You said:" Individuals are long-term investors only as long as the markets are rising. Despite endless warnings, repeated suggestions and outright recommendations - getting investors to sell, take profits and manage your portfolio risks is nearly a lost cause as long as the markets are rising. Unfortunately, by the time the fear, desperation or panic stages are reached it is far too late to act and I will only be able to say that I warned you."
Thanks a lot -- you have been warning us since August 2011 that a Crash was coming. You said exactly the same thing at that time (with slight variation in verbiage, but exactly the same message). I made the mistake of listening to what you were saying then (with such supreme confidence, as you do now).
I believe it is about time for you to change your tune before more idiots like me take your message seriously and suffer the same actual and opportunity losses that I had to bear. Or better still, if you can not change your tune, say it somewhere else where no one can read you or listen to you.
3 Key Metrics That Show Why We Can't Avoid Recession [View article]
Mr. Stanley J G Crouch,
Sir, I appreciate your advise for me to go and study up on my macro, but I think it is you who has to go back and do your homework. It is amazing how a simple matter like the Labor Participation Rate (LPR) can be ascribed to "a consequence of the realities of a seismic shift in the labor force, the economy and the 'support' mechanisms which allow for the LPR to fall while the burden for the gap is shifted to the programmatic efforts of government or 'burdened-shared' at the familial level."
And then the LPR decline has been described as "highly indicative of deflationary slack in both labor and productive capacity. Wages, hours worked, status and reduced benefits for those finding work are also correlated and highly indicative of the 'new reality'."
And all that high-powered verbiage just to refute the fact that causality flows from GDP growth rate to LPR -- NOT from LPR change rate to the rate of GDP growth. In the first place all of those details you quoted belong under the rubric of GDP dynamics, which is really not refuting the causality being claimed, at all. In the second place, your contention is probably not the precise explanation for the decline in LPR in recent decades. I have done my homework, so kindly allow me to elaborate:
The ratio of the labor force (the number of people having some paid job or its equivalent and those who are currently unemployed but seek for a job, from ages 15 and 64) and overall working age population, of course, defines the term “labor participation rate”, which provides a measure of labor supply not dependent on population size.
The LPR curve is characterized by a long period of rapid growth from about 58.5% in 1965 to ~67% in 1990 (as can be seen from Mr. Joseph Stuber's graph, longer period graphs available at the FRED). A short period of weak growth between 1979 and 1983 can be observed, however. Since 2000, the LPR has been decreasing at a faster rate. There is a statistical reason for this: the annual growth rates of labor force had been rising between 1947 and 2009 at circa 1.18% per year. But in 2009, the rate fell to around 1% per year. This value is lower than the growth rate of working age population in the US, and that is what effectively makes the negative growth rate of the LPR since then. Those are the numbers, but what is the proximate cause for this decline?
The fall in labor force growth since 2000 was induced by the baby boomers retirement (the early ones started to get off the labor force in 2000). Younger cohorts cannot completely replace the boomers in the labor force. Hence, the steady decline in LPR. The change rate of labor force likely reach its critical value in 2010 due to the sharp decline in the LPR as more baby boomers got off the labor force net. It will get worse.
The labor force projections made by various institutions (CBO, 2004; BLS, 2005) undoubtedly indicate a forthcoming decrease in the participation rate and a decaying growth rate of the working age population. According to the projections, staring from 2010, the annual increase in labor force will be less than 1,200,000 – and the negative spiral could feed on itself.
Thus, it is really the baby boomers falling out of the labor force net, which is the proximate cause of the LPR decline. This nonetheless, does not invalidate my claim that the causality flows from GDP to LPR. Even the San Francisco Fed says so: "Broadly concurrent with the decline in the economy at the end of 2000, labor force participation rates began to fall. While the downturn in the economy surely had an effect on participation, a look at patterns in key subgroups in the workforce suggests that more permanent changes were also underway (as in the retirement of the baby boomers, my comment)."
And of course, I have done the requisite econometric work on the subject: Granger Causality, Regression analysis: R2=0.69 (lagged 5 quarters), etc. Technical summary: the LPR is a nonlinear function of real economic (http://bit.ly/rxmtrP) growth and the trajectory of the GDP in the past does matter for the attained level of labor force participation.
You don't have to take my word for it: I suggest a peruse on these papers:
FRB San Francisco, (2007), Labor Force Participation and the Prospects for U.S. Growth, Economic Letter, No. 2007-33
Aaronson, S., Fallick, B., Figura, A., Pingle, J.,Wascher, W., (2006)
Fallick, B., Pingle, J., (2007)
You, sir, of course can have the last word, if you wish.
3 Key Metrics That Show Why We Can't Avoid Recession [View article]
Mr. Joseph Stuber,
I don't think you did any econometrics on the implications of the declining labor participation rates. Because if you did, you will clearly see that the labor participation rate (LPR) is a consequence of GDP growth -- NOT THE OTHER WAY AROUND.
The LPR is falling because the change rate of GDP growth has been declining since the the 1980s. The cause flows from GDP growth rate to LPR -- NOT from LPR change rate to the rate of GDP growth. This is a simple fact anyone can check with an excel spread sheet -- it does not need a sophisticated statistics program to check this out. Maybe you can even do it.
Return To Bretton Woods: Economic and Investment Implications [View article]
Use half of your stash to buy machine guns, barb wires, grenades, assorted ammo and a lot of canned foods instead. All that "hard asset" you are stockpiling is worth nada if the s&*! hits the fan as you envision.
Return To Bretton Woods: Economic and Investment Implications [View article]
The Jekyll Island episode was to create the Fed, and had nothing to do with the Bretton Woods agreement. Wrong place, wrong time. Get it right, please before you expose yourself at SA
Unemployment In The U.S. Will Fall To 6.2% By 2014 [View article]
apberusdisvet,
Kitov is not being apologist for the BLS or anyone.
You obviously have no clue what mathematics is, and what it can do. Why is it that the least capable always becomes the most vituperative when their ideology is challenged? Rant is no substitute for the power of mathematics -- but obviously you have no clue. Here is someone who is trying to provide us something other than the stale analysis one sees everyday in the blogosphere -- but unfortunately a lot of people have no appreciation for it simply because of the lack of capability to comprehend.
QE Buzz Lightyear: To Infinity And Beyond! Printing New Money Will Fuel Market's Fire [View article]
"Naturally, this will have debilitating effects on our economy sometime in the future. After all, as I lay out in Facing Goliath - How to Triumph in the Dangerous Market ahead, the answer to too much debt is NOT more debt. All of this money will have to be paid back. The balance sheet of the Federal Reserve is now at a mind-numbing $1.9 trillion with a cool new half trillion dollars added every year until we reach whatever is deemed an acceptable unemployment rate, in a time of an already extraordinary US indebtedness and stubbornly high unemployment."
All of this money have to be paid back --- yes to ourselves. All government debt is in Treasuries outstanding, of which more than 60% is owned by Americans.
The balance sheet of the Federal Reserve is now at a mind-numbing $1.9 trillion with a cool new half trillion dollars added every year . . . that by the way is not debt, per se. The balance sheet, a very large portion of it, are actually bank reserves (required and excess) the Fed holds for the commercial banks. It is held there to help the Fed maintain its Fed fund target rate.
Here is what the Fed has to say: "The quantity of Federal Reserve notes held by the public has grown over time. Absent any additional action by the Federal Reserve, the increase in Federal Reserve notes would reduce the quantity of reserve balances held by depository institutions and push the federal funds rate above the target set by the Federal Open Market Committee (FOMC). To prevent that outcome, the Federal Reserve engages in open market operations to offset the reduction in reserve balances."
You're Right, This Is All Insane - Don't Fight It [View article]
"To quote Henry Morganthau Jr., Secretary of the Treasury under FDR who oversaw the New Deal, "We have tried spending money. We are spending more than we ever have spent before and it does not work." "I say after eight years of this Administration we have just as much unemployment as when we started. And an enormous debt to boot." -- quoted by the author.
-- Brian, you should have completed the story . . . this same Mr. Morganthau Jr. in 1937 argued that the modest budget deficits Roosevelt ran in his first term (which lifted the economy from the 1929 - 1930 lows) were exacerbating the economy's problems, rather than being part of the cure. Morgenthau was successful in getting Roosevelt to raise taxes and cut spending, and in convincing the Fed to tighten monetary policy because prices were finally starting to rise.
This was, of course, absolutely the wrong policy at that time. The actual federal budget deficit was in fact much too small in every year of the Great Depression to power the economy towards escape velocity. And of course it was disastrous for the government to try and run a surplus in 1937. Economists are unanimous in their view that this was one of the greatest economic mistakes in history. The result was an immediate economic setback, manufacturing (which was the primary sector at that time) collapsed, and and unemployment started rising again. Roosevelt was forced to overrule his Treasury Secretary and so the government went into deficit spending again for the next five years, thereby ending the worst effects of the Depression.
If the author completed the story, it would have undercut his premise fatally -- instead he chose to selectively revised history. he is neither the first one nor the last to pull off this kind of chicanery -- all to bolster a defective premise.
12 Reasons This Bull Market Has Legs (Part 1) [View article]
Whidbey,
He is not cheer-leading. He is the telling the truth that you fog-shrouded bears fail to comprehend, despite being slapped in the face by market performance every year in the past three years.
Is Draghi Biting Off More Than He Can Chew? [View article]
User,
So trying to forestall your "inevitable default and wealth creating implosion" is bad per your definition then? What is the truth according to you, and what is your reality?
Visualizing Bob Farrell's 10 Rules [View article]
You said:" Individuals are long-term investors only as long as the markets are rising. Despite endless warnings, repeated suggestions and outright recommendations - getting investors to sell, take profits and manage your portfolio risks is nearly a lost cause as long as the markets are rising. Unfortunately, by the time the fear, desperation or panic stages are reached it is far too late to act and I will only be able to say that I warned you."
Thanks a lot -- you have been warning us since August 2011 that a Crash was coming. You said exactly the same thing at that time (with slight variation in verbiage, but exactly the same message). I made the mistake of listening to what you were saying then (with such supreme confidence, as you do now).
I believe it is about time for you to change your tune before more idiots like me take your message seriously and suffer the same actual and opportunity losses that I had to bear. Or better still, if you can not change your tune, say it somewhere else where no one can read you or listen to you.
How Much Longer Can The Fed Maintain A Corner On The Bond Market? [View article]
Did you get that Nobel Prize in Economics you have been pursuing for a number of years now?
Don't Fight The Mission Of The Fed... And Profit [View article]
Isn't it about time to listen to what the author is proposing?
Bullish Algos Seize The Tape [View article]
3 Key Metrics That Show Why We Can't Avoid Recession [View article]
Sir, I appreciate your advise for me to go and study up on my macro, but I think it is you who has to go back and do your homework. It is amazing how a simple matter like the Labor Participation Rate (LPR) can be ascribed to "a consequence of the realities of a seismic shift in the labor force, the economy and the 'support' mechanisms which allow for the LPR to fall while the burden for the gap is shifted to the programmatic efforts of government or 'burdened-shared' at the familial level."
And then the LPR decline has been described as "highly indicative of deflationary slack in both labor and productive capacity. Wages, hours worked, status and reduced benefits for those finding work are also correlated and highly indicative of the 'new reality'."
And all that high-powered verbiage just to refute the fact that causality flows from GDP growth rate to LPR -- NOT from LPR change rate to the rate of GDP growth. In the first place all of those details you quoted belong under the rubric of GDP dynamics, which is really not refuting the causality being claimed, at all. In the second place, your contention is probably not the precise explanation for the decline in LPR in recent decades. I have done my homework, so kindly allow me to elaborate:
The ratio of the labor force (the number of people having some paid job or its equivalent and those who are currently unemployed but seek for a job, from ages 15 and 64) and overall working age population, of course, defines the term “labor participation rate”, which provides a measure of labor supply not dependent on population size.
The LPR curve is characterized by a long period of rapid growth from about 58.5% in 1965 to ~67% in 1990 (as can be seen from Mr. Joseph Stuber's graph, longer period graphs available at the FRED). A short period of weak growth between 1979 and 1983 can be observed, however. Since 2000, the LPR has been decreasing at a faster rate. There is a statistical reason for this: the annual growth rates of labor force had been rising between 1947 and 2009 at circa 1.18% per year. But in 2009, the rate fell to around 1% per year. This value is lower than the growth rate of working age population in the US, and that is what effectively makes the negative growth rate of the LPR since then. Those are the numbers, but what is the proximate cause for this decline?
The fall in labor force growth since 2000 was induced by the baby boomers retirement (the early ones started to get off the labor force in 2000). Younger cohorts cannot completely replace the boomers in the labor force. Hence, the steady decline in LPR. The change rate of labor force likely reach its critical value in 2010 due to the sharp decline in the LPR as more baby boomers got off the labor force net. It will get worse.
The labor force projections made by various institutions (CBO, 2004; BLS, 2005) undoubtedly indicate a forthcoming decrease in the participation rate and a decaying growth rate of the working age population. According to the projections, staring from 2010, the annual increase in labor force will be less than 1,200,000 – and the negative spiral could feed on itself.
Thus, it is really the baby boomers falling out of the labor force net, which is the proximate cause of the LPR decline. This nonetheless, does not invalidate my claim that the causality flows from GDP to LPR. Even the San Francisco Fed says so: "Broadly concurrent with the decline in the economy at the end of 2000, labor force participation rates began to fall. While the downturn in the economy surely had an effect on participation, a look at patterns in key subgroups in the workforce suggests that more permanent changes were also underway (as in the retirement of the baby boomers, my comment)."
And of course, I have done the requisite econometric work on the subject: Granger Causality, Regression analysis: R2=0.69 (lagged 5 quarters), etc. Technical summary: the LPR is a nonlinear function of real economic (http://bit.ly/rxmtrP) growth and the trajectory of the GDP in the past does matter for the attained level of labor force participation.
You don't have to take my word for it: I suggest a peruse on these papers:
FRB San Francisco, (2007), Labor Force Participation and the Prospects for U.S. Growth, Economic Letter, No. 2007-33
Aaronson, S., Fallick, B., Figura, A., Pingle, J.,Wascher, W., (2006)
Fallick, B., Pingle, J., (2007)
You, sir, of course can have the last word, if you wish.
3 Key Metrics That Show Why We Can't Avoid Recession [View article]
I don't think you did any econometrics on the implications of the declining labor participation rates. Because if you did, you will clearly see that the labor participation rate (LPR) is a consequence of GDP growth -- NOT THE OTHER WAY AROUND.
The LPR is falling because the change rate of GDP growth has been declining since the the 1980s. The cause flows from GDP growth rate to LPR -- NOT from LPR change rate to the rate of GDP growth. This is a simple fact anyone can check with an excel spread sheet -- it does not need a sophisticated statistics program to check this out. Maybe you can even do it.
Return To Bretton Woods: Economic and Investment Implications [View article]
Return To Bretton Woods: Economic and Investment Implications [View article]
Unemployment In The U.S. Will Fall To 6.2% By 2014 [View article]
At least it had better predictive power than the "models" you have been using to make your market "forecasts".
Unemployment In The U.S. Will Fall To 6.2% By 2014 [View article]
Kitov is not being apologist for the BLS or anyone.
You obviously have no clue what mathematics is, and what it can do. Why is it that the least capable always becomes the most vituperative when their ideology is challenged? Rant is no substitute for the power of mathematics -- but obviously you have no clue. Here is someone who is trying to provide us something other than the stale analysis one sees everyday in the blogosphere -- but unfortunately a lot of people have no appreciation for it simply because of the lack of capability to comprehend.
QE Buzz Lightyear: To Infinity And Beyond! Printing New Money Will Fuel Market's Fire [View article]
All of this money have to be paid back --- yes to ourselves. All government debt is in Treasuries outstanding, of which more than 60% is owned by Americans.
The balance sheet of the Federal Reserve is now at a mind-numbing $1.9 trillion with a cool new half trillion dollars added every year . . . that by the way is not debt, per se. The balance sheet, a very large portion of it, are actually bank reserves (required and excess) the Fed holds for the commercial banks. It is held there to help the Fed maintain its Fed fund target rate.
Here is what the Fed has to say: "The quantity of Federal Reserve notes held by the public has grown over time. Absent any additional action by the Federal Reserve, the increase in Federal Reserve notes would reduce the quantity of reserve balances held by depository institutions and push the federal funds rate above the target set by the Federal Open Market Committee (FOMC). To prevent that outcome, the Federal Reserve engages in open market operations to offset the reduction in reserve balances."
It's Okay To Fight Fed Intentions, Just Not Fed Actions [View article]
Words of wisdom only a superb logician can put as starkly.
You're Right, This Is All Insane - Don't Fight It [View article]
-- Brian, you should have completed the story . . . this same Mr. Morganthau Jr. in 1937 argued that the modest budget deficits Roosevelt ran in his first term (which lifted the economy from the 1929 - 1930 lows) were exacerbating the economy's problems, rather than being part of the cure. Morgenthau was successful in getting Roosevelt to raise taxes and cut spending, and in convincing the Fed to tighten monetary policy because prices were finally starting to rise.
This was, of course, absolutely the wrong policy at that time. The actual federal budget deficit was in fact much too small in every year of the Great Depression to power the economy towards escape velocity. And of course it was disastrous for the
government to try and run a surplus in 1937. Economists are unanimous in their view that this was one of the greatest economic mistakes in history. The result was an immediate economic setback, manufacturing (which was the primary sector at that time) collapsed, and and unemployment started rising again. Roosevelt was forced to overrule his Treasury Secretary and so the government went into deficit spending again for the next five years, thereby ending the worst effects of the Depression.
If the author completed the story, it would have undercut his premise fatally -- instead he chose to selectively revised history. he is neither the first one nor the last to pull off this kind of chicanery -- all to bolster a defective premise.
12 Reasons This Bull Market Has Legs (Part 1) [View article]
He is not cheer-leading. He is the telling the truth that you fog-shrouded bears fail to comprehend, despite being slapped in the face by market performance every year in the past three years.
Is Draghi Biting Off More Than He Can Chew? [View article]
So trying to forestall your "inevitable default and wealth creating implosion" is bad per your definition then? What is the truth according to you, and what is your reality?