milkchaser

Forget the 1930s; We're Reliving 1975 (Part II)

You bring up a good point: Retirement accounts represent a capital reserve not widely funded in the 30s nor 70s.

On Jul 28 12:43 PM George Enone wrote:

> We are in the early stages of what will be known as "the great deflation"
> lasting to about 2015. Deleveraging takes time. Americans basically
> have 4 "money buckets" to keep our consumer economy going: wages,
> credit cards, home equity and 401Ks/IRAs. Wages are down for those
> who are employed and nada for the unemployed, credit lines has been
> cut and rates risen on existing card balances, home equity already
> maxed-out or severely reduced by falling home prices and difficult
> to use today, 401Ks lost about half of their values and with the
> recent rise in the stock market I expect people to try and lock in
> their 45% gains from 3/20 stock lows. Of the 4 money buckets only
> 401Ks/IRAs is now available and believe it or not is the "last gasp".
> Many are making hardship and early withdrawals to meet monthly obligations.
> An additional burden is the massive debt accumulated in recent years.
> How does this compare to the 70s or the 30s? Probably doesn't...I
> think this is a unique animal never seen before. Prices of everything
> will continue to drop as many people pay down debt, spend less and
> companies continue to cut costs and not invest in new projects. Any
> true recovery will come when the "money buckets" are somewhat restored...perhaps
> around 2013-2014 IF a new 500B infrastructure-only stimulus bill
> is enacted and government refinances all existing consumer debt at
> a fixed 2 or 3%. Otherwise you're looking at somewhere near 2020.

Forget the 1930s; We're Reliving 1975 (Part II)

Well you could try "Memories of the Ford Administration" by John Updike. www.amazon.com/Memorie...
It has nothing to do with investing (and not very much to do with the Ford Administration), but it gives a flavor of the time and Updike's prose is unbeatable. I know... not what you had in mind.


On Jul 28 11:56 AM Sugar Charlie wrote:

> Most interesting. Can the author or anyone else suggest any useful
> studies (books, articles, etc.) on the 1972-75 period, or of wider
> scope but with useful material on that period? Many thanks.

Forget the 1930s; We're Reliving 1975 (Part II)

I think you missed the part about inflation. And I don't want Mr. O to fail, I just sadly expect him to.


On Jul 28 09:12 AM Ferdinand E. Banks wrote:

> If what you say is true, and it might be true, then there is no -
> what you call - "bad news". It's roses all the way.
>
> Sorry folks who had hoped to see Mr O. and his government fall on
> their face, and there are plenty of those in this site.

Six Trends to Profit From

The problem is not credit, per se. We should all use as much credit as we possibly can afford. The problem is using credit unwisely (e.g. to buy a house that subsequently declines in value or to buy too much of something instantly consumed, like an expensive vacation). A country or company that does not wisely exploit its ability to borrow is leaving money on the table.

That said, $1.8 Trillion in debt in a single year that largely finances political pay-offs is a frightening example or irresponsible credit.


On May 31 04:40 PM Stomarkt wrote:

>
> Total credit market debt as a percentage of GDP has risen from 130%
> of GDP in 1952 to 350% of GDP today. The various bailout
> and stimulus schemes enacted in the last year will drive this percentage
> above 400% in the near future. When a country allows
> this much debt to accumulate versus its GDP, they have done something
> seriously wrong. The country’s politicians, business
> leaders, and citizens have all contributed to this disaster.
>
> I came across this interesting site..check it out url.moosaico.com/10424
> Econ & Finance Articles Updated Daily

Six Trends to Profit From

That would be "The Gods Must Be Crazy", I think.

Cycling is great, but I don't expect it to substitute for trucking and other transportation needs. Whenever I hear someone wax rhapsodic about the virtues of cycling, I picture a horde of cyclists strugglilng to carry tons of frozen McDonald's burgers and fries from warehouse to store -- each and every store -- twice a week. And another horde for Wendy's. And another horde for each grocery store. etc... And, of course, we'll all make several trips to and from the mall to bring back all of our stuff.

The notion that our society could function without lots and lots of fossil fueled vehicles is ridiculous fantasy. One can observe carless societies throughout the world. They are not productive.

On May 30 04:06 PM Jimbo wrote:

> Several years ago I saw a film based in South
> Africa: "The Gods must be Angry" I think was the title. The biggest
> laugh was when a housewife got in her car to drive about 50 feet
> to place a letter in her mailbox. She then returned her car to the
> garage.

Six Trends to Profit From

I will believe America will adopt such virtue (saving vs credit, solar vs fossil fuel, Prius vs gas guzzler, carrots vs coke) when I observe it.