1929 and 1987 were not election years. :wink:Originally Posted by Tom Mazanec
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1929 and 1987 were not election years. :wink:
I want people to know that peace is possible even in this stupid day and age. Prem Rawat, June 8, 2008
Sounds like a sales pitch for this guy's newsletter. So what does he recommend we do to protect ourselves?
I want people to know that peace is possible even in this stupid day and age. Prem Rawat, June 8, 2008
Just because a guy is a salesman doesn't make him wrong. I snipped the pitch, if you want to read it, click on the link.
My father moved recently to a nursing home. I am learning the hard way how much this costs. I may soon have to pull back my spending. Could a generation of post-elder parents in nursing homes help trigger/exacerbate the Great Devaluation?
Funny, my grandfather (Lost, 1896) moved his wife and two kids (my dad was 12 months old at the time) into his father's house in 1931, in order to weather the depressed economy. His sister also did likewise one year later, with her husband and two children.
So here's the elder Lamb, a Missionary immigrant, suddenly with a house full of little Brown Lambs, just as he reaches retirement age. Obviously he didn't retire, as a train engineer, as planned. He worked until he passed away some ten years later.
In other depressing news...No doubt the Commerce Department is cooking the books to help Bush. Boy, for being such an idiot moron, that Bush sure is clever, huh? :wink:
- WASHINGTON (Reuters) - U.S. new home sales jumped a surprising 9.4 percent in August, the fastest acceleration of sales in almost four years, as a fresh dip in mortgage interest rates attracted buyers, a government report showed on Monday.
Sales of new single-family homes climbed to a seasonally adjusted annual rate of 1.184 million units from a downwardly revised 1.082 million units the month before, the Commerce Department (news - web sites) said. It was the sharpest climb since December 2000.
Half the staff at the group home where I work are over 65, the other half (including me) plan to work till we become residents ourselves. Maybe this will delay the Great Devaluation?
Nope. Our society will just spend three times what you're saving and bring on the GD that much faster.
Americans have had enough of glitz and roar . . Foreboding has deepened, and spiritual currents have darkened . . .
THE FOURTH TURNING IS AT HAND.
See T4T, p. 253.
I posted this on the Energy Crisis thread, but it fits here just as well:
On the days that I don't publish, like today, you will
receive Bill Bonner's DAILY RECKONING. This will help you
to keep pace with the changes in the markets. Bonner and
I agree on most things in the field of economics, so the
two letters will reinforce each other.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * *
White Elephants
The Daily Reckoning
London, England
Wednesday, September 29, 2004
---------------------
*** A banana republic slips up - the humor of it all...
*** Bonds... the bandwagon... and Abelson's friend...
*** London house prices... Euro-snobs... the correct way to
pronounce 'often'... and more!
---------------------
"The world economy is on a collision course," writes
Stephen Roach.
The irresistible force of excess spending is about to run
smack dab into the immoveable object of massive debt.
Yesterday, the two closed in on each other. The price of
oil rose over $50 a barrel for the first time ever.
Of course, adjusted for inflation, oil is still cheaper
than it was at the time of the last oil crisis, 30 years
ago. But since then, a lot has changed. Since 1980, the
world has pumped out more oil than it has discovered. Last
year alone, a billion more barrels were used up than the
year before.
But that's not all. Thirty years ago, Americans were in a
better position, as more of their oil came from domestic
wells. And they had more money to pay for it.
Now, with oil less plentiful and more sought after, we
can't help wonder: How will Americans be able to afford it?
They must rely on the kindness of strangers...
"The United States - long the main engine of global growth
and finance - has squandered its domestic saving and is now
drawing freely on the rest of the world's saving pool,"
explains Roach. "East Asian central banks - especially
those in Japan and China - have become America's financiers
of last resort. But in doing so, they are subjecting their
own economies to mounting strains and increasingly serious
risk. Breaking points are always tough to pinpoint with any
precision. Most serious students of international finance
know that these trends are unsustainable...
"[O]verly extended U.S. consumers have wiped out any
vestiges of saving - taking the personal saving rate down
to a rock-bottom 0.6% in July 2004. In short, America is no
longer using surplus foreign saving to support 'good'
growth. Instead, it is currently absorbing about 80% of the
world's surplus saving in order to finance open-ended
government budget deficits and the excess spending of
American consumers.
"It wasn't all that long ago that the United States was the
world's largest creditor. In 1980, America's net
international investment position - the broadest measure of
the accumulated claims that the United States has on the
rest of the world less those that the rest of the world has
on the United States - stood at a surplus of $360 billion.
By the end of 2003, that surplus had morphed into a deficit
of negative $2.4 trillion, or 24% of U.S. GDP.
"This transformation from the world's largest creditor to
the world's largest debtor is, of course, a direct
outgrowth of year after year of ever-widening current
account deficits. Moreover, reflecting the particularly
sharp widening of America's current account deficit in the
past year - an external shortfall of 5.7% at mid-2004 that
is already running 1.2 percentage points above the 4.5% gap
prevailing at year-end 2003 - America's net international
indebtedness could easily hit 28% of GDP by the end of this
year... As scaled by exports - a good way to measure the
ability of any economy to service its external debt -
Roubini and Setser point out that U.S. international
indebtedness could be closing in on 300% of exports by the
end of 2004. By way of comparison, pre-crisis debt-to-
export ratios hit about 400% in Argentina and Brazil. Of
course, America is far from a 'banana republic' - or is
it?"
Roach points out that countries, like individuals,
eventually run out of time, out of money and out of luck.
When a banana republic slips up... it may be a terrifying
event for those in the country, but for us, it is primarily
comic. We laugh at triple-digit inflation rates and wonder
how the big banks could have been so stupid as to lend them
money in the first place.
But when China and Japan stop enabling America's credit
habit, many people will fail to see the humor in it. Asset
prices will fall, real rates will rise and all of a sudden,
people will be poorer than they thought they were... but, of
course, no poorer than they ought to be.
"It is not necessary for the market to decline sharply at
this time," writes Arch Crawford, gazing at the stars. "The
market will do what it pleases. We feel strongly that it
will drop steeply before March 23, 2005."
More horrid news on the economic front:However, it should be noted that U.S. economic growth for the second quarter has plummeted, from already sluggish 4.5% of the first quarter, to a near Great Depression-like 3.3%.
- World growth may be best since ?73, IMF says
Thursday, September 30, 2004
WASHINGTON (AP) ? The world economy this year should post its best growth in three decades even though oil prices are up sharply and economic activity in the United States probably will be slower than previously thought.
Those were some of the assessments in the International Monetary Fund?s World Economic Forecast released yesterday.
After expanding by 3.9 percent in 2003, the global economy now is projected by the IMF to grow by 5 percent in 2004, up from the 4.6 percent increase estimated in April. If accurate, it would mark the strongest growth since 1973, an IMF spokesman said.
Can Bushvilles be far behind these kind of numbers? Democrats should be very encouraged indeed.
Life can look pretty rosy in the short run when you're spending profligately on credit.
Americans have had enough of glitz and roar . . Foreboding has deepened, and spiritual currents have darkened . . .
THE FOURTH TURNING IS AT HAND.
See T4T, p. 253.
Devil's Advocate:
What was the economy like in the later part of the "Roaring Twenties"?
Tom Mazanec:
What was the economy like in the later part of the "Roaring Nineties"?
Excerpt from http://www.jamesgoulding.com/SA_s.html
He bases his theories on two basic ideas. First, invention cycles. Second, the consumer. In the invention side of his theory, he states that we are currently in a 500-year cycle (the printing press, 500 years ago) and an 80-year cycle (the auto, 80 years ago). In modern times, the transistor is the 500-year cycle (1947) and the Computer (1981) is the 80-year cycle.
What?s important to point out is that the computer is on course to reach 90% U.S. household penetration in 2008. The 90% penetration level is never a good thing for the economy. The last major invention to do this was the auto. It reached 90% in 1928.
The consumer is the other side of Dent?s equation. He simply states that the average person predictably spends money over the course of their life span. They spend more money up until their 46th birthday; (46.5, to be exact) then, their spending declines for the rest of their natural born life. You can chart this spending pattern by projecting the birth rate ahead by 46.5 years. (This theory can be used for numerous other economic interests, including housing.)
If we use the Boomers, as an example, Dent says it?s pretty easy to project how the economy is going to move by taking the yearly birth rate, minus deaths, plus immigration and lag it forward. Then, he lays this chart over a chart of the DJIA, and it matches.[2] It?s quite amazing. However, you can?t just take the any old generation and do this. If you want the chart to match the DOW, it must be an Idealist generation.
All four archetypes play a role in the consumer cycle and the invention cycle. I?m not going to go into great detail about Dent?s theories. They are so simple it?s scary. Buy his book. It only takes two days to go through it.
Earlier, I mentioned the computer will hit, that economically devastating, 90% U.S. household penetration rate in 2008. The computer is not the only mass-consumer device that will hit that rate in 2008. The Internet, cell phones, and broadband hit 90% at the same time. When all these devices hit 90% U.S. household penetration rate, we can expect the Great Devaluation will be just around the corner. Probably, in October, 2009. If you line up the economic, generational, and invention cycles from 1901, with today?s current cycle, the result is an economic crash.
The 1901 v. 1981 cycle is extremely similar. Looking at the stock market we have the 1987 v. 1907 crash, and the 1920-21 crash v. the 2000-01 crash (for simplicity I?ll be using 1920 for the 1920-21 crash and 2000 for the 2000-01 crash). The 1920 the 2000 crash are so similar it?s scary.
Both crashes were about technology. The crash, in 1920, was about the auto industry and the crash in 2000 was about the computer industry. Back in 1920, the S&P Tire & Rubber Index (SPRTI) and the S&P Autondex (SPAI) can be compared with today?s NasdaqND). The ND, is the index for today?s current technology companies.
If we look at October, 1919 to April, 1922, the SPAI lost 70% of its value.[3] Furthermore, from June, 1919 to about January, 1922, the SPRTI lost 72% of its value.[4] Shoot forward 80 years. The ND lost over 80% of its value from its high, in 2000, to it?s low in 2002.
What about individual companies? In about the same time frame, General Motors lost 75% of its value.[5] Flash forward again, to 2000, Microsoft hit a weekly high of $117.37 in January, 2000. It bottomed in October, 2002 at $43.81. That?s a 63% loss of value.
To continue the similarities between eras, let?s take a look at the 50% U.S. household penetration rate. The Internet hit 50% U.S. household penetration in late 2001[6] and the Auto hit 50% U.S. household penetration in 1921.[7] The Computer hit 50% penetration in 1999.[8]
In conclusion, we see that the Auto and Computer cycles, of 1901-1929 v. 1981-2009, are very similar in nature. What about the generational cycles?
Births
? 1901, new Hero generation born
? 1982, new Hero generation born
Ages of archetypes alive in 1901 (generation)
? Nomad, ages 1?17 (Lost)
? Idealist 18 to 41-years old (Missionary)
? Adaptive 42 to 57-years old (Progressive)
Ages of archetypes alive in 1981
? Nomad, 0 to 20-years old (Generation-X)
? Idealist, 21 to 38-years old (Boom)
? Adaptive, 39 to 55-years old (Silent )
--------------------------------------------------------------------------------
[1] The Roaring 2000s, by Harry S. Dent JR., published by Simon & Schuster through their division, Touchstone, Rockefeller Center, 1230 Avenue of the Americas, New York, NY 10020.
Devil's Advocate, the Roaring 2000s are the pertinent decade. We are in the equivalent of the mid-Twenties now.
Yes and no, Tom. I do find it interesting that post-modern liberals in fact sound very Mellon-like these days:In other words, very moralistic. One might consider that Mellon was not a Boomeresque figure, but rather an "adaptive," cut from the same S&H cloth as Croaker, our Silent 4T poster. Mellon's moralism was, in truth, rejected by Herbert Hoover. Instead Hoover reacted to the crisis with lots of government intervention. Intervention that, until that time, was considered an outrageous afront to personal freedom. The truth is, Hoover probably did more to worsen the depression, with high, isolationist tariffs, income tax increases and timidly dour Pollyanish pipings, and thus seal his own fate.
- As late as 1930, Secretary of the Treasury Andrew Mellon held that a panic might not be such a bad thing. "It will purge the rottenness out of the system," he added. "High costs of living...will come down. People will work harder, live a moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people."
Yet, FDR's "Happy days are here" preceded a still long -- long -- tough road ahead.
And that's where I have come to live with all this doom and gloom, dire predicting of the so-called "Great Devaluation" coming... So what? So life is gonna be tough, is gonna be dark? Hey, life goes on, dude. Sittin' around in a daze of gloom about what bad thing may happen is not, I repeat, not, what FDR was all about. Ya just got to face the worst possible scenario, make a choice on how to deal with it and roll with the punches.
Didn't "that generation" teach us anything?
The Great Devaluation has been delayed not cancelled*. A major factor behind the most likely trigger for the Great Devaluation is the fact that in many western nations like the trio of the US, UK and Australia have allowed their domestic savings rate to plunge to either zero or in the negative and piled up huge private sector debts.
Also it does not help we live in an economy where real wages have not increased very much since the 1970?s, while demand for latest consumer goods has strong increased (economy of scarcity and psychology of abundance mentality), leading people to put out second mortgages on their homes and/or piled up huge credit card debts.
For the moment the savings of countries like China and Japan are financing these debts, however the crunch will come and this crunch will result most likely in a delfationary sprial and asset price crash which could lead to a second Great Depression.
To avoid something like this happening again governments will need firstly to put very strict credit controls and massively increase real wages for most of the workforce.
Personally I not do think this economic crunch will come for another 4 or 5 years, however I would not be suprised if it occured sooner.
Scary Stuff
I was more betting on a deflationary sprial myself, however triple digit inflation rates is probably even worse.
I myself have run the worst case scenario, and have made two of my choices...going to work for the Feds, and holding off on buying another house. When and if the Great Devaluation kicks off the Second Great Depression, this is probably the safest position I can possibly be in (by no means safe, merely safer), since if the Federal government actually goes broke the Nation is doomed. Having my nest egg in a credit union is probably safer than in an overextended bank, and far better than becoming cash-poor to buy a hypervalued home. So I am not worrying too much about it...what will happen will happen, all I can do is try and mitigate the damage in advance.Yes and no, Tom. I do find it interesting that post-modern liberals in fact sound very Mellon-like these days:In other words, very moralistic. One might consider that Mellon was not a Boomeresque figure, but rather an "adaptive," cut from the same S&H cloth as Croaker, our Silent 4T poster. Mellon's moralism was, in truth, rejected by Herbert Hoover. Instead Hoover reacted to the crisis with lots of government intervention. Intervention that, until that time, was considered an outrageous afront to personal freedom. The truth is, Hoover probably did more to worsen the depression, with high, isolationist tariffs, income tax increases and timidly dour Pollyanish pipings, and thus seal his own fate.
- As late as 1930, Secretary of the Treasury Andrew Mellon held that a panic might not be such a bad thing. "It will purge the rottenness out of the system," he added. "High costs of living...will come down. People will work harder, live a moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people."
Yet, FDR's "Happy days are here" preceded a still long -- long -- tough road ahead.
And that's where I have come to live with all this doom and gloom, dire predicting of the so-called "Great Devaluation" coming... So what? So life is gonna be tough, is gonna be dark? Hey, life goes on, dude. Sittin' around in a daze of gloom about what bad thing may happen is not, I repeat, not, what FDR was all about. Ya just got to face the worst possible scenario, make a choice on how to deal with it and roll with the punches.
Didn't "that generation" teach us anything?
One thing that concerns me in the 4T, more than finances, is the level of isolation that many people have. Lots of Xers and late-wave Boomers are still doing their own "whatever" thing, and don't have closely knit families or circles of friends. When the last domino of the 4T Cascade falls, those who are most isolated from other people will be the ones who suffer the most. So we should be good to our old friends as well as potential new ones...in the coming years we will need them more than ever.
Marc,Yes and no, Tom. I do find it interesting that post-modern liberals in fact sound very Mellon-like these days:In other words, very moralistic. One might consider that Mellon was not a Boomeresque figure, but rather an "adaptive," cut from the same S&H cloth as Croaker, our Silent 4T poster. Mellon's moralism was, in truth, rejected by Herbert Hoover. Instead Hoover reacted to the crisis with lots of government intervention. Intervention that, until that time, was considered an outrageous afront to personal freedom. The truth is, Hoover probably did more to worsen the depression, with high, isolationist tariffs, income tax increases and timidly dour Pollyanish pipings, and thus seal his own fate.
- As late as 1930, Secretary of the Treasury Andrew Mellon held that a panic might not be such a bad thing. "It will purge the rottenness out of the system," he added. "High costs of living...will come down. People will work harder, live a moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people."
Yet, FDR's "Happy days are here" preceded a still long -- long -- tough road ahead.
And that's where I have come to live with all this doom and gloom, dire predicting of the so-called "Great Devaluation" coming... So what? So life is gonna be tough, is gonna be dark? Hey, life goes on, dude. Sittin' around in a daze of gloom about what bad thing may happen is not, I repeat, not, what FDR was all about. Ya just got to face the worst possible scenario, make a choice on how to deal with it and roll with the punches.
Didn't "that generation" teach us anything?
How on Earth do you expect us to avoid a major economic catastrophe with those piles and piles and piles of debt out there and a turning mood change in the offing?!?
I am not saying that Bush is fundamentally responsible for the mess we're in, though I do think he's made it unnecessarily worse with the tax cuts. It is the third turning mindset that is primarily responisible. But this "Bush will set things right" Pollyannaish attitude is kool-aid drinking at it's finest.
Americans have had enough of glitz and roar . . Foreboding has deepened, and spiritual currents have darkened . . .
THE FOURTH TURNING IS AT HAND.
See T4T, p. 253.
I will try to keep close to my family and what friends I have (as an Asperger, they are not many) and also try to keep my job at the Group Home (people will try to keep their relatives in there even if they have to cut back on luxuries, I think). That is about all I can do.
At this time, won't Medicare pay for your father's care? They did for both my parents...after their end-of-life care and illnesses wiped out their savings and forced the sale of their home (My Dad's pension and SS only paid for about half his nursing care; my Mom had no pension at all). I certainly wasn't too proud to use it either...considering that the alternatives were to let my parents die immediately or be forced into bankruptcy myself. This is why I don't mind paying SS taxes at all, even if I never see a dime of it for myself.
Which brings up a good point...what will happen to the Baby Boomers if SS and Medicare go out-of-business just as the less-wealthy of us need it the most? I was mostly being facetious a few weeks back when I spoke of Soylent Green-type euthanasia centers springing up around the country...but I do wonder if it'll come to that. I can hear Edvard Greig playing in my head right now. :shock:
Re: Scary Stuff
So what happens if we get both an inflationary and deflationary spiral, which cancel each other out, leading to stagflation?I was more betting on a deflationary sprial myself, however triple digit inflation rates is probably even worse.
"The urge to dream, and the will to enable it is fundamental to being human and have coincided with what it is to be American." -- Neil deGrasse Tyson
intp '82er
Isn't this a bit of a confession that you youself, or your parents were, are incapable of setting aside money for these sorts of things?
Certainly if, when you started working, you had invested your SS in a safe mutual fund, or even a bank, you'd have much more to meet these needs than what SS is going to give back to you. And furthermore, what SS is going to give back to you is going to come out of the pockets of younger generations, not what you actually put into it. Do you feel the least bit badly about that? Or is this a perpetuating cycle of guilt passed from one generation down to the next?
But most of what I was supposed to get of the estate was in the home, which we will have to sell and use to pay for Dad's care. And I work as a janitor/gofer in a non-profit Group Home, which does not make saving a lot of money an option. Of course, part of the reason I am underemployed is Asperger's, but even more fortunate members of my generation have abysmal saving rates.
Really smug, Marc. I hope your self-reliance model works for you, because you'll gain little sympathy from others if it doesn''t.Isn't this a bit of a confession that you youself, or your parents were, are incapable of setting aside money for these sorts of things?
Certainly if, when you started working, you had invested your SS in a safe mutual fund, or even a bank, you'd have much more to meet these needs than what SS is going to give back to you. And furthermore, what SS is going to give back to you is going to come out of the pockets of younger generations, not what you actually put into it. Do you feel the least bit badly about that? Or is this a perpetuating cycle of guilt passed from one generation down to the next?
BTW, all non-productives extract their upkeep from the efforts of the productive. SS is no different from any other scheme during the wealth transfer phase. The one undeniable advantage is the retention of US government debt in the hands of US citizens. We have too much held by overseas interests already. Add to that, the very distinct likeihood that interest rates would be much higher if we were exporting the entirity of our public debt.
Marx: Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies.
Lennon: You either get tired fighting for peace, or you die.
Not quite. My parents were well-educated (were yours?) and thus certainly not "incapable"...my Dad was an attorney for God's sake!...but they did make some less-than-ideal financial decisions after my Dad retired. Do I feel bad about my not setting aside money for their health care? I don't think so! Until maybe six years ago their net worth far surpassed my own.Isn't this a bit of a confession that you youself, or your parents were, are incapable of setting aside money for these sorts of things?
And you know this...how? When the GD finally happens...and eventually it must....who knows how much of anyone's wealth is still going to exist? Even yours.
Certainly if, when you started working, you had invested your SS in a safe mutual fund, or even a bank, you'd have much more to meet these needs than what SS is going to give back to you.
Nope. Because I have no illusions of getting much if anything back from SS...I do whatever I can right now to ensure that I'll at least have a dignified old age. As I said above, who knows whether it'll be enough, or still exist when I need it. Time will tell.
And furthermore, what SS is going to give back to you is going to come out of the pockets of younger generations, not what you actually put into it. Do you feel the least bit badly about that? Or is this a perpetuating cycle of guilt passed from one generation down to the next?
For the record, I have no intention of going out like my parents did...protractedly ill in a nursing home, getting frailer, sicker and finally wasting away on feeding tubes. That they did so was their choice, which I certainly could not make otherwise for them, but it won't be mine.
See ya at the Soylent Euthanasia Center in forty years, Marc! We'll have a few beers over Greig :lol: :lol: :lol:
