Randy_H

The Rally, When It Comes, Will Be a Doozy

Wow. Apparently many of you all missed the fact that people are scared. 2-in-5 of them are statistically likely to lose their jobs or be forced to accept pay cuts over the next 2-3 years. Shame on them for saving cash in a zero-risk place. How's anyone going to make commissions on that?

Sometimes this board reads like a realtor forum: "it's always a good time to buy!"

2009 Predictions I Hope Are Dead Wrong

I'm chuckling at all the comments "predicting" a housing recovery this spring. Actually, literally, laughing out loud. What? This will be the "Fourth Annual Spring Recovery" in housing? Keep it up, eventually you'll get it right.

Housing will not recovery by any measure this spring.

1. All previous recoveries took much longer to bottom. The most recent for my area (San Fran area) from peak to trough was 1989-1996.

2. All previous recoveries took place after much smaller peaks. How you think that translates into _less_ price stickiness confounds me.

3. House prices are sticky, even more so right now than normally.

4. There are three legs to housing-demand: credit, employment/wages, relative cost of renting alternatives. Even if credit is made available and costs fall below traditional equivalent rental costs, employment will not recover by spring. Simply, when people are worried about their jobs, they don't buy houses.

But good luck selling your overpriced homes this spring. There may yet be a few fools wandering around with pockets full of dumb money.

A Capitalist Reformation

Seems it's very hard for some people to think in dynamic terms. Capitalism isn't some cookbook of a few commandments chiseled into stone. Apparently a lot of commenters learned their concepts of Capitalism from neolibertarians. Capitalism is "changing" like the Earth's biosphere is "changing". Change is the only constant. Sometimes that change is slow, other times it is fast. But it is ever present. It is essential. It is pragmatic.

I'm appalled at the lack of historical perspective as well. Never once do we read in the knee jerk attacks on FDR anything that leads us to believe the authors have an appreciation for the historical context in which those events took place nearly a century ago. Viewing history through the lens of current society is less than wrong, it's foolish.

Were we to take a poll requiring every person who utters "Socialism" to define that term, in specific terms, I'm certain we'd find that merely 1-in-10 are even using it correctly. And I'm as far from a Socialist as you'll find. But hear this, true Capitalists in the tradition of Rand are disgusted even more so by neolibertarian cranks than by democratic socialists. One group professes to pursue the greater good. It's just that people like me disagree about how to define "greater good". The other side, due to some serious impairment of sensibility, relishes in deluding themselves into thinking they are more clever than they are -- in reality not much more than cynical, self contradicting hypocrites. (paraphrased from Rand, whom I'm sure at least one neolibertarian whack-a-mole will call a "socialist" just to put a cherry on top of the irony).

A Capitalist Reformation

What I missed in this articles is the contribution of innovation and non-linear growth. That Capitalism is changing is a truism. Capitalism is always changing. It is, at the core, Darwinistic. Species within the Capitalist system universe that fail to adapt, die. Eventually. Some are kept on preserves for a while. Some are kept in zoos for study and for spectacle. But only adaptive, progressive species survive and thrive.

The government has a role in the Capitalist universe also. That's the failure of the free market fundamentalists and neolibertarians. Without the government as an arbitrator and referee, the Capitalist game of life degrades rapidly into a kleptocratic thugism.

But the magic is that Capitalism is an emergent system. It is not a deterministic system, nor is it served well by negative utilitarianism (doing the least harm equals doing the greatest good). Capitalism instead is positively utilitarian. The least harm is not always the best outcome. At times, the greater good is indeed served by taking the path of the greater harm for a period. If that is the point of the author, then I agree wholly.

But what's unstated in this article is that the fruits of a positively utilitarian, emergent Capitalist universe is explosive, revolutionary growth. One could have said the same things stated in this article during the periods prior to every "revolution". The Industrial, the Information, the Communication... Odds are, using historical time series, we're approaching another seismic revolution. But, like a big earthquake, exactly when cannot be predicted.

We know the odds are rising. Capitalism ensures that the ground will shake. And when it does, all the linear extrapolations about which services cost what and what opportunity lies where, give way to a new reality for which new equations must be formulated and old ones recalibrated.

The Shallowest Generation

Ron Paul is as disingenuous as those his supporters cry about. Proof: he continues to insist we should eliminate the Federal Reserve and the US Central Banking function.

Supporting that is like supporting unilateral nuclear disarmament. We have a central bank because "they" have central banks. Encouraging elimination of our central bank is an open invitation to countries like China to manipulate our rates to their advantage.

It is insanity. Much like the proponent of that policy and his supporters, most of whom advocate a "buy guns & gold & canned food" economic policy. I, for one, have had it with these ideological zealots. Perhaps we can give them a state, like Wyoming, where they're free to hunker down an lay in wait for whatever rapture they fantasize about.

The Shallowest Generation

LordD, spoken like only a Boomer could: with arrogant narcissism and swagger. Boomers were the "first to create the politics of youth"? Or perhaps Boomers were the first to be woefully ignorant of even fairly recent history. You know, youth "bled in Chicago" long before your pompous arse was brought into the world. And only a Boomer could bemoan a slight on the fierce individuality of Boomers only to then proceed to refer to his own generation as if it were a uniform group of world changers.

Sickening.

You are correct, however. It is now up to the latter generations. And, for all our disorganization and genuine individuality to a fault, I strongly suspect that Gen X is about the business of throwing you and your ilk out of your seats of power, in government and industry, so that we might set about putting some order to this mess you've left us all.

Five Ways the Global Economy Is Rebounding

Oh no! It's the bottom again already? I just got over the daily bottom called yesterday.

Inflate, Deflate or Default

PPP is not 2073% lower today than it was in 1913.

Inflate, Deflate or Default

Russia proves my point. They defaulted. They did not willingly transfer their wealth outside of their borders servicing foreign debt by printing money. They told their debtors to get lost. You'll find that pretty much all hyperinflations since WWII have been caused by/overseen by the IMF, which only holds sway over weak countries.

Inflate, Deflate or Default

Hyperinflation is off the table. It does not occur to nations which maintain credible military force. Regardless, there are so many deflationary forces in the economy right now, I'm thinking that stagflation is our best outcome. Outside of energy and food, nearly everything is deflating rapidly, including incomes (thanks to wage efficiency theory's effect on displacement).

The US faces a very real liquidity trap scenario -- something I thought was relatively unlikely. But we're literally tracing Japan's every step in this mess, including now posting bad debts on the balance sheets at fictitious prices.

Inflate, Deflate or Default

Thanks for this essay. The primary failing of your original thesis as well as its redux is something you yourself pointed to: the LTCM-style error. These sorts of extrapolating macroeconomic analyses tend to either ignore or wrongly consider big tipping-point events which are often not economic or financial in nature, though they are ultimately caused by economic conditions. Just as how in 1928 no one could have extrapolated to 1938, in 2008 I doubt anyone can extrapolate accurately the next 10-15-20 years. Whether war, geopolitical shifts, population or environmental stresses (and related commodity implications) or something else, the current "perfect storm" as you put it is more of a "perfect breeding ground" for large, threshold events to occur.

Predicting whether those tipping point events benefit or detriment the US is impossible.