Manufacturing Collapse Reminiscent of Great Depression's Beginning 62 comments
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Well, here's the chart I think everyone really needs to see (below). The JPMorgan Global Manufacturing PMI hit 33.2 in December, a series record. More to the point, you can get a comparison between what is happening now and the 2001 "recession lite" with only a swift glance, and of course, the 2009 long recession is only just getting started.
click to enlarge
Now let's stick it alongside the one Paul Krugman put up last week of the US Great Depression:
Arguably, what we can see here is that the current collapse in industrial activity is starting to get near the US historic one in terms of proportions, but we still aren't quite there yet. What we could note that JP Morgan, in its monthly report, suggests that the present rates of global output are equivalent to an annual fall of between 12% and 15%. Really to compare with the fall in the US, we need to get up into the 20% region, but remember the global index is based on an average for 26 countries, and some of these are much worse than others (Japan, Spain, possibly Russia) and will already be around the 20% annual contraction rate in December. The point is also that the situation is still deteriorating, so hang on a bit, since it is not at all excluded that we will hit a 20% annualised contraction rate for the whole aggregate 26 sometime during the first quarter.
The second half of 2008 has been dreadful for global manufacturing and the sector enters the new year mired in its deepest recession for decades. Manufacturing will therefore continue to weigh on world GDP figures, with December PMI data consistent with a drop in global IP of around 12%-15% saar as indexes for output, new orders and employment slumped to record lows.
The weakest performance was registered by Japan, whose output and new orders indexes fell to levels unprecedented in the histories of any of the national manufacturing surveys included in the global manufacturing PMI.
Employment fell for the fifth successive month in December, and to the greatest extent in survey history. All of the national manufacturing sectors recorded a drop in staffing levels, most at series-record rates including all of the Eurozone nations, China and the UK. The sharpest falls in employment were signalled for Denmark, Spain, the US, Russia and the UK.
And watch out for the deflation backslap:
The Global Manufacturing Input Prices Index posted 31.3, its lowest ever reading. The rate of deflation was especially marked in the US, were purchase prices fell to the greatest extent since June 1949. Rates of decrease in costs hit series records in the Eurozone, Russia, Switzerland, the Czech Republic and Denmark.
And for those of you who are still skeptical that any of this has any validity, here's a PMI/GDP comparison chart for Japan - GDP rates to the left, diffusion index PMI readings to the right. Not perfect, but not a bad guide I would say, if you like your football live, that is.
So never mind the depth, what about the duration? Well, that is where I think that all of this will differ from what happened back then. As you can see in the US Great Depression chart, the 20% annual decrease went on for several years. At the present time I think there is no reason to assume that this will happen, i.e. that we will keep getting massive year on year contractions (in some cases maybe, Latvia perhaps?), but activity does look set to fall to quite a low level, and there is no strong reason at present for believing it will simply bounce back up again. More than likely we will simply trawl the bottom, at least for some months, and who knows, maybe a couple of years.
Well that's it for the big picture stuff, but I have actually been pretty hard at it all day down at the individual country level, so there is plenty more detail to come in forthcoming posts.
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This article has 62 comments:
Data points between Krugman's and JP Morgan would be interesting to see: from 1940 to 1980. I'm wondering how manufacturing fared in the 70s oil shock.
I'd also be curious to see data on inventory levels. One point I'm optimistic on is inventories are being drastically slashed- unlike in 2000 when firms were slow to respond. Even a slight pickup in demand may give a good bounce to manufacturing if inventories are very low.
Throwing in a little history from this point in the Great Depression, FDR discouraged employers from hiring anybody by adding new rules, increasing taxes and sticking it to any entrepreneurs who wanted to start a business. "That great sucking sound" was the wealth of the nation being vacuumed to Washington D.C. with measures like the April 5, 1933 Gold Confiscation and the January 30, 1934 devaluation of our currency wiping out 41% of U.S. savings accounts in one terrible swoop.
When the Obama administration realizes just how far federal revenues have fallen, we'll see how much of the wealth gets "spread around" to private citizens and how much he really just wants to feed loyal government employees.
I agree, this economic cataclysm has just barely begun...
We'll just fok it up half as badly as Japan in the 90s...
There are an equal number of blogs which tell us that today is 'the investment opportunity of a lifetime.'
The UBS chief something-or-other said these very words in 2001 and so I doubled down on the funds they sold me in 1999.
The funds all turned out to have swallowed the tech bubble so I lost half my retirement fund.
Not content with that disaster, I participated fully in this one as well.
Bonus is I lost half of much less money this time.
So i am very skeptical of the ' opportunity ' crowd.
We'll see.
With the US printing money like it's going out of style, $us is going to fall off the table. We might even see hyper-inflation. Never mind the upcoming "Card Check" fiasco that will provide a`substantial boost of inflation as well. Holding cash? We will be lucky if it keeps at least half of its current buying power. Welcome to the new "Jimmy Carter" years!
His recent article is a setup article for a turnaround in the economy. He can then later say, Obama Saved us! The truth is politicians aren't as powerful to change the course of the economy as many believe. They can screw things up, but fixing the economy often just takes time. Don't know what truly qualifies as a 'great depression'. If we need to see 20% unemployment and hold double-digit unemployment for 10 years as was seen in the FDR years, I'm not convinced at all. As long as we don't flip flop to hyper-inflation, I see an economic rebound as soon as late 2009, early 2010. That's hardly a depression and certainly not one that will be diverted by the great Obama as his time in office won't be sufficient to positively affect anything even if he could.
It is important to keep in mind that it's not an either/or proposition. Many fortunes were made during the Great Depession. In ALL market conditions there are winners as well as losers.
Even if the economy tanks, there will be companies that do well. The challenge is to find the gems in the multitude of losers. The process never changes but the odds get slimmer as the economy gets weaker.
My accounts are UP today.
1. The writer is a victim of static model fallacy and his graph comparisons are not useful.
2. Krugman? No.
3. Despair is rampant but not unanimous yet, so we do have more downside ahead in stocks and the economy.
4. The recovery may be slow, but anyone predicting that at this point is guessing, not truly forecasting (given my reading so far, though I may have missed someone making a good case). I would maintain that conditions are too uncertain to predict. the speed of the coming recovery. I confidently predict a recovery, this is not the end of capitalism.
5. Our job is always the same. We must look for ways to grow/conserve our capital under current conditions, with an eye toward the future.
6. I'll not be giving any advice though I am actively working on my number 5. Anyone who acts based on poster comments is a fool. Do your own research and place your bets accordingly. I have been doing well, but that could change at any time.
What, did 3 of our 10 remaining factories shut down?
On Jan 05 08:19 AM Adam Pawling wrote:
> Good article Edward. I'm glad someone is discussing the manufacturing
> report.
>
> Data points between Krugman's and JP Morgan would be interesting
> to see: from 1940 to 1980. I'm wondering how manufacturing fared
> in the 70s oil shock.
>
> I'd also be curious to see data on inventory levels. One point I'm
> optimistic on is inventories are being drastically slashed- unlike
> in 2000 when firms were slow to respond. Even a slight pickup in
> demand may give a good bounce to manufacturing if inventories are
> very low.
On Jan 05 09:58 AM AndrewBaker wrote:
> The ones telling us now is a great buying opportunity are probably
> the same ones who did not not tell us to sell 12 months ago: why
> would they be right this time? It strikes me that not saying sell
> and saying buy (selectively) are two sides of the same self-interested
> coin. Add in the politicians' economics (bad at the best of times),
> and the only way is further down, in my view. I'm sticking with
> shorts (through ETF) and bonds, and a very few stocks that I'll sell
> as soon as the price has risen. This is a depression and has a long
> way to go.
On Jan 05 10:57 AM Duude wrote:
> I don't anyone that can read Krugman without a grin on their face.
> Krugman always, always, always has an agenda. He isn't a credible
> guy. Some of you might point out that he won the nobel peace prize.
> Unfortunately, those who vote for the nobel peace prize aren't beyond
> politics. They voted for Krugman at a time when word had come out
> before hand that pickings for the economics prize were slim this
> year and the U.S. presidential campaign was in high gear. They actually
> based the award on work Krugman did 30 years ago. I'm not sure he
> even supports his prior work privately as he does publicly.
> His recent article is a setup article for a turnaround in the economy.
> He can then later say, Obama Saved us! The truth is politicians
> aren't as powerful to change the course of the economy as many believe.
> They can screw things up, but fixing the economy often just takes
> time. Don't know what truly qualifies as a 'great depression'. If
> we need to see 20% unemployment and hold double-digit unemployment
> for 10 years as was seen in the FDR years, I'm not convinced at all.
> As long as we don't flip flop to hyper-inflation, I see an economic
> rebound as soon as late 2009, early 2010. That's hardly a depression
> and certainly not one that will be diverted by the great Obama as
> his time in office won't be sufficient to positively affect anything
> even if he could.
96% of 401k's are about to be wiped out when people get back into the market and realize (way too late) that the Market is being manipulated.
The DOW should be at 5000 and not a penny higher.
On Jan 05 11:26 AM axelrod608 wrote:
> >> "an equal number of blogs which tell us that today is 'the investment
> opportunity of a lifetime.'" >>
>
> It is important to keep in mind that it's not an either/or proposition.
> Many fortunes were made during the Great Depession. In ALL market
> conditions there are winners as well as losers.
>
> Even if the economy tanks, there will be companies that do well.
> The challenge is to find the gems in the multitude of losers. The
> process never changes but the odds get slimmer as the economy gets
> weaker.
tip the mood this far. I think the media and the dems feel now that it has gotten a little out of hand and now there not sure if they can stop the wave.
All for there hatred of consevatives. Plus in the name of power hunger.
They actually based the award on work Krugman did 30 years ago.
Um, that is because the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel is most often given for work whose value has taken years to be sorted out.
You can read about the criteria here:
nobelprize.org/nobel_p...
Avinash Dixit, University Professor of Economics at Princeton University and President of the American Economic Association describes Krugman's many contributions here:
www.voxeu.org/index.ph...
Then....
On Jan 05 11:26 AM axelrod608 wrote:
> >> "an equal number of blogs which tell us that today is 'the investment
> opportunity of a lifetime.'" >>
>
> It is important to keep in mind that it's not an either/or proposition.
> Many fortunes were made during the Great Depession. In ALL market
> conditions there are winners as well as losers.
>
> Even if the economy tanks, there will be companies that do well.
> The challenge is to find the gems in the multitude of losers. The
> process never changes but the odds get slimmer as the economy gets
> weaker.
On Jan 05 09:28 AM Boubou wrote:
> I am in the further gloom and doom camp also, but I realize that
> I tend to reinforce my views by selecting blogs which support it.
>
> There are an equal number of blogs which tell us that today is 'the
> investment opportunity of a lifetime.'
> The UBS chief something-or-other said these very words in 2001 and
> so I doubled down on the funds they sold me in 1999.
> The funds all turned out to have swallowed the tech bubble so I lost
> half my retirement fund.
> Not content with that disaster, I participated fully in this one
> as well.
> Bonus is I lost half of much less money this time.
> So i am very skeptical of the ' opportunity ' crowd.
As you put it with your comment, most of production activity is offshore. I could make pages and pages with the things that are different -- now and then 20's and 30's/2008-2009. NAFTA, EuroZone, gold, technology... Ya know?
There are too many people like Krugman, Paulson and Bernanke trying to keep us out of the Great Depression, an event that occured almost 100 years ago. What we need are thinkers who will get us out of the economic crisis of 2008-2009!
To this day there is no agreement on the causes or what ended the Great Depression so long ago.
On Jan 05 05:27 PM Chris B wrote:
> Manufacturing in the US is down?
>
> What, did 3 of our 10 remaining factories shut down?
we might be in drift mode here for a few years...stagnant growth with
inflationary costs of living....should be another interesting year...
Well then Krugman is full of crap, since that is a garbage statement.
" He was warning about this bubble economy a long time before you learned how to type, my friend. " So he missed a whoe economic cycle where GDP went up 25%? He missed the increases in productivity too.
And now his dream of floods of govt money will actually do more harm than good and he's touting it like we need a 2nd New Deal. Well the first New Deal didnt even work! Why would we expect this one to work? It wont!
Krugman is an ass, he has been exposed as a partisan Bush-hating shill who willingly lies in his columns and mis-states to make his (incorrect points). Don Luskin has his number...
www.poorandstupid.com/...
I feel good about it because there is a lot of upside on a lot of my stocks still, I own some that are at fractions of book value, and because of course the market itself has barely cracked 9,000 and is down about 30% from a year ago.
The doom and gloomers might have less risk but will miss the upside as well.
tip the mood this far. I think the media and the dems feel now that it has gotten a little out of hand and now there not sure if they can stop the wave.
All for there hatred of consevatives. Plus in the name of power hunger."
The media is now playing the 'can obama save us?' game, which should make any honest citizen puke. Politicians dont 'save us' when it comes to our livelihood, they are like the stork in charge of the frogs. We should just hope to not get eaten!
allaboutedwardhugh.blo...
...and the impression I gain from perusing that site is that the guy is little more than an incredibly long winded, unemployed "hobo" who spends his days at his kitchen table in Barcelona cranking out blather for his blogs...but "seekingalpha" nevertheless provides him with yet one more soap box...gee, why am I not surprised?!
To this day there is no agreement on the causes or what ended the Great Depression so long ago.
----------------------...
Maybe among those who don't understand the simple things in life.
The causes were when a critical mass of enough human beings became high on the fumes of an over supply of fuel: easy money which could be invested with high leverage and an attitude that investments and business could only get better - a devastating, time-illusory environment which ended only when the economy ran out of "fuel" and people came down from their high and got their normal wits back. World War II helped considerably, of course. (Go through a major war with pure evil and win it, and see how you feel! ) And its hard to say how long things would have taken without the war, but probably longer. Its likely the case that overcoming the orgasmic delight of the illusion required an equal amount of suffering through a recovery process for the illusion to disappear. And WWII created a lot of suffering.
This is exactly what must happen to us today (without a war, hopefully.) The times have changed and the methods of alleviating the pain will vary, but until we deleverage sufficiently to normal values and have endured our proportional suffering, we won't get out of this physical and mental mess.
The government will function to try and smooth out our withdrawal from the addiction, but the money is causing a new addiction: bailoutititis. This may smooth out the landing but will probably extend the time of recovery, just like the addiction to methadone which manifests in the heroin addict, as attempts are made to cushion his crash. However long it lasts, our recession/depression won't end until the great unwinding is finished and we are spent of our insanities.
In the meantime, we will probably see a number of bear rallies (like the one we are in right now) where people think we are past the bottom and will be on our way to recovery in just a number of months. (There were five or six of them over the three year period before the bottom in 1932. The first one went 48% up before turning around.) Does anyone who is objective really think in 6 months or so that housing prices will stabilize? That bankruptcies will cease? That unemployment will turn up? That banks are going to be lending at usual levels? That trillions in derivatives are going to unwind? That there isn't a threat of high inflation with all the money being pumped into the system?
We are just getting started in this. The rest is wishful, illusory thinking.
"Usually a person has more faith in their fear than faith in their future" ?
Negativity breeds more and markets are definately driven by fear...
The Chinese need to keep buying American dollars and holding them. Their exports to the US are way down. The eventual deflation of the credit bubble will be a good thing, not a bad thing. It portends a prosperous future built on real GDP growth, not unsustainable nonsensical growth due to unlimited cyber paper.
Manufacturing?? Does the US really need to be the hub of manufacturing that it once was? Times change and economies advance... We don't need to do the manufacturing, we just need to have a degree of control of the means by which manufacturing is sustained around the world. Capital and equity! At the end of the day, who makes out better? The guy down in the pit running the manufacturing process, or the guys with the controlling shares of the company equity? Think about it. Happy and healthy 2009 to everyone...
To quote Gann: 'Booms and Busts are in the minds if men'.
But unfortunately most people will never grasp what this really means!
Good Luck. Your gonna need it.
Noworries
1) Hamas vs. Israel -- ceasefire? or escalation with more participants?
2) Political corruption -- Blago, Burris, Richardson, Obama's natural-born status...have we ever seen so many questionable things in such a short period? The political drama seems to be escalating.
3) Economic fraud -- Madoff, the bailouts, oil futures speculation last year?, what else can we add to this list? What if we find out that any of this was contrived? Or that bailout money has been siphoned? Or something else "big"?
4) Social unrest -- atheistic "anything goes" vs. traditional "family values" -- things are heating up noticeably, in case you didn't pay attention to the post-Prop 8 riots. What kind of effect could social chaos have on national unity during these times? and on economics?
5) Russia has been turning the screws on Ukraine over nat. gas. In recent years, Putin has made other moves to "consolidate power". We are again facing a Russia that is contentious and feels backed into a corner.
6) Ahmadinejad is still "the man" in Iran...Obama will sit down with him; Hugo Chavez still runs Venezuela.
7) Anyone in the insurance biz can tell you -- hailstorms can wipe out the years profitability before spring is even over; one good hurricane in summer/fall can wipe out companies for good. And then there's the recent seismic activity under Yellowstone. My high school geography teacher told us back in the day that if that sucker ever blew, 10 states would be covered in ash & more than ash!
So...anyone think everything is gonna fall nicely in line in 2009, with no major events of any type to kick us off the tightrope??? Our position is precarious. It will only take one more major event --> G.D. 2.
While I appreciate your point about fear, in this case, you really do not know what you are talking about.
You said..." The eventual deflation of the credit bubble will be a good thing, not a bad thing. It portends a prosperous future built on real GDP growth, not unsustainable nonsensical growth due to unlimited cyber paper."
You really haven't looked at GDP growth over the last 20-25 years have you? While we have been on a bull run since Reagan, the PERCENTAGE INCREASE year after year of GDP has been dropping since the high of @ 8% growth in 1984. This is why people have "felt" like they have been spinning their wheels lately concerning their income versus what they have been paying for stuff.
You said, "Manufacturing?? Does the US really need to be the hub of manufacturing that it once was? Times change and economies advance... We don't need to do the manufacturing, we just need to have a degree of control of the means by which manufacturing is sustained around the world. Capital and equity!"
Once again...look at the year on year GDP growth since 1984. As manufacturing has been driven overseas, so too has our GDP withered year after year. Why do you thing there was a need for all the complex debt instruments that have crushed this economy? Simple....there has not been for YEARS (pretty much since the Dot Com Bust in 2000) enough economic growth from things REAL and TANGIBLE like manufacturing. Even those things real and tangible like toasters, TV's, computers, clothes, textiles, steel, etc., which we haven't given up on or simply shipped overseas namely AMERICAN CARS, nobody wants to buy because we have no NATIONAL PRIDE anymore in MANUFACTURING something of QUALITY!
You said, "The Chinese need to keep buying American dollars and holding them."
What incentive do they have to do this for very long, when rampant inflation is on its way and the debasing of the currency is a near certainty. This was going to happen anyway as the BABY BOOMER iceberg really begins sucking all those non-existant dollars out of Social Security and Medicaid. But with "Trillion dollar deficits for years", according to the Messiah Obama added to the total Federal Debt of 60 trillion dollars, China will have less incentive to keep our dollars.
After all, eventually China will have an internal market of prosperous Middle Class Chinese who can sustain themselves because they have not only a manufacturing base but all the capital and equity they need for themselves.
Oh yeah....don't forget. The breaking point of this country was $147 dollar/barrel of oil and $4.00 dollar gasoline. As soon as your "Rosy Scenario" takes place that reality will come back.
No my perma-bull friend, 2007 will go down as the peak of America (2000 actually was, everything since then numerically has been fake because of the housing market and complex debt instruments). Its not the end of the world, just the inevitable decline of a superpower. All superpowers from Babylon to the Roman Empire to the British Empire to even us experience a peak and decline.
Get used to it...accept it....and make the best of it.
2) Political corruption was at its peak in the Nixon and Bush II administrations. However, partisans didn't think it was so bad at the time. Also, corruption prosecutions on the evening news is not a sign of trouble, corruption you never hear about is.
3) The good news is that mortgage fraud and the huge money sinkhole in Iraq (pallets of cash disappearing) will be winding down soon. Madoff and other conmen were exposed when markets went down. It's in up markets that you have to worry.
4) Social unrest? Where? The public is apathetic as ever, and a few dozen people in a protest march is more like a faint pulse for democracy than the beginnings of a revolt. Go to South Korea if you want to experience a vibrant democracy, with protests of hundreds of thousands of people and fistfights in the legislature.
5) Europeans will have to turn down those thermostats this winter and generate more electricity to heat with. The end result will be for them to move for greater energy independence from their unreliable supplier, just like they did with petroleum. In the long run, Russia loses. If only we were as concerned.
6) Oh well, tinpot dictators in 3rd world countries. The status quo is no reason to predict the end of the world.
7) The threat of a natural disaster is also the status quo and always has been. Quakes, hurricanes, and volcanos are as likely this year as last. If Obama is smart, much of his "stimulus" package will go towards shoring up levees, bridges, and buildings so that the economic losses from the next disaster (and from insurance premiums) will be smaller.
Overall, there are no good reasons to hide in a bunker.
On Jan 07 02:57 AM Socialism cannot compete! wrote:
> Instead of denouncing those who are "afraid", those of you doing
> so would be wise to ask whether it is rational fear. IMO, yes, the
> extent of the fear is historically wide right now...but not without
> good reason! From where we are today, list out the risks, economic,
> political, social...forces of nature...etc. Then ask yourself, what
> happens to the economy if even one more big thing hits the fan???
>
>
> 1) Hamas vs. Israel -- ceasefire? or escalation with more participants?
>
> 2) Political corruption -- Blago, Burris, Richardson, Obama's natural-born
> status...have we ever seen so many questionable things in such a
> short period? The political drama seems to be escalating.
> 3) Economic fraud -- Madoff, the bailouts, oil futures speculation
> last year?, what else can we add to this list? What if we find out
> that any of this was contrived? Or that bailout money has been siphoned?
> Or something else "big"?
> 4) Social unrest -- atheistic "anything goes" vs. traditional "family
> values" -- things are heating up noticeably, in case you didn't pay
> attention to the post-Prop 8 riots. What kind of effect could social
> chaos have on national unity during these times? and on economics?
>
> 5) Russia has been turning the screws on Ukraine over nat. gas. In
> recent years, Putin has made other moves to "consolidate power".
> We are again facing a Russia that is contentious and feels backed
> into a corner.
> 6) Ahmadinejad is still "the man" in Iran...Obama will sit down with
> him; Hugo Chavez still runs Venezuela.
> 7) Anyone in the insurance biz can tell you -- hailstorms can wipe
> out the years profitability before spring is even over; one good
> hurricane in summer/fall can wipe out companies for good. And then
> there's the recent seismic activity under Yellowstone. My high school
> geography teacher told us back in the day that if that sucker ever
> blew, 10 states would be covered in ash & more than ash!
>
> So...anyone think everything is gonna fall nicely in line in 2009,
> with no major events of any type to kick us off the tightrope???
> Our position is precarious. It will only take one more major event
> --> G.D. 2.
On Jan 07 09:29 AM Chris B wrote:
> 1) Israeli/Arab bush wars have been going on for decades. No one
> even pays attention any more. They're all crazy.
>
> 2) Political corruption was at its peak in the Nixon and Bush II
> administrations. However, partisans didn't think it was so bad at
> the time. Also, corruption prosecutions on the evening news is not
> a sign of trouble, corruption you never hear about is.
>
> 3) The good news is that mortgage fraud and the huge money sinkhole
> in Iraq (pallets of cash disappearing) will be winding down soon.
> Madoff and other conmen were exposed when markets went down. It's
> in up markets that you have to worry.
>
> 4) Social unrest? Where? The public is apathetic as ever, and a few
> dozen people in a protest march is more like a faint pulse for democracy
> than the beginnings of a revolt. Go to South Korea if you want to
> experience a vibrant democracy, with protests of hundreds of thousands
> of people and fistfights in the legislature.
>
> 5) Europeans will have to turn down those thermostats this winter
> and generate more electricity to heat with. The end result will be
> for them to move for greater energy independence from their unreliable
> supplier, just like they did with petroleum. In the long run, Russia
> loses. If only we were as concerned.
>
> 6) Oh well, tinpot dictators in 3rd world countries. The status quo
> is no reason to predict the end of the world.
>
> 7) The threat of a natural disaster is also the status quo and always
> has been. Quakes, hurricanes, and volcanos are as likely this year
> as last. If Obama is smart, much of his "stimulus" package will go
> towards shoring up levees, bridges, and buildings so that the economic
> losses from the next disaster (and from insurance premiums) will
> be smaller.
>
> Overall, there are no good reasons to hide in a bunker.
My numbers show the U.S. has shed 9% GDP from beginning of 2008 to current. I expect another 2%-3% in Q1. It's obvious to all of us that the U.S. will attempt reinflation with experimental processes. This is a W shape downturn. I was correct in forecasting the level of the crash and the timing of it by March of 2008. I had very good Boston VC mentors in 2005+2006, thank you gentlemen, you trained me well.
What I cannot seriously forecast is the effects of the fiscal stimilus in years 2011/2012 and if the U.S will shed yet another 3%-4% or if we'll see a super-spike in select commodities at that time mitigating the effects of lost GDP. I will say I am buying stocks in Q2 after earnings reports and seeing the Washington fiscal stimilus package. This will give me some options as to either taking profits during the reinflation period or deciding to simply hold stock for the five year period. I stay with a forecast that 2013 will be the next sustainable Bull market but it will be tepid in comparison to the 80's and 90's Bull.
www.worldnetdaily.com/...
The question is what will be the catalyst for the next boom? Alternative energy?
I really wish I knew? For the next true bull market or boom to happen we
will need something to kick start...
And when...could be 8-10 years away yet...could be a rocky road in the meantime.
Bring the jobs back to America! If people have to pay more for the goods at Walmart so be it. At least we will have jobs.
On Jan 05 09:58 AM AndrewBaker wrote:
> The ones telling us now is a great buying opportunity are probably
> the same ones who did not not tell us to sell 12 months ago: why
> would they be right this time? It strikes me that not saying sell
> and saying buy (selectively) are two sides of the same self-interested
> coin. Add in the politicians' economics (bad at the best of times),
> and the only way is further down, in my view. I'm sticking with shorts
> (through ETF) and bonds, and a very few stocks that I'll sell as
> soon as the price has risen. This is a depression and has a long
> way to go.
Maybe
On Jan 07 06:28 PM H Moura wrote:
> Marc Faber gave his economic outlook and is pretty bleak also:<br/>
>
> marcfaberblog.blogspot...;br/>
>
> Recession or depression...the jury is still out.
Many people blame the government's monetary policy of the 1920's for the depression, then blame FDR for making things worse, while others don't see it that way at all.
Although you gave a very simpleton answer, if you'd take some courses in economics/History, I think you'd find that some of your broad generalizations are off base. Of course, this is YOUR OPINION and you have a right to it, yet there are multiple views and opinions of how we entered the Great Depression, when it started, when it ended and how we got out of it. Some experts place the end of the Great Depression as far out as 1955, but it's just one point of view.
As for World War II, there are views that the victors even created that environment after World War I, through their economic policies against Germany.
All if not as simple as it seems, but I guess if one watches CNBC for too long, it might appear that way.
On Jan 07 01:12 AM You're Kidding wrote:
> curbs-in said:
>
> To this day there is no agreement on the causes or what ended the
> Great Depression so long ago.
> ----------------------...
>
> Maybe among those who don't understand the simple things in life.
>
>
> The causes were when a critical mass of enough human beings became
> high on the fumes of an over supply of fuel: easy money which could
> be invested with high leverage and an attitude that investments and
> business could only get better - a devastating, time-illusory environment
> which ended only when the economy ran out of "fuel" and people came
> down from their high and got their normal wits back. World War II
> helped considerably, of course. (Go through a major war with pure
> evil and win it, and see how you feel! ) And its hard to say how
> long things would have taken without the war, but probably longer.
> Its likely the case that overcoming the orgasmic delight of the illusion
> required an equal amount of suffering through a recovery process
> for the illusion to disappear. And WWII created a lot of suffering.
>
>
> This is exactly what must happen to us today (without a war, hopefully.)
> The times have changed and the methods of alleviating the pain will
> vary, but until we deleverage sufficiently to normal values and have
> endured our proportional suffering, we won't get out of this physical
> and mental mess.
>
> The government will function to try and smooth out our withdrawal
> from the addiction, but the money is causing a new addiction: bailoutititis.
> This may smooth out the landing but will probably extend the time
> of recovery, just like the addiction to methadone which manifests
> in the heroin addict, as attempts are made to cushion his crash.
> However long it lasts, our recession/depression won't end until the
> great unwinding is finished and we are spent of our insanities.<br/>
>
> In the meantime, we will probably see a number of bear rallies (like
> the one we are in right now) where people think we are past the bottom
> and will be on our way to recovery in just a number of months. (There
> were five or six of them over the three year period before the bottom
> in 1932. The first one went 48% up before turning around.) Does anyone
> who is objective really think in 6 months or so that housing prices
> will stabilize? That bankruptcies will cease? That unemployment will
> turn up? That banks are going to be lending at usual levels? That
> trillions in derivatives are going to unwind? That there isn't a
> threat of high inflation with all the money being pumped into the
> system?
>
> We are just getting started in this. The rest is wishful, illusory
> thinking.
>
On Jan 07 09:20 PM dinky229 wrote:
> I'm also short through ETFs. Specifically, SRS. I was in SKS but
> it seems the banks are too big to fail so I left SKS. Any opinions
> on SRS?
>
>
> On Jan 05 09:58 AM AndrewBaker wrote:
Think about it!!!