Guest Post: Our Economic Future - From Best to Worst Case

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Tue, 06/07/2011 - 16:53 | 1348392 philgramm
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Our economy?  Centrally rigged, er............planned casinos are not economies.  

Tue, 06/07/2011 - 16:55 | 1348408 Spalding_Smailes
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Container Leasing Reveals Economy Accelerating: Freight Markets

May 25, 2011, 12:24 AM EDT


May 25 (Bloomberg) -- The global trade rebound is pushing shipping lines to rely more on leasing companies such as CAI International Inc. and TAL International Group Inc. for the containers used to transport everything from bananas to blouses.

“We’re seeing perfect conditions,” Brian Sondey, president and chief executive officer of Purchase, New York- based TAL, said in an interview. “Relatively strong growth in trade creates a good level of need for containers, supply is very tight and shipping lines aren’t purchasing as many containers as in the past.”

Shipping lines that competed for containers in 2010 may face an even bigger shortage this year. Demand for steel cargo boxes may increase as much as 11 percent and manufacturers are limiting production. Sea carriers, including A.P. Moeller-Maersk A/S, operator of the world’s largest container line, are also sailing at slower speeds to save on fuel costs and are directing more capital to new vessels.

Even with enough containers currently in use to circle the earth 4.3 times, the shortfall has pushed new container prices to a record, allowing lessors to raise rates.


Tue, 06/07/2011 - 17:04 | 1348452 Highrev
Highrev's picture

Very cool, as always, Spalding.

You know, what with the negative news flow and the "disappointments" and what all, if equity markets don't go down and stay down (stay down is the key as I expect another V shaped bottom sometime in the near future), well, I guess that would mean that they are very strong (and that would be for a reason, uh, something like what you regularly post).

Oh, and imagine a rally without the help of the hypothetical QE3!

They say a good trader needs to be prepared for the unexpected (as in the market does exactly the opposite of what was expected).

We could also be at the end of a PM cycle (whether that would be cyclical or secular, I'm not willing to speculate yet.)


Tue, 06/07/2011 - 17:25 | 1348524 Reese Bobby
Reese Bobby's picture

You could grow up and pull you head out of your ass but that is not the base case scenario.  Why would you dopes try and pump shit here?  Know your audience.

Tue, 06/07/2011 - 17:56 | 1348644 The Profit Prophet
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Because they get paid by the post....please don`t feed the paid Shills.

T.E.I.N. everyone!

Tue, 06/07/2011 - 17:34 | 1348556 disabledvet
disabledvet's picture

why not speculate?  a market moves "towards us" because we all agree we can be wrong first and foremost.  the not so technical term is "wall of worry" when the market moves in our direction--"and when it doesn't we say past performance is no guarantee of future results."  precious metals have no worries--been true for a decade now.  still "silver prices corrected."  my worry in that space if i were critiquing "what could go wrong here" is "what if a large silver producer defaulted on its sovereign debt?"  would that cause the price of the metal to decline?  i say yes and more to the point "if the best credit risk in the form of euro and yen denominated debt is imploding" who benefits?  i say "Ben Bernanke."  period.

Tue, 06/07/2011 - 17:54 | 1348645 greased up deaf guy
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what exactly is a cyclical (pm) cycle?

puff puff pass, please...

Tue, 06/07/2011 - 17:10 | 1348455 DoChenRollingBearing
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Excellent post Spalding!  

We disagree on a lot, but you post news sometimes that I do not see anywhere, not even here at ZH.

Our bearings go in 20' containers, stuffed in there with other companies' cargo.  I'll ask Peru to check to see if their LCL Ocean Freight rates have started up.  I had no idea that rates were up, much less prices of new containers.

+ $1540

Tue, 06/07/2011 - 17:23 | 1348526 Reese Bobby
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There is a free Bloomberg site Einstein.

Tue, 06/07/2011 - 17:33 | 1348568 DoChenRollingBearing
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E=MC^2, yeah that's me!

Thanks for suggesting Bloomberg.  I'll go check it out and see if it is worth adding to my reading list each day.

Container prices and leasing rates are secondary news for me, prices for bearings are much more important to us.

Spalding posted a nice piece that I had not seen.  That's why I said something nice.

Tue, 06/07/2011 - 17:41 | 1348597 Spalding_Smailes
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Heavy-duty truck orders remain strong in May


COLUMBUS, Ind. — A preliminary reading of heavy-duty Class 8 commercial vehicles net orders for North American markets fell from April’s high water mark but remained strong, according to ACT Research Co. Net orders were up 85 percent from year ago May. Preliminary net order numbers are subject to revision and are typically accurate to within 5 percent, ACT noted.

May represents the seventh consecutive month of orders above the 24,000 unit level, a clear sign of elevated Class 8 demand. Though May had the lowest order intake of the last three months, orders were booked in excess of a 365,000 unit annualized rate from March to May, according to ACT.


Tue, 06/07/2011 - 17:53 | 1348633 Reese Bobby
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Truck cycle is real.  Good place to invest depending on valuation as that is no secret...

Tue, 06/07/2011 - 20:33 | 1349131 LowProfile
Tue, 06/07/2011 - 17:52 | 1348628 Reese Bobby
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Uh, yeah.  But it came from a Bloomberg News story word-for-word despite Wilson's obvious boots on the ground in what is left of industrial America.  Waiting for my "nice."

Tue, 06/07/2011 - 18:38 | 1348780 DoChenRollingBearing
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Suggesting a site worth a look IS nice.  But, I read a lot and have to be picky where I go.

But, since I am a married guy, I am hesitant to call you "nice", but OK.

Peace, Love, Woodstock.


Tue, 06/07/2011 - 17:19 | 1348501 Reese Bobby
Reese Bobby's picture

Unlike your loving-feeling fan I wonder what your point is.  Are you pointing out a short-term lack of container supply or a bullish call on economic momentum?  Or do you work for Business Week? 

Tue, 06/07/2011 - 17:30 | 1348541 Spalding_Smailes
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Point being the economy is not teetering on the edge of the abyss


Every shop I walk into has work. Grinders, chrome platers, heat treaters, machine shops ...

Tue, 06/07/2011 - 17:46 | 1348619 Reese Bobby
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Fair enough.  Is that a coincident or leading indicator?  Are these "shops" hiring?  Is the U.S. economy driven by honest manufacturing anymore?  Don't get me wrong:  I am not rooting against America.  I am mourning the Country we used to be, and we could easily still be today except for the EVIL work of the Global Bank Cartel that decided ethics were expendable in the interest of massive, ill-gotten gains; aka EVIL.

Tue, 06/07/2011 - 18:08 | 1348673 Spalding_Smailes
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The shops are not hiring. My bud had 135 machinist and when the shtf he cut 50%. But the insurance payments killed him ( I think he was on the hook for 80% of the insurance cost per month of those fired including family members $70,000 per month when no work is coming in for fired workers ). That will not happen again in his words and the office workers and shop managers are still taking a 20% cut off former salary ( pre 2008 )

I think the insurance bullshit is making owners stay lean and mean. Once its goes one way or the other then you might see some action. 



Tue, 06/07/2011 - 21:06 | 1349212 Prometheus418
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Our shops are hiring.  Major driver is US military orders, though.  Bullish for the worst-case above, and also indiciative of the starting phase of a Weimar-style hyperinflation, from what I can figure.  

Large orders with demands for ever shortening lead times from some of the first hands to hold QE2 money doesn't sound like a recipe for long-term sucess to me...

Wed, 06/08/2011 - 01:15 | 1349690 TruthInSunshine
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I have no personal beef with the people many on ZH think of as needlessly antagonsitic (to put it mildly), and this even includes MomoFlowRoboFader (though most of his comments are idiotic and devoid of thought, whereas Spalding at least takes the time to explain or break down his opinion), but Spalding is delusional if he can't recognize that government spending, whether within the confines of traditional governmental circuits, or within what is typically better viewed as the province of the private sector, has created a temporary floor to prevent a full blown crater speed depression, nor that this can't last much longer without some extremely painful and very long lasting (maybe permanent) damage to the organic economy and private sector in ways that even the brightest minds can't fully contemplate or predict or quantify at this time.

Aside from all that, there's a lot of fudging of numbers in many aspects of the transport index right now, and moreover, as LowProfile mentioned, the Baltic Dry Index is not confirming what are largely anectodal claims of strength in cargo/transports as relayed by Spalding.

Tue, 06/07/2011 - 22:50 | 1349515 Stuck on Zero
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Huge numbers of containers will be needed to haul around the dollars Bernanke is going to print when QE3 rolls around.

Wed, 06/08/2011 - 01:48 | 1349756 Hobbleknee
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Of course contain sales are high; China is planning a land invasion of 500 million soldiers disguised in containers as shipments to Walmart.

Tue, 06/07/2011 - 16:55 | 1348409 Yen Cross
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 Look @ the bond market!

Thu, 06/09/2011 - 11:26 | 1354514 GoinFawr
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Look at Pt, Ag, et al! It`s only Thursday, but it feels like Saturday Night (which is my cue). Logged.

Tue, 06/07/2011 - 16:58 | 1348424 disabledvet
disabledvet's picture

"soft landing" looking a bumpy--i agree. i say "send them free subscriptions to Playboy" as our first foray into if not IN CELEBRATION OF "the prosperous teens."

Tue, 06/07/2011 - 16:58 | 1348426 Ancona
Ancona's picture

We're all fucking doomed. Gold, silver, guns, butter and a bug out vehicle. Oh yeah, and gasoline to get there.

Tue, 06/07/2011 - 17:09 | 1348467 DoChenRollingBearing
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Preparation is very hard and expensive.  All of what you say and so much more.  I need to find a way to secure a water supply and store more food, we are "bugging-in".

Farming is just too hard for old non-farming Bearings...

Tue, 06/07/2011 - 18:03 | 1348667 Milestones
Milestones's picture

Those who have never been around a farm--hell even a good sized garden !/2 acre + are in for a shock. You are going to use muscles you didn't know you had. First year is a bitch because you have to do things over or repair after the cow gets loose in a newly watered field. You;ll come to appriciate the ole boy down the way and how things get done. Believe me, I've been there.    Milestones

Tue, 06/07/2011 - 18:56 | 1348833 gwar5
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Alternative to farming: Start networking (now) with people who live in the surrounding rural areas that are self sufficient and let them do the farming for you in exchange for something they need that you can provide. Fresh farm goods are readily available, all the time, at great prices. Look online for local farms in your area; go to a local farmer's market get their cards; or just go to a rural livestock feed/seed store and look on their message board for posts or ask the feedstore guy at the counter -- he'll know them all. When I was a kid we had milk, eggs, meat on our 5 acres and we always had more than we could consume so we sold the extra to neighbors -- our 'regulars'. People still do that.

I just put 20 lbs of strawberries in the freezer for smoothies from a local farm. Less than a $1 per lb. Made friends and found out what was coming up next on their harvest schedule. They're third generation and with lots of land and know what they're doing. Don't fight it. It'd cost me $4 per lb trying to do it yourself making all the mistakes.


Wed, 06/08/2011 - 07:23 | 1350026 Captain Planet
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Unfortunatly the average american farmer is a baby boomer, roughly 58 years old, and probably wont be producing as many strawberries if he has to do all the work himself.

It is no secret that many young people want to leave rural areas, and we've witnessed both the brain drain and family ties to land being eroded in farming communities.

Somebody's got to farm, and I'm not sure hopw good the soil on the west coast is anymore either

Tue, 06/07/2011 - 21:10 | 1349222 Prometheus418
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Depending on where you're at, it wouldn't be an awful idea to get some catchbarrels under your rain gutters and a hand pump to go in them.  You can filter water yourself with sand and charcoal, and chemically purify it with bleach, iodine, peroxide or ozone, and if you have none of those, you can always boil the filtrate, though it uses fuel.

Tue, 06/07/2011 - 22:30 | 1349463 NidStyles
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Aquaponics is easy.

Tue, 06/07/2011 - 17:32 | 1348563 disabledvet
disabledvet's picture

you forgot your Playboy mags.  Fess up, buster.  You got a load of those, too "in your survival kit."

Tue, 06/07/2011 - 17:01 | 1348437 jplotinus
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Under the best case, it is postulated that "[m]ost Americans [will] suffer a severe drop in their standard of living, as they’re forced into new patterns of production and consumption...". Accordingly, that is not the best case and should not be considered as such.

Tue, 06/07/2011 - 17:07 | 1348439 TruthInSunshine
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The velocity of the destruction wreaked by Modern Money Mechanics!

Bon Apetite, bitchez!

“The central bank, by purchasing and selling government securities, can deliberately change aggregate bank reserves in order to affect deposits. There are two other ways in which the System can affect bank reserves and potential deposit volume directly; first, through loans to depository institutions, and second, through changes in reserve requirement percentages. A change in the required reserve ratio, of course, does not alter the dollar volume of reserves directly but does change the amount of deposits that a given amount of reserves can support. Any change in reserves, regardless of its origin, has the same potential to affect deposits (pg 15-16). ”

The system of fractional reserve banking administered by the Federal Reserve and its member banks is essential a “ponzi” scheme of the largest magnitude. Initial investors are paid with money from later investors and in fact all of this “money” has its origins in nothing more than electronic entries in a quasi- governmental agencies' hard drive. The Federal Reserve is not a federal entity, it is not subject to oversight by the government, members are appointed to twenty year terms by the president and confirmed by the senate. The regional boards are elected by regional banks. They are not subject to any audit; private or public. Our entire economic system is mortgaged to the banking sector, immediate reforms are needed to take the power of credit creation away from private interests and place it back into the hands of the US government as prescribed by the constitution. Failure to act and bring this issue to the forefront will only further burden future generations with unnecessary debt created as a result of an unnecessary system.


Modern Money Mechanics: How To Make and Destroy Money
Tue, 06/07/2011 - 17:02 | 1348443 VyseLegendaire
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Doug Casey always says the same thing over and over.

Thu, 06/09/2011 - 11:37 | 1354570 GoinFawr
GoinFawr's picture

If it ain't broke...

Tue, 06/07/2011 - 17:07 | 1348448 longjohnshorts
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"I’ll hazard the major situs will be Europe – which has pretty much always been the case for wars in general for the last 2,000 years."


This is asine, euro-centric bullshit. Ever hear of the Sino-Japanese War? What happened in the Pacific between 1941 and 1945? What happened in ... Korea ... Vietnam ... Cambodia? How about throughout the Indian subcontinent throughout much of the 20th century? How about what has happened throughout Africa for the past 30 years? Oh, did we forget ... the Spanish conquests in the Americas? The American War of Independence? The U.S. Civil War? 100 years of warfare between the Europeans and Native Americans?

This kind of simplistic B.S. is symptomatic of the entire "Economic Future" prognostication.Fills space, though, doesn't it?

Tue, 06/07/2011 - 23:32 | 1349595 jeff montanye
jeff montanye's picture

excellent point.  in fact whether judged by total dead or percentage killed of total world population, most of the worst wars involved china:

Tue, 06/07/2011 - 17:11 | 1348461 Reese Bobby
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Did you really not know you would lose your entire audience on ZH with the phrase, "...resurgence of libertarian thought – reminiscent of the Reagan-Thatcher era"?

I'm a Libertarian and MAYBE Eisenhower was the last President even close; maybe...

Tue, 06/07/2011 - 17:25 | 1348522 cara leaf
cara leaf's picture

Yes.   That was a surprise.  Reagan: paid for by Merrill Lynch.  Remember Don Regan?

Tue, 06/07/2011 - 17:30 | 1348554 Reese Bobby
Reese Bobby's picture

Yes I do.  And for those who don't "Inside Job" puts him in context.  Lots of people on ZH didn't need "Inside Job" but if the MSM is going to produce insulting shit like "Too Big To Fail" it serves as an important counter-balance.  The scene where Regan barks orders at Reagan is priceless...

Tue, 06/07/2011 - 23:39 | 1349602 jeff montanye
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total touche bobby.  completely agree.  thatcher and reagan were shills for corporations and the military industrial complex.  authoritarians by policy and reflexive zionists.  puke city.

Wed, 06/08/2011 - 01:05 | 1349723 blunderdog
blunderdog's picture

Goldwater was more recent.  He lost the election, but he was definitely the real deal.

Tue, 06/07/2011 - 17:10 | 1348470 Parth
Parth's picture

I do not understand when forecasters try to project outcome of human societal behaviour come up with 1) best case 2) middle road 3) worst case 4) Surprise case. Human history has always proven that the "Worst case" scenario is always the outcome. Point is we can never really get along. I just wanna see Hangover 3 now.

Wed, 06/08/2011 - 01:39 | 1349750 TheMerryPrankster
TheMerryPrankster's picture

The worst we can imagine seems to be becoming "best case scenario" as mankind adapts to new levels of vileness towards each other. 12 monkeys at some point becomes a logical tactic in defense of some dastardly wrong or bag of dirty tricks.

Too many genies are being created by ever cheaper technology that allows for scaling of cause and effect in geometric proportions, a single vial of an engineered virus could reduce an entire  contintent's population to its knees in a single flu season.

I have no faith in institutions, or human enlightenment, we're clearly at this point in the hands of the gods territory and we all know how fickle deities are.

Tue, 06/07/2011 - 17:19 | 1348483 Rodent Freikorps
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Stand by sluts. This is big.

WARSAW, Poland – NATO and Russia teamed up Tuesday to test their ability to fight terrorism, using a military transport plane to simulate a hijacking over Poland and sending in fighter planes to save it, an official said.


Tue, 06/07/2011 - 17:22 | 1348498 kato
kato's picture

no it is not you ugly fat dumb pig it is week old news.

Tue, 06/07/2011 - 17:21 | 1348518 Rodent Freikorps
Rodent Freikorps's picture

What do you have against week old big? I'm still bragging about the hottie I hit last week.

Anyway, the author of this pos article is a moron with no time in the real world.

Carry on.

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