Predict the next few years!

[Ryeland]

^^ Yea me too cause I've been to china and im black and got no racism responses at all.

Eastern racism is different than what we experience here in the west. I have been a martial artist for about 13 years now. A few years ago i was told i had to re learn a bunch of techniques and forms that i had previously learned, because when the techniques were taught to my instructor by a master from Japan he intentionally taught them wrong because my instructor was white. Just my personal experience with eastern racism.

It does exist over there, but its not handled in the same way as it is over here. Disrespect and insults in eastern cultures are very different than the way we "loud mouthed" westerners do it. In order to spot the racism you would have to understand the culture very keenly.

 

[tim290280]

Here's what I predict will happen with the World and the USA.

1) More money will be pissed down the drain
2) Consumers will stop spending and do even more damage
3) People will start running in circles and screaming about how bad everything is
4) The media will hype the shit out of everything
5) Then "a miracle" will happen
6) Things will return to normal
7) Growth will go back to levels before the crisis and reset as the norm
8) We'll all wonder what the hell we were worried about.

 

[Duality]

Eastern racism is different than what we experience here in the west. I have been a martial artist for about 13 years now. A few years ago i was told i had to re learn a bunch of techniques and forms that i had previously learned, because when the techniques were taught to my instructor by a master from Japan he intentionally taught them wrong because my instructor was white. Just my personal experience with eastern racism.

It does exist over there, but its not handled in the same way as it is over here. Disrespect and insults in eastern cultures are very different than the way we "loud mouthed" westerners do it. In order to spot the racism you would have to understand the culture very keenly.

if you posted more you would easily be a VIP and Respected in no time. you are awesome.

 

[skindnef]

Well put Ryeland.
Hope your right Tim290280.

 

[tim290280]

Well put Ryeland.
Hope your right Tim290280.

Well I did miss out one point. That us and our kids will be paying off the debt the govts of the world are racking up to save us.

 

[Ryeland]

if you posted more you would easily be a VIP and Respected in no time. you are awesome.

I would love to have the time to post more often. That being said, having the label respected and being VIP would be awesome, but I come here to converse and we seem to have some great conversations. I will try to post more.

Tim - you make some very insightful and historically relevant points. One thing that we have not had in history before is level of debt we do now. It will be interesting to see if that is settled. I think you are right about the media and people freaking out. "A miracle" will likely happen. But if it doesn't wars may ensure, which historically have been ways of settling debts. I hope it doesn't come to that. But when you have a big enough divide between classes, things can get ugly.

 

[tim290280]

Tim - you make some very insightful and historically relevant points. One thing that we have not had in history before is level of debt we do now. It will be interesting to see if that is settled. I think you are right about the media and people freaking out. "A miracle" will likely happen. But if it doesn't wars may ensure, which historically have been ways of settling debts. I hope it doesn't come to that. But when you have a big enough divide between classes, things can get ugly.

Thanks

I sat through a couple of seminars on economics recently (plus my overdoing of economics in undergrad) and when you step back from the hype what you see is a giant market correction back to the long term growth trend. We had (at least for Australia) gotten well ahead of average long term growth and had a market fall back to what the average should have been. The level we had been sitting at should occur in about 5yrs time. So basically the market should be back to previous levels in roughly 4-7yrs.

The problem is that with market corrections the speculators in the market go into panic mode and strip value off of everything to cut their losses. This means market growth (be that retail, expenditure, etc) suddenly becomes more risky for the larger populous and gets media and govt running in circles. Yes you get more unemployed and it is harder to get cash flow and loans, but this is generally in the support industries that rely on extravagance. What is concerning is the writedown in companies that still have the same value (mining, industry) and will continue to be the basis of the economy. Suddenly we have businesses that don't have the cashflow (read overdraft facilities) because "we've hit hard times" yet still have the same asset base and only a small cut in demand. Now this small cut is significant, but becomes overplayed.

So the miracle will happen when governments do public works projects, or the pessimissim goes out of the market. It is mainly about the attitude of the market as to whether things are ok. Recession or depression are a function of growth, and ultimately tied to how big the market correction needed to be, but the strength of any economy is going to be how much of the GDP relied on tertiary industry and services and how much relied on primary and secondary.

So give it a couple of years and it will be like nothing had happened. But what scares me is the amount of $$ that is being thrown around that is purely about keeping people warm and fuzzy and liking the govt. This cash will ultimately disappear and we as tax payers will be lumped with 30yrs of interest debt on top of this spending with nothing to show for it. At least have some new schools or hospitals, a few big roads projects, something that will be there when we finally pay this debt off.

 

[Ryeland]

Thanks

I sat through a couple of seminars on economics recently (plus my overdoing of economics in undergrad) and when you step back from the hype what you see is a giant market correction back to the long term growth trend. We had (at least for Australia) gotten well ahead of average long term growth and had a market fall back to what the average should have been. The level we had been sitting at should occur in about 5yrs time. So basically the market should be back to previous levels in roughly 4-7yrs.

The problem is that with market corrections the speculators in the market go into panic mode and strip value off of everything to cut their losses. This means market growth (be that retail, expenditure, etc) suddenly becomes more risky for the larger populous and gets media and govt running in circles. Yes you get more unemployed and it is harder to get cash flow and loans, but this is generally in the support industries that rely on extravagance. What is concerning is the writedown in companies that still have the same value (mining, industry) and will continue to be the basis of the economy. Suddenly we have businesses that don't have the cashflow (read overdraft facilities) because "we've hit hard times" yet still have the same asset base and only a small cut in demand. Now this small cut is significant, but becomes overplayed.

So the miracle will happen when governments do public works projects, or the pessimissim goes out of the market. It is mainly about the attitude of the market as to whether things are ok. Recession or depression are a function of growth, and ultimately tied to how big the market correction needed to be, but the strength of any economy is going to be how much of the GDP relied on tertiary industry and services and how much relied on primary and secondary.

So give it a couple of years and it will be like nothing had happened. But what scares me is the amount of $$ that is being thrown around that is purely about keeping people warm and fuzzy and liking the govt. This cash will ultimately disappear and we as tax payers will be lumped with 30yrs of interest debt on top of this spending with nothing to show for it. At least have some new schools or hospitals, a few big roads projects, something that will be there when we finally pay this debt off.

Excellent post sir!

I agree entirely on the market correction idea. You are right on the money about that. You are also very correct in the idea that the government spending willy nilly isn't a great idea.

Once this market correction finishes we should be alright. The media doesn't help, but i guess they still make money no matter what. They can now sell us articles on the how bad things are.

In Canada the Governments Economic Action plan is based heavily around the improvement of infrastructure to create work and make work easier once the recession/depression is over. I think its a good idea on the governments part. Infrastructure is always a good investment.

Again Excellent post Tim.

 

[lifterdead]

hmm.. lots of good posts here!

Will write more when I have time/beer this weekend.

 

[pegasus]

Excellent post sir!

I agree entirely on the market correction idea. You are right on the money about that. You are also very correct in the idea that the government spending willy nilly isn't a great idea.

Once this market correction finishes we should be alright. The media doesn't help, but i guess they still make money no matter what. They can now sell us articles on the how bad things are.

In Canada the Governments Economic Action plan is based heavily around the improvement of infrastructure to create work and make work easier once the recession/depression is over. I think its a good idea on the governments part. Infrastructure is always a good investment.

Again Excellent post Tim.

The value of the markets going down as far as it has isn't all about panic. The likely hood of indices like the Dow Jones Industrial Averag going back up to their 14000+ levels, is the same as having the house prices going back up to where they were 2 years ago. These markets usually grow at the same rate as inflation, and from my calculations the the Dow is only a few hundred dollars bellow where it should be.

There has been two bubbles in the markets in the past decade and if you look at the graphs you'd see that the markets soon corrected them selves as they've done so now, just like the housing prices. This was also beginning to happen in the markets, where they were forming a bottom until Obama got in and started spending like crazy, and the markets lost all confidence in him, you can actually see the Dow drop every time he opens his mouth.

Who knows, maybe there will be another bubble in the energy sector or something, but the way this idiots going around spending like crazy, and increasing taxes, I don't see a bright future ahead. Like you said government should be investing the money, not throwing it down the toilet.

 

[tim290280]

The value of the markets going down as far as it has isn't all about panic. The likely hood of indices like the Dow Jones Industrial Averag going back up to their 14000+ levels, is the same as having the house prices going back up to where they were 2 years ago. These markets usually grow at the same rate as inflation, and from my calculations the the Dow is only a few hundred dollars bellow where it should be.

There has been two bubbles in the markets in the past decade and if you look at the graphs you'd see that the markets soon corrected them selves as they've done so now, just like the housing prices. This was also beginning to happen in the markets, where they were forming a bottom until Obama got in and started spending like crazy, and the markets lost all confidence in him, you can actually see the Dow drop every time he opens his mouth.

Who knows, maybe there will be another bubble in the energy sector or something, but the way this idiots going around spending like crazy, and increasing taxes, I don't see a bright future ahead. Like you said government should be investing the money, not throwing it down the toilet.

Yes instead of a correction we get a drop out due to overspend to try and stop the inevitable.

I'm not well versed in USA financial markets, but I do know that the Aust housing market still needs further correction. We have lost further value out of our market but we are down to the same levels of a couple of years ago (Oh fucking tragedy ).

But this drop out will just take a little longer to correct. That's why I stated the 4-7yrs. It could have taken as little as 3-4yrs to recover but it is now looking like 5-7yrs. But the turnaround point may still only be a year or 18 months away.

 

[Duality]

Thanks

I sat through a couple of seminars on economics recently (plus my overdoing of economics in undergrad) and when you step back from the hype what you see is a giant market correction back to the long term growth trend. We had (at least for Australia) gotten well ahead of average long term growth and had a market fall back to what the average should have been. The level we had been sitting at should occur in about 5yrs time. So basically the market should be back to previous levels in roughly 4-7yrs.

The problem is that with market corrections the speculators in the market go into panic mode and strip value off of everything to cut their losses. This means market growth (be that retail, expenditure, etc) suddenly becomes more risky for the larger populous and gets media and govt running in circles. Yes you get more unemployed and it is harder to get cash flow and loans, but this is generally in the support industries that rely on extravagance. What is concerning is the writedown in companies that still have the same value (mining, industry) and will continue to be the basis of the economy. Suddenly we have businesses that don't have the cashflow (read overdraft facilities) because "we've hit hard times" yet still have the same asset base and only a small cut in demand. Now this small cut is significant, but becomes overplayed.

So the miracle will happen when governments do public works projects, or the pessimissim goes out of the market. It is mainly about the attitude of the market as to whether things are ok. Recession or depression are a function of growth, and ultimately tied to how big the market correction needed to be, but the strength of any economy is going to be how much of the GDP relied on tertiary industry and services and how much relied on primary and secondary.

So give it a couple of years and it will be like nothing had happened. But what scares me is the amount of $$ that is being thrown around that is purely about keeping people warm and fuzzy and liking the govt. This cash will ultimately disappear and we as tax payers will be lumped with 30yrs of interest debt on top of this spending with nothing to show for it. At least have some new schools or hospitals, a few big roads projects, something that will be there when we finally pay this debt off.

i'm learning a lot in this thread. excellent posts being made here.

 

[El Freako]

Economics makes my brain hurty.

 

[pegasus]

Yes instead of a correction we get a drop out due to overspend to try and stop the inevitable.

I'm not well versed in USA financial markets, but I do know that the Aust housing market still needs further correction. We have lost further value out of our market but we are down to the same levels of a couple of years ago (Oh fucking tragedy ).

But this drop out will just take a little longer to correct. That's why I stated the 4-7yrs. It could have taken as little as 3-4yrs to recover but it is now looking like 5-7yrs. But the turnaround point may still only be a year or 18 months away.

The US housing market is the same, it still has a long way to go. The problem is that people are pretending as if this paper loss is the worst thing ever to happen to those who were investing or thinking of retiring. Of course there were some loser who bought near the peak and got hurt badly, buy there is always a risk when you invest your money anywhere.

Like you said though this government will also prolong the correction process, cause they think they can beat the market, but at the end of the day the correction will happen, whether they like it or not.

 

[Ryeland]

The value of the markets going down as far as it has isn't all about panic. The likely hood of indices like the Dow Jones Industrial Averag going back up to their 14000+ levels, is the same as having the house prices going back up to where they were 2 years ago. These markets usually grow at the same rate as inflation, and from my calculations the the Dow is only a few hundred dollars bellow where it should be.

There has been two bubbles in the markets in the past decade and if you look at the graphs you'd see that the markets soon corrected them selves as they've done so now, just like the housing prices. This was also beginning to happen in the markets, where they were forming a bottom until Obama got in and started spending like crazy, and the markets lost all confidence in him, you can actually see the Dow drop every time he opens his mouth.

Who knows, maybe there will be another bubble in the energy sector or something, but the way this idiots going around spending like crazy, and increasing taxes, I don't see a bright future ahead. Like you said government should be investing the money, not throwing it down the toilet.

Bump on that one. You are right, further correction of the bubbles is necessary. I am not entirely sure of which bubble will crop up next, you are probably correct in the assessment of it being an energy bubble.

I think however we all agree this government spending is making things slower and worse.

 

[Ironslave]

Interesting posts Tim, I'm not so sure I agree on all. I guess I view it akin to the whole "dont eat carbs and fat because of insulin and blah blah blah".... theoretically great, but in practicality, not that much. The danger in doing public works projects is something that doesn't get enough intention, imo. The problem is the government decides to create employment, which should NOT be the goal, the goal should be to create prosperity. I wrote this before: "Say the government decides to start building a bunch of bridges (let's not use the example of bridges collapsing currently in America). Let's imagine that the current bridges are perfectly safe and functional, but, the government wants to create jobs, so it decides to build new ones. After the job is done, there is a new bridge, but there is absolutely no difference in the beneficial effect of the policy. Before you had a bridge, and now you have a bridge. The policy may have created a job, but it was a job that didn't serve any value to the country's productivity at all, because it wasn't necessary.

Okun's law predicts something like 2.5-3% decreases in GNP should cause a 1% rise in the unemployment rates. This is assuming also productivity, it would be a much lower ratio in a less productive workforce, like the Soviets were, something like 1:1. I think that the GNP fell like 15% in 1991 with the collapse, but unemployment only fell around 2%, some of those were even restructuring in the company. It sucks that people can lose their jobs, but sometimes saving one job hurts many others.


The money spent on that is capitol which could have been spend towards something else, say exploration to discover new oil reserves. I definitely agree in the short term that unemployment can get pretty high. Looking historically, the '1920 depression' is a great example of how to handle things, and what the results can be.

Never heard of it? That's not surprising - it didn't last long. The 20's were roaring, not greatly depressing. Yet virtually none of the American population knows that the nation's economy actually took a worse hit in 1920 than it did at any point during the Great Depression.

Federal spending was cut from $6.3 billion in 1920 to $5 billion in 1921 and $3.2 billion in 1922. Federal taxes fell from $6.6 billion in 1920 to $5.5 billion in 1921 and $4 billion in 1922. Harding's policies started a trend. The low point for federal taxes was reached in 1924; for federal spending, in1925. The federal government paid off debt, which had been $24.2 billion in 1920, and it continued to decline until 1930.

With Harding's tax and spending cuts and relatively non-interventionist economic policy, GNP rebounded to $74.1 billion in 1922. The number of unemployed fell to 2.8 million— a reported 6.7 percent of the labor force— in 1922. So, just a year and a half after Harding became president, the Roaring Twenties were underway. The unemployment rate continued to decline, reaching an extraordinary low of 1.8 percent in 1926. Since then, the unemployment rate has been lower only once in wartime (1944), and never in peacetime.

The worst economic crash since we started keeping most relevant records didn't happen during the Great Depression. It happened in 1920. Yet America was back on its feet in less than two years, while the next crunch was dragged out for a decade. The free markets have proven beyond a shadow of a doubt that they grow faster than planned economies - why on earth wouldn't they fix themselves faster, too?

I look into the results from the Soviets, Japan, and even America in the mid-late 20's, intervention just seems to make things a LOT worse.

FDR doubled the length of the great depression
http://newsroom.ucla.edu/portal/ucla/FDR-s-Policies-Prolonged-Depression-5409.aspx

Japan's disastrous Keynesian experiment
http://www.aei.org/eo/eo7149.htm

There is discussion that the US bonds are the next bubble to pop.

http://www.infiniteunknown.net/2009/01/18/the-bond-bubble-marc-faber-peter-schiff-max-keiser/

 

[Samoan-Z]

"Say the government decides to start building a bunch of bridges (let's not use the example of bridges collapsing currently in America). Let's imagine that the current bridges are perfectly safe and functional, but, the government wants to create jobs, so it decides to build new ones. After the job is done, there is a new bridge, but there is absolutely no difference in the beneficial effect of the policy. Before you had a bridge, and now you have a bridge. The policy may have created a job, but it was a job that didn't serve any value to the country's productivity at all, because it wasn't necessary.

That really made me sit back and think on public works projects.

Edit: Pushed post too early, But in the direction of things are going of wanting to create jobs I can see the government moving nationalize alot of the corporate holdings and then I would definately see a possible Soviet-Like collapse in our economy, I doubt it would infact result in America falling apart as a nation but we would very well dwindle the value of our currency and have to sit back as possibly 4th in superpowers until our currency revalues.

 

[skindnef]

Could all this just be leading to the "Amero" ?

 

[tim290280]

Interesting posts Tim, I'm not so sure I agree on all. I guess I view it akin to the whole "dont eat carbs and fat because of insulin and blah blah blah".... theoretically great, but in practicality, not that much. The danger in doing public works projects is something that doesn't get enough intention, imo. The problem is the government decides to create employment, which should NOT be the goal, the goal should be to create prosperity. I wrote this before: "Say the government decides to start building a bunch of bridges (let's not use the example of bridges collapsing currently in America). Let's imagine that the current bridges are perfectly safe and functional, but, the government wants to create jobs, so it decides to build new ones. After the job is done, there is a new bridge, but there is absolutely no difference in the beneficial effect of the policy. Before you had a bridge, and now you have a bridge. The policy may have created a job, but it was a job that didn't serve any value to the country's productivity at all, because it wasn't necessary.

Okun's law predicts something like 2.5-3% decreases in GNP should cause a 1% rise in the unemployment rates. This is assuming also productivity, it would be a much lower ratio in a less productive workforce, like the Soviets were, something like 1:1. I think that the GNP fell like 15% in 1991 with the collapse, but unemployment only fell around 2%, some of those were even restructuring in the company. It sucks that people can lose their jobs, but sometimes saving one job hurts many others.


The money spent on that is capitol which could have been spend towards something else, say exploration to discover new oil reserves. I definitely agree in the short term that unemployment can get pretty high. Looking historically, the '1920 depression' is a great example of how to handle things, and what the results can be.

Never heard of it? That's not surprising - it didn't last long. The 20's were roaring, not greatly depressing. Yet virtually none of the American population knows that the nation's economy actually took a worse hit in 1920 than it did at any point during the Great Depression.

Federal spending was cut from $6.3 billion in 1920 to $5 billion in 1921 and $3.2 billion in 1922. Federal taxes fell from $6.6 billion in 1920 to $5.5 billion in 1921 and $4 billion in 1922. Harding's policies started a trend. The low point for federal taxes was reached in 1924; for federal spending, in1925. The federal government paid off debt, which had been $24.2 billion in 1920, and it continued to decline until 1930.

With Harding's tax and spending cuts and relatively non-interventionist economic policy, GNP rebounded to $74.1 billion in 1922. The number of unemployed fell to 2.8 million— a reported 6.7 percent of the labor force— in 1922. So, just a year and a half after Harding became president, the Roaring Twenties were underway. The unemployment rate continued to decline, reaching an extraordinary low of 1.8 percent in 1926. Since then, the unemployment rate has been lower only once in wartime (1944), and never in peacetime.

The worst economic crash since we started keeping most relevant records didn't happen during the Great Depression. It happened in 1920. Yet America was back on its feet in less than two years, while the next crunch was dragged out for a decade. The free markets have proven beyond a shadow of a doubt that they grow faster than planned economies - why on earth wouldn't they fix themselves faster, too?

I look into the results from the Soviets, Japan, and even America in the mid-late 20's, intervention just seems to make things a LOT worse.

FDR doubled the length of the great depression
http://newsroom.ucla.edu/portal/ucla/FDR-s-Policies-Prolonged-Depression-5409.aspx

Japan's disastrous Keynesian experiment
http://www.aei.org/eo/eo7149.htm

There is discussion that the US bonds are the next bubble to pop.

http://www.infiniteunknown.net/2009/01/18/the-bond-bubble-marc-faber-peter-schiff-max-keiser/

Interesting.

I think that I may have overstated the capitol works projects. I'm not saying build a useless bridge, I'm more saying bring forward some planned projects. In this manner you keep some of the skilled labour and professional/technical specialists (engineers, etc) in the market place rather than lose them. But you can't and shouldn't save them all. As harsh as it sounds there are some completely useless people in jobs that wouldn't have a job if there wasn't huge demand for hands on deck. They aren't effectively needed in the good times either, it just seems to happen that they get jobs.

But I agree that reducing the "cream" spending is very important. I know at the moment that our state government is cutting spending by 3% (which is effectively 10%). Now my job isn't at risk but it certainly limits what I can do for the next couple of years. This is why our state is in a better position than others in Australia.

 

[Ironslave]

Interesting.

I think that I may have overstated the capitol works projects. I'm not saying build a useless bridge, I'm more saying bring forward some planned projects. In this manner you keep some of the skilled labour and professional/technical specialists (engineers, etc) in the market place rather than lose them. But you can't and shouldn't save them all. As harsh as it sounds there are some completely useless people in jobs that wouldn't have a job if there wasn't huge demand for hands on deck. They aren't effectively needed in the good times either, it just seems to happen that they get jobs.

But I agree that reducing the "cream" spending is very important. I know at the moment that our state government is cutting spending by 3% (which is effectively 10%). Now my job isn't at risk but it certainly limits what I can do for the next couple of years. This is why our state is in a better position than others in Australia.

Oh i know for sure.

Glad to hear your government is cutting spending, at least some can do things right.