10:35 am
U.S. Economy: Jobless Claims Rise in Sign Labor Market Stagnant
The number of Americans filing claims for unemployment benefits unexpectedly rose last week, a reminder that companies will keep cutting staff even as the economy stabilizes.
“Unexpectedly?” really?
Initial jobless claims rose by 15,000 to 627,000 in the week ended June 20, from a revised 612,000 the week before, the Labor Department said today in Washington. A report from the Commerce Department showed gross domestic product shrank at a 5.5 percent annual pace in the first three months of the year.
The rate of decline is worsening when you consider that as a percentage the number of lost jobs to total jobs (employed) is getting larger!And look at that GDP shrinkage! At that pace we’d halve our GDP in about 12 /2 years (by 2023)!Mark
see.clay • June 25th, 2009 at 11:03 am
its ok, just normal behavior:”Rising unemployment claims shouldn’t be surprising to investors, because unemployment usually continues to increase even when the economy is improving, said Arthur Hogan, chief market analyst at Jefferies & Co.”I seriously dont know how anyone can read any financially related press, they are full of doubletalk and spin and many times contradictory figures. The whole system seems to be based on an ever changed unit/metric so how in the fak can you ever know what is really going on?!
Mark • June 25th, 2009 at 11:15 am
Yes, you are right.Much has to do with people trying to project a trend so that they (or their business) can profit. And in some cases it’s really a close call, but in others it’s a pretty blatant abuse of the truth, which leads one to wonder how such people could be employed when there are far more honest people out there struggling to find jobs!Mark
Guest • June 25th, 2009 at 11:52 am
Whoa. Curse my lazy brain for being unable to find the best adjectives to properly describe that striking photo of Dr.a really stunning portrait of a moment, it invites a lingering study. compliments to the photog.
Guest • June 25th, 2009 at 11:54 am
Being deceptive is a tenant of getting filthy rich in the U.S. Yes, we are a synical bunch, but we need to be. Spin is all around. I’m particullarly disappointed in Obama.
Guest • June 25th, 2009 at 11:59 am
Rationalizing for the Rich: Cakewalk No MoreIn tough economic times, work for some people can suddenly become significantly more difficult. Take, for instance, the analysts and academics who have decided, for whatever reason, to devote their careers to justifying the wealth of the wealthy.In normal times, these flacks for grand fortune can waltz through their workdays with the greatest of ease. They merely invoke the prospect of catastrophic economic collapse whenever anyone dares propose anything that might leave the wealthy even just a little less wealthier.Without the rich getting richer, these shills will note smugly, we’ll have no one to create jobs or keep the stock market humming.But what can apologists for the awesomely affluent threaten after an economy has already collapsed? What do they do then? Here’s what they do: They get desperate — and even more reckless than usual. They play games with stats. They torture logic. They invent ever more fanciful gloom-and-doom scenarios.We’ve seen, over recent weeks and months, all this desperation and more.The statistical games, of late, have revolved around the rich as “refugees.”The wealthy, fans of fortune have long argued, will flee any jurisdiction goofy enough to raise taxes on high incomes. Over the last year, a number of jurisdictions have raised taxes on the wealthy anyway, and that seems to have upped the pressure on the apologist crowd to “prove” the exodus effect.Editorial writers at the Wall Street Journal made just such an attempt late last month when they jumped on a news report that one-third of Maryland’s millionaires had disappeared from the state’s tax rolls.That “substantial decline,” the Journal editorialized, demonstrates the “futility of soaking the rich.” The “fleeced taxpayers” of Maryland, the Journal asserted, had decided to “fight back.” They were leaving the state.And what “soaking” had Maryland done? In 2008, the top state tax rate on income over $1 million had risen from 4.75 to 6.25 percent.Could an increase this modest actually drive Maryland millionaires to pull up stakes and leave hearth and home behind? Perhaps. But so far, despite the feverish claims of the Wall Street Journal editorial page and similarly minded media outlets, no evidence is actually showing any Maryland millionaire exodus.The number of taxable returns with over $1 million in 2008 income, the Institute on Taxation and Economic Policy notes in a detailed analysis of the Wall Street Journal’s exodus stance, has indeed dropped. But the number of returns with income just under $1 million “has risen noticeably.”The supposed “exodus” of Maryland’s rich, in other words, likely reflects a decline in the number of Marylanders with $1 million in income. Last year, amid the Wall Street nosedive, wealthy Marylanders simply made less money.In any case, the data the Journal cites to back up the exodus claim all come from a “preliminary” report on Maryland’s 2008 tax collections. The final report won’t be out until October. Last year’s final report featured over three times more $1 million returns than the preliminary.So much for the great Maryland millionaire exodus. Ready for some tortured logic? Last week the Harvard Business Review presented a hefty helping — from University of Chicago economist Steve Kaplan.Kaplan’s Harvard Business Review contribution, entitled (Good) CEOs Are Underpaid, offers a provocative take on corporate executive compensation. The evidence, Kaplan contends, “indicates that CEOs typically aren’t overpaid.”What evidence? Paychecks for top CEOs, says Kaplan, aren’t rising as fast as paychecks for top hedge fund managers and other financiers. In 2007, he informs us, the hedge fund industry’s top 20 earned over $20 billion, almost triple the $7.5 billion combined income of the nation’s top 500 CEOs.All true. Hedge fund managers are taking home rewards that dwarf the pay of even the highest-paid CEOs. But CEOs are taking home far more than average American workers, and the gap between CEO and worker pay has increased even wider and faster than the gap between CEOs and hedge fund managers.In 1970, as Labor Institute director Les Leopold has calculated, America’s top 100 CEOs made 45 times more than average American workers. In 2006, they made 1,723 times more.Given that gargantuan gap, might a reasonable observer conclude that “(good) CEOs” have become, in the grand scheme of things, grossly overpaid? Might this same observer wonder why the University of Chicago’s Kaplan compares CEOs and hedge fund managers but not CEOs and average workers?For this choice, Kaplan offers no logical explanation. He may not have one.Apologists for grand fortune who’ve been beating the drums against the federal estate tax haven’t been particularly big on logic either. They’ve taken, instead, to spinning ever more fantastic narratives on the dangers estate taxation forces upon us.A recent report from the American Family Business Foundation, a research group bankrolled to plug away for estate tax repeal, has elevated this fantasizing to fairly surreal heights.The estate tax currently applies only to the wealth over $3.5 million, or $7 million for couples, that the wealthy plan to pass on to their heirs. Taxing this wealth, economists Cameron Smith and Douglas Holtz-Eakin argue in their new assault on the estate tax, discourages the rich from saving and investing.Smith and Holtz-Eakin, the top economic adviser in John McCain’s 2008 campaign, go on to argue that estate taxation actually encourages the affluent to waste their money on creature comforts like round-the-world cruises. By engaging in such frivolous spending, after all, a person of means “reduces his estate and lowers his estate tax liability.”In the process, contend Smith and Holtz-Eakin, wealthy people end up frittering away their fortunes instead of investing in businesses that create jobs.Citizens for Tax Justice earlier this month subjected this claim to a little reality check. To appreciably spend down their estates and avoid estate taxation, the CTJ researchers point out, the wealthy would have to make a great many purchases that have no lasting asset value. That’s not easy to do.If a billionaire buys a yacht, for instance, that yacht becomes an asset and adds to the value of the billionaire’s taxable estate. Only those purchases that have no asset value can lower a wealthy person’s estate tax liability.“Can extremely wealthy people,” asks the Citizens for Tax Justice analysis, “really spend away their millions on expensive dinners and cruises?”To pull that off, answers the analysis, deep pockets eager to avoid estate tax would have to spend their “entire estate on caviar or cruises or cocaine,” things that “won’t be around” after they die. An unlikely outcome.“We won’t say it’s impossible,” quips CTJ, “because we really don’t want emails from over-eating, drug-addicted trust fund babies arguing this point.”So what, in the end, does the growing inanity of the apologetics for grand fortune tell us? Is this inanity a sign that the days of the super rich may be numbered?Unfortunately, not necessarily. The super rich have never depended on logic or statistics or credible narratives to make the case for their dominance. They’ve depended on the political power that great wealth creates. They still have that power. They remain a formidable force — even if their flunkies do look silly.www.toomuchonline.org
Gloomy • June 25th, 2009 at 12:01 pm
“But at some point—Roubini’s guess is 2011—the recession will end.”Or 2012, or 2013, etc.By the way, what does the title, “Dr. Doom Has Some Good News” have to do with the content of the article. Maybe the good news is that there is a one in a billion chance we will get past the zombie bank problem and money printing problem. I guses one in a billion is better than nothing!
Guest • June 25th, 2009 at 12:07 pm
also from there, just for your amusement:Russian oligarch Roman Abramovich’s newest yacht, the 558-foot Eclipse, just took its first test glide out of the German shipyard that’s been busy armor-plating it. The yacht — the world’s longest private pleasure craft, by 55 feet — comes better defended than some small nations. Among the security touches in the $608-million vessel: a military-grade missile defense system, bulletproof windows, and a private submarine that “doubles as an escape pod.” Abramovich hasn’t yet revealed whether he plans to unload any of his three other yachts. The smallest of the trio stretches half the length of a football field . . .
Anonymous • June 25th, 2009 at 12:24 pm
In capitalism (more like westernism) it is winner takes it all and the devil takes the hindmost. I foresee US elite owning capital and controlling what, where, when, how much and why products are produced and how they are redistributed among the producers after a 50% tithe is taken by the owners of capital. Will the 50% tithe be enough to support 300 million? Maybe, maybe not. I might be sufficient for 10 million elite and a 90 million underclass that services the elite. It is gloomy for the remaining 200 million.
Hubbs • June 25th, 2009 at 12:28 pm
Except for health care…whereby new technologies are not labor saving. The new MRI requires more skilled technicians, sales personnel..more tests ordered means higher medical costs,the costs of earlier and better detection not withstanding. New ICU equipment and monitoring requires more highly skilled nurses…to keep patients alive longer so that the next medical technology can string them along.Medic, what say thee?
Hubbs • June 25th, 2009 at 12:43 pm
I am on a roll here. In a nutshell, it seems possible that the 21st century could in fact unwind some of the “progress” made in the 20th century. A few people can do all the manufacturing, and other necessary functions of society, so that JOBS JOBS JOBS begs the question: If there is no work needed to be done, then no jobs will be forth coming. In other words, our course will be thrown into reverse and people will have to go back to the farms. Days of the Future (in the) Past. Crazy?Who was the author of the book: End of Work as We Know It?Was it Noam Chomsky or someone who lectured years ago that humanity will be obsolete? Is he a nutcase or a respected economist/sociologist? If not, then maybe I am becoming a nutcase by reading too much of this blog! (although I like reading it…thanks Nouriel.PS: from this threads picture, I think you would make a fantastic Dracula at this years Halloween Party! I bet you would be the life of such a party! You should do it.
Gu • June 25th, 2009 at 12:49 pm
Guest, that’s just the cover story, concocted to make murder look like an accident and hide the gruesome reality that the emaciated skinny died of exhaustion from having carried fatty-cat on his back all his life.It’s a mystery story.No one has ever figured out why skinny kept on carrying fatty, and never told him “get off and walk for yourself”.
Gu • June 25th, 2009 at 1:08 pm
we seem to be missing a huge point: the gains made from division of labor and technological progress were given, and are still being given to a few at the top, instead of being spread throughout the productive – like giving all the blood to the head thus depriving the rest of the body.our ethics lags our technological knowlege. we are all supposed to have jobs by now with everybody working fewer and fewer hours as we progress. increase of leisure time for the human race is the logical course of progress, only being hindered by extreme maldistribution of the gains – gains accomplished via the cummulative, generation-spanning, community efforts known as division of labor and technological progress.
Gu • June 25th, 2009 at 1:11 pm
winner take all and the devil take the hindmost = the devil takes all
Anonymous • June 25th, 2009 at 1:23 pm
1. The administration does not propose to do anything serious about executive pay and top-level compensation for financial firms.In terms of financial stability, the imperative is to do away with the Wall Street bonus culture, where executives and traders are given extraordinary bonuses — often four or more times base salary — based on annual performance. This bonus culture gives traders and executives alike an incentive to take big bets — because they get massive payoff if things go well, and don’t suffer if they go bad, or go bad sometime in the future.This is a structural problem, not a symbolic one. Anyone who thinks pay isn’t of overriding importance in financial regulation should have been set straight by the desperation of the bailed out Wall Street firms to pay back their loans from the government. That desperation is overwhelmingly tied to a desire to escape the extremely modest pay standards issued by the Obama administration.Besides financial stability, there are important questions of economic justice and taxpayer rights related to executive compensation. The Wall Street hotshots — including the major hedge fund players — have paid themselves unfathomable amounts of money over the last decade. They have set an aspirational standard for other executives and professionals, and helped drive wealth and income inequality to outrageous and unhealthy levels. Ultra compensation should be taxed at very high rates; and, at a bare minimum, the loopholes that let hedge fund managers pay taxes at about half the rate of regular folks must be closed. The case for aggressive tax reform on ultra rich financiers was overwhelming last year; now, with the financial system completely dependent on taxpayer largesse, there shouldn’t be anything left to debate. No one in finance can say they made their money just by working hard or being clever — their system was saved by the government.2. The administration does not propose structural reform of the financial sector.There is no discussion of returning to Glass-Steagall principles, to separate commercial banking from other financial activities including the speculative world of investment banking. Glass-Steagall was adopted during the Great Depression, as a response to financial abuses that closely parallel those of the previous decade. Repeal of Glass Steagall — following a decades-long erosion — came in 1999, and helped pave the way for the present crisis.Nor is there any discussion of shrinking the size of goliath financial firms. Everyone now recognizes the problem of too-big-to-fail and too-interconnected-to-fail financial firms. The administration proposes to deal with the problem through regulation alone; a more fundamental approach would break up giant firms (or at least commit to prevent further consolidation going forward).Addressing structure and size is important not only because of the economic power accreted by the goliaths, but because of their political strength — about which, see below.3. The administration’s approach to regulating financial derivatives is too timid.To its credit, the administration proposes to repeal recent deregulatory statutes and establish regulation of financial derivatives. But its plan does not go far enough. It creates a regulatory exemption for customized derivatives — a loophole that will create lots of business for corporate lawyers ready to change terms in derivative contracts so that they differ somewhat from standardized terms.Nor does the administration propose to ban classes of dangerous financial instruments that cannot be justified. A clear example of a product that should be banned is a credit default swap — a kind of insurance against a certain outcome, like the inability of a bondholder to make required payments — in which neither party has a stake in the underlying transaction. Such credit default swaps have no insurance component, and are nothing more than bets — but they are bets that can vastly exceed the value of the transaction being bet on, and can spread financial contagion, as AIG demonstrated. George Soros argues that all credit default swaps basically share this feature, and should be banned altogether.The administration proposal also fails to require that exotic financial instruments be subjected to pre-approval requirements. Under such an approach, financial firms would be required to show that new instruments offer some social benefit, and do not pose excessive risk.4. The administration does not propose to empower consumers.There is enormous merit to the proposal for a Consumer Financial Products Agency. But it is not a substitute for giving consumers the power to organize themselves to advance their own interests. Simply mandating that financial firms include in bills and statements (whether mailed or e-mailed) an invitation to join an independent consumer organization would facilitate tens of thousands of consumers — and likely many more — banding together to make sure the regulators do their job, and to prevent Wall Street from “innovating” the next trick to scam borrowers and investors.The UglyIdentifying the merits and gaps in the administration’s proposal is important. But the proposal does not exist in a vacuum, and it doesn’t become law just because the administration has proposed it.The Wall Street types don’t know shame. Having benefited from literally trillions of dollars of taxpayer largesse, one might expect that they would be embarrassed to lobby on Capitol Hill. Or, that Members of Congress would be unsympathetic to their pleas.But that’s not how Washington works. Having spent $5 billion on political investments over the last decade, Wall Street continues to pour cash into the political process — and those investments continue to pay handsomely.To understand how things work, consider the fate of the proposal to give bankruptcy judges the power to adjust mortgages, so that they could reduce the principal owed on loans on homes now worth less than value of the loan. Then-candidate Barack Obama campaigned in favor of such “cram-down” provisions. In a rational world, banks would agree to these adjustments to principal on their own, because they do better if people stay in their homes and continue paying on the loan, rather than by forcing foreclosure. Not long ago, it was widely expected that cram-down would quickly become law. But the banks deployed their lobbyists, and this vital though totally inadequate measure was defeated in May. The Obama administration sat quietly by.Now, Wall Street is already trashing the good parts of the administration’s proposals.”Congress is not going to impose a ‘skin-in-the-game’ requirement on all loans,” Jaret Seiberg, an analyst with Washington Research Group, a division of Concept Capital, flatly tells American Banker.The Chamber of Commerce and other industry groupings are attacking the idea of a Consumer Financial Product Agency, including with the extraordinary claim that it will improperly relieve consumers of their duty to do “due diligence” on financial products.Hedge funds are hiring ever more lobbyists and floating the claim that the administration’s requirements for some modest disclosure requirements for secretive hedge funds could do more damage than good. One purported reason: the disclosures may be too complicated for regular people to understand.There’s no question that Wall Street is going to mobilize — is already mobilized — to defeat the administration’s positive proposals.What remains very much in question is the administration’s willingness to engage in bare-knuckled political fighting to defend these proposals, as well as whether the public will be mobilized to support these and other moves to control Wall Street.A new public interest coalition — Americans for Financial Reform — aims to do just that, but they are fighting on occupied territory. As Senator Majority Whip Richard Durbin says, “the banks are still the most powerful lobby on Capitol Hill. And they frankly own the place.”by Robert Weissman[Disclosure: My organization, Essential Action, is a member of Americans for Financial Reform.]found at http://www.multinationalmonitor.org
Mark • June 25th, 2009 at 1:54 pm
I’d mentioned in a/the previous thread that computerization of medical records will lop off a bunch of jobs- records management (or whatever you call it; LOTS of people here, they even have schooling dedicated to it!).But… there’s been a drop in medical services as unemployment continues to cut into “demand.”Mark
Mark • June 25th, 2009 at 2:00 pm
Ethics aside, technology is a process, it does no work. What technology does is allow us to apply energy more creatively.Energy is the key. And what we’re seeing is the depletion of cheap, readily usable energy sources (not to mention other natural resources that allow us to actually build those things that technological processes have enabled).Mark
Mark • June 25th, 2009 at 2:08 pm
I’d only think it fair that big losses should be extracted from those who made big gains. Again, this goes to the heart of the matter of whether losses should be socialized while gains are privatized. I don’t care to try and regulate what people make (although, clearly, some “compensation” is absolutely criminal), as once it’s legislated then it has all the backing and support of the government, which would further legitimize crimes.
Do people demand a really just system? Well, we’ll arrange it so that they’ll be satisfied with one that’s a little less unjust … They want a revolution, and we’ll give them reforms — lots of reforms; we’ll drown them in reforms. Or rather, we’ll drown them in promises of reforms, because we’ll never give them real ones either!!
- DARIO FO, Accidental Death of an AnarchistMark
MA • June 25th, 2009 at 2:24 pm
With every technological “enhancement/automation” in the financial industry (Straight Tthrough Process), the 90% effect is a need for more employees.These advances always increase productivity, but at the same time increase the speed/volume/etc that the financial markets players move at.No longer do we use our calculators. Instead, we need to know how to write complex macros that are everchanging with each new advance.That’s the scoop on Tech advances in banking / wall st.Miss America
Hubbs • June 25th, 2009 at 2:36 pm
Guest :-=-_-=-: • June 25th, 2009 at 3:18 pm
g,is he not cynical enough?
Guest :-=-_-=-: • June 25th, 2009 at 3:18 pm
g,is he not cynical enough?
Guest :-=-_-=-: • June 25th, 2009 at 3:19 pm
g,agreed.
Guest :-=-_-=-: • June 25th, 2009 at 3:19 pm
g,agreed.
Anonymous • June 25th, 2009 at 3:32 pm
Is our good Dr. the fifth Beatle?
Softwarengineer • June 25th, 2009 at 3:40 pm
YOU’RE RIGHT MARKHere’s the 2006 oil barrels per day data [147] and it hit $100/barrel that year:http://www.dawn.com/2006/03/27/ebr7.htmCompare that to the 2009 projection URL of 85 at $70/barrel, and golly gee willerkers….we’re using 42% less projected oil today in 2009 than 2006………no wonder them darn freeways seem empty….LOLMaybe we don’t need all them hybrids and smart cars after all? All we needed was the equivalent of depopulation to solve global warming, a good ole fashion economic crisis? LOL
Anonymous • June 25th, 2009 at 3:44 pm
Reminds me of the movie Brewster’s Million. The main character had to spend $30,000,000 in 30 days and have nothing to show for it, in order to inherit $300,000,000.
Guest • June 25th, 2009 at 3:45 pm
What Wall Street does not seem to understand is that they have lost all credibility in an ever-growing segment of the population (as more and more analysis like the one above are spread on the Internet.) In the future no one will invest on Wall Street.
Brett in Manhattan • June 25th, 2009 at 3:49 pm
As I’ve said before, you look to the financial media not so much for news, as for the party line.”The market is always full of causes for which the Exchange is the chief “cause.”Richard Ney
Guest :-=-_-=-: • June 25th, 2009 at 3:50 pm
http://www.youtube.com/watch?v=oBDkFcwmAuY.music video..The Derek Trucks Band – I’d Rather Be Blind, Crippled And Crazy.ha! “than to let you break my heart, all over again.”
Guest :-=-_-=-: • June 25th, 2009 at 3:50 pm
http://www.youtube.com/watch?v=oBDkFcwmAuY.music video..The Derek Trucks Band – I’d Rather Be Blind, Crippled And Crazy.ha! “than to let you break my heart, all over again.”
Brett in Manhattan • June 25th, 2009 at 3:52 pm
Disagree. The lure of rising stock prices will catch the public in its net just as it has for the past 100+ years. Human nature doesn’t change.
MA • June 25th, 2009 at 3:59 pm
Nouriel,With regards to the “unintended consequences” of actions… I think there’s still a little too much Monday morning quarterbacking, going on with hindsight evaluations on the cause/effect of this crisis.The Rates:The contradictions of statements like: “The fed kept rates to low for too long” (which you say/imply were a cause of the problem???) are followed by a statement like: “The fed and banks didn’t lower rates fast enough in 2007”. You see, I find that contradictory… and a bit cherry picked with 20/20 hindsight. In my opinion, it wasn’t the fed rate, or pace of increase/decrease that mattered nearly as much as the regulations that accompanied those rates both now and then. 2003 was a different animal, because so much cash/credit was tied to an industry (tech) and the faux wealth that was assumed to be made from it, that extra credit was needed. While at the same time, the financial world was reeling from the UNKNOWN ripple effects of ENRON, Worldcom, Arhtur Anderson, etc… (the uncertainty of the “strength” of the recovery was looming very large, especially in the face of new expensive wars that were eating up cash/credit) I can tell you first hand that there was a lot of liquidity fear in the banking industry at that time!!!Now that we are in the thick of it, and rates are at/near zero, will we 15 years from now look back at this era and say: “In 2008, we should’ve never lowered rates to those levels!”For me, I say, Fuk the economists, formulas, quants, theorist, etc… It comes down to simple basics you know deep down inside. We need to save more and spend less. That’s it. …and the incentive for that are better interest rates! plain and simple. We need to screw the DOW, and forget the notion that it is a “savings vehicle” when it is in fact nothing more then a casino. A speculative play that is “somewhat historically reliable.” …but it is rigged, propped, etc… and this is UNDISPUTED!!! (When Paulson FLAT OUT ADMITS to buying equities, as an only option to save the market, (because they didn’t have enough cash to stop the downward spiral in the fall) you’ve gotta smack yourself and say….. Wake the F up!!! The market is not a savings vehicle if it is subject to these kind of MANIPULATIONS!!!)The alchemy world of finance moved well beyond it sustainable existence. If the financing of finance can’t be covered somewhere between par and the existing interest rate, then it’s not functioning properly! The fact that we let it grow to 30-40% of GDP was an enormous mistake, and that extraction from the net credit/money supply needs to be covers via bailout/printing or it needs to be realized/destroyed.With that said, interest rate increases would potentially destroy the market. (…and would likely destroy much of the 30-40% overgrowth) …but maybe they won’t? The reality is, I need to eat tomorrow, and somebody needs me to do something for them and so on… The world will still exist. …and regardless of the outcome for the rigged market, it is better to rebuild it correctly, rather then patch up a system that has failed us because its seed of alchemy can grow so large through all the “captured” pieces of our systemBank Nationalization:Assuming the Zombie banks, can be Cleaned up and sold back to the markets… What rich uncle is going to pay for them???You see, with the nationalization of many banks, (which means subsequent failures and many ripple affected markets) …the markets will once again tighten. Credit will dry up. Now with these “failures”, there will be a smaller market to circulate the net money supply around to, thus further adding to the new credit crunch (or shall we call it “brunch” since we’ll have a banking-crunch) as velocity of lending destroys fractional reserve credit creation.(God forbid, we do this with the “big” players, since their role in the money markets right now is too important. With rates this low, and non existent spreads, we already see a repo/TD/CD market that is operating just for the sake of operating, rather then with a financial purpose! If a big bank goes down like this, what will happen first: The Government will completely prop the existing money markets, or will we let the markets “break the buck” across the market??? (rather then at one or two smaller MMKT accts.))So now that this plan has gone into effect, a la Sweden, who is the buyer of the cleaned up shiny new restored bank??? (You see, It worked in Sweden because there was not a catastrophic systemic worldwide failure looming, based on the actual process of nationalizing these banks.) In the US case, it will be a hungry snake eating his tail.Unless of course there is a new hedge fund from MarsAs for your defence of Geithner…I’m sorry if I do not share your enthusiasm for the man. As you stated, if he was aware of these systemic risks…. why wasn’t he beating his drum louder? Being the person he is, with the position he was in, he should’ve beat the sh!t out of that drum. What is worse… being ignorant to the tsunami that hits you, or being aware of it, and not doing enough to warn everyone?I understand that you have ties to him and many of the other players within the Obama team, but we’ve seen too much nepotism over the past few years to accept that from you. Especially as we all deem you to be the one guy that “gives it to us straight”. (Nouriel, if they’re holding a gun to you as you type, press the “x” button twice, or blink 10 times. Well send help.) Though it is understandable in the circles you are in… it is not necessarily acceptable. I’d call a spade a spade. …and the way I see it, very few of those charge of ANYTHING during the last few years should still be in charge of that same thing. Time to start fresh! Knock em all off their pedestals and work their way back up. In the meantime, it should be someone else’s turn to completely F up our economy. The replacements can do NO WORSE!!!Even with my disagreements listed above, I still value your foresight, and willingness to share with us you genius. I hope my comments do not offend you… it’s just how I roll.All the best,Miss America
Guest • June 25th, 2009 at 4:00 pm
yes, plus, wall street has Ben to serve their interests. so they can risk all, including public money
Guest • June 25th, 2009 at 4:00 pm
yes, plus, wall street has Ben to serve their interests. so they can risk all, including public money
Mark • June 25th, 2009 at 4:05 pm
Softie,This is why I’ve been advocating for no new roads or road expansion. Why build up infrastructure that won’t be able to be (fully) used in the future? Instead, I think it better to give tax rebates to businesses hiring local people, a commute trip reduction program with teeth! Better to help communities build local businesses rather than subsidizing others to pull workers in from long distances. I found myself in this trap of working farther and farther away from home to make more money, resulting in paying more and more taxes so that roadways could be expanded in order to help me travel farther and farther… Fortunately, as a percentage of my work history, my commute distances have been really short (currently bike to work).MarkA barrel of oil contains roughly 23,300 hours of human work output (source: http://www.lifeaftertheoilcrash.net/Research.html#anchor_70. NOTE: I believe that there’s actually more recoverable/usable energy in a barrel of oil than the 46.6 gallons of gasoline.
Jason B • June 25th, 2009 at 4:54 pm
what percentage growth is sustainable? I need a number.Dr. Doo
Mark • June 25th, 2009 at 4:58 pm
I looked briefly for an article on Bloomberg that came out the other day in which it was stated that there was going to be a big public relations push to clear up the image of bankers (and other thieves), unfortunately couldn’t find it. If someone runs across it please post.Never underestimate the power of marketing. Watch The Century of the Self (BBC, Adam Curtis) to see how powerful marketing has been. Think about it, most people in the US actually believe George W. Bush was a cowboy, and that Barrack Obama is some sort of liberal, ha, modern marketing!Mark
Guest :-=-_-=-: • June 25th, 2009 at 5:01 pm
http://www.realclearmarkets.com/articles/2008/06/review_of_robert_auerbachs_dec.html.June 03, 2008Review of Robert Auerbach’s Deception and Abuse at the FedBy John Tamny…”Whether readers possess a little or a lot of knowledge concerning the Fed, what will strike them most about Auerbach’s account were the boldly dishonest measures taken by the Fed, and in particular Alan Greenspan, to hide the discussions that centered around interest-rate decisions. When we consider that the Fed serves at our pleasure, and issues the currency that is the lubricant of our economic activity, it’s shocking to learn how eager Greenspan et al were to keep their doings secret.The above serves as the book’s most entertaining thread whereby Gonzalez sought greater transparency from the Fed about the thinking that went into rate decisions. Remarkably, Auerbach reveals that for seventeen years our central bank stuck by the falsehood suggesting that it kept no records or minutes pertaining to the FOMC meetings where rates were discussed. When asked by Rep. Maurice Hinchey if meeting records existed at all, Greenspan replied: “There is no permanent electronic record, this is correct. We obviously have rough notes.” When he finally achieved access to the allegedly “rough notes,” Auerbach hints with a bit of sarcasm that the “neatly typed FOMC transcripts I later viewed were not rough notes.”…..w/guest Prof. Robert AuerbachThe Gary Null Show – 06/24/09June 24th, 2009.http://garynull.org/.fun and games.
Guest :-=-_-=-: • June 25th, 2009 at 5:01 pm
http://www.realclearmarkets.com/articles/2008/06/review_of_robert_auerbachs_dec.html.June 03, 2008Review of Robert Auerbach’s Deception and Abuse at the FedBy John Tamny…”Whether readers possess a little or a lot of knowledge concerning the Fed, what will strike them most about Auerbach’s account were the boldly dishonest measures taken by the Fed, and in particular Alan Greenspan, to hide the discussions that centered around interest-rate decisions. When we consider that the Fed serves at our pleasure, and issues the currency that is the lubricant of our economic activity, it’s shocking to learn how eager Greenspan et al were to keep their doings secret.The above serves as the book’s most entertaining thread whereby Gonzalez sought greater transparency from the Fed about the thinking that went into rate decisions. Remarkably, Auerbach reveals that for seventeen years our central bank stuck by the falsehood suggesting that it kept no records or minutes pertaining to the FOMC meetings where rates were discussed. When asked by Rep. Maurice Hinchey if meeting records existed at all, Greenspan replied: “There is no permanent electronic record, this is correct. We obviously have rough notes.” When he finally achieved access to the allegedly “rough notes,” Auerbach hints with a bit of sarcasm that the “neatly typed FOMC transcripts I later viewed were not rough notes.”…..w/guest Prof. Robert AuerbachThe Gary Null Show – 06/24/09June 24th, 2009.http://garynull.org/.fun and games.
Anonymous • June 25th, 2009 at 5:16 pm
Unemployment continues to rise, but productivity is rising, too. Fewer workers involved in production brings better productivity and lower prices for consumer products.
Mark • June 25th, 2009 at 5:25 pm
MA,I tend to agree with you. But… if we save more and spend less in an economy that’s 70% consumer driven we’re going to really wipe out the economy. Clearly, however, the current model needs to die: there is no correcting it!I’m just not seeing any possible fix. The real fundamental that we have to come to grips with is how we attain any sort of stability in a declining environment (dwindling resources). The sooner that we recognize this as the focal point, the sooner that we can get on with actually coming up with something that’ll have a chance of being able to perpetuate.Mark
Guest :-=-_-=-: • June 25th, 2009 at 6:14 pm
@ above… ha and guest gu etc./s ….The Gary Null Show – 06/25/09June 25th, 2009http://garynull.org/.interview with satish kumar.minute 16, the half-educated and the damage.economy / ecology. a real good interview….”We can relate to planet Earth either as tourists and look at the earth as a source of goods and services for our use, or we can act as Earth Pilgrims and treat the planet with reverence and gratitude.”….and let me add this introductory link to the journeyto now..http://verbewarp.blogspot.com/2006/05/involitile-universal-law-of-gender_23.html.we always miss it.
Guest :-=-_-=-: • June 25th, 2009 at 6:14 pm
@ above… ha and guest gu etc./s ….The Gary Null Show – 06/25/09June 25th, 2009http://garynull.org/.interview with satish kumar.minute 16, the half-educated and the damage.economy / ecology. a real good interview….”We can relate to planet Earth either as tourists and look at the earth as a source of goods and services for our use, or we can act as Earth Pilgrims and treat the planet with reverence and gratitude.”….and let me add this introductory link to the journeyto now..http://verbewarp.blogspot.com/2006/05/involitile-universal-law-of-gender_23.html.we always miss it.
Guest • June 25th, 2009 at 6:18 pm
whats this i hear about economy shrinks 5.5 % this quarter
Guest • June 25th, 2009 at 6:33 pm
gold bull market still intact, usd and long dated fix-income still weak. FED continue to pump money.
Guest • June 25th, 2009 at 6:38 pm
FED is determined to blow equity, real estate, and commodity bubble, no stop in sight.
Guest • June 25th, 2009 at 6:58 pm
dont fight FED, FED not only push you around, but also push central banks around. look at central banks around got push into short end of market or into corner making nothing, yes into dollar and T-BILL making nothing -> just look at “13-WEEK TREASURY BILL (^IRX)”. and FED still printing dollar and T-BILL, and punishing central banks in the corner. it is great to be FED.
Mark • June 25th, 2009 at 7:04 pm
0/Zero (reference)Mark
Mark • June 25th, 2009 at 7:10 pm
Don’t you think that this trend would prove just a tinsy bit problematic? How are the unemployed going to buy that increased production output?2/3 of the world’s population lives on $3/day or less. This ratio/percentage is increasing by the day.Also, think “economies of scale.” We were always told that prices would come down as volume of production increased. Do you really think that volume of production is increasing? If not, then that means decreasing production, which in turns backs out the notion of economies of scale: plants are most efficiently utilized when running 24 hours a day; scaling back operating hours means that whatever the plant creates is going to have to bring in more revenue for decreased amounts/production.Death spiral!Mark
Jason B • June 25th, 2009 at 7:41 pm
Mark -The answer is so unacceptable that no one is willing to consider it- fewer people
Guest • June 25th, 2009 at 7:42 pm
I’d rather be deaf.
Mark • June 25th, 2009 at 8:30 pm
Actually, the answer lies with significantly reduced consumption: the US population is a small fraction yet it consumes a major portion of the world’s resources.But population size Would have to be kept in check. Eventually societies would figure out what a reasonable balance was.To most, reduced consumption (when we’re so heavily programmed to consume) is unthinkable (folks have been programmed to believe that population reduction is OK, as long as it’s some third world peoples- ugh!).Mark
Medic • June 25th, 2009 at 8:33 pm
My good Dr. Hubbs -I say the last thing medicine needs now is a fast shove towards technology that will require more skilled providers (techs, nurses, PA’s, NP’s or MD’s / DO’s) to run the machines instead of taking care of patients.At this point, I really feel the most likely outcome will be nationalization of health care with regionalization of services, much like what was done with the VA over the last 30 years.We don’t have enough of the right people / providers / skill sets to provide all things to all people in all communities. And we won’t anytime soon.Regionalization will allow for a centralized agency to focus specialized care in specific areas of the country where care givers will be expert. The patients will travel to these areas for treatment.Local services will be provided in clinics and PCP offices. ER’s will still exist in communities, but admissions may be shipped to another hospital because smaller local hospitals will not have in-patient beds. EMS will provide more services than they do now and their goal will not be to transport, but to treat as much as possible in the field (in the patient’s home).Medics will no longer bring patients to the ER who have lacerations. They will clean wounds, suture them and start patients on antibiotics, telling them to follow up with their PCP’s. They will bill for treatment, not transport.That’s where the technology will go. We don’t need more expensive, cumbersome and utterly useless MRI machines. We need boots on the ground, teams in the field, doing more than they do today so fewer people come to us with small and dumb things.My money is on education for front line providers. That will be the growth industry in medicine. The rest is outdated garbage that’s too expensive with too little benefit. We will soon be forced to try and get the most bang for the buck.
Guest • June 25th, 2009 at 8:46 pm
Well, my husband and I (retired) have recently moved from Rhode Island to Washington state specifically to save $25,000+ a year in RI state income taxes. RI state income tax rate is 25% of your federal tax bill. Property taxes in our new community are 1/2 or less than RI. Cost of heat and electricity is 1/2 or less than RI. I can tell you that a number of our friends are taking the same action, choosing to vote with our feet, and heading to Florida, Texas, Wyoming, Nevada and Washington.And the billionaire who buys a yacht knows that the maintenence and upkeep isn’t an asset. The yacht will depreciate in value at a horrifying clip, while the expenses will only go up. That’s money that’s just disappeared, poof! You might as well light a fire and just pitch in piles of Ben Franklin’s.
Guest • June 25th, 2009 at 9:00 pm
Wow MA, that was quite a rant! As usual it was right on too! To recap:1. We need the 1970′s solution of 17-21% interest rates right now. And we need public FOMC meetings to make sure the Fed does not diddle interest rates back down.2. We need full and public bank accounting now! Of the 8,400 banks, maybe 4,000 will be caught with their pants down. Send them packing, it cannot be any worse than what we have now and it will provide a solid path to (slow) recovery.3. And, drum roll …, Nouriel has been deep captured. We all began to realized it over the last five months, but it took MA to have the guts to say it!
Guest • June 25th, 2009 at 9:03 pm
http://www.deepcapture.com/category/introduction-an-overview-of-deep-capture/
Guest • June 25th, 2009 at 9:49 pm
GDP has been shrinking since 2000, but who are you going to believe: the government or your lying eyes?YEAR____BLS____Shadow Stats2000q4__2.24%__-1.05%2001q4__0.23%__-3.09%2002q4__1.87%__-1.72%2003q4__3.68%__-0.05%2004q4__3.15%__-0.48%2005q4__2.68%__-0.30%2006q4__2.44%__-1.53%2007q4__2.33%__-2.26%2008q4__-0.85%__-4.09%2009q1__-2.45%__-5.12%http://www.shadowstats.com/alternate_data
Mark • June 25th, 2009 at 10:41 pm
If GDP has been shrinking for this long, then how can shadowstats imply inflation is rampant? Can we have inflation AND a contracting GDP?Mark
Guest • June 25th, 2009 at 10:42 pm
Fucking Michael Jackson, Roubini is so wrong !!!Inflation man ! Inflation !!
Mark • June 26th, 2009 at 12:38 am
Ah, found it (right under my nose)!Wall Street Sets Campaign on ‘Populist Overreaction’What’s the matter with those uppity people anyway?!Hmm… do the banksters really want to declare war on the common person? I’m sensing that this may be the end of their empire.Mark
Wolf in the WIlds • June 26th, 2009 at 1:18 am
http://www.reuters.com/article/bondsNews/idUSN2425368520090624Sigh. Markets continues to be led astray. They must be pretty desperate to do this
Wolf in the Wilds • June 26th, 2009 at 1:22 am
The Biggest Pay-In-Kind marketThe US Treasury bond market has to be the biggest PIK market ever. Where else would a country pay for its debt for more of its crappy dept that it can print irresponsibly. Are we so enamoured to the short term trade that we don’t see that we are being scammed by a scammer bigger than Madoff?Geithner is lost more credibility with the indirect bids rule change than anything else. If he has to resort to that to get someone to buy US Treasuries, then the US is well and truly shafted.
The Alarmist • June 26th, 2009 at 3:05 am
Gee, I’m grateful I came of age in the Reagan era. The ’70s sucked, but weren’t so bad if you were a teenager.I feel for my parents who had to scrape through the 70′s and now have to retire in the midst of ’70s redux … then again, they broke the system with ever-increasing entitlements for their generation, so I don’t feel so bad for them after all.
The Alarmist • June 26th, 2009 at 3:06 am
Yes, you have a debased currency and no real economic growth.
Anonymous • June 26th, 2009 at 6:28 am
Agreed.A combination of simpler lifestyle will and a reset of priorities will make limited resources go a long way.Telecommuting and work from home are possible. The internet makes it possible even though the internet itself consumes a lot of energy. The technologies needed to telecommute have matured in the last few years. This could make suburbs viable.Wind Power, Solar Power are approaching efficiencies which make them practical alternates. There are safer models of nuclear reactors. India has develped a Thorium based nuclear reactor and also completed technical feasibility of extracting gas from ocean floor hydrates.Unfortunately, these technologies will all take 10-15 years before they can effectively start replacing existing systems. And this is going to be an interesting period.Demographics are interesting too. American consumers are getting older and satiated. You don’t need to consume all the time to be happy.
Guest • June 26th, 2009 at 6:33 am
According to Shadow Stats there is still about 6% inflation. But it has dropped from about 7.5% at the beginning of the year. So inflation is going down in spite of rising energy costs — interesting.You know the economy is so propped up with deficit spending that the world’s economy could collapse in almost any direction: Deflation (reconciling $5 to $500 trillion of off-book debt), Inflation (out-of-control speculation in energy), Stagflation (no jobs and out-of-control speculation in energy), Hyper-inflation (Fed’s over reaction to fear of deflation).Inflation seems the obvious choice, but for the moment I’m picking Stagflation until shadow stats goes negative; then I am picking Deflation.
Free Tibet • June 26th, 2009 at 6:41 am
I have complained for years that medical knowledge is concentrated in too few hands. What do we do in an emergency? First Aid training today has been dumbed down to, “stop the bleeding and call 911”. That isn’t adequate. What do I do when 911 doesn’t answer? Think that can’t happen?OSHA required that I receive first aid training. And required that I keep a first aid kit in my truck. I’m not required to do that anymore, but the kit is still there. And it’s “sized” for 16 people. So, if 16 people all get nosebleeds at the same time – I’m the man to call. But if anybody gets hurt… God help him. I won’t know what to do.Your knowledge and training is not to be taken for granted.My mother is quite elderly and doesn’t walk well. I applied for one of those handicapped parking permits so that she might not have to walk so far when I took her to the grocery. Who do you think had to fill out the forms? Her doctor! I imagine her doctor could find better things to do. I’ve been shopping retirement communities for her and they don’t take leapers. Who do you think has to fill out the health assessments? Oh, you’re quick!!It starts here. With me. I need to be better equipped. And the business is set up to keep me out of it.
Guest • June 26th, 2009 at 6:44 am
I came of age in the 1960′s. Scrapped through the seventies with my long hair, hated the 80′s, made money in the 90′s, watched it dribble away in the 00′s. Will watch my children come of age in the 10′s (did not have kids until my 40′s). What future do they have? Ten years of recession/depression, in the 20′s, peak oil effects in the 30′s, Amish lifestyle in the 40′s?
Guest • June 26th, 2009 at 6:55 am
Q: How do you know when it’s bedtime at Michael Jackson’s house? A: When the big hand touches the little hand!Q: Why did Michael Jackson like twenty eight year old kids? A:Because there were twenty of them!
Guest • June 26th, 2009 at 7:15 am
cavemen in 40′s
Guest • June 26th, 2009 at 7:18 am
China ‘to block’ Hummer takeoverHummer had thrived from its military image and demand for large carsA Chinese firm’s bid to buy the gas-guzzling Hummer car brand will be blocked on environmental grounds, according to Chinese state radiohttp://news.bbc.co.uk/2/hi/business/8120231.stm
MM CA • June 26th, 2009 at 7:31 am
Chew on the below numbers… NO JOBS, WAGE DESTRUCTION, HORRIFIC GDP and no slowdown in the negative trends of all three. Food stamp applications up over 30%. New car sales nember under 9M. and for anyone that thinks that unemployment will get better, let me just say that every company in good old USA, especially the fortune 5000 are already planning more cuts based on tanking demand/consumption. below are job cuts planned for december of 2009 (yet to happen)in california. i can assure you these cuts and planning will be in all the states. the below is just California. I am compiling the data for job cuts that will occur from june 09 thru Dec 09. the list of comapnies is too long to post here. December had the smallest amount. And this data is only for larger employers. You be assured small business is proably doing more…I watched a video of Obama yesterday where he went on for 5 minutes announcing the creation on new green energy jobs (which is good)actually giving the name of the project and how many jobs. so he goes over 10-15 projects and the numbe rof jobs created and as he is speaking he almost seems embarrased, probably thinking is anyone actually adding up these numbers as i speak. Well it added up to about 15K jobs. And that folks is abotu all he has in the tank it seems….DEC Calif JOB cuts: By Decemebr this number will be in the tens of thousands for december12/1/2009 ROCHE PALO ALTO PALO ALTO 4712/11/2009 GREENE TWEED GARDEN GROVE 812/11/2009 USS-POSCO INDUSTRIES PITTSBURG 82712/13/2009 GREENE TWEED GARDEN GROVE 912/15/2009 HUNTER DOUGLAS FABRICATION COMPANY STOCKTON 2812/31/2009 HUNTER DOUGLAS FABRICATION COMPANY STOCKTON 212/31/2009 JPMORGAN CHASE BANK (JPMORGAN CHASE & CO.) CHATSWORTH 612/31/2009 JPMORGAN CHASE BANK (JPMORGAN CHASE & CO.) IRVINE 412/31/2009 JPMORGAN CHASE BANK (JPMORGAN CHASE & CO.) PLEASANTON 2412/31/2009 JPMORGAN CHASE BANK (JPMORGAN CHASE & CO.) STOCKTON 6012/31/2009 SARGENT FLETCHER, INC DBA COBHAM EL MONTE 8WASHINGTON (MarketWatch) — The U.S. economy just went through its worst two quarters in more than 60 years, as businesses reduced their investments at the fastest pace since the Depression, the Commerce Department reported Thursday as it revised its estimate for first-quarter gross domestic product.Real GDP — the measure of the value of goods and services produced in the economy — fell at a 5.5% annual rate in the quarter after plunging at a 6.3% pace in the fourth quarter of 2008, the government said.A month ago, the government had estimated GDP fell at a 5.7% pace in the January-through-March quarter. The government revises the estimates as it obtains more complete data not available earlier. Read the full government report.Economists surveyed by MarketWatch were forecasting that the final estimate for first quarter GDP would be unchanged at a negative 5.7%. They expect the economy to contract 1.5% annualized in the second quarter (which ends next week) and to grow 1.3% in the quarter that begins July 1. See Economic Calendar.On Wednesday, the Federal Reserve said the pace of economic contraction was slowing, but cautioned that the economy would remain weak for some time. See full story.The GDP revisions were largely trivial and don’t alter the big picture of an economic calamity in the six months following the collapse of Lehman Bros.The main changes in Thursday’s report were higher inventories and lower imports than previously estimated. Consumer spending, business investment, residential investments, and exports were revised lower.Business investment declined at a record rate during the quarter. Investments in housing fell at the fastest pace in 29 years. Domestic demand fell at the fastest rate in 29 years. Exports fell at the fastest pace in 40 years, while imports fell at the fastest pace in 62 years.The big story for the first quarter was in the business sector, where firms stopped new investments, and shed workers and inventories at a dizzying pace to bring down production and stockpiles to match the lower demand from U.S. and foreign markets.Much of the contraction in the economy was due to unprecedented inventory liquidation by businesses. Falling inventories subtracted from GDP in the first quarter, but that liquidation will set the stage for stronger growth later after companies have brought supply back in line with demand.The swing in the inventory cycle from being a massive drag to being a small help is the main reason economists expect the economy to begin to grow again in the third or fourth quarters. That growth won’t be sustainable, however, unless consumer and business demand picks up, both here and abroad.Final demand was extremely weak in the first quarter. U.S. residents’ purchases of goods and services (regardless of country of origin) dropped 7.5% annualized, the largest decline since 1980.Final sales of U.S. goods and services fell at a 3.3% annual rate. Final domestic sales of U.S. goods and services fell 5.4%. Exports fell at 30.6% annual rate, the most in 40 years, as foreign markets fell into a deep recession.The two-quarter contraction is the worst in more than 60 years. Since 1947, the economy had never contracted by more than 4% for two consecutive quarters. With a 0.5% drop in the third quarter of 2008, it’s the first time the economy has contracted for three consecutive quarters since 1975.In the past four quarters, the economy has fallen 2.5%, the biggest year-over-year decline since 1982.Although the decline in GDP in the first quarter was nearly as deep as in the fourth quarter, the report was more varied in tone, with some positives mixed with some record-setting declines.In a separate report, the Labor Department said first-time claims for unemployment benefits rose by 15,000 to 627,000. The number of continuing claims rose by 29,000 to 6.74 million.Details of GDPThe price index for domestic purchases (prices paid by U.S. residents) fell 1% in the quarter on lower energy costs. Consumer prices fell 0.9%, while core consumer prices (which exclude food and energy) rose 1.6%.In current dollar terms, GDP fell 2.9% to an annual rate of $14.1 trillion.Corporate profits from current production rose 3.8%, or $48.1 billion, compared with the fourth quarter when they fell by $250 billion, or 16.5%. It was the largest quarter-to-quarter gain in profits in three years.However, all of the profits accrued to the financial sector, which profited from very low borrowing costs as the Federal Reserve struggled to keep the banks alive. Domestic non-financial corporations saw their profits fall by $49 billion after they fell by $89.1 billion in the fourth quarter.Over the past year, before-tax profits are down 17.6%. After-tax profits are down 14.7%.Final sales, which exclude inventories, fell at a 3.3% rate in the first quarter after plunging 6.2% in the fourth quarter. Consumer spending rebounded to rise 1.4% after dropping at a 4% annual pace in the previous two quarters.Consumer spending added 1 percentage points to GDP.Spending on durable goods rose 9.5%, and spending on nondurable goods fell 0.4% as spending on food fell for the third straight quarter. Spending on services increased 0.9%.Despite the bump in spending, the savings rate rose to 4.3% as real disposable income rose 6%.Business investments fell at a record 37.3% annual rate in the first quarter. Investments in structures dropped a record 42.9%, and investments in equipment and software fell at a 33.7% pace, the biggest drop since 1958. Business fixed investment subtracted 4.6 percentage points from growth.Inventories declined by $87.1 billion. The change in inventories subtracted 2.2 percentage points from growth.Investments in housing fell for the 13th consecutive quarter, dropping at a 38.8% annual rate, the largest decline since 1980. Residential investments subtracted 1.4 percentage points from growth.Trade collapsed during the quarter. Exports fell 30.6%, the most in 40 years, reflecting the global recession that has hit Europe, Japan and other trading partners even harder than the United States. Imports dropped 36.4%, the most in 62 years, as U.S. consumers and businesses stopped buying. Net exports added 2.4 percentage points to growth, however, as the trade gap narrowed.Government spending fell at a 3.1% annual pace, the largest drop in 13 years. Spending by state and local governments fell 2.2%, the most since 2001. Federal spending fell 4.5%, including a 6.8% drop in the volatile defense spending category. Government spending subtracted 0.6 percentage points from growthhttp://www.marketwatch.com/story/gdp-revised-to-55-decline-in-first-quarter
MM CA • June 26th, 2009 at 7:35 am
I wonder what will happen when Govt jobs at State and county and local levels start to go away…State shutdowns loom as deadlines nearAt least 19 states still have to approve their fiscal 2010 budgets before next Tuesday. If they don’t, staffers might not be paid and services might shut down.States are struggling to close shortfalls totaling $121 billion for fiscal 2010 as the recession decimates tax revenues.Read the rest: http://money.cnn.com/2009/06/24/news/economy/Clock_ticking_on_state_budgets/index.htm
MM CA • June 26th, 2009 at 7:40 am
I have been saying 10-20 years…. and only if the solve the Medicare 40 Trillion dollar liability problem within the next 5 years.U.S. households may take as long as 15 years to rebuild wealth lost in the recession, said Columbia University professor Edmund Phelps, winner of the Nobel Prize in economics in 2006.Rest of article:http://www.bloomberg.com/apps/news?pid=20601103&sid=aKMxwUC4D3nw
MM CA • June 26th, 2009 at 7:42 am
Excellent reports at this site: http://www.kroll.com/about/library/fraud/Seems the banksters and fleecers just cannot stop.Government stimulus funding totaling $5 trillion has unintentionally introduced new opportunities for fraud and corruption worldwide, according to the latest edition of the Kroll Global Fraud Report. The report reinforces the global risk consultancy’s consistent call for greater transparency and compliance among organizations worldwide, and coincides with FBI Director Robert Mueller’s recent announcement that corruption and fraud tied to stimulus spending may be the “next wave” in financial fraud cases.
FEDup • June 26th, 2009 at 7:48 am
Wow, whoopee-US May consumer spending up 0.3%-could that have anything to do with putting a few more hamburgers on the grill over the memorial day weekend? Like MM CA and others stress, no jobs, no recovery.
MM CA • June 26th, 2009 at 8:12 am
Sad, Sad, Sad… We have 20 million unoccupied housing units and this is coccuring… as with everything else something is fundamentally wrong witth thispicture:Cutler, 34, and Labitue, 30, found themselves homeless in March after Cutler lost his job. They are among 751 families, including about 1,000 children, housed in 39 motels at a cost to state taxpayers of $85 per room a night on average – nearly $2 million last month alone.more at: http://www.boston.com/business/articles/2009/06/24/record_number_of_families_in_mass_are_living_in_motels_at_state_expense/
MM CA • June 26th, 2009 at 8:15 am
So just where is all the credit and liquidity that has been injected (to the tune of $13 trillion or so). Its no coincidence that small buisness accounts for 70% of all jobs in the US and the consumer accounts for 70% of GDP in the US.Tightening credit puts a squeeze on business ownersBusinesses that depended on credit cards to make purchases and manage monthly cash flow are paying higher interest, having trouble opening new lines or seeing existing ones canceled.Rest at:http://www.latimes.com/business/la-fi-smallbiz23-2009jun23,0,3542374.story
MM CA • June 26th, 2009 at 8:20 am
The U.S. Federal Budget Pipeline: Where Do The Dollars Drain?http://www.globalresearch.ca/index.php?context=va&aid=14074All in all, the ongoing U.S. financial mess provides signs that, while China’s rising, the USA will never gain back its former glory days that gave rise to both world dominance and a large middle class. As the country continues to lose jobs at the rate of approximately one every thirty seconds to either offshore company sites or business cutbacks, it has nowhere else to go except to sink down into increased hardship, as well as some degree of destitution, for an increasing number of Americans and the nation as a whole
MM CA • June 26th, 2009 at 8:23 am
GDP will be down alsmot 6% for all of 2009 and down 3-5% at least for 2010, and stay down 1-2% for 2011. Obama will do whateve rhe can to get GDP positive by 2012, but will nto be bale to get it higher than 2% run rate for 2012. and anyoen who beleives the numbers by then will be a fool. they will be so mnaipulated as time goes on
MM CA • June 26th, 2009 at 8:30 am
another staple of Americana on its way out….Commercial real estate: The day the mall diedAccording to the Federal Reserve, U.S. household net worth fell by $1.3 trillion in the first quarter, proving that green shoots are something of a fairy tale for the U.S. consumer, at least.In fact, since its peak in the third quarter of 2007, household wealth has decreased by 21.6%, or more than a fifth. That is the most dramatic fall in the series since reporting began more than 50 years ago.Yet somehow, the bulls keep pounding the table, saying there is light at the end of the tunnel, even though consumer spending is over 70% of the U.S. GDP.Now, I don’t understand how anyone could possibly think the consumer is coming off the mat given that type of wealth destruction.Instead, I’m firmly in the camp that believes a “new normal” has begun, and it’s based upon frugality more than frivolity.Meanwhile, caught between a rock and a hard place during this change is a worsening outlook for the commercial real estate market.Unfortunately, it gets worse everyday. . .Commercial Real Estate… in the CrosshairsThat’s because as unemployment surges, home prices continue to drop, and more wealth evaporates, consumers are more likely to slam their wallets shut rather than open them.http://www.examiner.com/x-1528-Baltimore-Personal-Finance-Examiner~y2009m6d22-Commercial-real-estate-The-day-the-mall-died?ref=patrick.net
Morbid • June 26th, 2009 at 8:39 am
If you want to see the Middle Finger of the Apocalypse check out one of Mark’s favorites – The Olduvai Theory
It has often been said that, if the human species fails to make a go of it here on Earth, some other species will take over the running. In the sense of developing high intelligence this is not correct. We have, or soon will have, exhausted the necessary physical prerequisites so far as this planet is concerned. With coal gone, oil gone, high-grade metallic ores gone, no species however competent can make the long climb from primitive conditions to high-level technology. This is a one-shot affair. If we fail, this planetary system fails so far as intelligence is concerned. The same will be true of other planetary systems. On each of them there will be one chance and one chance only. (Hoyle, 1964; emphasis added)
MM CA • June 26th, 2009 at 8:42 am
Just who was surprised… mainstream press needs tos top this crap… being surprised when there is no reason to be and being too optimistic when ther eis no reason to be…so after the all the talk of housing recovery occuring the past 2 months I ask them ALL who say this stuff to, SHOW ME WHERE? NO JOBS = NO BUYERS for the most part… AGAIN over 20 million unoccupied housing units in the US- Who will fill them? Who will buy Them? Who will Rent them? who will tear them down?It all comes down to NO JOBS= Which equals NO MONEY for those with out the jobs, which Equals no Spending by all of them and more reliance on assistance programs then ever…New home sales fall unexpectedlySales ticked down 0.6% last month, down 32.8% from last year.http://money.cnn.com/2009/06/24/real_estate/new_home_sales/index.htm?NEW YORK (CNNMoney,com) — Sales of newly constructed homes fell unexpectedly in May and were down almost a third from last-year’s levels, a government report said Wednesday.New home sales ticked down 0.6% last month to a seasonally-adjusted annual rate of 342,000, the Commerce Department reported. That was from a revised reading of 344,000 in April.Analysts expected the rate of new home sales to rise to 360,000, according to a consensus estimate of economists compiled by Briefing.com.New home sales were 32.8% below the same month a year ago, when the estimate stood at a 509,000 annual rate.This is a big difference from existing homes sales. On Tuesday, the National Association of Realtors reported that sales of those properties rose 2.4% in May, as prices fell nearly 17% from a year ago.”Newly constructed homes simply cannot compete with the values found in the existing home market,” said Bob Walters, chief economist at Quicken Loans.In recent months, plunging mortgage rates had attracted buyers into the market. But in the past few weeks they have rebounded slightly to near 5.76% for a 30-year fixed mortgage. They have been pulled up by higher bond yields.But even with the recent increase, mortgage rates still remain much lower than last year, when the average 30-year fixed mortgage rate was 6.62%.Median and average prices: In a sign that single-family home sales may have already hit bottom, the median sales price continued to increase.The median sales price of new homes rose to $221,600 in May, up more than 4% from a revised $212,600 in April — and up more than 3% from the median price of $229,300 in May 2008.The average sales price in May was $274,300,up more than 5% from a revised $260,800 in April.Supply: The seasonally-adjusted estimate of new houses for sale at the end of May was 292,000, a 10.2-month supply at the current sales rate.”As we get deeper into the summer and ever-closer to the start of the next school year, we will see some positive moves in the new home market,” said Walters
economicminor • June 26th, 2009 at 8:43 am
Go to the basis of many of the nation’s health care problems and that is that our food is making us over weight and that causes many of our most expensive health care problems.What is it about the food that is causing this? Why do so many Americans have diabetes, cancer, heart and vascular problems, knee and hip problems, even allergies?Look at the connection between Omega 6 fatty acid and these problems. Then look at why we have so much Omega 6 in our diet.We also have a lot of chemicals being used in our food production that are contributing. Some even banned in the US but used by the out of country food producers.Our health problems are much bigger than what people are discussing here or in the media. You can’t fix them with just new insurance. That is a joke and a lie. You can’t fix them with computerized record transfers or even more feet on the ground. This nations health issues are big and complex and go to the heart of the Industrial Food Complex and the Industrial Drug Complex and the Industrialized Health Care and huge Insurance companies that all have business plans that feed off the way the system currently is. Changing these relationships and fixing our health care is a huge ordeal and will not happen outside a major crisis that brings the big players to their knees.
economicminor • June 26th, 2009 at 8:57 am
And in our depletion of non renewal carbon based resources comes the cost of pollution in most cases.Which has other costs. One of which is that pollution is killing the viability of the earth to produce health food for us to eat causing us to be less well and that costs us in health care cost.Mark, we should be building efficient rail instead of inefficient roads. That is until Scotty gets done inventing the teleporter.
economicminor • June 26th, 2009 at 9:07 am
Because of the damage to our earth (space ship earth) done by the current amount of production, we need to either change our style of production or reduce it so that the ecosystem that supports human life can be maintained. Otherwise humans will end up as another endangered species.We produce enough food for us all already. We already have fresh water shortages and energy shortages. The current growth path the world is on logically leads to less quality for everyone and a continuation of that leads to crisis. The only reason we need hyper growth is to service hyper debt. The profits are in most cases diverted to some other debt anyway. It is all a game of hyper transfer and growth to maintain it all.What’s the point? Just a Monopoly game with the end of the game a folding up of the board or starting over? When does human intelligence come into play?
Softwarengineer • June 26th, 2009 at 9:30 am
YOU’RE RIGHT MARKWhy are we afraid to admit we have deflation? Everyone wants their rib steaks and plasma TVs cheaper, but home owners in debt consider their house some how different? Rentors dreaming of a house will beg to differ though.COLA is already -3.2% and that’s without house price degradation factored in. Smile, deflation durinng a recession/depression is far better than stagflation. Its extremely good news with all the chronic unemployment.
Softwarengineer • June 26th, 2009 at 9:36 am
WHERE’S YOUR ACTUALS TO PROVE YOUR ALLEGED INFLATION?COLA is -3.2% currently and the CPI had a 50 year record downward shift; and that’s without factoring in the price collapse of housing.As Suzy Orman would say, “show me the numbers”.
Medic • June 26th, 2009 at 9:40 am
E-minor:You are so correct. What you say is true – and we can’t fix things from here without massive help (like an insurance industry melt-down).But it has to start somewhere. The move to at least a public funded health insurance is a first step. The rest will follow, but remember the journey has to start with but one step.I say let it begin. The biggest issues need to be addressed, yes, but big changes need to be made everywhere in the system for it to become streamlined and efficient. Just getting the food to improve won’t cure everything – we still need to be able to treat patients with NATURAL issues. We are human after all, and we break down over time, regardless of what goes into our bodies.Hubbs – I just interviewed for a job doing stress tests for a cardiology group. What a difference to enter an office where they get reimbursed for what they do. It was like entering another world. They didn’t even bat an eyelash at my salary request.So this is how the other half lives………Next interview with the partners is Monday. I’m keeping my fingers crossed……
MA • June 26th, 2009 at 9:46 am
MMCAThat $13T (give or take a few trillion) has been injected into the VOID. It’s now the real money on the books that replaces the fictional money that was accounted for… but never was real.Extraction, consumption and asset depreciation leave voids. The money still circulates, but not the same net amount that everyone thought existed.Conceptually, it’s like an accounting error on the ground level. Where in the mutual fund world, “fund of funds” are careful not to double count an assets value, (both at the account level and the FoF level) our society essentially does. We look at the stock market, and our equity in it like an asset. …and that company that we invested in, also looks at that cash as an asset. We’re both counting the asset on each of our books. The company has spent, invested, created, etc… and we hope for our dividends, ROI, or appreciation of that equity… but in truth… the money’s actually gone. Spent! …and if the company’s not making money, then that equity is just fictional. …and it’s only hard assets are deteriorating/depreciating hard assets, or products/ideas. In a deflationary market, when the stocks value goes down, all of those assets do too….but the debt products are perceived the same way. WHICH IS AN INSANE CONCEPT!!!The debt product, especially in a deflationary environment, is explosively compounding. The fact that we allowed just about any and every debt product to become securitized/”tradable” is the greatest accounting error of all time. Any person, company, concept, was able to become a spent product. Cash now. Payment later. That’s fine for strongly backed people/companies/concepts or governments… but that’s not what has happened. We’ve let all, the weak, the criminal, the strong, the inane, the brilliant, the stupid, all create debt products….and now everyone owns these debt products in some way. …and the “cash now” from their issuance is gone! …and the books of every person/company had to reflect that not all the money they were hoping to eventually collect will be there. (Forget the fact that so many have cashed in on the fictitious run-up of these “debt-assets”. The brokers, investors, etc…) ??? If “Alchemy” is when your money/assets of little value are transformed into something that is worth much more… what is it called when your fake money/assets are turned into wealth??? Reagonomics? Modern finance? The stock market?That’s the void that’s being filled.All the best,Miss America
Softwarengineer • June 26th, 2009 at 9:50 am
GREAT POINT MM CAIn my State of Washington the spendthrifts wiped out our budget surplus in a few years and the last I hear, the deficit was like $9-11B [it keeps going up in billion dollar chunks, almost monthly?]….even using the low ball estimate, Hades, we’re three times worse than California per capita.To counter the budget red ink, we’ve installed stop lights with cameras, seat belt laws, massive proposed tolls on our floating bridges [paid for or not], a proposed milage tax on automobile use, etc, etc…..But none of this is working. We’re closing schools, county workers are getting laid off and the ones still working are taking 5% pay cuts too, we’re cutting aid to the disabled and elderly, etc, etc….In 2010, the new property tax estimates will be down at least 10% on a three year average, unemployment will run out for many by year’s end, etc, etc….That’s when the manure will really hit the fan and I expect a huge spike in foreclosures by the end of the year, since recent home purchases in the high priced real estate Seattle almost entirely depend on two incomes, with twice the probability that one is laid off.Ditto for California and Oregon too…
Softwarengineer • June 26th, 2009 at 9:55 am
WE NEED MEDICARE REFORM FIRST, THEN WE CAN DREAM OF HEALTH CARE REFORMWe must honor our original contract first before we sign another. Especially if debt funding from the 2nd contract destroys the first.
Novice • June 26th, 2009 at 9:59 am
Was wondering when someone would bring this up. While the focus is on fixing the federal economy, the state economies are unwinding. Without federal assistance, the states are going to implode. Can we look at California and other struggling states as a microcosm of the country as a whole?http://www.nytimes.com/2009/06/22/us/22states.html?bl&ex=1245816000&en=6e29c37c8c521c7d&ei=5087%0A
economicminor • June 26th, 2009 at 10:02 am
I have been watching the system for 30 years and studied how most things transpire. Because of entrenched interests, and in this issue there are many, NO One will willingly give up anything.Education has needed to have a major overhaul for 20 years and it hasn’t happened yet. The basics of what we have were developed during the Industrial Revolution to mass produce workers. It is still basically the same.Look at the Post Office. It has undergone changes, including semi privatization and nothing has really changed in 30 years.Our energy complex has needed major upgrading for 30 years or more and little has changed.Look at the auto industry and our transportation system. Another mess that has not changed and is still in denial.So to think that some small changes will do anything is overly optimistic and not backed up by history.Sorry. IMO it is just another waste of time and energy when it is so complex. Any benefit from tweaking will just get absorbed by the other broken parts > IF anything actually happens anyway.
Softwarengineer • June 26th, 2009 at 10:03 am
IMAGINE THE SHOCK IT WOULD CAUSELike John Lennon’s song, “Imagine”, imagine everone in America debt free and a good savings pile in the bank.What’s wrong with lower prices homes?What’s wrong with banks with cash they’ll readily lend, to spur a new industrial base for America?What’s wrong with 6-8% interest on your retirement savings and banks charging 8-9% for mortgage loans again?What’s wrong with a stock market gradually adjusting and permanently repairing the damage done to it by reckless growth spending destroying retirements?What’s wrong with being frugal, environmental and smart?
Softwarengineer • June 26th, 2009 at 10:11 am
HI MM CAOut in the State of Washington we’re in DENIAL on that issue. The RE media tells us that as the housing RE rebounds by year’s end [LOL], the Commercial RE will plummet 15% in price….LOLThat’s like saying unemployment will go way down, when employers owning commericial RE watch their wealth go down the toilet. Or to put it a different way; unemployment will go way down when much of job site commercial RE sits empty and becomes worthless.
PeteCA • June 26th, 2009 at 10:12 am
Actually – local and state governments have typically been major employers compared to Washington DC. Layoffs by the states can easily offset the 600,000 jobs added by the federal government over the last couple of years.PeteCA
JLC • June 26th, 2009 at 10:13 am
Where is the Gold?http://www.huffingtonpost.com/nathan-lewis/wheres-the-gold_b_216896.html”snip”Jim Sinclair of jsmineset.com, a legendary gold trader, reported that some of his contacts have told him that, when they request to withdraw their 100oz. bars from the Comex depositories, they have not received the proper indicted bars. They received a bar, but not one with the correct serial number or weight.Why not? One possibility is that an honest mistake was made. The high demand recently has apparently kept the depository workers very busy. Wall Street veterans recall that delivery errors were chronic in the days of paper share certificates.Another possibility is that the bar indicated on the warehouse receipt does not actually exist. The implications of that are rather dire.This would not be so troubling if there were not already a series of very odd things happening down at the Comex. Delivery delays have been chronic. This could be a symptom of an overworked staff. Or, it could be a purposeful stalling tactic. In any case, it should not take weeks and possibly even months, and sometimes dozen of inquiries, to get the gold you already own out of the warehouse.The Comex itself, however, has been reporting that business at the warehouse is very slow. The daily reports of warehouse movements show almost nothing happening, day after day. So which is it, busy or not busy?As futures contracts expire, a certain number of holders elect to pay cash to receive the physical gold. The number of delivery notices has been very high since autumn of last year. For example, in May, investors requested the delivery of 20 million ounces of silver, against a dealer inventory of about 64 million ounces. Since then, there has been no record of anywhere near that amount of silver leaving dealer inventory, being delivered into the warehouse, entering customer inventory, or leaving the warehouse. Another 17.45 million ounces of silver were requested in March, evidence of which was nowhere to be seen in the warehouse reports.In April, delivery notices were sent on a whopping 1.5 million ounces of gold, against 2.5 million ounces of dealer inventory. That month, Deutsche Bank alone delivered 850,000 ounces. This coincided, rather suspiciously, with a sale of 1.14 million ounces of gold by the European Central Bank that month, suggesting that Deutsche Bank was being bailed out in a big way. Nothing of this size turned up in the warehouse reports. Nothing followed similarly large deliveries in December 2008. By Comex rules, all physical deliveries must go through the warehouse. What happened? Until investors receive an explanation from the exchange, which has thus far been silent, we must regard it as being very suspicious. Very, very suspicious.What does it all mean? First, there are indications that the seller side of futures contracts (such as Deutsche Bank in April) are having a difficult time making good on their commitments. Second, the information reported by the Comex regarding physical inflows and outflows is looking more and more like a convenient fiction. Third, there is some doubt as to whether there is gold in inventory — as there absolutely should be — to match existing warehouse receipts. Fourth, the Comex warehouse is one of the most secure forms of gold investment in the world. If they can’t be trusted, what does that say about ETFs, pooled accounts, futures, forwards, options, and all the other forms of “paper gold” out there? Fifth, if it becomes clearer that there is no physical supply to meet physical demand, the dollar price of gold could go much higher.
Little Saver • June 26th, 2009 at 10:13 am
Chinese are clever people, don’t need hummers to inflate their ego.
Softwarengineer • June 26th, 2009 at 10:18 am
HI MM CAThe worst data to use on housing is month to month; its a complete joke and your article pointed it out. In summer, more moving to new jobs before the school year starts occurs….so of course home sales seasonally increase, they have to.Your 32% drop in sales YOY is the figure to zoom in on, the month to month increases are meaningless spring/summer predictions, especially predicting a bottom to this mess.It seems if the sky was really falling, there’d be someone blind to reality and in DENIAL to retort, “well, the rate of degradation was slower’.
Little Saver • June 26th, 2009 at 10:44 am
What’s wrong with being frugal, environmental and smart?The corporate sector doesn’t like this, will do everything to restart the waste mill for the profits they make out of it, including brain washing. Bush was clear after 9/11: save the country by spending, spending, spending. Geithner is clear now: save the country by lending, lending, lending. “Honest mistakes” all over again.sigh
Guest • June 26th, 2009 at 10:59 am
Could you explain the connecton between Omega 6 and chronic health problems?
MM CA • June 26th, 2009 at 11:04 am
Hi softwarengineer – I agree with all the month to month data… trends and runrates over periods tell the true stories…3 months minimum, 12 possibly 24 months max, tells the stories… it’s like house values, they may be down only 15-20% this year, but they were down that last year and 10 % in 2007… so what is the net down? its horrific over 24 months. and housing values in certain markets still have a long way to down in certain areas, escpecially California and the northeast….and to repeat, i look for good news too, but there is none… And i’m tired of being Bull “shooted” to by the mainstream media and the stupid, if not corrupt politicians. I’ve learned to look deep at what data they give us and i use my own 2 eyes and 2 ears to see what is going on….In La now and there are lots of people mouring Jacko, i suspect most them are unemployed as it is a work day friday… you would think the world stopped down here. at least Arnold and the idiots in charge have about 2 weeks cover now because of jacko in dealingwith the financial budget doom… it will be amazing to watch the states econimic woes pushed to page 36 and 1 minute blurbs a day on tv and radio whilel the disect Jacko and his life.
MM CA • June 26th, 2009 at 11:10 am
this has been simmering for a while now. Most ar ein agreement there is physcial shortage of gold versus paper owners. Smart players are taking possession…. Could make Madoff Ponzi sceme look like a walk in the park. Could also be why the FED and US, as well as every other country is doing all they can to keep the current “system” in a place, knowing if it collapsed that this gold ponzi scheme would be exposed and that folks would indeed be world financial armageddon.
Guest • June 26th, 2009 at 11:18 am
It dawned on me watching the chaos in Iran that I wonder what our PTB and polical leaders think of twitter, cell phone cameras, Facebook, the internet and the total inability to control what is seen and communicated. Basically there is no where to hide anymore and I suspect they know it. Just look at the emials on the SC gov and Benny – stuff gets out and people see it. there is no where to hide these days…
MM CA • June 26th, 2009 at 11:22 am
Above job loss data is based on WARN act notifciations- meaning 50 or more at one location. Does not take into account other planned job cuts not covered by the WARN act. again the Calif numbers of WARN notices for June thru DEC are horrific, about 50 pages of filed notices. Seems all these empoyers know somethign we dont.
MM CA • June 26th, 2009 at 11:27 am
Check the report out if interested in the numbers and details: http://www.bea.gov/newsreleases/national/pi/pinewsrelease.htmToday's Awful Income Newshttp://www.businessinsider.com/todays-awful-income-news-2009-6This morning the BEA came out and said American personal income up was up 1.4% in May, which was more than the .7% it grew by in April.That’s where the good news ends.For one thing, the money’s being saved, not spent. Consumption was up only .3%, and the savings rate hit 6.9%. Actually, we don’t buy into the orthodoxy that Americans need to spend-spend-spend in order to fix the economy, since that’s the thinking that got us into this mess. But if you’re desperate to see positive GDP sometime soon, then shrinking spending isn’t what you want to see.But beyond that, the gains came from transfer payments.Karl Denninger breaks it down:Here’s what the BEA said:The pattern of changes in personal income and in DPI reflect, in part, the pattern of increased government social benefit payments associated with the American Recovery and Reinvestment Act of 2009.Right. The government hands out money (which it taxes or borrows) and this is reflected in these numbers but taking money from one hand and giving it to another does not help GDP as it does not represent income produced through labor.A couple of paragraphs into the release the BEA explains:Private wage and salary disbursements decreased $12.4 billion in May, compared with a decrease of $0.7 billion in April.Notice that number – it is dramatically worse than April. That’s the REAL income contribution (or in this case, loss) to the economy.Just as we can’t believe the financial markets, since the Fed has created so much liquidity, we’re at the point where it’s hard to believe the real economy, because so much of it is based on transfer payments and government spending obscuring what the private sector is able to do on its own.
Morbid • June 26th, 2009 at 11:32 am
North Korean Nuke Was A “Fizzle”
…both bombs were much less powerful than the Hiroshima bomb, an enriched uranium bomb that had a yield of 15 kilotons, and also less powerful than the Nagasaki bomb, a plutonium bomb that had a yield of 21 kilotons. In the terminology of nuclear weapons designers, both North Korean nuclear tests were “fizzles.”The fact that both tests were fizzles has three important implications. First, both tests were tests of a plutonium bomb. Second, it is highly unlikely that the Iranians had anything to do with either test. Third, it is highly unlikely that the North Koreans have developed the technology for enriching uranium to weapons grade.
Why do we mess with this guy – let China and Russia sort him out.
Morbid • June 26th, 2009 at 11:51 am
The Climate Change Climate Change
Among the many reasons President Barack Obama and the Democratic majority are so intent on quickly jamming a cap-and-trade system through Congress is because the global warming tide is again shifting. It turns out Al Gore and the United Nations (with an assist from the media), did a little too vociferous a job smearing anyone who disagreed with them as “deniers.” The backlash has brought the scientific debate roaring back to life in Australia, Europe, Japan and even, if less reported, the U.S.
Softwarengineer • June 26th, 2009 at 11:54 am
EXACTLY PETEWhere’s the job growth? Our politicians should take adequate time to study and actually read thick bills before they implement them. That’s what we pay them to do.The imminent rush to implement has been our downfall.
Softwarengineer • June 26th, 2009 at 11:57 am
I HEAR GEITHNER WAS IRRITATED WITH AMERICANS SAVING TOO MUCH TOOLOLWhere’s the friggin’ CHANGE?
Softwarengineer • June 26th, 2009 at 12:06 pm
YOU’RE RIGHTI go to UK news and find stuff Ameican media never prints.Did you know Japan’s exports are currently down 50% and their car exports to America are down like 71%….LOL, GM and Chrysler look good in comparison…..China’s exports are down 25%….nope, when America sneezes, the rest of the world catches pneumonia…Hey, maybe a GM or Chrysler car is a less risky bet, at least Obama guarentees the warranty….LOL
TfT • June 26th, 2009 at 12:14 pm
Hypothetically, does a comprehensive universal health care system that include everyone for basic medical cares from new-borns to elderly solve at least a certain portion of Medicare problem? I said ‘hypotehically’ because a comprehensive universal health care system for the people is NOT going to happen in the US.
Morbid • June 26th, 2009 at 12:47 pm
New Thread
Mark • June 26th, 2009 at 12:51 pm
Anonymous, I don’t agree with your suggestion that nuclear is in any way viable. Further, the “solution” isn’t to seek more and more energy, it’s to learn to conserve. Otherwise we’ll be chasing the energy ghost until we totally over-populate and trash the planet. And 10 – 15 years? Not going to happen. Our window of opportunity for anything resembling a transition passed by at least 20 years ago.Econ, yes, rail is more efficient (I regularly experience Vancouver, B.C.’s Skytrain), but I’ve still got to ask why it is that we feel that we have to be hurling our bodies all over the place? I have friends who don’t own cars, only ride bikes: I too ride bikes, though mainly for commuting.Mark
Mark • June 26th, 2009 at 12:53 pm
Amen!Mark
economicminor • June 26th, 2009 at 12:53 pm
Minsky postulated that when risk was ignored by an economic system, this leads to distortion and eventual decline until such time that risk has been squeezed out of the system. Stability leads to instability and instability eventually leads to purging and stability. This goes hand in hand with Austrian Business Cycle Theory. Sort of explaining why it works.I have seen/read no reasonable or even plausible explanation that nullifies these theories.As in sine waves, there are many different durations and lengths. I see what is happening as a large rounding top rather than a correction. We have not purged the system of risk. All we have done is shuffle the deck chair on a sinking ship. The risk was moved from the TBTF banks to the even bigger TBTF government but little of the debt has been wiped out and few of the imbalances have been rebalanced.None of what has been done has addressed the real underlying issue of consumer or business insolvency. Profits which should go to the stock holders (the public) or expansion or even R/D is being consumed by debt servicing. The debt is so huge, companies are forced to lay off workers which just exacerbates their and other company problems.What the elite do not want is rebalancing because the scale of imbalance is so large, it really means that many of them really have nothing and would be or will be insolvent also. Their policies are to transfer to the lower echelons of workers the cost of their follies (or lack of attention to real underlying risks). I believe we are at the top of a K wave.As Kondratieff discovered in his research. Nothing goes straight anywhere. Economies move in waves. Waves up and waves down. The waves up are longer and higher than the waves down but never the less we have to have corrections of the imbalances in order to build the next leg up. The longer the imbalances are papered over or ignored, the bigger the correction. Keynes, Kondratieff, Minsky, Mises and E.T.A.L. were all good at understanding the basis of economics. We have seen what is happening to us many times in history and after we get through this, it will happen again in the future. It is just human nature. Blind optimism leads to mistakes which if not corrected lead to massive imbalances and catastrophe. If you create debt, it must be serviced or repudiated because in the end, you can never inflate it away by using more debt because the more the debt, the more the service cost and when you take to much in service plus taxes there is a point where production fails under the load. The old last straw on a camel that breaks its back.So at this moment in time, we are stranded on the slight down side of a huge build up of debt and risk while those who pull the strings and push the buttons do absolutely everything they can to keep from moving down the other side of debt collapse, rebalance and in many of their cases, insolvency and bankruptcy.Why do I see this? Because on the way up, money that isn’t leveraged is losing value. So most of the big gainers are more than totally leveraged. They made the big gains. The trouble is that leverage in a deflationary cycle is a killer.Many of you believe that it is possible to fill the holes of debt with more debt or even by devaluing the currency. I say, no system has ever been able to do that in at least 3000 years of systems, and it is illogical that it can work because it will just create more imbalance and imbalance is one of the main problems. So if creating more of what caused the down turn is the answer then it will work but I say that is not logical nor in my world mathematically possible.But TPTB will try anyway because they have to in order to stay in power.But just like the up cycle wasn’t straight up, neither will the down cycle of deflation and debt collapse be. We will have false hope rallies and some things like commodities might even rise for much longer than anyone believe they can.
Mark • June 26th, 2009 at 1:13 pm
Excellent commentary!To simplify: it’s like being on a sinking raft in which air is rapidly being pumped back in, which is good, but in the process we’re all being thrown overboard. Raft lives, we don’t…Let go of the raft. Let go of the shore. Learn to swim…Mark
Mark • June 26th, 2009 at 1:26 pm
The unending act of misappropriating a land’s collective assets year after year has a way of ensuring this final result. As Ethel Grodzins Romm alleges,“What could our worst enemy do to damage this strong and beautiful country? He could do no better than to get us to squander our human and natural resources on dubious missions and then trick us into plugging our ears against the howls of those who object.”
Read this:International Bailout Brings Us Closer to Economic CollapseMark
Mark • June 26th, 2009 at 1:41 pm
You might find this interesting:Gaia’s evil twin: Is life its own worst enemy?Mark
JoyceF • June 26th, 2009 at 9:17 pm
Economic growth may be reported; it’s “uneconomic churn” we get.
farnorth5 • June 26th, 2009 at 11:15 pm
Well,yes the answer goes beyond the question of population,but that is part of the physical solution,as well as a more equitable sharing of the earth,s resources.But what can you do when our current economic system is only based on more production at any cost? What Mark appears to be pointing out is that there is a real disconnect between the Physical Economy and the Financial Economy.There is no such thing as physically continuing to grow at a constant rate in perpetuity,notwithstanding the Official Opinion of all Chambers of Commerce around the world.The physical economy doesnt allow it ,notwithstanding increases in technical knowhow from time to time.The current financial system is not providing a basis for a balanced world economy.Physical Shortages and Pollution are the order of the day.Under the current system ,for example ,no one is responsible for the garbage floating in the Pacific Ocean in massive amounts or the Oceans Freighters using the most polluting Bunker Fuel or for the Fishing Devastation where 80% of the biomass from 100 years ago is GONE from the Worlds Oceans.We are truely living in a physical dream world as well as a financial dream world.All because we refuse to accept responsibility for our group actions (Read-Government) and the resulting lack of change to our Financial Systems.They are simply not designed to do the job we are asking of them.Perhaps one day the Atlantic Ocean waters will come in the front door of the New York Stock Exchange and finally someone will actually take serious PUBLIC ACTION for the betterment of all Peoples of the World.
Farnorth5 • June 26th, 2009 at 11:58 pm
A very interesting comment!!!As you probably know most other western countries have a Medical Plan that is based on an Individual State/Province and NOT FEDERAL as is sometimes commented on.The State in question has a Private/Public Partnership that includes appropriate user fees and budgets the costs and the Doctors continue with their private practices and bill the State rather than the Private Health Care Company.This has the effect of all companies and Federal Govts, small and large not having to get involved in Health Care Plans for current staff or retirees.This is truly a BONUS situation for the employer and an advantage for the employee,as no deduction comes off the pay cheque…However all plans around the world are having to face up to the issue of NEW TECHNOLOGY in the system and the new costs (NEW OPERATIONS,NEW PROTOCOLS,NEW DRUGS Etc)at a slowly increasing rate over this past 30 Years ,to the point there has been a Ten Fold Increase overall….The President is probably correct,in that there are probably substantle savings possible,but,who amongst the parties are going to volunteer TO CHANGE????
TurnaroundBlogger • June 27th, 2009 at 1:21 pm
Dr. Doom predicts the recession’s end in 2011. Will he be right again?Your guess about when the recession will end may be as good as his.To find out, enter my contest, “ARE YOU SMARTER THAN AN ECONOMIST?” athttp://theturnaroundblogger.com/index.php/are-you-smarter-than-an-economist/
Young Economist • June 28th, 2009 at 12:11 am
The climate change bill that recently passed is the bad example of the reckless policy. This applies for the domestic producers and if it does not apply to the imported goods, there will be the collapse of domestic businesses and US jobs from uncompetive domestic production. The governments are saying that the bill will create the jobs but that is in the case that we also have the tax and fee on the imported goods that are from the high carbon foreign production .Therefore, government should tax on imported goods the same as the domestic producers on the carbon emission. If there is the tax on imported goods with the high carbon emission, it will create some jobs in domestic industry especially in alternative energy and maybe US can get the oversea income from creating the organization to inspect the carbon emission, get fee from the certificate, and sell the new alternative energy. The oil price will be much lower from lower demand; therefore if we apply the bill to all domestic goods and imported goods, we will have the more jobs, more foreign income (lower trade deficit) and lower price or lower cost of living and cost of production.The recklessness is not enforcement of the bill on foreign goods and foreign production and it turn the economic situation worse, rather than better.I think it is bad news but it can turn into good news.
Anonymous • June 30th, 2009 at 3:23 pm
So??
Nanotechnology or the Devil • June 30th, 2009 at 7:25 pm
Nanotechnology! Ok! But, and Startrak, this is also Ok!The call of this interview has nothing with the content of the interview.Roubine annouces the economic recovery for 2011… but maybe! This is his know actual scenery. Nothing new!But, by other side: “Anonymous on 2009-06-30 15:23:42″ is on a insolent way! My apologyse in the name of thruth, in the name of the entire group of the readers of this Blog! FIRST (or better, FIRSTO) is a velvet plume in the cold and dark night in Cabiria!Please, be our “first” forever…
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