Two Articles on the Economy and Possible Future

[cabmandone]

I've read a lot about China's economic crisis where their economy only grew by 6.9%. I wish the US economy was in such bad shape.

[recycled sixtie]

Originally Posted by tabs

I have been telling you adnauseam since the Fall of 2008 that there is a whole new economic paradigm at work. So with your posting of this Thread it shows that you have not been taking my analysis seriously and thus not listening. Which makes you one stupid fk.

Now the question becomes why haven't you been listening?

Tabs I like your theories but you won't be around long if you keep abusing the good folks on this forum coz you will be banned.

Guy

[wayner]

I must be dense. I've been reading all this stuff with no idea what to do

What's the action plan?
My dollar costs me 300 on every thousand...

[Aurel]

Inverse ETFs that are shorting the chinese stock market, or that are shorting oil stocks, are making really good returns right now. Fast money, but risky.
For longer term, real estate funds still look good to me, much less volatile than stock market. That is because people pay rent regularly, and property does not sell as quickly as stocks.

[recycled sixtie]

First of all find a one armed economist to eliminate this scenario "on one hand this is going to happen but on the other hand....."

From what I see the US$ is going to stay strong as long as the economy is doing fine.
But that is not going to last forever so the next recession in North Amer. will be deep.
I think we are overdue for one as it has been eight years since the last.

They say buy stocks when there is blood in the streets. There is not enough blood here yet but it will come.

The Can. $ I think will increase in value some. As long as you have political stability and a currency that people have faith in then you have a good place to invest.
Diversify. Not too much of anything.

Don't forget in this world of information tech being in North Am we are bombarded with bad news. Getting away from it if you are retired is not a bad thing. Renting or owning property in a third world country where there is political stability is probably a good thing.

For all of those affected in oil country you have my sympathy. I think it will get better in time. Living within your means helps weather the storms. I am an optimist.
People want to raise families, buy homes, appliances etc.

[wdfifteen]

Originally Posted by tabs

I have been telling you adnauseam since the Fall of 2008 that there is a whole new economic paradigm at work. So with your posting of this Thread it shows that you have not been taking my analysis seriously and thus not listening. Which makes you one stupid fk.

Now the question becomes why haven't you been listening?

Because you sound like some guy with a tin foil beanie running around yelling that the sky is falling. IOW you aren't as credible as David Stockman and Tom Friedman.
That is why.

[Tobra]

That, and they write in English.

[Don Ro]

Originally Posted by tobra

that, and they write in english.

^ ^ ^

[Brando]

This is a pretty good explanation of banking & financial institutions.

[Don Ro]

Among many realizations I got out of David Stockman's video is that neither political party has a clue as to what to do and who to appoint that's qualified to manage this economy.
Perhaps neither party wants the economy managed...for if it is managed both parties will be limited in their practice of crony capitalism, general corruption, and the actualizing of their idealizations.
The image I have of this economy and the country is of a van full of celebrating folks having a whooping party and the van is screaming toward a cliff.
...and there is no driver.

[tabs]

Originally Posted by wdfifteen

Because you sound like some guy with a tin foil beanie running around yelling that the sky is falling. IOW you aren't as credible as David Stockman and Tom Friedman.
That is why.

And in listening to Friedman and Stockman is part of the reason why you remain ignorant.

The real problem is that you Boyz just can't keep up.

[Aurel]

Originally Posted by Don Ro

Among many realizations I got out of David Stockman's video is that neither political party has a clue as to what to do and who to appoint that's qualified to manage this economy.
Perhaps neither party wants the economy managed...for if it is managed both parties will be limited in their practice of crony capitalism, general corruption, and the actualizing of their idealizations.
The image I have of this economy and the country is of a van full of celebrating folks having a whooping party and the van is screaming toward a cliff.
...and there is no driver.

That is why I think Donald trump is the most qualified to manage this country, because he is not in the van so to speak. He is not bought by any corporation, and actually knows how businesses run. And the polls say the same.

A very big problem I see in the US political system is the role private corporations are allowed to play into it, via lobbying. This results in completely screwing up the people, and destroying the middle class. Tax loopholes result in mega corporations like Google or Apple paying no income tax, by sheltering all their gains offshore. Even worse, some corporations were bailed out with taxpayers money, and when given a sweet deal of only 5% income tax to bring back foreign funds and create jobs in the US, first thing they do is lay off people and buy back shares to make their own stock go up and fill up the pockets of the executives. This revolting situation will continue as long as the political class is bought by them, while things could be much improved if their fair share of taxes could be collected.

[Dantilla]

Originally Posted by Don Ro

Among many realizations I got out of David Stockman's video is that neither political party has a clue as to what to do and who to appoint that's qualified to manage this economy.

Both parties look no further than the next election. Meanwhile, the economy will take far longer than four years to fix, and it will be difficult during the fixing. Try to fix it for real, and the populace will throw you out at the next election, as the populace doesn't even look four years ahead.

Kinda like a long road construction project. Very inconvenient for the drivers during construction, and the short sighted cannot see past the orange cones and bumpy gravel to the nice, wide, smooth pavement in their future.

The typical voter will want to toss the construction crew off the job instead of letting them finish. Typical voter will also get rid of anyone in office who makes the tough decisions to slash spending, bumping tax rates up to eliminate the deficit.
That's just for starters.......

[tabs]

Originally Posted by wayner

I must be dense. I've been reading all this stuff with no idea what to do

What's the action plan?
My dollar costs me 300 on every thousand...

When you find yourself on the deck of the Titanic with all the life boats away, there is nothing to do.

The FED has no more tricks in the bag, nor plays as they have come to the end of the book. The US political process nor American people have the will to ameliorate the "landing." So the hole grows deeper and the economy slips beneath the waves into recession. Thats reality.

Ohhh and with sub 2% growth there has been no REAL RECOVERY in that the growth rate mirrors population growth. The provision of pumping liquidity has kept this economy afloat. Without it everybody would have EBT cards.

In 2014 the FED had to see if the economy could stay afloat without the provision of liquidity. So they TAPERED and the results have not been very good in 15. Right now the FED is very worried.

[MRM]

Herr Tab's is not just an Oracle, he is this board's Oracle. As such, he is entitled to dispense his wisdom as he sees fit in language he feels is appropriate to the situation, even if it is not entirely the English language that he is communicating in. Excuse the preposition. We all appreciate his wisdom when he shares it with us.

As to Stockman, he is a truth teller, but you always have to remember that he has a bit of a chip on his shoulder too. No one else is quite as accomplished of an economist, as capable or as perceptive as he. This doesn't mean he's wrong, it just means that when he belittles government officials, he has his own agenda - showing that he's smarter and more capable than them. It's probably fair to say that his generic analysis of the economy is objective, but when he critiques government performance, he will never admit that anyone did their job as well as he would have in the same situation.

Anyway, the two articles discuss different issues that may be facing the US (and world) at the same time, but are unrelated. First is the China bubble. We in the US have heard about the Chinese stock market falling, but that represents a tiny part of their economy and is really irrelevant to us because US and European investors have little exposure to the Chinese stock market. They have no accounting standards and the strong indication is that the generally accepted accounting principles for publicly traded Chinese companies would make a Greek bookkeeper blush. Therefore, almost no Western money is in the Chinese stock market. It could collapse without impact on the US.

The issue with China is that about 20-25% of the US economy depends on trade with China. This includes a significant amount of sales to China. The Multinationals based in the US and Europe now sell into four large markets that they depend on for revenue: North America (the US), which remains the largest single market; the EU, South America (especially Brazil) and APAC, meaning China. If China turns out to be a huge Ponzi scheme, US international companies, and all companies that support that market, will see a reduction in demand of at least 20-25%, similar to the Asian Contagion of the 1990s. This can be partly offset by increased efforts in the other three pillars of international commerce, but the loss of sales and profitability will be a significant drag on corporate earnings, which means a loss of revenue, tax base and jobs.

None of this future risk has been factored into the market yet. As long as the world's businesses can still sell into other markets to partially make up for the loss of China, we will see recessionary times rather than 2007-2009 style end of time when we can't see the bottom and we don't know how far we can fall. If there is a bottom. Current stock market losses are based simply on the fact that global demand is falling, and with it, earnings. As earnings fall, so does the value of companies. If China ceases to be a viable market, the current market weakness would be accelerated. As bad as it's likely to get, it will be bad times rather than the end of time. Inside China it will be the end of times. It will be a Chinese Great Depression that might result in great social unrest.

China has been growing as supposedly double digit gains, but as Stockman points out, GDP numbers include debt. Increasing national debt increases GDP, but at some point even the central bank runs out of money and the debt comes due. When the Chinese debt comes due you'll see huge unemployment in China, vast devaluation of the RMB, and massive internal deflation.

The article by Friedman is completely separate but complementary. The US's position in the world is based on the current world order. There are good reasons to think that the old world order is ending. Friedman asks what happens to us when our firmly held assumptions are no longer true.

I am not yet sure what this means for an investment strategy for North American and European investors and where is the safe harbor for the coming storm. I am still thinking on that and will report when I have a more complete evaluation. As of now, my thoughts are dollars under the mattress and European index funds. The dollar is very strong against the Euro and European markets are depressed. As they rebound the Euro will increase in value, giving an American investor a double whammy.

[McLovin]

Tabs is correct.

The problem is there has been no real economic recovery since 2008.

We've basically treaded water by using constant "stimulus" zero percent interest rates and tons and tons of debt (soon to be an unfathomable $20 trillion).

We've therefore paid a lot (which will come back to roost), for very little in return. No real economic growth, labor participation at a decades low, average american makes less than $30K/yr (decades low).

With a worldwide recession in the works, we have few "tricks" left. Can't put interest below zero, and there's little "stimulus" left. It's all been borrowed against

[Tobra]

Originally Posted by cabmando

I've read a lot about China's economic crisis where their economy only grew by 6.9%. I wish the US economy was in such bad shape.

That is phony baloney growth though, not unlike "the recovery" the US has undergone in the last half dozen years. I do expect it to be pretty bad when that house of cards blows over. They will just bury a lot of their problems though, or throw them down a well.

Ted is not so much a cheerleader of the armageddon as painfully honest and surprisingly erudite when it comes to guns and macroeconomics. He is a realist, not a pessimist. He just comes across as depressing because it is fixing to get ugly up in here because he is an Oracle of Truth, rather than a purveyor of happy and shiny.

If you think about it, or even if you don't, he is pretty insightful for a guy with 947 pairs of shoes and a penchant for treating the English language like Jack Bauer would treat a guy with a copy of "IED Manufacturing for Dummies" in his back pocket.

The monkeys running the circus are on 2, 4 or 6 year schedules, not all that consistent with the long term planning you need to run an economy. That is but one piece in the puzzle. People are accustomed to the crackrock that cheap, easy money is. There are a lot of addicts, and it will be a rough trip when the crack runs out. China going teats up is going to create an economic tsunami that it will be tough to weather, no matter how well and diversely you arrange your assets.


It won't be long until the Illuminati pull the trigger and 90% of us are soylent green anyway, or that is how it looks to be shaping up at least.

[Black968]

The US Dollar has been the go to currency for the last 70 years and should continue for the next 70 years. The Euro has tried to take the title, but no dice. Ever since capitalist societies have gone away from the gold standard (Sold off all of their Gold), the USD is King. If the USD fails to be the go to currency (virtually impossible IMHO) there will be BIG Trouble. Printing Money is a bad idea though.

[john70t]

https://www.washingtonpost.com/news/wonk/wp/2015/03/24/how-china-used-more-cement-in-3-years-than-the-u-s-did-in-the-entire-20th-century/
-Could be a major population shift from rural to urban.
-Could also be a sign of internal political upheaval.

Europe is dealing with immigrants and their threat to established unions and lifestyle.
-Could also be trouble for them there.

[zelrik911]

Originally Posted by john70t

https://www.washingtonpost.com/news/wonk/wp/2015/03/24/how-china-used-more-cement-in-3-years-than-the-u-s-did-in-the-entire-20th-century/
-Could be a major population shift from rural to urban.
-Could also be a sign of internal political upheaval.

Europe is dealing with immigrants and their threat to established unions and lifestyle.
-Could also be trouble for them there.

One huge reason China is modernising so rapidly is that they have successfully controlled their population growth with their one-child policy. This facilitates 2 parents working and compliments their industrialisation. It also means there are fewer people to share the increasing wealth between, so families become more prosperous.

This is an amazing turn around in 1or 2 generations. This new prosperity is containing political upheaval in China as people find themselves moving upwards.

The opposite is happening in Europe and US - unprecedented people smuggling into the wealthy countries from the 3rd world is putting pressure on the established population and will lead to political 'changes' in the first world - before this happens in China.