axelrod608

2009 Economic Forecasts Ignore Demographic Shift

John Lounsbury - false modesty, my friend. >> "I'm not as efficient as Steven Hanson at turning out well researched articles " >> You provide SA with some of the very best, most insightful articles and comments. It is clear that, while you do pointed research on specifics, you also have the eye of a generalist and a keen ability to synthesize a wide scope of factors into your analyses.

Much economic "analysis" is so limited in scope that it pertains very little to the economy as a whole. Or as my son would say, "charts, schmarts".

When one attempts to view the economy as a whole, the view does not inspire great confidence, though there may be small rays of hope here and there. Your insights are valuable and needed.

2009 Economic Forecasts Ignore Demographic Shift

Steven - excellent article. There are so many pundits predicting something based on one factor, one sector or one measurement while the truth is that our economy is a very complex construct with very many large and small factors driving it. As you point out, and I agree, there are a number of major sectors at risk, unlikely to provide any positive push to the economy in the near future.

One sector you left out is commercial real estate, which - other than apartments - is limping badly into the new year and may well beat the automakers to the crash.

I would love to be an optimist, to be wrong, but the overall health of the economy and its primary drivers just won't support optimism. I fear our "bailout" plans will do to the American economy what the Japanese bank bailouts of the 80's did for theirs. Permanent recession.

What Happened to Demand?

Credit and debt are nothing more than pre-spent income. Americans, on average, have already spent most of their next year's income. We've been living large on incomes that haven't grown in 30 years. It was inevitable that an end would eventually be reached.

Also, the financial system we brought into the 21st century was and is unsustainable. The proper way to restructure is in bankruptcy. Based on the size of the losses, what Hank and Ben are doing is "fighting" a forest fire with a garden hose. They're just adding to the eventual losses.

Demand as we knew it in 2006 is dead, Time to bury it and restructure.

Can Central Bankers Prevent a Great Depression?

Prevent ? Not likely. Postpone is more likely. The national and global economies that entered the 21st century were/are unsustainable, being totally supported by a foundation of debt. Add to that the $Trillions of losses on derivatives and there's simply no substance in the economic foundation.

We either crash or go into hyperinflation. Thanks Greenspin.