perceptions_now

The Hidden Depression of the 2000s

Well, I can only assume that Bernanke and his Bankers and our friendly politicians, must have access to some secret alchemy?

And, the those entrusted with US budgets, as shown in the historical tables must be terribly inept.

Whereas, Bernanke & Co are suggesting green shoots everywhere and an economy that is springing back, bolder than ever, the 2009 budget shows a drop in 08 to 09 for individual tax receipts of 17% and a massive 48% for the Corporates, followed by an anemic & imaginary minor pick up in the 2010 estimates.

Meanwhile, outlays are set to jump 34% bewteen the 08 to 09 comparison and the deficit is set increase 40%, to $1.84 Trillion in 2009, up from $458 Billion in 2008, which in turn was up from $160 Billion in 2007.

So, we have the above, then we have -
1) Consumers have taken a massive hit, via falling housing equity, lower share values & reduced access to credit.
2) The economy is deleveraging and will do so, for some time to come. Derivatives is the other Elephant in the living room!
3) Two of the three major growth drivers (Oil & Population), have Peaked and are heading south.
4) Unemployment still rising.
5) Business Earnings are falling dramatically and bankruptcies are rising, which is where the falling Corporate tax receipts com from.
6) Consummer activity is down.
7) Massive increases in Health and Social Security Costs, are on the way, again expanding government deficits.
8) Problems arising from Climate Change and Food Production are also set to interfere with future plans.
9) Share Markets first fell some 50% and have since increased some 50%, still leaving a massive reduction in total wealth.
10) Gold is rising & the US$ is falling.

And yet, we have P/E ratio's moving into orbit, based on what???

I don't know about alchemy, nor green shoots or whether the government can budget, but I do know where the US & Global economy is likely to go over the next few years and it won't be a place for bulls!

Countering Those Anti-Peak Oil Types

t me put it this way, we (humanity) took some 4.5 million years, after the formation of this planet, to reach our first Billion people, it then took another 130 years to reach the second and in the last 80 years, we have added another 4.5 Billion. Equally, the cheap & abundant energy supplies that enabled our population & economic explosion over the last 200 years, is now in permanent decline, having effectively Peaked in 2005. At CURRENT RATES OF CONSUMPTION, we will irreversibly decimate reserves of our current energy capacity, within 20 years. So, in 200 years of exponential growth in Population & Oil Production, we will have blown the planets Global inheritance to humanity on a consumption binge that could only be described as indulgent, at best. No, that doesn't mean it will ALL BE GONE, but it will mean that the economic model that drove the Global economy over the last 200 years, will be gone! It has taken until 1 minute to midnight (in terms of total species lifespan); for the dilemma to all of a sudden become apparent and still, there are many who never see reality. So, the question put in Joseph A. Tainter article "The Collapse of Complex Societies" (www.theoildrum.com/nod...) is not just a theoretical one, it is something we are living thru, right now. Therefore, timing is now critical! Irrespective of the complexity of our situation, we either find solutions now or at least buy some time or the operative word in Tainters work, will become the operative word in human society and that word is Collapse!

Social Security Trust Fund Shocker: $6 Billion August Deficit

There are some very difficult decisions to be made!

With Social Security & Health costs, an economy failing on many fronts, Politicians and establishment elite may not willing or able to accept the need for change or the right courses of action that are needed.

I say hang on to your hats, it's going to get very stormy!

The Myth of a Jobless Recovery

Jeff,
I don't think the trickle down theory was never meant to work, it was meant to delay!

As far as jobless a recovery, talking heads and parrots goes, my parrot is more convincing (when squawking for food), than the talking heads that push their own self-interest stories and we have more chance of trickle down economics working, than we have of a jobless recovery!

Roger,
It seems the Greek claim may be stronger.
www.livius.org/pi-pm/p...

WSJ 1930s Articles Show Eerie Similarities

Comparison to the past, are certainly useful!

That said, whilst some of the current outcomes may appear similar to previous events, such as the Great Depression, some of the inputs are substantially different, as will be some of the other outcomes!

16 Reasons for Equities Markets to Fall Soon

Ok, I'll give it a try -
1) The Debt to GDP ratio is heading north quickly, to 100% and beyond.
2) Consumers have taken a massive hit, via falling housing equity, lower share values & reduced access to credit.
3) The economy is deleveraging and will do so, for some time to come. Derivatives is the other Elephant in the living room!
4) Two of the three major growth drivers (Oil & Population), have Peaked and are heading south.
5) Unemployment and Taxes are both rising.
6) Business Earnings are falling dramatically and bankruptcies are rising.
7) Tax revenues and consumption are both down.
8) Massive increases in Health and Social Security Costs, are on the way, again expanding government deficits.
9) Problems arising from Climate Change and Food Production are also set to interfere with future plans.
10) Share Markets first fell some 50% and have since increased some 50%, still leaving a massive reduction in total wealth.
11) P/E ratio's moving into orbit, based on likely future earnings.
12) Increased insider trading and low volume are hardly encouring signs.
13) Gold is rising & the US$ is falling.

As Thirteen is a lucky number, I would try for 16.

Why Economists Messed Up

Depending on your perspectives, there are a few basic ways that the world’s Economic system is meant to function –
1) Hands off/Market based approach, more commonly known as Capitalism.
2) Planned or Hands on approach, more commonly known as Communism or Socialism
3) A Mixed economy, which is a mixed of both Market and a planned economy.

It is apparent that there are those who are “true believers” in these variations, come what may, there are those who take a pragmatic approach and there are those who say, we need to start again.

At the basis of these systems, are two competing assumptions –
1) Markets are efficient and governments ruin everything they touch.
2) Only governments can provide the planning needed, to avoid irrational markets.

The truth is that “Economics” does not stand alone, it's not like mathematics, where we know that 2+2, will =4.
Economics is not a science, where you routinely have the same inputs factors and the same outcomes.

The truth is that Economic is, in fact, a culmination of many factors, which are in a constant state of change!

Included in the economic mix, is the past history of what has happened, which people, by enlarge, rely on. However, included in the mix (amongst others) are the competing interests of Domestic Politics, international Geo-political power struggles, Elite Multi-National organisations and the apparent human desire for infinite (exponential) growth, in a finite environment.

The truth is that neither Markets nor Humans are rational or inherently efficient and that Economics is a fluid, moving, living thing, not a fixed target that may be easily hit by a “silver or single bullet solution”! It is also true that the vast majority of past Economists & Politicians, would never have imagined, in their wildest dreams, some of the Global factors, now in play.

In fact, most current Politicians & Economists still refuse to admit to the Public and even themselves that we are at and are approaching once in history tipping points, which may change Humanity, forever.

The current Global Financial slowdown includes examples of systematic failings, in that –
1) Many Politicians, Economists and Business failed to realise &/or consider that a number of once in history factors would impact on and change their basic assumption, that the usual “Boom/Bust” historic cycles, would simply continue to repeat. Those factors include Population Aging & Total Population Growth rate reduction and Peak Oil.
2) The Political & Business games are now too closely interwoven, with corruption a systemic player, not just an occasional interloper.
3) Humanity, including the establishment (the FED, Politicians, Business & others) refused to voluntarily consider that our system requires exponential (infinite) Growth, in a world full of finite limitations.

The truth is, irrespective of the “smoke & Mirrors” of Politicians and other self-interested party’s, we are now in the early stages of some vital once in history events, Exponential Growth is no longer an option. The Global Economic & Political situation is now under great stress and change must come to the whole system or that system will break!

Finally, I would say to those “truebelievers”, there must be room for flexibility. Markets can be effective, but they do need parameters & regulations that are enforced, to function properly, for the long term benefit of all. Governments are a necessity, to provide that which the Private sector is neither designed nor equipped for, such as Police, Armed Forces, the setting of realistic Business regulations and the provider of long term vision for the future. But, above all, Politicians (Globally), business & other self-interest players need to disconnect themselves from their self-interest, long enough to understand that these arrangements are not in anyone’s long term interest!

As per the following NY Times article, “this seems like a good time to recall the words of H. L. Mencken: “There is always an easy solution to every human problem — neat, plausible and wrong.”
NY Times article link -
www.nytimes.com/2009/0...

Politicians, Economists and Business, need to rethink their foundations, we need to help them in those endeavours and we should encourage them to get it substantially right, via easily understood means, the electoral vote & consumer spending.

Scary Drop in Velocity of Money: Is Deflation Knocking?

1) "I would add that 78 million boomers and 37 million retirees just saw their retirement nest eggs hit. Some were in home equity and others in stocks that got hammered."

2) "Given that between the two, that is over 1/3 of our population, it is a huge paradigm shift in consumer thinking."

3) "Smaller homes, fewer discretionary items, more fear at investing in a rally, etc. This will be with us for years"

4) "While we could have a major additional down leg in the market, it would probably need a loss of faith in the global recovery." ========================
Jan,
1) Other age groups will have more time to re-group. But, this group will have insufficient time or NO time to recover the hit they have taken!

2) Yes, this a paradigm shift. There are those who say this is NO different to other economic slowdowns, but that disregards the facts. The US economy is in the process of lossing 2 of its 3 driving forces (of the last 200 years). With Oil & Population factors already in the process of Peaking, Innovation is now the last new frontier.

3) Falling Housing prices & lower Consumer demand are principal causes of this slowdown, or are they merely symptoms? I suggest that a rapidly aging population and a steadily reducing total population GROWTH RATE, may provide many of the basic cause behind many of the symptoms. Then, throw Oil, which Peaked around 2005 and there is a economic double whammy, of once in history proportions!

4) as you correctly point out, even though the US is still the pre-dominant Global economic force, if the rest of the world picked up, then all would be well.
That said, there are two major problems!
First, the US GDP is as big as the next 3 countries GDP combined, which means there is NO de-coupling likely, at this time.
Second, the rest of the developed world and including the BRIC countries, have the same major problems, Population Aging, slowing total population growth rates & Peak Oil!

So, leaving aside the spin of self-interested party's, THE QUESTION is, "WHAT IS THE CIRCUIT BREAKER THAT WILL RE-START ECONOMIC GROWTH?

Will the Market 'Melt Up'?

"Does the rally seem that big when considering the bigger picture?"

It sems I must be looking at a different bigger picture?
1) The Debt to GDP ratio is heading north quickly, to 100% and beyond.
2) Consumers have taken a massive hit, via falling housing equity, lower share values & reduced access to credit.
3) The economy is deleveraging and will do so, for some time to come. Derivatives is the other Elephant in the living room!
4) Two of the three major growth drivers (Oil & Population), have Peaked and are heading south.
5) Unemployment and Taxes are both rising.
6) Business Earnings are falling dramatically and bankruptcies are rising.
7) Tax revenues and consumption are both down.
8) Massive increases in Health and Social Security Costs, are on the way, again expanding government deficits.
9) Problems arising from Climate Change and Food Production are also set to interfere with future plans.
10) Share Markets first fell some 50% and have since increased some 50%, still leaving a massive reduction in total wealth.
11) P/E ratio's moving into orbit, based on likely future earnings.

A Crisis in Economic Confidence

History can confirm, later, that this is much less to do with confidence, than is currently suggested.

Today, the Fundamentals are telling us -
====================
1) The Debt to GDP ratio is heading north quickly, to 100% and beyond.
2) Consumers have taken a massive hit, via falling housing equity, lower share values & reduced access to credit.
3) The economy is deleveraging and will do so, for some time to come. Derivatives is the other Elephant in the living room!
4) Two of the three major growth drivers (Oil & Population), have Peaked and are heading south.
5) Unemployment and Taxes are both rising.
6) Business Earnings are falling dramatically and bankruptcies are rising.
7) Tax revenues and consumption are both down.
8) Massive increases in Health and Social Security Costs, are on the way, again expanding government deficits.
9) Problems arising from Climate Change and Food Production are also set to interfere with future plans.
10) Share Markets first fell some 50% and have since increased some 50%, still leaving a massive reduction in total wealth.
==================
that the average taxpayer is hurting and shouldering much more of this downturn, than they should, in oder to reward the failure of those who caused the problem!

Crude Weakness Ahead? Part III

"Can Demand Hold?"

To put it Crudely, were Demand to hold short term, that would send Oil prices higher, as Production HAS PEAKED.

In fact, we may have already seen that over the last 6 months.

The problem is one of BALANCE, in that, we are now out of balance!

Whilst everything was in balance with Demand, Production, Consumption and Reserves, all heading North, all was well with the world.

But now, we have a tug of war, with Production and Reserves heading south, whilst Demand & Consumption, are still trying to go north.

There is only one possible winner in this struggle, with major Producing countries already indicating lower Production has commenced.

Should the Saudi's follow the others and announce their fields are set to follow with lower Production, then the warning bells will ring loud! Even without any official Saudi acknowledgement, the fall in their Production over recent years is very suggestive!

So, whilst Demand may have held so far, it may be looking for another leg down, shortly, as the Global economy relapses, following another leg down on global share markets, over the next couple of months.

In the final analysis, the real question is not whether Demand will hold, it is whether Supply (Production) will hold?

And, again there is only one possible answer there, NO!

However and strangely, falling Oil Production may well be followed by a falling Global economy, with a corresponding drop in Demand and the end result could be that the Oil Price does not escalate, as may be thought lkiely!

Are We Headed for a Green World or Business-as-Usual?

"In our view, both "camps" should be listening to him, and to each other."

I agree, that would be a good idea!

And, the chances of that happening, are pretty much ZERO!

3 Reasons Why a September Stock Sell-Off Isn't Likely

"While the fundamentals haven’t been very good, it is still difficult to explain that to your investors in the face of 50% returns."

That can not be allowed to stand and it requires two basic corrections.

The 50% returns referred to, is the bounce since March lows, but prior to that investors had already taken a 50% hit, as share values went lower. And, now, shares are falling back to retest those March lows.

Second, your assertion that the "fundamentals haven’t been very good", is an absolute understatement, as the real position is -
1) The Debt to GDP ratio is heading north quickly, to 100% and beyond.
2) Consumers have taken a massive hit, via falling housing equity, lower share values & reduced access to credit.
3) The economy is deleveraging and will do so, for some time to come. Derivatives is the other Elephant in the living room!
4) Two of the three major growth drivers (Oil & Population), have Peaked and are heading south.
5) Unemployment and Taxes are both rising.
6) Business Earnings are falling dramatically and bankruptcies are rising.
7) Tax revenues and consumption are both down.
8) Massive increases in Health and Social Security Costs, are on the way, again expanding government deficits.
9) Problems arising from Climate Change and Food Production are also set to interfere with future plans.
10) Share Markets first fell some 50% and have since increased some 50%, still leaving a massive reduction in total wealth.

Next, I scratch my head at your statement that the reliability of economic data has changed the landscape, followed by " Barring some major catastrophe in the employment figures, I can’t see anything out there that would take us off course".
In fact, the only thing that could be conceiveably accepted with the government stats, is that it is "Full of Spin"!

Lastly, you say, "there just isn’t anywhere else to put your money".
I would suggest a Mark Twain quote is at this point, that is good advice!
"I am more concerned with the return of my money
than the return on my money"

Expect Oil Prices to Rise: Three Major Oil Exporters Warn About Production

Nawar, this is the double whammy of exponential growth.

Whilst everything is aligned with Demand, Production, Consumption and Reserves, all heading North, the Global "Economic Growth Fairy" is happy & all was well with the world.

However, when the economic enabler (Cheap & Abundant Oil ), is ending, as Production effectively Peaks, while Demand & Consumption continue to head North, then Reserves are Depleted, in double quick time!

That said, it is likely that Global Economic Growth will ratchet down, as will share Prices & the Oil price will ratchet up, over the next 3-4 years.

Innovation, is now the final frontier for economic sustainability, the "exponential Economic Growth Fairy" is no more, it died of "shortages of natural causes (oil)”, in 2005, but in the long run, we are all dead.

The warning bells will ring loudest, when the Saudi's follow the others and announce their fields are set to follow with lower Production, particularly regards the Ghawar fields.

The "fundamentals" are now changing!

Is a Crash Impending?

Is a Crash Impending?

Short answer is YES!

50% DOWn, 50% up, now 50% DOWn!!!