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1999 Or 2008 All Over Again?
- Bond
- Congressional Budget Office
- Consumer Confidence
- Consumer Sentiment
- Creditors
- default
- Double Dip
- Dubai
- Eurozone
- Foreclosures
- Fund Flows
- Global Economy
- Greece
- Housing Market
- Hyperinflation
- Japan
- Middle East
- New Home Sales
- None
- Quantitative Easing
- Recession
- recovery
- Reserve Currency
- Sovereign Debt
- Sovereign Default
- Wall of Worry
On Sunday morning, I watched an interview on CNN's State of the Union with Candy Crowley (see video below or click here
to watch it). The interview was on the US economy and the guests
were two two former directors of the Congressional Budget Office,
Alice Rivlin who's now a Brooking's expert, and Doug Holz-Eakin, president of DHE Consulting, LLC.
Not
surprisingly, both Ms. Rivlin and Mr. Holz-Eakin were talking about
cutting spending, especially entitlement spending, but they also
addressed the impact that the crisis in Japan and the Middle East unrest
are having on the global economy. At one point, Candy Cowley asked
about the recovery in the US economy. Here is part of the exchange taken
from the show's transcript (added emphasis is mine):
CROWLEY: Alice Rivlin and Douglas Holtz-Eakin, thank you both so much for joining me.
You know, every time we watch the stock market, the analysts say,
well you know, the oil did this and, therefore, the stock market's done
that. What is the net effect of what's going on in the world -- I
know the markets don't like things that aren't settled, but what about
just every day living, you know, in America, looking for a recovery
that is still sluggish?Japan, has that affected the recovery at all? And how about Libya and the Middle East in general on oil?
RIVLIN: Well, nothing is going on is good -- Japan, Libya,
whatever, the high price of oil and gasoline, all of these create
uncertainty and to some extent a drag on the economy, especially the
price of gasoline and oil.But none of it is major yet. Your
intro emphasized all the things that might be bad, but the good news
is the economy is perking along, not fast enough, very weak hiring,
very weak in housing, but the rest of the economy does seem to be
coming back slowly but steadily.CROWLEY: But what -- can
you really have a recovery with -- in a housing market, we keep saying
the housing market hit bottom. Oh, the housing market has hit bottom.
So now we've gone to the lowest ever in new home sales which are the
most important, because they provide jobs in building, et cetera. Can you really have a recovery without a recovery in the housing market?HOLTZ-EAKIN: There are two pieces to the housing recovery. The first is construction of new homes. And there we've seen the housing market go from just a really drag on the economy to about neutral.
It's not adding or subjecting from growth at this point. The
second piece is the value of homes, which affects deeply how families
feel about their futures and their ability to spend. And there I think we're about to see the worst end. But until both of those start moving north, we're not going to see a really robust recovery.CROWLEY: Because it undermines consumer confidence, right?
HOLTZ-EAKIN: Absolutely.
CROWLEY: And what about hiring and gas prices? Isn't there some
connection there? If I'm a business and suddenly my energy costs have
come up whether it's a business that involves trucks or a business that
involves heating or air conditioning in the summer, doesn't -- isn't
that a drag on hiring people?RIVLIN: Yes. For some
businesses, it is. The main effect is that consumers who have to buy
gasoline will spend less on other things. So it's a drag from that
sense. And for some energy intensive businesses as well.But we don't have as many of those as we used to. We're not as dependent as an economy on energy.
HOLTZ-EAKIN: I think there are three lessons on the oil and gas
front. Lesson number one is we have oil at $140 a barrel in 2008. And
it went down not because we somehow discovered a lot more oil. No,
it went down because we went into a massive global recession. As
economies recovered, it was inevitable that prices were going to rise.
And this was utterly foreseeable.Second piece is that
Libya's not really the concern. That's not what markets are pricing.
It's the broader Middle East. Libya is 2% of oil supplies. That's
not our problem. It's what happens in the rest of the Middle East.And the third is, something like this is always going to happen.
There is always some piece of bad news out there. So, the key should
be to build an economy that's growing more robustly, it's more
resilient to bad news that inevitably will happen. And there we could
do better.We've seen calls for more pro-growth strategies
this week from Eric Cantor, for example, and it really is time to get a
strategy that is about having the economy grow faster.CROWLEY: And so what I take from you is, yeah, around the margins this
isn't great for the economy. However, when you look at the current
state of the economy, the sluggishness of recovery, what worries you
most?RIVLIN: What worries me most, and I suspect Doug as well, is our looming debt crisis. We've got to get past this squabbling over the federal budget for this fiscal year. That's just a squabble. But
what is really important is that we're moving into a period when we
will have debt rising rapidly because of the retirement of the baby
boom generation and high medical care costs. And we've got to do
something about that. It's got to be bipartisan, and we've got to do it soon so that we reassure our world creditors that we're on the job.CROWLEY: Doug, can you just -- I think people know intrinsically
the debt is a bad idea, and when they hear trillions and trillions,
it's an even worse idea. But can you connect debt to my life, to the
life of the viewers?HOLTZ-EAKIN: Sure. If we continue down the path we're going down, in the good-news scenario, what we see is interest rates start creeping up and then elevate sharply.
That
means that, if you want to buy a car; if you want to buy a house; if
you want to send your son or daughter to college, it's a very expensive
proposition.It also means that the place you work
can't invest in the upgrades it wants to and it really can't start
giving you raises because they're carrying costs of their debt. So you
see an economy that starts to stagnate, where you don't increases in
the standard of living, and everyone suffers from that. And it goes on
for a long period of time. That's the good news scenario.The
bad-news scenario is we see 2008 all over again, where credit freezes
up and we get a sharp recession. Neither is something we should mess
with.CROWLEY: I was going to ask you, I mean, can
you -- if the crisis remains a crisis and Congress can't get its act
together nor do something about it, which I'm assuming is for you all
cutting spending, perhaps raising taxes, some -- you know, combination
thereof, could we have a worse recession than we have just experienced?RIVLIN: Yes, we could definitely have what's called a sovereign
debt crisis. We used to think that only happened to small countries on
other continents, but it could happen to us as well.That means we would not be perceived as able to get our act together and pay our debts. And our creditors would lose confidence in us. And when that happens, things go south very fast.
We could have a big spike in interest rates, a big fall in the dollar
and be plunged into a worse recession than the one we're climbing so
slowly out of right now.
Let me comment on this
exchange. First, as I stated above, given their background and
ideological views, it hardly surprises me that Ms. Rivlin and Mr.
Holz-Eakin are sounding the alarm on US debt and entitlement spending.
But to claim the US might suffer a sovereign debt crisis is simply
ridiculous. The US is the largest economy in the world by far, it prints
the world's reserve currency and the risk of a US sovereign debt crisis
lies somewhere between zero and zero. All the doomsayers will tell you
otherwise but that's a fact.
As far as entitlement spending "run
amok," we need some perspective. These aren't pension liabilities of
state plans where it's difficult to cut benefits, they're entitlement
programs that are based on current spending and are subject to political
decisions. If they need to be cut or reformed, and if there is
political will to do it, US Congress will take action.
Ms. Rivlin
also dismissed rising energy prices, stating that "we're not as
dependent as an economy on energy." That may be true but oil prices
still matter. Rising gas prices are going to hammer consumer confidence and
are ultimately deflationary, not inflationary for the economy,
something that analysts keep omitting.
That brings me to Mr.
Holz-Eakin's comments on housing, interest rates and another sovereign
debt crisis. On housing, Mr. Holz-Eakin sounds more sanguine than
others, stating that new homes construction is no longer a drag on the
economy and that the he sees an end to the drop in home values. But
others aren't convinced that housing is stabilizing. Diana Olick of CNBC
recently wrote a comment on why housing is going through a double dip, citing these reasons:
- Supply supply supply. Too much. Can't overstate that.
- Foreclosures.
Banks are pushing properties through the foreclosure process at a
really rapid pace now. I'm also hearing they may be ramping up sales
ahead of any settlement with nation's attorney's general over the
so-called "robo-signing" paperwork scandal. More foreclosures on the market means more supply and more price pressure. - Gas prices: See yesterday's blog post. It's real.
- Mortgage applications. They are way below historical norms. All cash buyers in February rose to a record 33 percent of all buyers of existing homes. Many many Americans simply can't qualify for a mortgage anymore at a reasonable rate.
- FHA: Next month the cost of an FHA loan goes up yet again. FHA loan volume dropped 26 percent in February month to month.
- Consumer sentiment: Awful. No confidence in this market. Only the investors are out in droves, looking for and getting bargains. We need them, but we need real buyers as well.
Mr.
Holz-Eakin also noted that they see "interest rates start creeping up
and then elevate sharply". If that happens, it will kill any recovery
in the housing market. But I just don't see rates rising sharply for two
reasons. First, the Fed's policy remains reflate and inflate at all
costs to avoid a prolonged period of debt deflation. They will continue
with quantitative easing (QE) which will cap long-term bond yields.
Second, without a robust housing and more importantly jobs recovery, the
risks of deflation remain elevated. I simply cannot understand all
these doomsayers who see hyperinflation on the horizon. Why? Because oil
prices are rising again? Again, if they rise too high, too fast, it's
ultimately deflationary for the US and global economy.
Mr.
Holz-Eakin also stated that he sees "2008 all over again, where credit
freezes up and we get a sharp recession." But to see 2008 all over
again, you need a catalyst, perhaps a major sovereign debt crisis. The
doomsayers will tell you look no further than Greece and the Eurozone,
but as I wrote in my last comment, I'm not buying the drama.
There are serious structural problems in the Eurozone, but to claim
that a major European default is a "done deal" is way too easy.
Importantly, when everyone is on the same side of the trade, shorting
the sovereign debt of European periphery economies, then I start
questioning the merits of that trade.
It's also worth keeping in mind all the macro events that rocked markets
over the last year or so, starting with Dubai, Greece, PIIGS, and more
recently Japan. In every case, markets were able to climb the wall of
worry and head higher. This doesn't mean that it will continue or that
some serious sovereign default or geopolitical crisis can't rock the
global financial system again, but it speaks volumes to the amount of
liquidity out there ready to soak up any major macro event.
This brings me to my final point on another bubble forming in the stock market. Earlier this week, Dave Kansas of the WSJ reported that Red Hat Jumps Higher After Strong Earnings:
The remarkable return of hot 1990s-era hot stocks continues (think JDS Uniphase, Ciena, Micron et al) this morning with Red Hat.
The
open-source software company is surging more than 13% out of the gates
following strong fourth-quarter earnings after-the-close yesterday
afternoon.
Oppenheimer (Outperform rating): “While we were
pleased to see the company deliver strong results across the board, we
were particularly impressed with RHT’s ability to deliver over 30%
billings growth and over 20% growth in cash flow from operations ($95.0
million).” Oppenheimer says, and backs an outperform rating.Robert Baird raised Red Hat to outperform from neutral.
As Matt reported earlier, Micron is jumping more than 6% after reporting its own earnings.
Among other highfliers, JDSU and Ciena are up about 2%. Maybe it is the 1990s again.
Semis,
networking stocks and materials have been on fire following the
earthquake disaster in Japan. Earnings have been strong but there is a
lot of hot money flowing into these sectors too, making them very
volatile. It all looks and feels like the reemergence of the tech
bubble, a point covered by Jameson Berkow of the Financial Post, Bootup: Experts warn of Internet bubble 2.0:
Today
in technology: With a number of new web firms expected to make public
stock offerings this year, observers are growing concerned the market
could be headed towards another bubble; Canada’s first offshore wind
farm project wins a key victory in the regulatory process; the inner
workings of the computer hacker group known as Anonymous are exposed
and Research in Motion Ltd. along with several other Waterloo,
Ontario-based tech giants are looking to recruit more Canadian talent.
Is Silicon Valley ‘on tilt’ again?
Noted financial commentator Paul Kedrosky
used a poker metaphor on Friday evening to explain why the Internet
industry is about to do the same thing it did back in the spring of
2000, when the first dot-com bubble burst and an estimated US$6-trillion in shareholder value vanished. He offers a Top 10 list
of reasons why that could soon happen again, among them being the
extreme popularity of conferences such as South by Southwest (SXSW), or
the fact that private valuations are approaching public valuations
(i.e. privately-held Facebook has reached valuations as high as
US$65-billion).
Steve Blank, a professor at Stanford University’s
engineering school and at UC Berkeley’s Haas School of Business, has
gone so far as to publish New Rules for the New Bubble.
Unlike the last Internet bubble, writes Mr. Blank, the next one will
involve “real” companies with real revenue and masses of real customers.
Facebook, LinkedIn, Skype and Groupon are all examples of firms
expected to launch IPOs in the next year or two, and all have displayed
an ability to earn money and maintain a strong customer base. “But like
all bubbles, these initial IPOs will attract companies with less
stellar financials, the quality IPO pipeline will diminish rapidly, and
the bubble will pop,” Mr. Blank cautions.
I
would also caution people to avoid chasing stocks that run up too high,
too fast. There is a lot of liquidity spurred by hot money, hedge funds
and banks engaging in high-frequency trading, mutual fund flows, pension flows,
sovereign wealth fund flows, and last but not least, retail investor
flows (they're always the last ones to the party and typically get
slaughtered). Tread carefully, these markets may appear easy but if you
become complacent and ignore risks, you'll get killed.
I will however tell you that I feel like we're heading towards another
1999 rather than another 2008. Call it a gut feeling but I look at the
stock market every single day, tracking unusual volume and which stocks
and sectors are making new highs. I also study the quarterly holdings of
top hedge funds and mutual funds. Right now, I see the "Risk On" trade.
Will it last? Will it be in tech or so will it be in some new bubble
like renewable energy? Who knows? All I know is that the liquidity party
will continue on Wall Street for the foreseeable future, which is why I
continue to advise people to keep buying the dips.
»
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This "bear" is up 140% this year alone Leo.
We are not Bears we are realists and understand and share our knowledge of "The MAtrix Economy" and aren't smoking dope like the sheeple are. While the sheeple watch the final 4, or Baseball, or Hockey, or Football we are ringing cash registers.
It will be as it always has been. Sheeple get slaughtered and fish get eaten. They are food nothing more.
We can feel sorry for them or accept the simple fact that there are losers on every trade. You choose to be fish or you choose to ring cash registers
"The US is the largest economy in the world by far, it prints the world's reserve currency and the risk of a US sovereign debt crisis lies somewhere between zero and zero. All the doomsayers will tell you otherwise but that's a fact."
Substantiate this so-called "fact".
The risk of US sovereign debt crisis lies somewhere between 0.995 and 1.0.
1. US credit is based on dollars, which are being printed.
2. There is a better currency, gold and silver.
3. Bad currency drives out good.
4. Soon no one will purchase US debt.
5. Rates will increase.
6. Reserve status will be lost instantly when one country goes to sound money.
7. Fake money means fake economy. Why work when you can just get paid by cronies?
8. US economy in shambles, no production, no energy since US pursued a thermodynamically impossible fake "green" energy grid.
9. Military contractors demand payment in sound currency.
10. US can't pay, military folds and viola, game over.
Just one of many possible scenarios. This only goes in one direction, increasing entropy.
dE = TdS + PdV !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Are you so naive that you think the rest of the world wants to support the American economy in the ways that we currently force them to do?
Leo,
You hit it. There's this whole culture of traders, from the vampire squid, through Charlie Gasparino down to the day traders here, that claim they are the best and brightest, and then whine and moan when they don't have an investment environment so predictable that my dog could make money.
Hey you're raising the bar. I went to the trouble of using the calculator app on the captcha.
Sorry sunshine traders want chaos not predictable investment environments. We maek money when there is radiation in the air and blood on the streets.
You clearly are not understanding who "we" are.
We do not wish ill will on anyone for the most part either so shut before you reply. We care about the human race and the world around us. We suffer as they suffer and try to help in our own individual ways.
We return our profits through charity in many forms.
So before you open your yap and criticise us. Walk a mile, dude, walk a mile
I'm with Leo. If I am the government and I owe dollars and I can print dollars, I see no meaningful default scenario. Inflation yes, but only a chump shorts inflation. Buying silver is the inflation bet.
Fuck those assholes.
Really now.
Where is the austerity in bailouts and 0.025% to the TBTF banks?
Who gets the shaft of consequences and no free lunch? The individual, the family - not the fucking wanker bankers or pussy politicians.
THEY WILL HANG.
Trust me, give it time, the truth will out and they will HANG for their malfeasance.
If you have an honest cell in your body don't believe a thing coming out of Washington or Wall Street.
The only thing you can trust is lead and gold.
Kill the rest.
Don't forget I told you.
#uck... this posting tonight delivered quite the performance. I'm trying to determine if it is more in the gendre of Attack of the Killer Bees, or Night of the Living Dead... with trolls instead of bees or zombies. You decide...
http://www.youtube.com/watch?v=smTOgJN8WOs
http://www.youtube.com/watch?v=yXWm4Gwbf18&playnext=1&list=PL84E669F9EF7...
Tick...tick...tick...
SCHWARTZ: And secondly, as I think has been pointed out, and the person in the chair, Mr. McClintock, and senator from Pennsylvania, our new senator, Senator Toomey, have proposed legislation that would make debt payment to our creditors, our foreign creditors the priority over paying, instead of paying, our Social Security beneficiaries possibly not getting checks, our veterans not getting payments, U.S. contractors not getting payments.
So it would put the U.S. in a different position of no longer having faith with American seniors, American veterans, and, of course, U.S. companies or creditors.
So could you comment on both of those? And I think you've commented very much on the first piece about how reckless it would be. But of course the second one, to put us in a position of losing faith with the American people who have counted on us to do that and leaving that prioritization, making a statement very clearly that we'd rather pay our foreign creditors than to actually pay the American people.
BERNANKE: On the first, defaulting on the debt would create probably an immediate financial crisis, very severe one, and would have very deep consequences for our economy.
And even assuming we were able to get to get through that, it probably would lead to much higher interest rates for the United States for many years to come here. And has been pointed out by a couple of folks that applying a higher interest rate to our existing debt means that that would be a very big step backward in terms of trying to balance our budget.
On the prioritization, that might help -- that might help address the default problem, which is very important. It's up to Congress, I suppose, whether you think it's worth doing what you say, which is you would be stopping Social Security checks and those sorts of things.
I just wanted to make the very narrow point but still important point that there are operational problems as well. I mean, even if we were instructed, the Federal Reserve is the agent of the treasury, and we do a lot -- actually make a lot of the payments on behalf of the treasury, and we would have to figure out how to tell that this check to Mr. Jones is a payment on his interest and this check is a Social Security check. There would be some practical operational problems that we would like to bring up if -- if -- if we move in this direction.
YARMUTH: Thank you, Mr. Chairman.
Chairman Bernanke, thank you very much for your testimony.
I want to return to this issue of -- of the possibility of not extending the -- or raising the debt ceiling and focus on the economic consequences. I think the American people I think would be repulsed by the idea that we could default on our debt, just as a concept. You've called it "catastrophic." We call it "reckless." All in all, not a good idea.
But the idea or prioritizing payments is frightening to me because wouldn't essentially this have the effect of we would be paying China before we would be paying our troops in Afghanistan?
BERNANKE: Yes.
TL;DR
BERNANKE: On the prioritization, that might help -- that might help address the default problem, which is very important. It's up to Congress, I suppose, whether you think it's worth doing what you say, which is you would be stopping Social Security checks and those sorts of things.
YARMUTH: But the idea or prioritizing payments is frightening to me because wouldn't essentially this have the effect of we would be paying China before we would be paying our troops in Afghanistan?
BERNANKE: Yes.
Pretty cool that every single claim and characterization that Holtz-Eakin made about the state of housing, in this show, is quantifiably untrue. And special thanks to our TV hosts who are never able to refute such assertion. USA, FTW.
GG
Gary,
Holtz-Eakin's views on housing are off, which is why I added Diana Olick's comment on why housing is going through a double dip. Also, he sees housing stabilizing but interest rates creeping or spiking up?!?!? Makes no sense whatsoever.
I hope Tyler is Reading this. Tyler can you please add a thread filter to ZH categorize and filter posts based Long trade ideas, Short trade ideas, Contribution, and banter for when a user posts. We all could be making allot more money know how to trade both sides of these events when we as a person feels the trade idea is right for them. It may contribute to grow readers understandings beyond just stocks, example, options, futures, currencies, swaps in how these events play out.
Instead of me having to scroll through hundreds of whiners contributing nothing more bitching with no facts, pointless youtube videos to movies, no good trade ideas for or against the ideas contributed with deep explanation. If you dont have any useful info related to the article or a trade based on it please shutup and learn something. I dont know Leo, but I know his piece on Canada has truth. The question is how and when to play it. Out of the hundreds of posts I never saw one good contribution on how to play the event in either direction.
Well done Leo. This was more pointless than one of your summaries of a Canadian pension plan investment report; and I did not think that was possible.
But like I've said before, I bet your not a bad guy...
If it's "pointless" why do you and others bother reading it and commenting on it? Go figure...
Because lies, disinformation, and apologies for corruption and criminality demand rebuttal from those who have a moral center in which to feel outrage, unlike you Leo.
I WISH I HAD LISTENED TO LEO INSTEAD OF ALL YOU GUYS, BEEN READING SINCE EARLY 2009.
The first problem with this article is basing it on something from CNN and their version of a fireside chat. The second is relying on commentary from two people that now belong to think tanks, who are now paid to sway opinion in order to the bidding of their principals. Smoke and mirrors, baby! Keep the illusion alive.
The problem is that you didn't bother to carefully read my comments where I pretty much question everything Rivlin and Holtz-Eakin state! All of you need to read my comments more carefully before posting your comments.
Just the standard bullshit. Contract the damn empire and the finances would just about balance. If we refuse to contract the empire then make it pay. Appropriate resources from the conquered territories. Given what we spend to control the production and flow of oil our blended cost of a refined gallon of gas should be less than $2.00. The fact that it's a lot higher than that indicates that the spending is not supporting itself. Iraq was a freaking disaster the way Bush bungled it and Afghanistan is pointless.
You only quibble with them, and with other Establishment mouthpieces, over relative minutia, but never question their overarching, and failing, oligarchic statist paradigm.
You, Leo, are a jellyfish, lacking both eyes and a backbone, content to drift wherever larger forces would wash you, and only dimly sensing where you are at the moment, but incapable of being able to realize where you might be heading.
Leo,
Over 50% of all US debt is held in securities < 3 years to maturity at almost zero interest. What the #uck are we to do over the next 24 months when a bulk of this debt needs to be rolled over at higher interest rates... and couple to this the fact that we are looking at ongoing deficits > 1 trillion dollars per year for the foreseeable future?
We are heading to default... this is such an obvious issue that you ignore. Please respond.
Tell you what, why don't you short US debt and become a zillionaire? Just don't come crying to me when you get slaughtered!
You dumb amoral, power-worshiping Canadian idiot, you don't even realize your paper-loving head is already on the chopping block. But when WE "bears" (read: realists) are proven correct, and you spectacularly wrong, we are hardly going to be worrying about telling you "I told you so", as your sorry ass will be long gone from this site.
But while you can, go chase your nominal & illusory gains in fiat toilet paper --- that is exactly what an asshole like you needs to clean off at least some of that Keynesian bullshit in which you are covered.
Leo,
Answer the #uckin question. If you can... then your thesis has some merit. How the #uck are we going to deal with this question that I've posted?
Please respond.
First off, where did you get your stats? Provide a credible link first to your assertion and then I'll answer you. But the short answer is easy: the debt will be rolled over and bought by other central banks.
Leo,
The problem is the #uckin interest. By 2020, the US is looking at over 40% of every tax dollar collected going to service interest...
I feel like telling you to look up the #uckin numbers yourself, so you can get an education... but I'll include these links for your assitance:
http://www.businessinsider.com/a-sobering-look-at-the-structure-of-us-tr...
http://www.merkfunds.com/merk-perspective/insights/2011-03-15.html
I think you need to get yourself a case of 50, have a couple of beer and chill out for a bit... and answer my question.
Don't worry, by the time we reach 2020, you'll have the answer to all your questions :)
So Leo... you resort to sarcasm... I've read your past writings and I'm surprised.
If you would answer my question with sense, you'd have some credibility regarding your article.
web bot,
I disagree with you and I'm confident US debt will get rolled over even at much higher interest rates (which won't be the case). If you're so confident it won't, short it and try making a killing. Good luck.
Leo... do the #uckin math. Do you have 10 fingers? then #uckin use them and count.
You're treatise this evening would have had some credibility if you took the view that there is no issue in rolling over the debt... because we we'll be in a hyperinflation environment... where the debt will become worthless. At least, this line of thinking could be defensible.
Shorting the US dollar, which will be a worthless currency is ridiculous. PMs are the only true store of value for a period of time during the upcoming storm.
Does your nose grow when you knowingly lie so blatantly?
You truly are blind Leo --- you can neither see nor imagine ANYTHING than the status-quo, even as it dies before your eyes. You define the very essence of denial. It is conformist, morally weak, center-thinkers like you who are driving Western society headlong into the ground.
akak, do us all a favor, ask your shrink to up the dosage!
Leo, do us all a favor, and go check into a Dutch euthanasia clinic.
You cannot seriously be expecting an honest and straightforward answer, web bot, as you clearly have Leo painted into a corner, and he knows it, and he knows that you know it. As per character, he will simply cut and run when confronted by facts, undeniable logic and the truth, none of which he carries in his quiver of blunt and broken Keynesian arrows.
It comes down to sometimes being too smart for one's own good.
He should only post when he has something sensible to say as opposed to posting just to hear himself talk. A cute treatise is not the same as something that is well thought through.
Oh, so, it's "Kick the can to infinity", eh Leo?
You forgot food Leo. We live in a society where most are incapable of growing food, on our present path there will come a point when grocers refuse to trade food for fiat.
I am nearly speechless when I read this:
But, wouldn't a rapid rise in oil prices, even if it is driven by actual higher demand from growin economies be just such a trigger? And, if the recession sets in again (and one can easily explain 2008 in just that way), then we go into in a much worse fiscal position throughout the world. I don't think sovereign debt crises will cause the downturn- a second downturn in the next 2 years will cause the sovereign debt crises.
Yancey,
You wrote: "I don't think sovereign debt crises will cause the downturn- a second downturn in the next 2 years will cause the sovereign debt crises."
And I stated that if oil prices rise too high, too fast, it's ultimately deflationary. That's a risk to global growth. But the last thing the bankers want is a prolonged period of debt deflation. That's where it gets tricky with oil prices spiking, which is possible given the speculation going on right now. As far as a second downturn, I don't see it. US housing remains weak, job growth is anemic, and while some feel global gowth has peaked, I think it's probably going to pause before heading back up. I'm not in the double dip camp because the momentum in emerging markets remains impressive.
Leo, you are so monstrously and willfully clueless and/or disingenuous, are you really Ben Bernanke just tweaking our noses for spite?
Speechlessness tends to walk hand-in-hand with Leo's smug cluelessness.
A crash is probable; the implementation of the NWO depends on Americans to be on their knees begging for a savior; the only question is timing. Everything is incremental with the elites. From the Patriot Act to the current ability of the FBI to do warrantless searches and seizures and Big SIS/Dyke with her "domestic terrorist" warnings. Any government dissent is now a potentially treasonable act. Notice all the anti-gun talk lately? The 2nd amendment has to be killed or ammo heavily taxed or outlawed; the elites can live with the do-it-yourself makers. This is probably at least 2 years away. But the dots are all there to reasonably connect.
The economy is on heroin. Almost every correlation, rule of thumb and predicable understanding of markets pre 2008 doesn't apply. Nuclear meltdown in Japan... no problem, markets go up. Oil above $100... no problem... markets go up... 2 countries overthrown their governments... markets go up... Greece and Ireland... don't worry... be happy.
When this #uckin joke ends in June... and we see marging compression start going into Q2... we are going to see a massive market correction. This is unsustainable.
We are in a commodity bubble because of the massive amount of government money sloshing around the global economy seeking yield... but don't get out of you PMs to quickly... once the crash comes... inflation will continue and you'll see a snap back in PMs to protect value.
Leo---
You're quickly becoming the laughing stock of this site (and that's saying quite a lot if you include MHFT's recent posts). Make a freaking forecast, one freaking forecast, and try to stick with it before the next moon phase change. Then you might actually get some respect. At least then anyone, who still reads you consistently... would know if you had actually been right and not feel like they had a horrid case of vertigo.
"Becoming" the laughing stock of this site?
I think that the USS Noncredibility of Leo already left port a long, long time ago, and has since been carried by a tsunami of arrogance and statist propaganda onto the Shoals of Keynesian Intellectual and Moral Bankruptcy.
Ahhh, I believe more like 1977 or 78'. We will soon see a Greenspan like chairman who will let the rates explode after stagflation in all sectors except energy. It will come in two to three years and until then more fantasy and QE.
Seriously, Alice Rivlin? How relevent. Everyone else dead?
I like this part: "because of the retirement of the Baby-Boom Generation and high medical care costs. And we've got to do something about that.". Easy. Since we already have experience in infecting certain groups in our society with deadly diseases, and we've a tremendous resource in the CDC, now all we'd have to do is unleash a highly communicable upper-respiratory virus, and wipe out the "Boomers". Problem solved, right? And, a side benefit is the market going up STRONGLY. Wow, what a country, all problems now solved. (Sarcasm-on people)
"....they're entitlement programs that are based on current spending and are subject to political decisions. If they need to be cut or reformed, and if there is political will to do it, US Congress will take action."
But only "if" the biggest most powerful voting block, one with about the same outlook and generational appartenance as most members of Congress, agrees they need a big pay cutfor themselves to the favor of electorally and economically weaker generations. Ergo the political will won't be there. We are going to print.
"We are going to print."
And the dollar crashes and Leo's entire construct of faith & credit in "professionally managed paper products" is laid bear for the world to see.
He won't be around to say I'm sorry, I was misled, ill informed, it's someones elses fault!
I'm taking bets right now.
Takers?
http://www.youtube.com/watch?v=JFvujknrBuE
Leo: so you believe that the liquidity can absorb Japan, Mideast, oil etc. and more indefinitely? It would then follow that you believe QE3 will further enable this infinite liquidity absorption of global market fluctuations? You believe that inflation will not effect bond prices too? And that in turn will not effect housing? And do you then believe that housing (as reported to date) will not drag on this your infinity liquidity calculus? Is this a multiple case of ceteris paribus all out of context applied to variables in some kind of new radical model of yours?
And I'm not a bull nor am I a bear nor am I blue nor red.