This page has been archived and commenting is disabled.
Guest Post: The Economic Death Spiral Has Been Triggered
- Bank of England
- Bank of Japan
- Ben Bernanke
- Ben Bernanke
- Capital Markets
- Central Banks
- China
- CPI
- default
- Deficit Spending
- Double Dip
- Enron
- European Central Bank
- Federal Reserve
- fixed
- Foreclosures
- France
- Global Economy
- Gross Domestic Product
- Guest Post
- Home Equity
- Housing Bubble
- Iraq
- Japan
- Mervyn King
- Middle East
- Monetary Policy
- Monetization
- Money Supply
- Non-performing assets
- Private Equity
- Quantitative Easing
- ratings
- Real estate
- Real Interest Rates
- recovery
- Reserve Currency
- Shadow Banking
- Stimulus Spending
- Transparency
- Trichet
- Unemployment
- World Trade
- Yen
Submitted by Gordon T. Long
The Economic Death Spiral Has Been Triggered
For nearly 30 years we have had two Global Strategies working in a symbiotic fashion that has created a virtuous economic growth spiral. Unfortunately, the economic underpinnings were flawed and as a consequence, the virtuous cycle has ended. It is now in the process of reversing and becoming a vicious downward economic spiral.
One of the strategies is the Asian Mercantile Strategy. The other is the US Dollar Reserve Currency Strategy.
These two strategies have worked in harmony because they fed off each other, each reinforcing the other. However, today the realities of debt saturation have brought the virtuous spiral to an end.
One of the two global strategies enabled the Asian Tigers to emerge and grow to the extent that they are now the manufacturing and potentially future economic engine of the world.
The other allowed the US to live far beyond its means with massive fiscal deficits, chronic trade imbalances and more recently, current account imbalances. The US during this period has gone from being the richest country on the face of the globe to the biggest debtor nation in the world.
First we need to explore each strategy, how they worked symbiotically, what has changed and then why the virtuous cycle is now accelerating into a vicious downward spiral.
ASIAN MERCANTILE STRATEGY
The Asian Mercantile Strategy started with the emergence of Japan in the early 1980s, expanded with the Asian Tigers in the 90s and then strategically dominated with China in the first decade of this century.
Initially, Japan's products were poor quality and limited to cheap consumer products. Japan as a nation had neither the raw materials, capital markets, nor domestic consumption market to compete with the giant size of the USA.
To compensate for its disadvantages, Japan strategically targeted its manufacturing resources for the US market. By doing this, the resource poor island nation took the first step in becoming an export economy - an economy centered on growth through exports versus an economy like the US, where an excessive 70% of GDP is dependent on domestic consumption.
The strategy began to work as Japan took full advantage of its labor differential that was critical in the low end consumer product segment, which it initially targeted. Gradually, as capital availability expanded, Japan broadened its manufacturing scope, moving into higher levels of consumption products requiring higher levels of quality and achieving brand recognition.
Success soon became a problem as the Yen began to strengthen. To combat this the Japanese implemented the second critical component of what became the Asian Mercantile Strategy template. It began to manipulate its currency by aggressively intervening in the forex market to keep the yen weak.
Further success forced Japan to move to a more aggressive forex strategy to maintain a currency advantage. It was strategically decided that Japan's large and growing foreign reserves were to be re-invested back into the US. By buying US Agency and US Treasury debt instruments it kept the dollar strong relative to the Yen. The more successful Japan became, the more critical this strategy became. In the 80s Japan dominated global expansion as it brought US automotive and consumer electronics' manufacturing to its knees.
By the early 90s the Japanese labor advantage was quickly being lost to the Asian Tigers because the Yen versus the Asian Tiger currencies was too strong. The Asian Tigers were following the Japanese model. The Asian Crisis in 1997 re-enforced to all Asian players the importance of holding large US dollar denominated reserves. This further accelerated and reinforced the strategy of purchasing US Treasury and Agency debt.
With China's acceptance into the World Trade Organization (WTO), China emerged on the scene in full force. Armed with the lessons of the last twenty years, China took the Asian Mercantile Strategy to another level in its ongoing evolution.
The results were one of the largest and fastest transfers of industrial power ever to occur in history. In ten years, China assumed the role of the world's undisputed industrial powerhouse in the world.
The virtuous cycle further accelerated as Asia became more dominant because its reserves, reinvested back in the US, began to have a larger and larger impact. The more Asia bought US Treasury and Agency debt, the lower US interest rates were forced, allowing Americans to finance more and more consumption. The more Asia bought US securities, the stronger the US dollar was against Asian currencies, and therefore the cheaper Asian products were relative to US manufactured products. It was a self reinforcing Virtuous Cycle.
The result was a staggering 46,000 factories transferred from the US to Asia over the same 10 year period. The transfer set the stage for chronic unemployment and public funding problems, but it was temporarily hidden by equally massive increases in debt spending.
The low interest rate driven housing bubble, being of historic proportions, made Americans feel richer than they were. They took on excess debt in various forms such as Home Equity Loans (HELOCs) at unprecedented levels. The acceleration of debt materially impacted both the GDP and employment of the nation through Real Estate, Construction and Mortgage Finance job growth further hiding underlying problems.
US DOLLAR RESERVE CURRENCY STRATEGY
Since President Richard Nixon took the US off the Gold Standard in 1971, the US has adopted what I refer to as the US Dollar Reserve Strategy. After the Second World War, at the Bretton Woods Conference, the US dollar was accepted as the world's reserve currency and as such was pegged to Gold at a fixed rate of $35/oz. due to massive Vietnam war costs and President Johnson Great Society, the US could no longer honor its agreement. In 1971, when France demanded conversion payment in Gold, the US refused. At this point the US become a fiat currency, not backed by anything other than the full faith and credit of Washington politicos.
What were other countries to do in retaliation? What quickly became evident was there was little they could do. The fact was that international trade was conducted in US dollars as a matter of necessity due to the dominance of US export trade; and as such, nations were forced to have US dollars to transact international trade.
Additionally, the US established agreements with oil producing Middle East countries that oil could only be sold in US dollars. Since energy is a dominant import cost for most nations, this secured the strategic position and requirement that the US dollar would be maintained as the preeminent reserve currency by trading nations.
What this strategy meant to the US was that it could now print money, and effectively export the potential inflationary consequences of its actions. The 1970s were initially marked by dramatic increases in US inflation as the strategy took hold and was implemented. By the time of President Reagan's presidency, the strategy was working thanks to some herculean efforts by Chairman Volker at the Federal Reserve. This well executed strategy is what I refer to as the US Reserve Currency Strategy.
The strategy allowed Regan to implement 'Reaganomics' and his new Supply Side economic policies which launched the longest bull
market in US history. Further enhanced by an extremely loose monetary policy under Greenspan, relaxed reserve requirements under Clinton, and tax cuts under George Bush II, the US moved quickly from being the world's richest country to being the world's largest debtor.
Historic debt growth was built up without the disease of inflation infecting the US economy. This is explained by inflation that was effectively exported whenever increasing levels of US dollars were printed by the US Treasury.
Any threat to this strategy was rapidly challenged by US military power. As an example, when Saddam Hussein, President of Iraq, decided to sell Iraq oil denominated in Euros, he was invaded by US forces three months later and removed from power. When Libyan leader Muammar Gaddafi wanted gold in exchange for Libyan oil, he almost immediately found himself the target of US planned military intervention.
Presently, oil is still sold only in US dollars, but more and more trade deals are being negotiated between China and its trading partners. This is a serious threat to the US and the US Dollar Reserve Strategy.
THE SYMBIOTIC RELATIONSHIP
One of the reasons the US Reserve Strategy has worked for as long as it has, is because there was an incentive by other countries to sterilize the US dollars they received. This, in the case of Asia, was because of the Asian Mercantile Strategy they were executing. By sterilizing US dollars, they held down their currency's exchange rate, which helped their exports though creating potential domestic inflation. Until recently, these inflation pressures have been manageable.
In the case of Europe, the Euro was only coming into existence in the late 90s, but then quickly moved from well below par to nearly 1.50 to the US dollar, causing competitive problems for European export trade for many peripheral countries (PIIGS).
The Asian Export Strategy and the US Reserve Dollar Strategy were symbiotic for a number of reasons:
1. Though the Asian Export Strategy was an Export Trade Imbalance game and the US Dollar Reserve Strategy a Volume Trade game, both were centered on global trade. The US won by increased global trading and the growing requirement for the US dollars it required - dollars that could be increased to pay for the military industrial complex without increasing taxation and used as reserves for global banking growth. Asia won by getting an ever increasing share of a growing volume of trade.
2. The US as a 70% consumption economy needed cheap financing to sustain its insatiable consumption. Asia needed consumption to absorb its growing exports.
3. The US needed a strong dollar to attract financing for its debt. Asia saw US debt as a store for its growing reserves that additionally reduced financing costs for its export products. In a way Asia was offering a form of vendor financing or 'lay away' financing.
4. US corporations saw 'off-shoring', 'outsourcing' and 'rightsizing' as major productivity improvements. The Asian Mercantile Strategy offered American corporations an opportunity to significantly increase profitability while Asia needed every increasing and larger market segments to penetrate. US corporations brought know-how, branding and capital to the Asian economies who desperately needed these strengths to employ unskilled populations, increase standards of living and reduce the always present and potential social unrest.
5. The US economy which had shifted from an industrial economy to a services economy was quickly becoming a financial economy with 44% of the stock market being financials. The financial economy needed increasing capital inflows to sustain itself.
WHAT HAS CHANGED
So what could possible stop this ideal symbiotic relationship from continuing to feed on itself?
A number of factors, all of which are now coming together to end this Virtuous Cycle.
DEBT SATURATION
I recently authored a paper entitled Debt Saturation & Money Illusion , that if you have not read, I encourage you to read since it would take up too much space here. It makes the case that the global economy has reached the point where annual debt costs are now outstripping the global economy's ability to support the exponentially increasing burden.
Additionally, stimulus spending by governments has now reached the point where it is actually counterproductive.
The above chart shows that even using government numbers for inflation (which are disgracefully inadequate and understated) the real rates in the old industrialized economies are negative. By contrast, rates in emerging economies are positive.
This means central banks are effectively paying banks to take money, yet commercial banks cannot find sufficient investments to actually absorb the money. Like pushing on a string, the global economy simply cannot absorb debt at the levels required to sustain required growth rates which must exceed inflation rates.
The level of nonperforming bank assets is growing at such a rate that global banks have serious concerns with their existing loans and potentially their own solvency.
Growth in Non Performing Bank Loan Levels is shown below.
MALINVESTMENT
I found a recent article entitled: Technology firms struggle to cover interest payments in the Korean Times to be very instructive. Despite Asian economies growing rapidly and now dominating the global electronics industry, the study by the Korean Times found alarmingly that:
a. One in three firms traded on the Kosdaq stock exchange failed to earn sufficient money to cover their interest payments in 2010.
b. 280 out of 876 Kosdaq-listed corporations, or 32 percent, could not reach the benchmark reading of one in the interest coverage ratio. The interest coverage ratio, otherwise dubbed times interest earned (TIE), refers to the measure of a firm’s ability to honor its debt payments.
This is classic mal-investment in the truest sense of the Austrian School of Economcis.
Corporations now have balance sheets so leveraged with debt that their business models are barely able to cover debt payments even when interest rates are at historic lows. What does this suggest for possible debt default and forced unwinding going forward?
Private Equity corporations with leveraged takeovers and buyouts dominated the US financial landscape for years. These takeovers left corporate balance sheets severely damaged and barely able to pay the debt burdens they were forced to assume.
Additionally, we have learned since the days of Enron, there are significant amounts of debt held off balance sheets today in Special Purpose Entities (SPEs). There is no investor transparency to these obligations. This debt and other forms of 'contingent liability' reporting presently allow corporations to assume ever larger amounts of debt without impacting their corporate credit ratings. Everything works fine until growth slows.
Corporations over the last decade are acting more as highly leveraged hedge funds with the consequential exposure of margin or collateral calls. This is a highly risky and unstable situation in the longer term.
CONSUMPTION IMBALANCES
Another factor causing the unwind is a tapped out US consumer. This has been forecast for over a decade as an eventuality, but the US consumer continued to surprise everyone with their willingness to consume and take on debt. However, since the 2008 financial crisis things have changed. The US real disposable income has fallen and US consumer debt loads are now impacting their ability to consume.
Consumption growth rates in the US have slowed. The Asian economies have consumption rates below forty percent. The consumption growth rates of these Asian economies, though growing, are increasing from a much smaller absolute size. This imbalance is placing further pressures on the symbiotic relationship.
A VIRTUOUS RISING CYCLE BECOMES A VICIOUS DOWNWARD SPIRAL
Slowly, the cycle is reversing. What was once a virtuous cycle is now a potentially vicious downward spiral.
The death knell for the cycle will be:
1. A deteriorating US dollar,
2. Rising US interest rates,
3. Sustained and chronic US unemployment,
4. Asian inflation, especially in food where 60% of Asian disposable income is spent.
5. Pressures on Asian currency pegs
6. Collapsing values of US Reserve holdings.
BERNANKE'S BOX
I recently published another paper entitled BERNANKE'S QEx BOX! where I argued what Chairman Ben Bernanke was likely to do at his critical April 27th FOMC 'Signal' meeting. I was proven right as he delivered precisely on cue. It was not a difficult call.
The reason I was so sure is because the real problem was clear. It is about what the Basel BIS (Bank of International Settlements) Bankers are more than aware of.
As I point out in Debt Saturation & Money Illusion, the Shadow Banking liabilities have fallen by $5 Trillion since the financial crisis, which is a crushing blow to global liquidity and in fact global financial banking solvency.
An analysis of data by Fathom Consulting for the US Federal Reserve, the European Central Bank, the Bank of Japan and the Bank of England, showed their assets swelled from around $4 trillion at the start of 2006 to just short of $9 trillion by the end of February this year. The increase in the size of G4 central bank balance sheets since mid-07 has ALSO been around $5 trillion to end February 2011, or 8 percent of global GDP.
It is my view that the Basel BIS Bankers have orchestrated their balance sheet growth to offset the contracting Shadow Banking System liabilities. For those that are not aware, Federal Reserve Chairman Ben Bernanke, Bank of England Governor Mervyn King, ECB President Jean-Claude Trichet and Bank of Japan Governor Masaaki Shirakawa all sit as Board Members and meet regularly.
FED'S DUAL TRIPLE MANDATE
To do this the central bankers have increased their balance sheets to their political limits which can be seen in the following Federal Reserve chart from Zeal.
In the case of the US Federal Reserve, this has meant such significant changes that effectively the Fed's dual mandate has now expanded to three. Besides the official mandates of Full Employment and Price Stability, a third has been added: Asset Appreciation.
This is clearly evident when we overlay the above balance sheet growth with US equity market appreciation, as represented by the S&P 500 in the chart below.
The top of the red Treasury series (chart above) represents the total Treasuries, MBSs, and agencies the Fed purchased in its quantitative-easing campaigns. That red line above is then transferred to the second chart below as total QE. Superimposed on top of it is the US stock markets as represented by the SPX (blue). The strong correlation between the Fed’s monetization and the post-panic stock-market recovery is remarkable, perhaps even scary.
The Federal Reserve is no longer the "Lender of Last Resort"
The Federal Reserve is now the "Buyer of First Resort"
INHERENT LIMITER: INFLATION
There can be little doubt, despite Federal Reserve rhetoric, that Quantitative Easing , ZIRP (Zero Interest Rate Policy) and negative real interest rates have caused a surge in global inflation rates.
Recently Oil was at a 31 Month high and up 22 percent Year-on-Year. Corn was up 90 percent, Wheat and Soybeans up 45 percent and Rice at yet another high.
This inflation has been acutely felt throughout Asia which has to combat this in parallel with trying to keep their currencies competitive as part of their Asian Mercantile strategy.
Across Asia, interest rates and bank reserve requirements have been increased, and in some instance capital control restrictions implemented. Pressures are such that many, including China, are now at the point of surrendering sacrosanct currency appreciation.
The problem is food inflation. Food must be imported and a stronger currency would help avoid consumer sensitive food inflation, at the expense of assisting with its own export strategy.
Sixty percent of disposable income in Asia, according to the Asian Development Bank (ADB) in a major report entitled: Global Food & Price Inflation & Developing Asia, is spent on food. Food is presently expected to average 10 percent inflation in 2011. This has created tremendous pressures on the population and potential social unrest for Asian governments.
64 Million people have already been moved into the category of poverty, which the ADB classifies as below $1.25/day. With 3.5 Billion consumers, it is expected that 190 Million will be pushed into poverty if food inflation continues. Food prices were up 30% in February's report, so the 10 percent Asian food inflation is no doubt seriously too low.
GLOBAL SLOWDOWN - Q1 GDP SIGNALS
The efforts to fight inflation are now impacting the 7.8% Asian growth rate, which is now demonstrating the expected signs of slowing.
US Gross domestic product was recently reported as rising only 1.8 percent from January through March, after a 3.1 percent pace in the last three months of 2010. Taking out inventory builds this number as only 0.8 percent.
Britain reported 0.5 percent growth and is now on the edge of a double dip.
The Federal Reserve and most economists are all revising 2011 GDP growth lower, as a steady stream of negative news hits the markets.
If GDP numbers were adjusted for true inflation, rather than the suspect government CPI distortions, real GDP would be negative. Considering government deficit spending is now 20-25 percent of the US economy, can there be any question that we have effectively very negative economic growth?
The Basel BIS Bankers are acutely aware of this.
QEX WILL HAPPEN - 'The Risk-Off that Refreshes'
So what is to be done?
I believe a decision has been taken to temporarily remove some of the pressures off increasing money supply before resuming expansion of money and credit later in Q3 or Q4. There is little choice.
Make no mistake about it however, central bank money printing must continue and at an accelerated rate. I suspect it will emerge not as QE III, but in another form to address the massive and growing problems with non-performing assets, foreclosures and REOs occurring at Fannie, Freddie and the FHA.
Don't get fooled. Watch the balance sheets of the central banks. They will by necessity continue to grow to stop the vicious spiral from accelerating.
CONCLUSIONS
The Basel BIS Bankers fully understand the underpinnings of the shift from a Virtuous Cycle to a Vicious Spiral presently underway.
They are doing everything within their power to offset it. Policies of "extend and pretend" and "kick the can down the road" are all just attempts at buying time.
Unfortunately time is working against them, as existing debt only increases as interest owed is relentlessly and cumulatively added.
The Basel BIS Bankers have no real answers. The eventuality of a fiat currency crisis is ordained and has been since the early warnings in 2007 of the Financial Crisis. The roadmap has been clear to all that actually wanted to look.
»
- 78946 reads
- Printer-friendly version
- Send to friend
- advertisements -
Have a good weekend. Yen Cross.
http://www.youtube.com/watch?v=aH2yqLXhMkQ&feature=related
Because you kids know, you are not the first nor the last to have sex.
Another dip being bought with the utmost force and fury.
Bears lose again.
lieutenantjohnchard you are welcome to come visit me in my office on Grand Ave. in El Segundo and you can see my 4-monitor workstation. Afterwards we can have a few martinis at my 400 sq. ft. apartment overlooking the smoggy 101 freeway and chase around some of the skanky tenants in my building. Of course, you will have to drive unless you want to meet me at the Metro Green line at the Mariposa station.
LOL.....
that's comical. do banks now supply their contract labor doing 1099 work with 4 monitors so they can surf the internet, trade stocks and post at zh all day? does this bank also give their contract labor a corner office with clerical support?
what a liar and fraud you are.
But he has good taste in avatars.
I may just show up without an invite someday. Got some friends in la.and i have a pretty good idea where you live!
Very good post. We are as ready as we can be. Still not in the camp to load up on food, but that too can change. Still buying more gold, silver, whenever we have a few extra pennies.
Mind the priorities of hoarding: food, water purification, tp, ... ,precious metals. Don't be one of the potentially starving proles that only has condiments in their refrigerator if or when things get dicey. Besides someone's always accepting canned goods as donations if you don't feel like rotating through the inventory.
Beans, bullets, and Band-Aids, my friend...
www.survivalblog.com
BAC and MS up 2.4%, textbook launch off the lows.
Every hedge fund on the planet that is short is going to be looking at those charts over the weekend and wonder if they should flip and go long.
looking at the BAC charts...he checks over his shoulder to see if the coast is clear...his other hand slowly reaching down below the desk...unzipping his pants quietly...he's almost ready....
lol
Right robot, BAC great play. From 36 to 7 to 12. Corrupt insolvent bank with enormous debt and hated by the sheeples. Great call. Up 3% to 11.71, you are beyond words.
You don't really see the market like that do you?
Even if he does, both are running into massive overhead resistance... on crap volume. Robo, how much is this bank paying you? Are they looking for more help? LOL
ps- this is for you... I know ya love it. http://youtu.be/hon7o8nV7s4 might as well have some comfort of home, lol
Just lost my job today. Co. couldn't afford my salary anymore and will likely be completely closing-up shop w/i a few mos. Offered me an independent rep position which I declined. Think I'll have Uncle Barry take care of me for the immediate future and use my time to stockpile for the impending fireworks.
Sorry to hear that, bro.
I lost my job in July 2009 and was "forced" into retirement, but it was the best thing that happened because it was right after the intermediate bottom in stocks that summer and I loaded up on stocks and started ignoring the bad news and made huge money for 18 months and actually got my accounts large enough to where I really don't have to work again if I don't want to. I had to put my biases aside and watch the tape and trade accordingly and it was a life changing experience. Now I'm working on a contract basis voluntarily and still have plenty of time during my assignments to trade so I'm finally out of the woods.
You will find something else to do to make money and you will probably look back at what had just happened as a key turning point and will be glad it happened.
but not to worry. you too can be like robottrader and get the bank where he does 1099 contract work to supply you with a 4 monitor (his words) work station so that he can surf the internet, trade stocks and post with commentary on almost every single zh post.
riiiiiight!
the only thing that could be better than that would be five. lulz
what's amazing is that he actually thinks people believe him.
1. surf the internet, 2. trade stocks and 3. post with commentary on almost every single zh post. That's three monitors, so I guess the 4th is for tranny porn.
Robo, don't mistake the mouse wheel for your dick, you might accidentally buy 2 million shares of BAC.
lol!
Oil at $100/bbl we wasted our money in Military Ops.
could you really with a clear conscience (assuming you posses one) advocate to anyone who is putting their own money into this market to be going long stocks at this point?
seriously? you can't possibly that foolish or cruel could you?
the 'if you can't beat them, join them' philosophy is not so bad as long as the music is still playing.
key is to get out right before the music stops.
You got junked but I appreciate ++ thoughts.
I might take the independent rep if i were you. It will keep your.foot in the door and show you are a team player. No future employer will assume you were really just fired because you were no good. Remember employers dont like to hire unemployed people so stay in the game.
Back after downing a good bottle of vino. I would've thought of remaining in some capacity but they have NO cash and can't ship. One owner is dipping into personal stash to cover payroll. Only a matter of weeks before they roll over. Consumers aren't consuming and retailers not retailing. Haven't had a vacation in 3 yrs., but will use the time wisely. But wish my silver stash and other things were a little larger. What's the margins on canned goods?
To the Man::
Tyler, please leave us a thread and take at least 2 days off to unwind and relax. We cannot do much until Tuesday so plenty of time to get ready. And thanks for all you do. We need you so be well. A "voice of truth, maybe not always right but always real".
Good weekend all. Not a bad day.
Yeah i think i can handle a couple of days of withdrawal. Go get laid or something.
GREAT ARTICLE !!!!! Thank you for your efforts and time to put this "out there" .
Read all about TEOTWAWKI and Au at my new blog. Send me an email at gmail, prove who you are and tell me you will be nice (as I am using my real name at my blog). ZH-ers are the only ones I make jump through the hoops, because of the sensitive and secretive nature of this site and the numerous trolls. I thank the 25 of you who asked to get the link, thank you for your interest and work (and nice comments!). I have widgets for PM prices.
13 minutes ago
Thai authorities said Friday they arrested an American citizen on charges he insulted the country's monarchy, in part by posting a link on his blog four years ago to a banned book about the Southeast Asian nation's ailing king.
stay anony-mouse, BiCheZ!
yeah, it is a pretty bad situation in thailand regarding that law, but sounds like the guy is thai-born and likely has dual citizenship, and was arrested of course in Thailand. the interesting thing is the posting was done while in the US, and maybe on a US based website, which is the same situation a certain julian assange from wikileaks is in. naturally the fact that assange hasnt done anything inside the US or involving US computer servers, wont help him either if the US gets his hands on him.
The Republican tax cuts have been in effect for a decade, unaltered. If you look on the wral.com web site, only 2500 jobs were created during the past year.No details given. These could be Mickey D's jobs.
All Congressional Republicans should be out looking for jobs in the US. Take Faux news cameras, the ACORN pimp and prostitute and show us exaactly where new jobs have been created.
here is what Gordon T Long thinks said above:
here is the extent of Gordon T Long's detailed prediction:
ie, hardly a prediction at all, but we will work with that anyway.
this is what the Statement said:
ie it is an affirmative statement that QE2 will end in Jun
Bernanke, in his press conference said the marginal impact of QE had diminished and the tradeoffs had become less attractive. he also predicted there would be little market impact from the end of QE2.
the only thing he didnt say was give an absolute, positive guarantee that there wouldnt be further QE at some point. and why would he?
You needed to read down further, and then follow links to the rest of his articles.
OUCH! Have you all seen the pending home sales report for April? I am surprised nobody has mentioned it today.
Released on 5/27/2011 10:00:00 AM For Apr, 2011 Prior Actual Pending Home Sales Index - Level 94.1 81.9 Pending Home Sales Index - M/M 5.1 % -11.6 %Highlights
In what could be the first signal of another breakdown in the housing market, April's pending home sales index fell nearly 11 points to 81.9, down 11.6 percent from a downward revised 92.6 in March. Regionally the decline is centered in the largest region which is the South where pending sales fell more than 17 percent. This decline could reflect the extraordinary weather that hit the region during the month. The National Association of Realtors is trying to be upbeat, citing weather factors along with high oil prices and the rise in jobless claims. Hopefully they're right and the likely decline ahead for final sales of existing homes will only be temporary. This report is moving the markets, pulling money out of the stock market and into the safety of bonds.
http://www.nasdaq.com/markets/us-economic-calendar.aspx
"COULD be a signal" of another breakdown in the housing market? Where do they get these guys? A depression level residential RE market gets hit in April with a 17% decline in the largest region and they say it may be an indication of trouble? And note how they blame May weather for it as though you can't remember that April was really not so terrible weatherwise.
IMHO , Housing has to come down to a level the current Job market can support. So if everyone is working at Mcdonald type wages, well housing must come down to that level.
So what, a $100 menu at the local ReMax™ office?
Interesting and well constructed but artificial.
The truth is that we have never been in control of our destiny no matter how much we want to believe otherwise. This is what makes it fascinating for me. Chaos defines disorder but does not order it; it remains chaos and unpredictable. This is where we will always be, hopefully. "Hopefully" because and ordered and predictable system is just plain fucking boring.
We are not as we see ourselves, but rather as we are and this how the world is 'ordered' in dis-order-----I love it because it is real and not merely a construction of the human mind.
Please, guys----let's keep having fun at Zero without forgetting we are funny.
That's what an old man thinks whenever he thinks at all oldman
well said, Alan Watts would be proud.
Any threat to this strategy was rapidly challenged by US military power. As an example, when Saddam Hussein, President of Iraq, decided to sell Iraq oil denominated in Euros, he was invaded by US forces three months later and removed from power. When Libyan leader Muammar Gaddafi wanted gold in exchange for Libyan oil, he almost immediately found himself the target of US planned military intervention.
Presently, oil is still sold only in US dollars, but more and more trade deals are being negotiated between China and its trading partners. This is a serious threat to the US and the US Dollar Reserve Strategy.
The MOU for the biggest oil trade deal in the world - the supply of energy from Russia to China has already been signed- neither party has any interest in changing the settlement curreny to USD.
The United States will not invade Saudi Arabia to enforce the continued use of the USD for oil trade settlement. Obama doesn't have the balls or military to survive over one billion angry Muslims and several hundred nuclear warheads.
The failure of the FED to bail out any single large EU FI over dollar denominated derivative instruments will remove any and all obstacles to the EU signing an energy deal with the former USSR along the same lines as China.
The US military simply does not have the strength or the strategy to maintain the US dollar as the sole settlement currency of the global oil trade. Ignorance may help fools sleep at night, but preparation for the future founded on ignorance is not preparation.
The conspiracy theorists need to either stick to a single conspiracy theory, or at least theorize about conspiracies that are not mutually exclusive. Either Bush decided to invade Iraq before 9/11 or Bush decided to invade Iraq after Saddam expressed an interest in switching from USD settlement of oil contracts, both conditions cannot be true. Regardless, it is a FACT that preparations were underway for invading Iraq more than 3 months beforehand, and Gordon Long should not be presenting as fact what is demonstrably FALSE.
i aint got me no MBA so i maybe wrong but if i spend more money than i makes ten i will be poor and starve to death......why is we still arguing about how this economy from the last 100 years will survive?...oh we can jest print all the money we want and that will fix everything?...problem solved....
Silver bitchezzz!
This is best article by Tyler because it explains exactly why global economic model has failed the USofA, and why idiology is still being pursued backed by banks and multinationals that are no longer nationals in any respect when it comes to hiring in US or paying taxes. Every day you hear of another US company stating they are doing better with a "global" strategy. This is a "buzz" word for outsourcing and closing US plants. Yesterday it was Delphi, former division of GM that went thru reorganization. The only problem is beyond bemusing the facts , not much we can do about it because ,like a drunken sailor we are hooked on free trade , our own invention and religion.
So perhaps we are in need of a more refined religion , a new economic model or a new higher form of political reality before the whole monetary system collapses taking down everyone--republicans and democrats,elitists and union members, young and old, developed nations and emerging--everyone
>we are hooked on free trade , our own invention and religion.
Actually, free trade is the natural state of things. The alternative is unfree trade, where you shoot or otherwise coerce others who don't abide by the rules you want to impose on them.
It is people who don't understand human action or economics who also don't understand this; and if they are also sociopaths or statists then it probably bothers them to no end that they don't have complete control over other what other freely-acting, peaceful people do.
And by "free" we mean: Carefully manipulated so that only the people at the top win.
I don't know why you got junked. The company I work for is a big multinational and they ahave all these "global" strategies and each time they announce a new one, a few more jobs trickle over to Bangalore where things are booming and software developers are paid a few bucks a day. It's a race to the bottom.
Companies have no obligation to keep plants here to employ American workers that were raised in socialist indoctrination camps to know nothing. They have no obligation to endure crippling taxation, deal with strangling piles of red tape, or deal with hostile TSA / border guards that want to touch you in ways that would make Strauss-Kahn blush.
Instead of blaming others for moving their capital away from you, maybe you should look in the mirror?
Yeah by god, let them discriminate in a pluralistic society and poison the air and water so long as their profits remain secure and obscene. Labor laws? We don't need no stinkin labor laws! Government is just a waste of money when the true people who govern also own you. Unfair business practices? You can't HANDLE fair business practices. Decency? Morality? They are about as relevent as the Easter Bunny and Paul Bunyon. Only one thing counts in life, power, and money IS power. The rest of you sniviling retards can go off and wallow in your sentimental angst thinking you can win because you hoard a few ounces of gold when gold is worth no more or less than your owners say it is and even then they can confiscate it at the stroke of a pen, they did it before and when it becomes advantageous for the ruling oligarchs to do it again you will find your pile gone before you can Google Leavenworth.
Viva laissez-faire and remember to vote republican. See you in church (mandatory if you want that raise).
For you who flagged, it was I thought obviously a snarky sarcastic reply to the post above, unless you are the one who junked me!
boiltherich - You are a snarky sarcastic sniviling retard.
I moved from the US to Europe - where we poison the air and water freely, don't have no stinkin labor laws, don't waste our money on government, and we certainly don't have any fair business practices, Decency, or Morality.
I had to get away from the US- where they load landfills corrosives and mercury, where inefficient labor laws go beyond protecting workers rights and instead protect continued subsidy to malcontents who refuse to contribute to collective performance, where the barriers to entry for new businesses are too high, but not as high as the taxes for those who chose not to engage in the legalized bribery of legislators, where the cost of complying with regulations actually erodes all the profit on which to pay taxes, and where investing corporate profits back into the business to achieve growth can taxed less favorably then paying excesive bonuses or dividends to shareholders. I did have to accept more government in Europe, but it does a vastly superior job of paying for itself compared to the US, which doesn't even meet global public-sector accounting standards.
The problems with job flight from the US are complex and structural, and the US isn't making any strides in improving the situation, in fact they continue to make the US less and less competitive vis-a-vis the rest of the world, and this before taking into account the capacities of the barely functional retards that are called high-school and college graduates.
Me neither. I like your posts. It happens. Kids. Get used to it. Keep up the good work.
Ex Scientia Pecuniae Libertas Out of Knowledge of Money Comes Freedom
We don't....so we're not.
Theme Song for this site should be 'The End' by The Doors.
Nothing's coming to an end; end-time prophecy is just profitable. Do what you love and it will work out... at least 'till it doesn't anymore. Then you die with clear conscience.
Hey, look how well it worked out for Cheney.
Is it possible BOJ has been told to print print print and buy US Treasuries under threat of US trade ban on Jap imports given Fuk_U situ - an alternative to invading Japan to help string this out
I started reading this one thinking: "Do you have eany idea when you will be getting to the fucking point?"
Then I had to skip to the end to ensure it wasn't just another pitch for gold or silver.
"to the biggest debtor nation in the world"
Does this mean we're Poor?
OHH NOOO !!!
OBAMA'S HOPELESS CHANGEIt's hard to explain any double digit approval number of the most disastrous presidency (both foreign and domestic) in our nation's history. But it speaks to the power of big media. Bush's unemployment was 4.6% and we were told what a horror it was. Everyone was working, prices were low, the country was safe and the left was sick with a form of mad cow disease called BDS (Bush Derangement Syndrome).
Here we are in an economic tsunami of bad news, and the Obama economy is being hailed as a recovery. And in what can only be diagnosed as stockholm syndrone, a ruby red district goes to a Democrat in a special elction in NY, a party that has proven time and time again to be the Defeat America party. And the media lauded that singular election as the second coming of Obama (while they negated the 600 legislative seats that went red not five months ago). America, snap out of it. You are walking into serfdom.
It took nearly 200 years to build up this great nation,but only 40 years to wreck it down. i fell sorry for every decent american!
.
Oh for the halcyon days of slavery and genocide.
Oh the deal the Tea Party would like to make you!
Your partisan insanity is showing (how typical)...
If you stopped gorging on your libtard koolaid, you might see that you're still ideologically aligned with at least 1/2 of the Kleptocratic Empire, and thus still part of the problemo.
I suggest you read the following a few hundred times, meditate upon it, and then come back when you pull your head out of your ass:
Objectivism says there are only two kinds of people in this world; creators and parasites.
Actually, objectivism as well as subjectivism says so.... just two sides of the same dichotomy.
During the time i wrote literature, i had to regularily search encyclopedia and dictionaries to find terms for things that do not exist in common everyday language. One of them was a word for "something" that neither is biased towards "object" nor towards "subject" (i picked "entity"). Another case was a word for relativism... i couldn't use the term relativism anymore, after it had been overly perverted by einstein, subjectivists and egalitism.... in the end had to make up a new word myself (relationism).
Rule of thumb: Whenever you deal with a dichotomy, you NEVER solve it by switching sides. You solve it by rejecting the premise: the artificial disjoint.
Fed press conference...
Bernank: Yada, yada, yada, "perceived" inflation, yada, yada, yada, Splash for my lost homie's of LEH, big shout out to my ho's at GS, who loves you boys?
Reporter: Mr Bernank, why did you focus liquidity into commodities and force a bubble while the average worker was suffering from a recession?
Followup, if you didn't "focus" it, how do you feel about the unintended consequinces of liquidity driving a bubble in commodities while the american public suffered from high unemployment, low wages and an aging population that is expanding the fix income percentages on the whole?
Second followup. Once the feds balance sheet reaches 14 trillion, what would be the value of the dollar? and would that wipe out the federal debt, and if so could we return the federal assets to the treasury and simple end the fed?
Is that not the elephant in the room Mr. Bernanke? Can the federal debt ever be zero as long as the federal reserve exists?
Your response sir?
I don't see whats the fuss about. 50% of Americans have $2000 cushion or less
withdrawing $1000 a day is adequate. So many upside down homes, student loans, credit cards. Hmmm its the rich that get hurt. Bring on the inflation!!!!!
My own personal version of a bank run would be to withdraw my last $5.87 and head to Starbucks for a latte.
A Mish Shedlock rebuttal to Hyperinflatuation
John Williams on the Weak Dollar
Please consider The Energy Report interview John Williams: Weak Dollar Behind Inflationary Oil Prices. Here are a few select quotes from Williams (JW), the Energy Report (TER), and my responses to them.
JW: Let's say the U.S. wants to sell debt to Japan, but Japan doesn't like the way the U.S. is running fiscal operations. It can say, "We don't trust the U.S. dollar. We'll lend you money, but we'll lend it in yen." Then, the U.S. has a real problem because it no longer has the ability to print the currency needed to pay off the debt. And if you're looking at U.S. debt denominated in yen, most likely you would have a very different and much lower rating.
Mish Response: Williams makes a fundamental mistake regarding trade. Several of them in fact. The US does not go about wanting to sell debt to Japan or China. Rather Japan and China buy US debt as a mathematical consequence of trade imbalances.
Moreover, Japan and China are more dependent on the US for their export model than the other way around. The odds China or Japan would not take US dollars is virtually zero. Both economies would crash without exports to the US. China's unemployment would soar and so would political unrest.
I keep stating, and it keeps falling on deaf ears, that as long as the US runs a trade deficit, it is a mathematical certainty that some country is accumulating US dollars or US dollar denominated assets.
cut n pasted from here--->>> http://www.marketoracle.co.uk/Article28325.html
Fuck Mish, he's a cowardly pussy!
+1
Word.
Just another lame-ass Banker-Gangster whose never worked a day in his life yet finds plenty of time to beat on those who have.
Unfortunately, you are right.
It is by design, that being the world reserve currency, US will always have a trade deficit.
It is a mathematical fact.
That's why it is very important to keep all EuroDollars, PetroDollars and Treasuries flowing. This will keep exporting inflation to the World, specially the producers.
The current interest rate is zero because current FRN are junk, as well as most financial instruments. That's why they can inflate, they have the housing bubble disinflating, plus deleveraging so that's approximately the rate of printing they are aiming at.
Unfortunately, unbalanced systems eventually break.
If it breaks, it depends now on what new system they want to put up. I guess this is might be a several generation plan.
".... Take thy plague away from me: I am even consumed by means of thy heavy .... In the midst of life we are in death: of whom may we seek for succor...?"
I'm good with a cookie.
A man will only need four things in our future.
Beans
Bullets
Bullion
Bitch
Band-Aids.
haha
nice
Speak for yourself because there are a whole bunch of us that have no use for the bitch!
The end, you say...
THIS is the end, my only friend, the end:
http://www.youtube.com/watch?v=QHFK1yKfiGo
If we Wanted their OIL, we wouldn't have to steal it, they would gladly give it at $100/bbl. am I stupid? Or are you?
Steal? the consortium has preserved, the biding process on the backs of our FORCES!
You just found your self. Clown with a yellow hat!
Uncle Sam invaded to ensure HIS capitalists got the contracts to dig it out of the ground, and not the Russians and French ones. Why do you think Clinton kept the 'genocidal' sanctions policy imposed on Iraq that killed a million people during the 1990s?
It's not about who USES the oil - it's about who makes BANK from it.
LJS - very good...
If i may add the essential 8 P's?
PM's...
Pot...
Poker...
Plant(seeds)...
Pistols...
P()ssy...
Provisions...
Percussion(drums)...
Fried(e)
For nearly 30 years we have had two Global Strategies working in a symbiotic fashion that has created a virtuous economic growth spiral. – Gordon T. Long
The symbiotic relationship is not between nations; it’s between the rulers of developing nations and investment bankers.
It leaves out the US middle-class economy and American workers.
The investment banks bring along multi-national corporations and buy large sections of the emerging nations’ real estate, industry, economy and markets, giving a share to the emerging nations’ rulers who are often puppets of the US government.
Here’s Long on what he believes is part of this symbiotic relationship :
“US corporations saw 'off-shoring', 'outsourcing' and 'rightsizing' as major productivity improvements. The Asian Mercantile Strategy offered American corporations an opportunity to significantly increase profitability while Asia needed every increasing and larger market segments to penetrate. US corporations brought know-how, branding and capital to the Asian economies who desperately needed these strengths to employ unskilled populations, increase standards of living and reduce the always present and potential social unrest.”
This is hardly the way it works. The banks and multi-national corporations make huge profits mining the resources of emerging nations using their cheap labor, transferring US technology, resources and physical structure offshore while Americans are set up to buy the returning cheap products.
We get the cheap plastic products while the dollar goes south, the jobs go east and inflation takes what’s left.
This exercise is not theory or an economic 101 lesson or a division of labor miracle. Americans were cheated with the decreased standard of living while the banks and corporations got filthy rich...that’s what is symbiotic. We have the unemployment, a seesaw of bubbles wiping out whole segments of our population – the tech investors and dot.com companies, the retail stock investors, homeowners, the construction industry and all the rest - build them up, knock them down.
We didn’t ask for this symbiotic "growth" miracle just so we could have an LP refrigerator from Korea and use our tax money to bail out the banks.
What kind of government falls for a symbiotic ruse of globalization without comparative advantage that enables a corporatocracy to outsource 46,000 American manufacturers within 10 years for its personal gain while destroying the livelihoods and standards of living built by the free enterprise of the American people who, at the same time, must protect this network of profiteers with the nation’s tax dollars and military?
Fantasy Planet, who commented above, is representative of the mutual benefits the American people accrued from this symbiotic relationship: “Just lost my job today. Co. couldn't afford my salary anymore and will likely be completely closing-up shop w/i a few mos...”
Fantasy Planet ...well now let me put the http://www.masonic-lodge-of-education.com/point-within-a-circle.html
>>>Fine Point Within The Womb<<< http://en.wikipedia.org/wiki/Theta
http://ancientegypt.hypermart.net/giza/
...here it is Bitchez, http://bible.cc/genesis/3-4.htm
http://megalithicworld.wordpress.com/category/cult-of-horus-in-ancient-egypt/
http://www.ufo-blogger.com/2011/04/nasa-elenin-2011-comet-planetary.html
You may think that we are getting screw'd by ''chance'' and the ''giant gains'' of this market define the inverted reality of unemployment and demand destruction, do to the principle debt established through the offer(s) of temptation by the ''moral hazard gang'' doing their ''gods'' works, but, the black hole is a bottomless, that is well timed, my friend. The Truth is not a choice and the fallen know their time is short. The public trust has been broken and the Great Seal upon the dollar is well defined by the debt and short term gains of corruption. Your labor would just feed the self devouring beast to death, that fine point is obvious in the Fight Club.
We are dealing with fallen angels and occult circles of power that have ''accepted'' the panthiest new world order of the masonic builder's cryptic secret knowledge, cast down by the elder race, the angels before man was risen from the Word of our Father in Christ.
The Bride, in agreement with the Son of God, is created in the image which the fallen false claim of dominion rests upon. The seal, which was broken by the offer of the elder of man, allowed the fallen to enter into the host, as the accuser before The Throne, crying out ''adultress!'' as the mark of contempt upon all the nations and Israel. http://www.youtube.com/watch?v=1e0LB1GWtak
The case has been proven, the revelation of the full law of mercy and the love of our Father in Christ is defining victory, in agreement. The penalty rests upon the accuser, whom is fallen in judgment and sealed in the bottomless pit, as are the nations. Do not perish in agreement with the world, stand forgiven and redeemed and risen unto eternity. Fear not, QE Eternity ends. Q3E... http://www.youtube.com/watch?v=Bow1ZJTV4L4
For all his excellent work, Long is blinded by a wistful idea that White Capital has become corrupted but really does (or at least CAN) provide something USEFUL to the world (i.e., not landfills and dioxin contamination).
The trap into which Long has fallen plagues many people on these very pages, and it has much to do with their need to look in the mirror every day and justify the fact that their profession is on par with being a baby-rapist.
Very colorful...excellent!
It ain't about money, it's about stuff. If the delusional, stupid banker assholes including stupid asshole Bernanke haven't figured that out yet, they soon will.
Virtuous cycle my ass. We are calling thieves virtuous now? What a clueless bunch of economic mumbo-jumbo. Here's my summary of the situation- "They are doing it on purpose."
As painful as that reality is for many to accept, it is the truth. And once you come to that realization, preparing becomes much simpler.
VIRTUOUS! My kind of person!
It ain't about money, it's about stuff. The stupid, delusional asshole bankers & stupid delusional asshole Bernanke haven't figured that out yet, but they soon will.
Kill the beast - kill the consumption - tax sales and remove tax from income and saving.
In other words, attack the poor.
I am still left with this question: What do we as individual do about it? How do we prepare -- and prosper -- during the great unwind? I wish Gordon Long had addressed this question.
All I can think of is to exit fiat currencies, debt, and enter hard assets. Anyone have any other thoughts?
Problem is that the "great unwind" is not just going to happen one day and we will all know because it is the top story on the evening news, it is like erosion, slow and inexorable. Like continental drift or global warming no single generation can live long enough to notice the frog has boiled in the pot. But, if it were to happen rapidly enough as it did in say Wiemar, then a huge stockpile of barter goods would be a wonderful thing to have, if you have a way to keep it secure. Here is a hint, tobacco and tobacco seeds will be really profitable. People will kill for smokes. In fact there is a good reason tobacco is currency in prisons. Alcohol too, pass the pruno and light me up!
Revenue bonds.
Senior secured bank debt.
Dividend paying equities with no debt.
If you'd followed his links you'd have read where he says exactly that -go pms. And he also dais be aware that in extremis they may make it hard for you to own pms.
Due to the Fed, we are going to run out of trees and die because of a lack of oxygen.
lol, but its digital make believe money
So Tyler,
How many Tylers are there?
No individual could be so prolific
Not using the money that these slave masters issue would be a start
The dollar has entered it's final death throws! I'm flat, and dollar cost averaged out for a small profit.
This may be entirely possible, but I'd expect the Yen and Euro asshats to lead the trend.
Never trust a weak, pussified hand...
It's all about the bluff, don't cha know? ;-)
Is the MAGMA, red or green on the Fed balance chart?
if there is such a place known as Hades, ben is going there....
The article misses one key cornerstone of the "Virtuous Cycle": the symbiosis depends on full cooperation between what are essentially competing national interests. When that starts to fray the system has problems. And when everyone is playing liar's poker, making leveraged bets with money they don't really have, then it frays faster. That's the situation that's currently developing.
They do have the same national interests: Control over the masses.
CE one thing JR fails to understand, is that symbiosis research is based on (Small ecosystems) I think viruses are a medium that is workable on a macro scale. Scales of Real Trade. Ants don't deliver Cattle. Well they do, HALF eaten.
Any threat to this strategy was rapidly challenged by US military power. As an example, when Saddam Hussein, President of Iraq, decided to sell Iraq oil denominated in Euros, he was invaded by US forces three months later and removed from power.
That's where he lost me. Isn't that just too simplistic. Sure all was a big part of it but....
Revenge for trying to assasinate George, Sr.
Ah, no. Not too hard to contemplate. Do some more reading and you'll get there.
Oh, and that's coming from an ex-idealist.
Look at DSK.
He challenged the USD as reserve status.
What happened next?
USD must continue to be reserve currency to keep the empire from collapsing.
Any threat to this strategy was rapidly challenged by US military power. As an example, when Saddam Hussein, President of Iraq, decided to sell Iraq oil denominated in Euros, he was invaded by US forces three months later and removed from power. When Libyan leader Muammar Gaddafi wanted gold in exchange for Libyan oil, he almost immediately found himself the target of US planned military intervention.
Presently, oil is still sold only in US dollars, but more and more trade deals are being negotiated between China and its trading partners. This is a serious threat to the US and the US Dollar Reserve Strategy.
The MOU for the biggest oil trade deal in the world - the supply of energy from Russia to China has already been signed- neither party has any interest in changing the settlement currency to USD.
The United States will not invade Saudi Arabia to enforce the continued use of the USD for oil trade settlement. Obama doesn't have the balls or military to survive over one billion angry Muslims and several hundred nuclear warheads.
The failure of the FED to bail out any single large EU FI over dollar denominated derivative instruments will remove any and all obstacles to the EU signing an energy deal with the former USSR along the same lines as China.
The US military simply does not have the strength or the strategy to maintain the US dollar as the sole settlement currency of the global oil trade. Ignorance may help fools sleep at night, but preparation for the future founded on ignorance is not preparation.
The conspiracy theorists need to either stick to a single conspiracy theory, or at least theorize about conspiracies that are not mutually exclusive. Either Bush decided to invade Iraq before 9/11 or Bush decided to invade Iraq after Saddam expressed an interest in switching from USD settlement of oil contracts, both conditions cannot be true. Regardless, it is a FACT that preparations were underway for invading Iraq more than 3 months beforehand, and Gordon Long should not be presenting as fact what is demonstrably FALSE.
Here's my conspiracy theory: Peak oil has been on everyone's mind since 1970, when America's oil went peak, as Hubbert had predicted.
The powers that be have much more production data than we do and when global oil production went peak, as it did in 2005, a plan was already in place.
There were 2 options for a system of economic growth to meet peak oil: full tilt GDP growth with ever increasing demand for oil running up against the diminishing supplies and decreasing oil production of oil. Followed by a terrible cultural dislocation and an immediate depression.
Or, on the sunnier side, a purposely created recession with a decreasing demand for oil, which also hid the fact that peak oil had arrived. Several years of this created recession, will accustom the population to the harsh economic times as far as the eye can see and inure them to a future without the advantages they had been used to.
For a further description of this theory, see "1984" by George Orwell.
yes it is too simplistic. please continue........
The United States of something is niggah rich!
Forehead slap: It is Issac Asimov and the "Foundation Trilogy". DUH
I agree totally in what he said, and it will be painful. The problem with extend and pretend, and also manipulating the market is that you don't see anymore where the next problem or blackswan event will erupt. You think you have it under control, but when it goes out of control this time people will know that all we are doing is printing money for this state or that state or this program in the next QEn. This is going to hurt the US public worse than the Great Depression of 1920's, because everybody believed the lie of entitlement both in getting rich and in govt..
Gordon Long is one of the most important authors appearing from time to time in ZH. Thank you for one of the best deconstructions of the crisis I have seen. It is remarkable to consider the poss, no probability that these central bankers actually understand what is going on (vs being idiots) and have no clue what to do about it. The ripoff of the US is virtually complete. And all the Wall St bankers have mansion hideaways in Montana and Wyoming where the riotous public will never get to them. Sweet.
hey CHINA is invited! You bailed out New Zealand and Portugal.
Some guys around here think we need to see fire and brimstone to call this economy a fail: well guess what, we're already at fail. Take a look at the data coming in and a peek around the neighborhood. Even the most pie in the sky bulls are beginning to say that we should already be at substantial GDP growth and off all the steroids by this stage of the business cycle. We also should have seen lots of job growth and lots of new construction and consumer spending growth. What we got is minimal at best and getting smaller. It's all going in the wrong direction and not behaving like past cycles. That's a fail and a big one considering the trillions spent to get there.
The ugly truth is that this economy needs good growth to survive. That's built in because everything is riding on the ability to repay past credit and grow asset values to make capital investment worth the risk. Otherwise credit alone sucks most of the fat out of the economy. And capital doesn't get invested since it can grow risk free. And it seeks risk offshore.
The only shoe left to drop would be social unrest and deterioration. Already the economy has been striped of the social mobility that used to be part of the bargain. That's a fail. And opportunities at the entry level have dried up a lot. Another fail. And at the other end, opportunity to retire has dried up too. So there's the potential for social unrest coming from a bunch of different angles. That's worse than just one angry group like in past crises.
Agreed.
And when internal unrest of that kind starts it is important for TPTB to find a world war to occupy the masses.
Add politicians and a world armed to the teeth to the economic inflection points and "death spiral" is the perfect term.
.
Money: De Gaulle v. the Dollar --- Feb 1965 Time Magazine Article
You can read Time magazines old articles for free, this one was about the US deficit back in 1965.
http://www.time.com/time/magazine/article/0,9171,840572-4,00.html#ixzz1Nbzdvcjr
Wholesale Chanel Handbags
Wholesale D&G Handbags
Wholesale Coach Wallets
Wholesale LV Wallets
Wholesale Gucci Wallets
Wholesale Chanel Wallets
Wholesale LV Sunglasses
Wholesale Gucci Sunglasses
Wholesale Chanel Sunglasses
Wholesale D&G Sunglasses
Wholesale Oakley Sunglasses
Oakley Sunglasses
Ray.Ban Sunglasses
LV Sunglasses
Gucci Sunglasses
Chanel Sunglasses
Wholesale nfl jerseys
wholesale jerseys
wholesale football jerseys
authentic jerseys
Wholesale nfl jersey
wholesale nhl jerseys
wholesale hockey jerseys
discount nhl jerseys
Wholesale nba jerseys
wholesale basketball jerseys
discount nba jerseys
Wholesale mlb jerseys
wholesale baseball jerseys
discount mlb jerseys
Wholesale NCAA Jerseys
Wholesale Custom Jersey
Air Max 2010
Air Max 95
Femme Nike Air Max 95
Air Max 90
Femme Nike Air Max 90
Air Max LTD
Air Max LTD II
Femme Nike Air Max LTD
Air Max TN
Femme Nike Air Max TN
Nike Air Max Skyline
Air Max Skyline
Femme Air Max Skyline
Air Max
Nike Air Max
Air Max pas cher
Kobe Bryant Jersey
Air Jordan Shoes
Wholesale air jordans
Replica Air Jordan
Cheap Air Jordan
get the fuck out, ya bitch. hell of it is he/she will never be back to read; just post to eyeballs & exit. cunt
thanks for listing the things we DONT NEED !!
if i want a gucci handbag, i will just buy one from some mexican selling them out of the back of his old van, on the side of the road.........
Shrek, take back Fiona to faraway land!
The only logical conclusion one can reach from this article is that we are about to see global conflict escalate to a point which will make WWII look like a dildo fight.
yes and in WW2 there were " rules of war " that people observed..........
This time its going to be animal like
We already have.
Uncle Sam's attack on Pakistan more-or-less commenced with the 'murder' of USAma. Factor in the Libya nonsense, the escalation in Palestine and in Syria ...
We're living in suspended animation right now.
Didn't you mean
ONLY BUYER OF ANY RESORT?
"The United Nations warned on Wednesday of a possible crisis of confidence in, and even a "collapse" of, the U.S. dollar if its value against other currencies continued to decline."
http://www.reuters.com/article/2011/05/25/us-economy-un-idUSTRE74O6EI201...
"It'll probably beat say living in some third-world shit hole like Mexico, Greece, France or Spain!"
Dude, think twice about one fact before you post crap : the so-called PIGS are among the world's top private gold owners.
Now let me translate it for you : catholics countries like Spain Portugal France Italy (and Greece?) have rural roots and this ancient reflexe of converting part of their income in gold coins month after month year after year. They distrust the banking system and they like the fact you can keep your P.M.s by yourself.
So the PIGS are not bare-assed like the U.S. who live on debt in a systematic fashion with plastic money.
When the Big Bang happens a few surprises might happen if you take into account that the new world currency will be gold.
Which 'world' of shit-hole is Babylon?
Historically Iraq, near Baghdad.
Presently NY.
The first comment is wrong.
It wasn't the FED that did it.
It was China, who pegged their currency and refused to allow it to float. It should have increased by 40% and this would have maintained employment and trade balance.
But they are greedy and want all the manufacturing, all the employment and all the commodities.
The U.S. has had their weak money policy much longer than the Chinese have pegged their currency to the dollar. They made the right choice and saw what the U.S. is up to and is emulating them especially with their bullshit GDP numbers and govt. statistics.
They are doing what is in their best interest as any smart country would do. The U.S. is killing their own middle class and Ross Perot told everyone twenty years ago there would be a great sucking sound...and it wasn't about Clinton and Monica Lewinsky.
China is an easy scapegoat just like "terrorists" the U.S. creates are easy scapegoats. Too many people are blinded by nationalism.
"The other [mercantile strategy] allowed the US to live far beyond its means".
To an otherwise excellent article, I would add:
Part of living beyond its means includes funding a global war machine. That supported the ability of the US to enforce petrodollar purchasing. US militarism has propped up pliant despots and quisling oligarchies throughout the world, and has furthered the hollowing out of the US economy by misdirecting resources from better uses.
It has led to the growth of a now out-of-control global military-CIA-arms merchant complex which has self-serving motives of its own to control resources and expand. That military is both the world's single biggest consumer of petroleum and the world's worst environmental destroyer and polluter.
In the midst of the economic travail, the global military is a wild card which poses an immediate threat to all life and liberty.
a great article, thx :-)
well, even in a hyperinflation gold stays gold, silver stays silver, farm land stays farm land, house stays house ... lets go for the real things NOW
the hyperinflation pays off our mortgages easily? hmmmmm, im not sure abt that ... if the price of food skyrockets, there will prolly be no money left to pay off even the 'cheaper' mortgages, isnt it? then the banks/creditors will take over all that houses/flats we folks cant pay for and throw them on the (very weak) housing market ...
what to do? im really not sure ... in my case i have to decide over this weekend and answer on monday(!) wheter to fix my mortgage rate from early 2013 for the next 5 years @ 3.8% p.a. and be debt free by 2018 or do nothing and just hope that the interest rates will be lower than 3.8% then or hope my stock market profits will be high enough to pay off my remaining debt in 2013 in full .... difficult ...
jaro :)
think about what you are saying. if you are in a position where you must have stock market profits to maintain your lifestyle you are in trouble.
thx, thats true, i will sell part of my stocks and reduce my liabilities (esp. that mortgage) and than just be happy if the remaining stocks provide some profits but not be dependend on them ...
jaro :-)
Hyperinflation will make buying daily essentials like a dog chasing its tail, forever playing catch up day by day, your mortgage wont get a look in at the begining of the inflation launch pad, until Eventually you will be able to pick up dollars off the street to pay off your mortgage providing your interest rate haven't risen with the inflation rate.
thx kina,
so i should better reduce liabilities (mortgage) asap :-)
jaro
In hyperinflation you want to go deeper into fixed debt, not get out of it, because you can then repay later say a whole mortgage with an hour's wage, ever lower dollars. If you are certain it is to be hyperinflation the best course is to stock up on (relatively) non perishable consumables, that are cheaper now in both nominal and real terms, because in that situation people will hoard. Hoarding is when you know for sure it is to be real hyperinflation. I would for example buy up smokes, TP, bottles of decent wine, cans of coffee, the things that I don't want to have to do without that could both make my life easier and possibly be of use when barter becomes necessary. I would not want to hold cash at all. If you require medicines for life/health like insulin try to have as much as you can store within use by dates.
In a major or hyper deflation it is the opposite, cash and highly liquid cash equivalents will steadily increase in value so you want to hang on to them, defer spending them as long as possible. But, at the absurd end of hyperdeflation at max can only take a dollar to the total value of all things, so there is a limit, but inflation has no such limit in theory, they can add zeroes forever. In the end both are the end of the economy as we know it, both are a crash from which a new order has to be built. PM's make good money in a long-term situation of either scenario, but I think in either situation the authorities will have a plan ready to roll out within days, weeks at most, where a new economic paradigm will be put in place and with force if necessary.
The one thing I think all ZH readers agree on no matter your personal politics or beliefs about economics is that it is almost here, not if but when. Some are wealthy enough to be proactive while most of us are not and when the time comes will just have to go with the flow. I can pretty much guarantee there will be surprises in store for all. Perhaps gold and silver confiscation, concentration camps, feeding stations, a new republic, a confederacy of North American States, any or none of these but different things, as well as the speed with which it can all happen, we are one flash crash, one black swan away from having a front row seat for it. Could be really evil, might have many silver linings. We will see. I am of an age where I want to live but no longer at any cost under any circumstances. I am not willing to fight a war or kill people for "stuff."