"Eye-tee', not "One-tee". IT.

Gee, I thought Robert was close enough for government work.

Originally Posted by monoghan

"Eye-tee', not "One-tee". IT.

Gee, I thought Robert was close enough for government work.

My bad. Blame my ageing Boomer eyes. :oops:

In the Gloom and Doom Community "IT the Big One" is the gigantic financial earthquake which will destroy our fiat monetary system. Sorry for the misunderstanding.

Originally Posted by The Wonk

Originally Posted by monoghan

"Eye-tee', not "One-tee". IT.

Gee, I thought Robert was close enough for government work.

My bad. Blame my ageing Boomer eyes. :oops:

Don't you dare! ;-)

Originally Posted by Kevin Parker '59

Originally Posted by The Wonk

Originally Posted by monoghan

"Eye-tee', not "One-tee". IT.

Gee, I thought Robert was close enough for government work.

My bad. Blame my ageing Boomer eyes. :oops:

Don't you dare! ;-)

Actually, my eyesight stank from the tender age of seven. I've ALWAYS had bad eyes! However, I never had to wear bi-focals until shortly before 4T began.

:sad:

Here's an interesting article by George Soros on market reflexivity.

http://www.thenewrepublic.com/doc.mh...&s=soros090202

There is a generational angle, but its not emphasized. I discussed this in my K-cycle book. Note how he describes how the conglomerate boom of the late 1960's was "contained" by the establishment (mostly Civic) but that the 1990's boom was let to run its course by the establisment (mostly Boomers and Silents) because of "market fundamentalism".

Market fundamentalism is a belief system, in certain ways almost like a relgion that is based on ideas of how economies ought to work. It assumes a kind of benevolance to amoral markets. It naturally appeals to idealistic generations, who focus on what "should be" as opposed to materialist generations, who focus on what is.

Over the first two decades of this century, the markets and economy are going to perform poorly. Millions of Boomers and Silents who believed will find their faith shattered. More importantly, late wave nomads and heroes who can remember the 1990's boom will marvel at how their elders could have been so stupid. And when the next boom peaks in the late 2030's, they will call a halt to any "90's style" foolishness, just as did their predecessors in the 1960's.

The key je ne se qua that might be missing from the solutions of these so-called "market fundamentalists" is Trust.

Free market economics is great but requires people to trust one another enough to deal with one another. People build public institutions that make regulations in order to promote trust.

While in one view these institutions tend to hinder the economy, in the long haul the economy would be much worse if no one trusted one another.

Can private institutions alone create this kind of trust? I don't know. The "market fundamentalists" would say "yes." But trust is something, that, as far as I know, cannot be measured.

Does anyone know how it could be done?

Originally Posted by Mike Alexander '59

Here's an interesting article by George Soros on market reflexivity.

There is a generational angle, but its not emphasized. I discussed this in my K-cycle book. Note how he describes how the conglomerate boom of the late 1960's was "contained" by the establishment (mostly Civic) but that the 1990's boom was let to run its course by the establisment (mostly Boomers and Silents) because of "market fundamentalism".

Market fundamentalism is a belief system, in certain ways almost like a relgion that is based on ideas of how economies ought to work. It assumes a kind of benevolance to amoral markets. It naturally appeals to idealistic generations, who focus on what "should be" as opposed to materialist generations, who focus on what is.

Over the first two decades of this century, the markets and economy are going to perform poorly. Millions of Boomers and Silents who believed will find their faith shattered. More importantly, late wave nomads and heroes who can remember the 1990's boom will marvel at how their elders could have been so stupid. And when the next boom peaks in the late 2030's, they will call a halt to any "90's style" foolishness, just as did their predecessors in the 1960's.

Thanks, now I feel SO much better.

As a boomer, I always assumed that the likelihood of a comfortable retirement was pretty slim. Boomers have seen prices rise and compensation fall in response to our bloated demographics, so adding stupidity to the mix only makes the bad a little worse.

BTW, great article. Thanks.

We're at a crucial point in this saga of the greatest financial assets mania of all time. The S&P 500 has just completed what the technicians call a "Head and Shoulders Top". If you look at a linear graph of the S&P 500 (not one of those flakey logarithmic graphs the brokers use to fool their customers into believing the market is in an upward "channel") you'll see that over the last four years the graph forms something that looks like a person's head with a shoulder to each side. The market made this same formation back in 1987 during that crash. The Japanese market did the same thing right around 1990 when it crashed.
The question is now what next? After the Panic of '87 Sir Printsalot (Big Al) pumped like crazy and managed to avoid a further slide if not a Depression. Can he do it again? It all comes down to whether his Big Green Credit Machine is still working. There's no way to predict this. The economy is basically a gigantic massively parallel computer running in real time which continuously cranks out the clearing price for everything from beer to underwear and it is impossible to foretell what it will do(if some financial advisor says to you he has a "model of the markets which predicts blah blah blah..." RUN do not walk to the nearest exit). As always we'll have to wait and see!

Here's one for Mike Alexander: :wink:


Well, I know that Newt Gingrich thinks that "it's 1930", and today I heard this shocker:

"We've got a parallel to 1929, here. Not nearly as bad, but we had the same situation. We had a slow growing economy and we had budget deficits." Rush Limbaugh (September 13, 1929)


Bringing back Hoovernomics?

"Ironic as it may seem, ignorance of economics and history in Washington is so pervasive we may repeat the disastrous mistakes of 72 years ago, which gave us the Great Depression."

We've ALREADY made the mistakes which will produce a Depression. We've been making those mistakes for the past 20 years if not the past 70 or 80 years! If there is going to be a deflationary Depression it will simply happen. There is NO WAY to avoid it now. It isn't the actions you take after the bust starts that make a difference, it's the actions you took during the prior Boom that are causing the problem now. Or don't you believe in cause and effect? Milton Friedman was wrong when he maintained that the Fed caused the Thirties Depression by their refusal to "print money". They DID print money. A lot of it! That's ALL they can do! That's all they've been doing for the last 70 years. The only question now is is this IT? Are we now in a Depression?

Originally Posted by Marc Lamb

Here's one for Mike Alexander: :wink:


Well, I know that Newt Gingrich thinks that "it's 1930", and today I heard this shocker:

"We've got a parallel to 1929, here. Not nearly as bad, but we had the same situation. We had a slow growing economy and we had budget deficits." Rush Limbaugh (September 13, 1929)


Bringing back Hoovernomics?

"Ironic as it may seem, ignorance of economics and history in Washington is so pervasive we may repeat the disastrous mistakes of 72 years ago, which gave us the Great Depression."

Not exactly, this Hoover is going to war.

The main reason we are going to war (I can't think of any other) is to maintain our position as the world's policeman. In return for policing the entire world foriegn investors will continue to hold dollars. That's the deal: We'll keep the peace so long as you continue to soak up all the dollars we print. This is the ONLY thing holding up our economy. As Dr. Richebacher has noted, when the dollar breaks so will the American economy.

The latest figures for the Second Quarter 2002 are in over at the Federal Reserve Website. They show that Total Aggregate Debt (the TRUE rate of inflation) is growing at 7.37% at annual rate. This up a bit from 2001 which was at 7.27%. The long term average is about 9.45%. Anything much below that indicates the economy is in recession (no kidding!).

So, no real deflation yet EXCEPT in the Stock Market Bubble. The Total Value of all US stocks topped out at 20.3 Trillion several years ago and the latest figures show the entire market is now worth 13.3 Trillion. This is bad but this bear market has not yet matched the 1974-75 bear market in which the market lost half (50%) of its value. The market will have to lose another 3 Trillion to match the early 70's bear market.

I have the sense that we are at a critical point. If the market loses too much more value we will be beyond the Point of No Return just like the Japanese are now. Remember that lost 7 Trillion was all borrowed money. Someone was depending on that money and now it is GONE. That will tend to put a crimp in any further efforts to reflate. No use throwing more money after bad.

J. P. Morgan closed at 16.88 today. Once the stock breaks below 16 it'll REALLY start to accelerate downward. Once J.P.Morgan is dead General Electric will be next on the bear hit list. ("Hey Tony, you want we should clip him?")

I have a question concerning the behavior of the stock market in the year leading up to the crash. Was the market fairly stable or did it fluctuate wildly up and down? (sort of like it is doing now) I seem to recall that it was a wild ride some time before wall street ran into a wall or fell off a cliff, which ever image you prefer. Reminds me of the Arlo Guthrie song. The Motor-sickle Song. "Forunately I didn't run into the mountain; I ran off the cliff instead."

I just have this feeling that we're close.

:-? Well... OK... I'll try to look it up myself. It wasn't that important anyway. I just thought someone knew. :-?

Originally Posted by buzzard44

:-? Well... OK... I'll try to look it up myself. It wasn't that important anyway. I just thought someone knew. :-?

Sheesh. Don't go away mad, Buz!

In short, the answer is no. Aside from the farm markets, which were racked due to trade barriers ans other things, the Dow was blazing "up, up, up" for about four years prior to the crash (it did so, again from 1933 to 1936, too).

But there were clear signs (always is) of a wild bubble in stock prices. Any right-thinking man was out before the crash.

But folks aren't comparing 2002 to 1928. That bubble has already burst. It's 1930 to them. Here's what I wrote before in this thread about that:



Dateline: Oct. 28, 1929, The Wall Street Journal's main headline announced that the Industrials were off 38.33. The next day, they fell another 30.57 points. (Those two plunges, of 12.82% and 11.73% respectively, remain the second-highest and third-highest of all time in percentage terms, behind the record 22.61% crash on Black Monday, Oct. 19, 1987.) In six days, the industrial average lost more than 96 points, nearly 30% of its value.

Such is history, huh. But did you know... the Dow came racing back in 1930 to nearly match that October high of 360.64? Yup, by April of 1930 the Dow stood at 293.18, or down just 18.7% from it's previous high.

But that's just when things got messy... some say more greed, some say the winds of the anti-trade Smoot-Hawley, some say Hoover's rumor of raising taxes darkened the skies, but darken they did. The slide was down, down, down from that month on. All the way down 85.3% before the bottom was reached in the summer of 1932. Eighty five point three percent! In two short years, Hoover had manged to travel back in time, back to the year 1908 to be exact. Just after the great "Panic of 1907", the Dow stood at 42.92 in February of that year. Back to the days, Hoover went, to when Mr. Morgan agreed to rescue the economy & Theodore Roosevelt was President. On the 26th of June, 1932, just before another "Roosevelt" was about to change America forever, the Dow stood slightly higher, than it had twenty four years earlier, at 42.93.

Such is history, huh? Zip forward to the post-9/11 world of 2002... Ok, the Dow takes a major hit when the market reopens in late September. But by Wednesday, March 27, 2002, the Dow Jones industrial average closed up 73.55 at 10,426.91, therby regaining more than all the loses incurred the previous year.

Then it happened. A rumor here, a rumor there. A bad move by Congress here, an unconvincing word from the President there. The oracles sound off, The economy is fundamentally sound, they say. Down go the common stock, down, down, down...

Now try to imagine the same scenario playing out... down 85.3% goes the vaunted Dow. Down 8894.15 points in the next two years!

It's summer, 2004. The Dow stands this day at 1532.76, and Mr Bush finds he has gone back in time, back, back, back... Back before his father was President, back even before the Crash of 1987... for Mr. Bush finds himself back in January of 1986, yep just before the Challenger explodes in full view of millions, the Dow stands at 1537.61.

Great scenario for all you liberals, huh? No pain, no gain, they say. :wink:

Perhaps the NASDAQ is a better stock market for our generation. Two or three years ago it topped 5000. Lately it has barely been over 1000. Is this our equivalent to the c1930 DOW bear market?

I know that there is a lot of discussion going about whether our economy is improving or not.

Here is one sign that its not. Food stamp caseloads are up, up, up.

In the next few days, USDA is officially going to release numbers showing that between August and July 2002, food stamp caseloads rose by over 350,000 people, to 19.7 million Americans. This represents an increase of nearly two million from August 2001 and a jump of 2.8 million from the low point of July 2000.

Also, the August numbers do not include the immigrant restorations from the Farm Bill. A small handful of legal immigrants became eligible on October 1 but most won't be allowed to participate until after April 1, 2003.

Of course, we are nowhere near our peak, which was March 1994, when just under 28 million Americans received food stamps.

We'll find out how the economy is doing November 6. The Federal Reserve Open Market Committee meets. If they hold steady they at least THINK things are getting better. If they cut again it would indicate things are deteriorating.

EDITORIAL ? November 3, 2002

The productivity surge


At last week's conference on productivity sponsored by the Department of Labor and the American Enterprise Institute, Federal Reserve Board Chairman Alan Greenspan began his comments with a rather startling observation. "The increase in nonfarm business output per hour over the past year," Mr. Greenspan declared, "will almost surely be reported as one of the largest advances, if not the largest, posted over the past 30 years." Given the fact that the four quarters through June, including the September 11 quarter (when the economy was in its third consecutive quarter of decline) and the first half of 2002 (when the growth rate of final demand fell in the first quarter and became negative in the second), that is a truly remarkable achievement. For the year ending June 30, nonfarm business output per hour of labor ? the technical definition of productivity ? increased by an astonishing 4.9 percent.

The recent acceleration of the rate at which productivity has been increasing in recent years requires some perspective. First, the rate of increase of productivity for the past year is double the annual change experienced during the go-go years of the second half of the 1990s, when yearly increases averaged 2.5 percent. Second, that 2.5-percent annual rate of increase from 1996 though 2000 represented a significant improvement over average annual changes in productivity experienced during the preceding 22 years (1974-1995), when the rate of increase averaged 1.5 percent a year. The 1974-1995 average annual rate of increase reflected a 50 percent plunge from average annual 3 percent rate of increase that prevailed from 1960 through 1973.

To be sure, nobody expects the unusual productivity surge of the past year to continue at its torrid pace. However, the fact that productivity has performed so well during the tail end of a recession and the beginning of a decidedly modest recovery is an important development. It has provided even more evidence supporting Mr. Greenspan's belief that the "significant step-up in the growth of productivity" that occurred during the second half of the 1990s "appears to have persisted." And it strongly suggests that the step-up will continue to prevail in the foreseeable future.

The importance of faster productivity growth cannot be overemphasized. As Federal Reserve Board Vice Chairman Roger Ferguson observed in his own speech about recent productivity trends last week in London, "[F]aster productivity growth raises real wages, stimulates growth in real incomes and contributes to an increase in our standard of living." Strong productivity increases also contribute to a non-inflationary environment, which is more conducive to higher long-term growth in the economy, in wages and in profits. There was a clear causal relationship, for example, between the impressive gains in productivity during the second half of the 1990s, on the one hand, and a five-year average annual economic growth rate of 4 percent, relatively robust increases in wages of non-supervisory employees and significant improvement in corporate profits on the other.

The long-term consequences of the 1 percentage point increase in productivity from 1.5 percent (1974-1995) to 2.5 percent (1996-present) are extremely beneficial. The 1-point increase means that output per hour of labor will double in less than 30 years rather than nearly 50. In addition, the Labor Department estimates that a 1 percentage point increase in productivity would reduce the cumulative budget deficit by $2 trillion over 10 years; and it would reduce the projected Social Security shortfall by 25 to 50 percent over 75 years.

Perhaps the best example of the impact of productivity can be gleaned from the manufacturing sector, where output growth has been especially impressive over the past 10 years. Total manufacturing output has increased by 44 percent over the past 10 years, during which time manufacturing employment has declined by 7 percent. That represents a 55 percent increase in productivity (output per hour of labor). In durable-goods industries, output has increased by 77 percent, while employment has declined by 3 percent, representing in increase in productivity of 82 percent over the past 10 years. In other words, if 100 workers produced 300 refrigerators a week in 1992, today 97 workers would be producing 550 refrigerators.

Milton Friedman once famously remarked that in economics "there is no such thing as a free lunch." True. But rapid increases in productivity probably come as close as any other economic phenomenon to approximating that ever-elusive free meal.

Today's election is of absolutely NO IMPORTANCE. It doesn't matter who wins. The IMPORTANT decisions will be made tomorrow at the Fed meeting (by unelected bureaucrats) as to whether or not interest rates should remain the same or be cut again.

Originally Posted by Robert

Today's election is of absolutely NO IMPORTANCE. It doesn't matter who wins. The IMPORTANT decisions will be made tomorrow at the Fed meeting (by unelected bureaucrats) as to whether or not interest rates should remain the same or be cut again.

I don't know how important it is, but they will probably ease 25 points. 8)

I just finished a major article on shorter term business cycles and their relation to generations. It suggests that a real estate bust is not in the cards just yet.

http://www.safehaven.ca/Editorials/Alexander110602.htm

Today is the end of the Bronson bear market attractor window. We might be at the beginning of a multiyear bull market.

Could be another false alarm, so I'm keeping 20% cash as a reserve. But I am 80% invested so let the bulls run!