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Guest Post: Will Ignoring The Mistakes Of The Past Result In A 20 Year Bear Market?
"Will Ignoring The Mistakes Of The Past Result In A 20 Year Bear Market?" Some great work submitted by The Pragmatic Capitalist (standalone pdf link here)
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Could be twenty years. I've been talking about the bull thats coming out of the media to anyone who will listen for months. Also, denninger has the much more believable labor data at over 1 million people leaving the labor force, not 260,000.
http://market-ticker.denninger.net/archives/2009/10/02.html
Turning Japanese I think we're turning Japanese I really think so.
an excellent piece of work.
The next step:
The new global output gap information system
measures output gaps for the entire global
population, with several million investigators
adding data in real time. It's much like this
website, only it does not require the Internet.
The filters and kill switches on the Internet
make it unreliable.
But you do not need a big system for day
trading. On your trading preference, oil, whatever,
build a fulcrum of fulcrums with data initially
populated out of good resource and production
atlases, and update like you update everyday,
until you match the existing equilibrium action.
Then build a matching system with participation
output gaps. First estimate whole population output
gaps to get it in synch, then move into sub-
populations. Make estimated guesses for the
output gaps.
What you learn from one system will reveal
adjustments necessary to converted the other,
so you have a self-reinforcing mechanism.
It is not dissimilar to the relationship
between the balance sheet, and the income
statement.
Here's a basic algorithm you may find helpful:
Egrowth = (C + I) / G
B/S(I)
/ talent development --- idea holders --- ideas --- B/S(I) ---
I/S(I)(real labor) --- B/S(I) retained talent investment +
profit taking;
Multiplier Effect - B/S(C) w I/S(I) feed
/ profit taking --- alternative talent development B/S(I) +
consumption (surplus / waste);
/ consumption --- I/S(C) --- B/S(C) + G
/ B/S(C) inflation = retained earnings + dividends +
interest + salaries --- I/S(C) --- B/S(C) + G
B/S(C) deflation, I/S(I) short-circuit --- decomposition
/ monetary misdirection --- B/S(C) bubble reflation ---
real asset liquidation --- I/S(C) --- insolvency
/ until, unless I/S(I) circuit restored, talent emigration
/ magnetic side - effective allocation of talent
/ gravitational side - efficient allocation of capital
I think I'd find it even more helpful just to use yours... output that is.
that would be like using a sledge hammer
to install siding. Possibly interesting, but ....
(or chasing a butterfly with a sledge
in cases like gold)
Mistakes, as egregious as they have been, will not result in "a 20 year bear market", but in NO MARKET (for paper assets i.e.).
Agreed. We'll be LUCKY to have a 20 year bear market if this keeps up.
At this point, with the die cast, I just can't imagine how the markets/economy can heal themselves without a major disruption, e.g. total meltdown, WW III, civil war.
While I want to believe it will all be OK, every day brings more evidence that a major disruption is inevitable. We are on a path that has never been taken before, and the pilots of the ship are not only clueless, but incredibly corrupt and incredibly powerful. Seems like a recipe for a world-class clusterfuck of the highest magnitude.
To be so bold - this guy(s) (Gals?) missed a very large point, Japan had the U.S. to support it's economy. Who supports the U.S. during this deflationary depression? Answer: No one. Maybe, just maybe if Uncle Ben starts putting money into our checking accounts every month (I'd like 1 Billion dollars, thank you very much) that may make us feel a little better about what is actually happening.
I maybe be full of shit, but I need more data to fully buy into this parallel with Japan.
I don't disagree with the premise that resolution of debt is paramount to ending this financial crisis.
There just something that doesn't feel right about the data.
As the reserve currency, the entire world supports the us economy (or portions thereof).
Reserve currency status is the lynchpin and what clouds an accurate analysis of the global monetary situation.
SDR's are an intermediate step on the way to a new way of doing business.
The ultimate goal is a proportional weighted trade/production/consumption/capitalization basket.
How and when it comes to pass is fodder for in-the-know, good guessers, lucky gamblers to profit from.
40muleteam borax
Suggestion: Fannie and Freddie offer 1% 30 year mortgages to anyone who has a mortgage as of 10/1/09. All liquidity needed to provide these mortgages is provided by the Fed printing-press.
We'd be paying $20 for a loaf of bread/gallon of gas, but we'd be out of expensive debt and the banks get paid back many loans that are going bad???
Heck, let's go for 0 to .25% like the big boys get!
Awesome post... but what we are in now is an order of magnitude larger than Japans problem. The starting points were also much more favorable to the Japanese situation.
We need more people manning the oars (jobs) rather than just finding a new way to refi the slave galley.
"This was also the time when substantial progress was being made in corporate restructuring with respect to the so-called “three excesses”: debt, employment and production capacity. This restructuring helped the final pick up. In this way, the Japanese economy was, in general, out of the woods around 2005, although some regional economies lagged behind, having benefited less from the global growth.""
Can somebody elaborate on the way corporations achieved this?
I think this has to be solved in the west also
Something for all inflationistas to pounder:
We are sitting on piles of unfunded liabilities: social security, medicare, public and private pensions. Inflating the currency does not eliminate these unfunded and unspecified liabilities. They will have to be paid back in future, inflated terms.
How could social security possibly be unfunded......I've bee n paying into it for 50 years!!!
The third precedent is the Long Depression which was worldwide and lasted 6 years (1873-1879), but its effects lasted for a good 20. As with today, the cause for the Long Depression was due to deflating asset prices, only at the time it was silver instead of property. It is more similar to our current recession than the Great Depression. Problem is, no one is alive anymore who remembers it, so it's often forgotten.