This Recession Is a Reset to a New Normal 41 comments
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A major structural change happened to the economy in 2000 in employment / unemployment. It was caused by an increase in our productivity (needing fewer workers to do the same task) and exporting jobs.
The Fed released this past week their Industrial Production and Capacity statistics G.17 for February 2009. For those who would like to read the whole report – here. Industrial production fell 1.4 percent in February; the overall index has now declined for 4 consecutive months and for 10 of the past 12 months. At 99.7 percent of its 2002 average, output in February was 11.2 percent below its year-earlier level and was the lowest level since April 2002.
Industrial production mimics the trends we see in overall employment in America. A structural change occurred in 2000. This change appeared in employment trends and in American production indexes – but did not appear in GDP. A good portion of the GDP growth since 2000 was done with smoke and mirrors (or as economists call it - “credit”) – and it is that growth which this Great Recession is reclaiming.
The actions of the Fed during the 2001 recession papered over the real problems. No one was willing to make some hard decisions then – nor are they willing now.
America is now almost 10 years on a new trend line for industrial production. What indication have we seen in the last few years to dispute what these graphs are saying? What are the actions by government and industry to address this problem? Denial and pork barrel politics will not solve this.
We will exit this Great Recession in the New Normal. It will be a world of overcapacity in many sectors of the economy, poor employment conditions, abandoning of innovation, and credit abuse. I suspect a Japanese ‘L’ type recovery cannot be avoided. There is no magic bullet to create employment, and happens following years of targeted investing in new technologies. Without new areas of employment, return to pre-2000 conditions are impossible.
Taxing corporations more only drives their various entities overseas (my solution would have been to not tax corporations at all but tax the stockholders only). What taxes are there on overseas companies which import into America? What taxes are there on Corporations in America? You do the math – we are creating a structural cost advantage to non-American offshore companies through our tax system.
Update of Economic News from this Past Week
Overall, there are signs that the rate of economic collapse is slowing. This is not an indicator of recovery – far from it. The economy is still collapsing. There has been massive damage done to our economic system which will take time to repair. Growing unemployment will continue to weaken our economic base. But the rapid economic free fall is showing signs of slowing.
The Federal Reserve announced they would start purchasing $300 billion worth of 2 to 10 year Treasury Notes “to help improve conditions in private credit markets” over the next 6 months. The timing and the exact target of the program is not apparent. The guts of the FOMC statement read as follows:
In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide greater support to mortgage lending and housing markets, the Committee decided today to increase the size of the Federal Reserve’s balance sheet further by purchasing up to an additional $750 billion of agency mortgage-backed securities, bringing its total purchases of these securities to up to $1.25 trillion this year, and to increase its purchases of agency debt this year by up to $100 billion to a total of up to $200 billion. Moreover, to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months. The Federal Reserve has launched the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses and anticipates that the range of eligible collateral for this facility is likely to be expanded to include other financial assets. The Committee will continue to carefully monitor the size and composition of the Federal Reserve's balance sheet in light of evolving financial and economic developments.
This Fed statement significantly weakened the dollar on the currency exchanges and moved commodity prices up (oil above $50 per barrel), It essentially printed over $1 trillion in new money with this statement. Some punters point to the Fed trying to drive down mortgage rates with these moves – but the mortgage rates already are at 4.89% - almost at the lowest level since WWII. Whatever the Fed is trying to do – they are not talking plainly. They are imbedding trillions of dollars of Government loans at very low interest rates – which the taxpayer will have to support when interest rates rise. We are stealing prosperity from our future so that today can be better.
Overall, I am concerned that Bernanke is relying on economic simulations played out on computer. Consumers and business do not have to behave rationally – or morally. He cannot control the stupidity of politics. He is not able to control events outside of America’s borders. There is not a chance that this Great Recession will play out as Fed Chairman Bernanke envisions.
The Consumer Price Index (CPI) for February 2009 (.pdf) shows a very slight increase (0.4% increase annualized). The point is that from an overall inflationary point of view, the economy appears stable with no apparent inflationary or deflationary effects at the consumer level.
click to enlarge images
The Fed’s TALF program is now operational and is making its first loans against the following types of collateral.
The Fed through the New York Fed is making $200 billion dollars available to this program with the objective to create “normal” market conditions for these kinds of debt. With the Fed entering the market at so many points, I wonder if we need banks anymore. And to demonstrate my point, they have expanded TALF to include four additional categories of asset-backed securities (ABS):
- mortgage servicing advances,
- loans or leases relating to business equipment,
- leases of vehicle fleets, and
- floorplan loans (auto dealers method of financing auto inventory).
The March 2009 Empire State Manufacturing Survey indicates that conditions for New York manufacturers deteriorated significantly.
- The general business conditions index fell to a fresh low of -38.2.
- New orders and shipments indexes also dropped sharply to new record lows.
- Inventories index declined to its lowest level since 2001.
- The indexes for both prices paid and prices received remained negative for a fourth consecutive month.
- Employment indexes remained close to their recent lows.
- The six-month outlook continued to be very subdued, with capital spending and technology spending indexes falling to record lows.
Chicago Fed Midwest Manufacturing Index (CFMMI) declined 5.9% in January. This is a trailing index and does not give you much more information than you already know. This index is heavily influenced by the auto sector.
The Philadelphia Fed issued their March 2009 Business Outlook Survey showing continuing contraction. Indexes for general activity, new orders, shipments, and employment remained significantly negative. Employment losses were substantial and continuing declines in input prices and prices for their own manufactured goods. Most of the indicators of future activity suggest that the region's manufacturing executives expect declines to bottom out over the next six months. These type of surveys historically do not do a good job of forecasting the future.
The real average weekly earnings slightly fell in February 2009 (month-over-month).
French bank Societe Generale [SOGN.PA] agreed to beef up its anti-money laundering compliance policies at its New York branch.
Fed Chairman Ben Bernanke addressed the Independent Community Bankers of America's National Convention this past week. There was nothing new in his speech.
The Producers Price Index (PPI) advanced 0.1% month-over-month and declined -1.3% year-over-year for finished goods in February 2009. Intermediate and crude goods indexes continued their declines. All percentages in the table below are month-over-month unless indicated otherwise. These are not the items sold directly to consumers. There is little inflationary or deflationary pressures coming from this segment of the marketplace.
Residential Housing data for February triggered a rally this week on housing starts being up 13.5% month-over-month and minus 47.3% year-over-year. Looking through the data which includes house permits, starts, houses under construction, and completions – the only good news is that the continuing erosion seems to be subsiding (data cannot keep falling forever) – but there is little evidence that new construction is improving. Keep in mind that housing starts and permits exceeded 2.2 million per year in 2006 and that current data is only 1/3 of the previous normal. With the current glut of houses on the market, it is hard to envision that building more houses improves the economic situation.
The rate of job destruction remained essentially constant into the second week of March with the four week moving average with 654,000 jobs being lost every 4 weeks.
Filing for Bankruptcy: Primus Telecommunications Group Inc (PRTL.OB), Greenbrier Hotel Corporation (wholly owned by CSX), Chemtura (CEM), Fairchild Corporation (FCHD.PK). New bank failures this week: TeamBank (Paola, KS), Colorado National Bank (Colorado Springs, CO), and FirstCity Bank (Stockbridge, GA) – 20 bank failures so far this year. The WLI from ECRI is forecasting more stable conditions within the coming months. In their statement last Friday, they said in part as the index was holding steady, it “is clearly holding above its December low, suggesting that U.S. economic growth will stabilize in coming months.” The Conference Board also released their leading and concurrent indicators for February 2009. The LEI (leading index) continued the general downward trend with its rate of decline moderating slightly. The CEI (concurrent index) remained on a downtrend with the decline accelerating in recent months. The six-month decline in the CEI is the largest since 1975. According to The Conference Board: Taken together, the behavior of the composite economic indexes suggests that the economic recession that began in December 2007 will continue in the near term. If you would like a summary of all government financial indicators, click here. Disclosures: NoneEconomic Indicators Published this Past Week
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This article has 41 comments:
The ramifications are deep. Demographic and Social make-ups will change rather quickly as well. It is not much of a concern with those who deal with facts and figures.
Having sold our future to the rest of the world, the "new America" will also begin to look quite different as our new owners take rightful ownership of social institutions forming it to their own cultural likes and dislikes.....the melting pot is no more. The reforming of our social structures and basic human interactions is an often overlooked outcome of all of this. No comment on the "good or bad" of this...just that it is bound to occur.
We look for patterns that repeat to help make future predictions.
Here we see the replay of the USA financial valuations of assets in the 1900 to 1970 period which is repeating in the 1970 to 2040 period. 2009 maps to 1939. just as 2000 maps to 1930. Real estate prices broke down in 1930 and fell on larger houses until 1970. Stock market prices fell from 1930 to 1960 and are now retracing that pattern from 2000 to 2030.
Yes, that USA located mansion which cost 5 million in 2005 will go to zero in 2040 based on 2005 value US dollars. Politicians, every greedy for personal power and wealth will do everything except what they should which is to let the cartels die and the internet and other new energy inventions liberate the US to a low travel and low cost of government economy.
Would it not be nice to skip the wars that enrich cartel owners and pauperize the poor from now on.
Good luck.
Your piece, with the comments from others, prompts a question for me. It really wanders off topic, but I can't help myself. I see a fundamental weakening of the concept and application of capitalism as a result. I believe this leads to the shift you describe and demonstrate with the charts and statistics.
Ignoring the "cyclical nature" of business, often attributed to the existence of the privately held Federal Reserve, can this new paradigm (whatever it ultimately becomes) be attributed to historical trends encompassing several fundamental shifts away from the foundations of our country?
I think specifically of the concepts embedded in our constitution of "private property" - the foundation of all the capitalist tools that served us so well for so long.
It seems to me that through the apathy of good folks, and the hubris of well-meaning but mis-guided social architects and/or politicians, we have slowly but inexorably eroded the concept of private property and leaned at an ever-accelerating pace towards a pure socialist society and government. There is really no ability to rely on the concept of "private property" any longer.
For recent evidence of such a claim, look at the recent abuse of "eminent domain", serious recent attempts at abrogation of contract law by certain members of government (e.g. AIG bonuses), application of retroactive taxation to specified individuals rather than a "general" policy (AIG again - many thanks to the Senator that has asked for a more lengthy reasoned consideration of the implications of this), and so many other examples that others could cite from our brief (relatively) history as a nation.
Not being a scholar about this or any other major subject, I still have the intellectual curiosity to posit the following.
The single greatest mistake in our history was giving the federal government the power of taxation, ostensibly through representatives of the people - such no longer exist, in my opinion, as they are representatives of corporate bodies now.
The most egregious manifestation of the results of this is the income tax. Why? Because it was the final step in allowing the unrestrained growth of the federal government, a complete contravention of the intentions of the founding fathers. It was also the deepest penetration by government into the direct confiscation of private property for "social purposes" - taking directly from the wages of individual labor before it could even be applied to second-order functions. Money directly taken from the citizens' labor, by coercion, is diverted to Washington and redistributed as Washington desires, including being coercively returned (after frictional losses) to the states - if they comply with federal mandates (think seat belts, helmet laws, national speed limits, etc.).
No more egregious example occurs to me.
In my opinion, the budget of the federal government should be cooperatively set *and* funded by the states themselves - the exact mechanism being open for discussion. Even the "fair tax" or national sales tax concepts fail to address the basic problem I see in the current processes.
This "budget and fund" by states *only* achieves one important goal, keeping decision-making *and* concomitant results as close to "home" as possible. One can envision all sorts of good (and bad) results of this, a discussion of which certainly belongs in other fora. Of course this would seem to be "unworkable", but then so was our form of government considered prior to its successful application. "Politically impossible"? Yes, until it is accomplished.
Well, I'm sure I've taken this further than most would desire.
HardToLove
> This was great. I think this guy would make a great asset to the
> current administration though he might be over qualified due to having
> paid his taxes.
Even more, he obviously can apply constructive thought to relevant data and draw conclusions about possible outcomes. If we had more of this in our government, the number of "unintended consequences" we observe might be substantially reduced.
Who knows - we might even see rational solutions that grow from proper problem resolution processes!
BANISH THE THOUGHT! What universe am I living in?
HardToLove
On Mar 22 10:08 AM The Mad Hedge Fund Trader wrote:
> Fasten you seats belts! Early data show that the economy was getting
> traction even before B-52 Ben launched his carpet bombing campaign.
> Some $45 billion poured out of near zero yielding money market funds
> last week. Fannie Mae financed $41 billion in new home loans, the
> most in a year. Bring on the “V” recovery!
"God has wars from time to time in order to teach Americans geography" - Ambrose Bierce - 1880
On Mar 22 10:09 AM G.Kelly wrote:
> Excellent analysis.
> The ramifications are deep. Demographic and Social make-ups will
> change rather quickly as well. It is not much of a concern with those
> who deal with facts and figures.
>
> Having sold our future to the rest of the world, the "new America"
> will also begin to look quite different as our new owners take rightful
> ownership of social institutions forming it to their own cultural
> likes and dislikes.....the melting pot is no more. The reforming
> of our social structures and basic human interactions is an often
> overlooked outcome of all of this. No comment on the "good or bad"
> of this...just that it is bound to occur.
>
On Mar 22 10:01 AM misolarman wrote:
> Great article, you would think as a country we would look at successful
> examples like the Irish, who have created a pro business atmosphere.
> Instead we are bent on punishing success and propping up failure.
> We are headed towards the French model which has been disasterious.
> This is Darwinism in reverse.
Good analysis, however, the new normal is either we all give up a little bit of sovereignty for financial improvement and security, or the old solution of trade and hot wars is the reset..and nothing has changed.
Picking winning countries, industrys and companies here is what is hard, because there are so many variables. But, I would rather be in America than anywhere else all things being equal.
And, amazingly, if you do them well you often earn a great deal of money.
On Mar 22 01:27 PM Mike O. wrote:
> If we are resetting to an economy that cannot provide full employment,
> what choice is there other than to have government act as an employer
> as last resort?
"A good portion of the GDP growth since 2000 was done with smoke and mirrors (or as economists call it - “credit”) – and it is that growth which this Great Recession is reclaiming."
What the social engineers fail to realize in their hubris is that they cannot control nature. Attempting to do so has unintended consequences that are often worse than the temporary pain they attempt to conceal.
No BS, just plain, cold facts.
Great article and comment stream.
I want to comment on some thought provoking statements:
1. <<<Industrial production mimics the trends we see in overall employment in America. A structural change occurred in 2000. This change appeared in employment trends and in American production indexes – but did not appear in GDP. A good portion of the GDP growth since 2000 was done with smoke and mirrors (or as economists call it - “credit”) – and it is that growth which this Great Recession is reclaiming.>>>
The structural change that occurred in 2000 was at least partly related to the bursting tech bubble. Millions of jobs were lost in over-expanded industries (tel-com comes to mind) and many thousands of poorly executed dot.com ventures that went belly up. Those jobs have never come back.
The smoke and mirrors was largely a pyramid of financial instruments stacked one on top of another such that when one piece of paper was removed, the entire structure started to collapse.
2. <<<We will exit this Great Recession in the New Normal. It will be a world of overcapacity in many sectors of the economy, poor employment conditions, abandoning of innovation, and credit abuse. I suspect a Japanese ‘L’ type recovery cannot be avoided. There is no magic bullet to create employment, and happens following years of targeted investing in new technologies. Without new areas of employment, return to pre-2000 conditions are impossible.>>>
The last sentence is the key to any possibility of a hopeful future. After the dot.com bubble burst, the new area of employment for American exports was the financial sector. Now that those exports have turned out to be far worse than contaminated pharma and lead painted toys from China, American entreprenurial reputations are trashed. What areas will the new employment come from? Alternative energy? That can only go so far. If it turns out to be cheaper energy, that is only step one. We have to find things we can make with that energy to create exports.
3. <<<This Fed statement significantly weakened the dollar on the currency exchanges and moved commodity prices up (oil above $50 per barrel), It essentially printed over $1 trillion in new money with this statement. >>>
Debasing the dollar is one way to make cheaper exports. But that means the "new normal" is at a lower standard of living with respect to everything not created domestically.
4. <<<With the Fed entering the market at so many points, I wonder if we need banks anymore.>>>
Excellent point. If banks become nothing more than middle men in the financing process, why should the consumers of credit pay extra for the intermediary? However, if we eliminate the middle man, won't that just remove another sector for employment? This is an intriguing topic broached in a very unassuming sentence.
5. <<The rate of job destruction remained essentially constant into the second week of March with the four week moving average with 654,000 jobs being lost every 4 weeks.>>
Just a couple of months ago we were worried about how bad things would be if initial weekly unemployment claims stayed below 500,000. Now we are worried about them staying below 600,000. Just imagine, what would have been considered a disaster two months ago (initial claims around 500,000) would now be hailed as an early sign of recovery. How fragile the straws to which we will now cling.
6. <<<The WLI from ECRI is forecasting more stable conditions within the coming months. In their statement last Friday, they said in part as the index was holding steady, it “is clearly holding above its December low, suggesting that U.S. economic growth will stabilize in coming months."
The Conference Board also released their leading and concurrent indicators for February 2009. The LEI (leading index) continued the general downward trend with its rate of decline moderating slightly. The CEI (concurrent index) remained on a downtrend with the decline accelerating in recent months.>>>
Yes, the recession will end. The problem is that when we reach the bottom it is not clear that we will be able to see the recovery. At least temporarily, the new normal may be a lower standard of living, a persistent high unemployment rate and rising inflation.
Now I am a person who likes to be optimistic. But I also like to be realistic. I was raising a young family in the 1970's and early 80's when we had our standard of living challenged, persistently higher unemployment and rising inflation. Conditions may resemble those in some ways in the coming years. At that time (70's and 80's) no one foresaw the coming tech revolution that revived our economy. In fact, the possibility of such a revolution was scoffed at by "experts". I know when I bought a "Day One" PC from IBM, many of my learned technical friends ridiculed my opinion that this "little" machine would ever be more than a curiosity.
Sometime in the next several years there will be another "Day One" PC and a new period of prosperity will start. Where will this come from? I don't know. And the "experts" will not recognize it when it arrives, but arrive it will.
Steve, forgive me for rambling, but, when a thought is sparked, I fan the flames.
Visiting other countries and talking to people, Europeans, Eastern Europeans and Russians for example, I was really struck by the difference in our US culture. It seemed that the ideal job in Germany was to be a gov't employee for a nice, easy, long career and retire comfortably. A Russian guy I talked with had just come up with a nice little product that people liked to buy, and I immediately started talking to him about making more of them, building a nice business, etc and he promptly said, 'oh no, can't do that, I have to stay below the radar, can't make it too big'. Why? Because the mafia would take notice and come around and extort a lot of money from him.
We have a tremendous entrepreneurial culture in the US. My main concern now is the direction gov't is going, but I'm confident that over time we will get the pendulum to swing the other way.
Thank you Steve Hansen for the article, and many thanks to everyone who comments here at Seeking Alpha. I'm learning a ton by reading lots of articles and most of all from the commentary. I finally got so fed up with fund managers and financial advisors watching so much of my money evaporate that I've fired them all and taken control of my own finances, including what I do in the stock market. I would rather be out working on my golf game, but it became a financial necessity. So again, thanks to all of you who participate. I'm sure there are many more people like me who are benefiting from Seeking Alpha.
Have I got a deal for you! - there are plenty of places to go where you don't have to pay taxes at all. Problem solved!
Take a gun. Good luck
On Mar 22 11:18 AM HardToLove wrote:
> Great article.
>
> Your piece, with the comments from others, prompts a question for
> me. It really wanders off topic, but I can't help myself. I see a
> fundamental weakening of the concept and application of capitalism
> as a result. I believe this leads to the shift you describe and demonstrate
> with the charts and statistics.
>
> Ignoring the "cyclical nature" of business, often attributed to the
> existence of the privately held Federal Reserve, can this new paradigm
> (whatever it ultimately becomes) be attributed to historical trends
> encompassing several fundamental shifts away from the foundations
> of our country?
>
> I think specifically of the concepts embedded in our constitution
> of "private property" - the foundation of all the capitalist tools
> that served us so well for so long.
>
> It seems to me that through the apathy of good folks, and the hubris
> of well-meaning but mis-guided social architects and/or politicians,
> we have slowly but inexorably eroded the concept of private property
> and leaned at an ever-accelerating pace towards a pure socialist
> society and government. There is really no ability to rely on the
> concept of "private property" any longer.
>
> For recent evidence of such a claim, look at the recent abuse of
> "eminent domain", serious recent attempts at abrogation of contract
> law by certain members of government (e.g. AIG bonuses), application
> of retroactive taxation to specified individuals rather than a "general"
> policy (AIG again - many thanks to the Senator that has asked for
> a more lengthy reasoned consideration of the implications of this),
> and so many other examples that others could cite from our brief
> (relatively) history as a nation.
>
> Not being a scholar about this or any other major subject, I still
> have the intellectual curiosity to posit the following.
>
> The single greatest mistake in our history was giving the federal
> government the power of taxation, ostensibly through representatives
> of the people - such no longer exist, in my opinion, as they are
> representatives of corporate bodies now.
>
> The most egregious manifestation of the results of this is the income
> tax. Why? Because it was the final step in allowing the unrestrained
> growth of the federal government, a complete contravention of the
> intentions of the founding fathers. It was also the deepest penetration
> by government into the direct confiscation of private property for
> "social purposes" - taking directly from the wages of individual
> labor before it could even be applied to second-order functions.
> Money directly taken from the citizens' labor, by coercion, is diverted
> to Washington and redistributed as Washington desires, including
> being coercively returned (after frictional losses) to the states
> - if they comply with federal mandates (think seat belts, helmet
> laws, national speed limits, etc.).
>
> No more egregious example occurs to me.
>
> In my opinion, the budget of the federal government should be cooperatively
> set *and* funded by the states themselves - the exact mechanism being
> open for discussion. Even the "fair tax" or national sales tax concepts
> fail to address the basic problem I see in the current processes.
>
>
> This "budget and fund" by states *only* achieves one important goal,
> keeping decision-making *and* concomitant results as close to "home"
> as possible. One can envision all sorts of good (and bad) results
> of this, a discussion of which certainly belongs in other fora. Of
> course this would seem to be "unworkable", but then so was our form
> of government considered prior to its successful application. "Politically
> impossible"? Yes, until it is accomplished.
>
> Well, I'm sure I've taken this further than most would desire.<br/>
>
> HardToLove
In a negative interest scenario the lender pays the borrower interest on the loan, credit line, or credit card balance as it matures. Case in point: a 30-year fixed mortgage paying interest at -2% (negative two percent). Each payment toward this negative interest amortized loan applies to principal, and interest paid by the lending institution reduces the mortgage balance each month.
Indeed, negative interest is Bernanke's 'neutron bomb' for retiring massive debt. It effectively retrofits the economy's keel with enough reinforcing strength to avoid structural failure before irreparably breaking. Lesser stresses caused the 1930's economy to run the economy aground in heavy seas. Negative interest self-navigates this aircraft carrier-sized economy through the eye of this category 5 hurricane, until the storm dissipates.
Maybe the new 'Day One' PC that John L refers to could be the Green Revolution...I think that is what Obama is hoping it will become when he talks about energy independence etc. It would certainly be a nice thing if we could use technology to harness resources on this planet in a way that won't diminish them over time. Maybe I'm deluded, but I cling to that hope for now.
On Mar 22 07:39 PM Epiphany wrote:
> Zero interest is not the bottom... NEGATIVE interest is.
>
> In a negative interest scenario the lender pays the borrower interest
> on the loan, credit line, or credit card balance as it matures. Case
> in point: a 30-year fixed mortgage paying interest at -2% (negative
> two percent). Each payment toward this negative interest amortized
> loan applies to principal, and interest paid by the lending institution
> reduces the mortgage balance each month.
>
> Indeed, negative interest is Bernanke's 'neutron bomb' for retiring
> massive debt. It effectively retrofits the economy's keel with enough
> reinforcing strength to avoid structural failure before irreparably
> breaking. Lesser stresses caused the 1930's economy to run the economy
> aground in heavy seas. Negative interest self-navigates this aircraft
> carrier-sized economy through the eye of this category 5 hurricane,
> until the storm dissipates.
What was the old normal? Hopefully the new normal will be made up of real wealth and not phantom wealth.
"
We have a tremendous entrepreneurial culture in the US. My main concern now is the direction gov't is going, but I'm confident that over time we will get the pendulum to swing the other way.
"
That may be so, but, in my opinion, and in the opinion of the serious strategists of capital, time is limited for capitalism: they fear the proletariat will eventually come to string up the bourgeoisie.
2009 03 08
"Capitalism Future Of: Seeds Of Its Own Destruction"
www.ft.com/cms/s/0/c6c...
On Mar 22 10:08 AM The Mad Hedge Fund Trader wrote:
> Fasten you seats belts! Early data show that the economy was getting
> traction even before B-52 Ben launched his carpet bombing campaign.
> Some $45 billion poured out of near zero yielding money market funds
> last week. Fannie Mae financed $41 billion in new home loans, the
> most in a year. Bring on the “V” recovery!
While in the short term business made money doing this, in the long term wages of the customers in their home market have fallen and now they cannot afford to buy their products.
Perhaps business is counting on rising wages in Asia to buy more of their products. I think they will find that the mercantilists in Asia will reserve the new home consumer purchasing power for their own business.
Way to go, suckers.
The nation and the world will indeed look very different on the other side of this mess. And that is what makes it the investing challenge-- and opportunity-- of a lifetime.
Kudos to Mr. Hansen, who I have added to my watchlist.
Socialism from England to Canada, to the USA. This is the same direction Trudeau took Canadian's in the late 60's.
The US Government will continue to own large parts of mega corporations. More and more of that is yet to come.
The Democrates in the name of keeping things under control, are approaching entrenched Socialism. All of this as the reset unfolds before our eyes. All to perpetuate Democracy. Hmmmm!!!
Wall Streets insured greed got us here. Average Americans will
be paying for those mistakes for decades to come.
Printing new US dollars (will be seen by other countries as an arrogant USA replacing dollars lost in toxic assets sold overseas).
Eventually this will disgust the offended Countries ie: Ireland, Iceland, etc. IMO....The new reset United States of America will carry a stained relationship with many parts of the world for some time. After all weren't those asset bundles sold in pieces all over the world suppose to have some sort of value.
Funny how the US stock market has started to recover and yet the fat lady has just been rumoured to have been seen, never mind that no one has even seen her.
IMO....get ready, this rollercoaster ride will continue for some time.
Printing dollars was done to devalue the dollar vs. other currencies. This is standard practice in reviving an international economy that is running a trade deficit like the USA does. By printing dollars, the Fed also sent a warning shot over the bows of countries that are trying to devalue their currencies versus dollar. The statement the Fed is making is, "He who has the printing press has the power to devalue by using market forces."
This is really spot on with what the Fed should be doing. The big question is whether the Fed will start pulling back dollars when the economy starts back up.
Until then, buy Gold, silver and gold mining stocks with a target value of $1400 to $2000 as the gold price is going to have to go up to support a dollar devaluation.
Then There was something about getting ALL the Troops out of Iraq too was'nt there ? But NOW we will be leaving 50,000 permantly , just a small security force You understand , ya right ! Good move Mr. Obama
And All You Greenies sorry by end of the year All that Green Energy talk ,Green jobs ect , well that just wont be practical to do after all sorry folks . But We'll throw a few more billion tax dollars at it but bottom line is,,, 10 years from now 97% of cars will still be burning Gasoline and 90% Of electrcity will still come from Coal and Nuclear.
You wanted Change will about the only change You folks will be getting the next 4 years is the change You get back from your value meal at Mc Donalds . Bottom Line You all Got hood winked into voting for a smart guy from Harvard POSING as a left wing Democrate. And after 60 days its starting to become clearer everyday that he wasnt being quite truthful in the things he said he believed or planed on doing after he was Elected . ! NO Wonder John
McCain had that Big Grin on his face a week after the election !!
P.S. In case You missed 60 mniutes last night Obama all but apologized to AIG execs for that angry Congress that tried to Pass a Nasty Tax on there ''Bonuses"
--A good portion of the GDP growth since 2000 was done with smoke and mirrors (or as economists call it - “credit”) – and it is that growth which this Great Recession is reclaiming.--
This "smoke and mirrors" sounds like the latest of the great Bank(st)ers innovations that can be likened to the masive quantity of derivatives leveraged to the tipping point and just floaitng around in cyberworld looking for a home.
Definition::Smoke and Mirrors = Derivatives are financial instruments based on other financial instruments paper based on paper.
What happened to Americas ability to produce tangible assets? Apparently it is smoke and mirrors (but hopefully not for too much longer)