looking at these graphs, you can say that any growth in the economy was pure fantasy these past four years. Indeed, this could well explain a good portion as to why many companies went into debt. Manufacturers who went to China thinking they could escape wage increases I'm sure got a rude awakening this past half decade. Yes...you may have escaped paying fair wages, but the laws of supply and demand and prices still apply to you bastards. I remember watching the price of copper and the statements coming from mining companies like Rio Tinto. Their customers were bitching, but hey, that's how it is. To the author, if I may say so, good job. Another reason why I like EP.
I wonder how much of the current negative inflation rate can be attributed to the rise of the dollar?
It occurred to me that gold is off nearly 30% from its highs in dollars, but hit new all-time highs in October in most other currencies (such as Euros and Pounds).
A bailout of the auto industry (blue-collar) would be a tenth of the size of the bailout of Wall Street (white-collar), and would effect many more people.
That this is likely not to happen, while the bailout of Wall Street happened without oversight or debate, only shows who the real owners of this country are.
I trade forex, mainly the futures, and I have to tell you, these traders have no fucking clue either as to what's going on. Half think the US Dollar is a safe haven because Europe and Asia are going to face the brunt of our economic downfall. The other half think the Dollar will fall because all this debt and well...economic downfall. Traders don't know, otherwise they wouldn't be bidding up the 30 year.
"Tort" reform argument as being the reason. I've read that primary care, general practice, internal medicine they can't stand it because of the insurance bureaucracy. It's the insurance companies themselves who are driving up the costs and much of this is their attempts to deny benefits.
What else? A lack of sufficient regulation & malpractice law creates a glut of barely competent doctors, which lowers cost.
Where in the United States, draconian regulation & malpractice law, combined with an overabundance of insurance companies, reduces the number of doctors one is able to see to those who have specific deals with one's insurance company, which yields a smaller supply. Thus prices go up.
Supply and demand, not just a good idea, it's the LAW.
But I do believe that the current Demopublican oligarchy is stupid enough to keep printing money until the original debt is worth less than a loaf of bread.
The question is will the final collapse happen before then or not.
To stop the rest of the bail out. $350 billion. I think they should pass it and stop this taxpayer giveaway right now and save it for a HOLC type of structure as well as public works funding.
I find it amazing that the big 3 are getting blasted for $25 billion while AIG gets ?? I think now it's $150 Billion/. Each financial institution got $25 billion so why would they fuss over the big 3 which they just gave away to the financial sector way more money than that...for what?
How about letting some of these banks go into Chapter 11?
A deflation followed by an massive inflation followed by a collapse is the Weimar Republic from 1918 to 1933. The exception cited of retiring debt is not worth considering in the U.S. for many years. The last shot at retiring debt came in 1996 to 2000. Those days are definitely over for a long while.
Ruinous monetary aggregates will be created in the next few years as current debt levels are monetized. Does anyone believe these U.S. debt levels will be paid off soon?
Where we get just damning testimony which Congress then completely ignores and votes however corporate lobbyists want them to....well, it's like a snow show.
On the foreclosure rate some of the banks are voluntarily setting up their own refinancing programs, but there are estimated 4 million foreclosures coming.
Now that the unemployment rate is spiking up yet we hear arguments on the hill about how the UAW (unions) are the problem of the big 3 (lie, lie, lie) and how Americans need to be more productive (we have some of the highest productivity rates in the world) when they mean paid even lower wages....
Well, once again ignoring the fact the economy is the US working and middle class means more disaster ahead.
Damn! Not that this is good for the economy but so glad you are here swimming against the current consensus. I thought for sure that massive spending would immediately bring dollar deflation and I know I'm not alone out there, so hello, dead wrong!
I'm not at all sure a bread and circuses recovery is what we need this time. What we really need is a safe and stable money supply that is tied to real production of goods, rather than pushing paper around in new and innovative ways.
For that, we need a true bottom up bailout- and something to do with our excess labor.
Here's what it looks like to me: Whenever the financial sector tries to take over everything else, it becomes overleveraged and causes debt-destroying deflation.
Any government that tries to avoid the deflation (by printing money) will cause an inflationary bubble. IF they attempt this before enough debt has been destroyed, then they only delay the inevitable- and cause more problems.
Obama and Bush Administrations both have the potential to overreact in this way. Doing so will cause an inflationary bubble, yes, but it will be followed with more drastic deflation when the bubble pops.
EP has been suggesting deflation for some time. RGE also.
The open question is whether a big killer inflation tsunami will follow. This inflation tsunami depends on the torrent of liquidity now frozen, to be thawed.
Credit thaw seems almost a political inevitability but not so fast. The Japanese had 10 years of zombie banks stuffed with liquidity and making no loans in ths 90's. The Obama regime likes the light touch regarding business regulation. So the relations between Treasury and Fed may be some form of status quo with Hanky and Spanky (he won't say where the loans are) today.
Some time soon, the pressure from Congress or the people will build and the torrent will be unleashed from the banks.
The credit reflation will take the size and shape of the liquidity bubble formed this fall. This bubble is larger than Greenpondscum's bubble from late 1987 (around $250 Billion).
looking at these graphs, you can say that any growth in the economy was pure fantasy these past four years. Indeed, this could well explain a good portion as to why many companies went into debt. Manufacturers who went to China thinking they could escape wage increases I'm sure got a rude awakening this past half decade. Yes...you may have escaped paying fair wages, but the laws of supply and demand and prices still apply to you bastards. I remember watching the price of copper and the statements coming from mining companies like Rio Tinto. Their customers were bitching, but hey, that's how it is. To the author, if I may say so, good job. Another reason why I like EP.
I wonder how much of the current negative inflation rate can be attributed to the rise of the dollar?
It occurred to me that gold is off nearly 30% from its highs in dollars, but hit new all-time highs in October in most other currencies (such as Euros and Pounds).
A bailout of the auto industry (blue-collar) would be a tenth of the size of the bailout of Wall Street (white-collar), and would effect many more people.
That this is likely not to happen, while the bailout of Wall Street happened without oversight or debate, only shows who the real owners of this country are.
some sort of nationalization, restructuring on the auto industry is in order.
I still can't believe they are arguing considering the absolute giveaway to the financial institutions.
This is insane.
RO, I was just thinking the same thing.
I trade forex, mainly the futures, and I have to tell you, these traders have no fucking clue either as to what's going on. Half think the US Dollar is a safe haven because Europe and Asia are going to face the brunt of our economic downfall. The other half think the Dollar will fall because all this debt and well...economic downfall. Traders don't know, otherwise they wouldn't be bidding up the 30 year.
if they allow the big 3 go into bankruptcy what kind of ripple effect that will have on these numbers.
Man, you did call it when every one thought you were kind of nuts! ;)
stating the statistics of a study of the loss in GDP, massive unemployment and so on if the big 3 are forced into bankruptcy.
They are really working it. I think they should get it and then a major restructuring some sort of alignment to the national interest should be done.
It'll pop quicker than the commodity bubble.
"Tort" reform argument as being the reason. I've read that primary care, general practice, internal medicine they can't stand it because of the insurance bureaucracy. It's the insurance companies themselves who are driving up the costs and much of this is their attempts to deny benefits.
I agree with everything in your post but the timing of all of this is key. I was very surprised to see the dollar strengthen at all.
Maybe this is all going to hit in 2009, Q2 or Q3, not sure but it doesn't seem to be the immediate reaction at all.
Great post!
What else? A lack of sufficient regulation & malpractice law creates a glut of barely competent doctors, which lowers cost.
Where in the United States, draconian regulation & malpractice law, combined with an overabundance of insurance companies, reduces the number of doctors one is able to see to those who have specific deals with one's insurance company, which yields a smaller supply. Thus prices go up.
Supply and demand, not just a good idea, it's the LAW.
But I do believe that the current Demopublican oligarchy is stupid enough to keep printing money until the original debt is worth less than a loaf of bread.
The question is will the final collapse happen before then or not.
To stop the rest of the bail out. $350 billion. I think they should pass it and stop this taxpayer giveaway right now and save it for a HOLC type of structure as well as public works funding.
I find it amazing that the big 3 are getting blasted for $25 billion while AIG gets ?? I think now it's $150 Billion/. Each financial institution got $25 billion so why would they fuss over the big 3 which they just gave away to the financial sector way more money than that...for what?
How about letting some of these banks go into Chapter 11?
A deflation followed by an massive inflation followed by a collapse is the Weimar Republic from 1918 to 1933. The exception cited of retiring debt is not worth considering in the U.S. for many years. The last shot at retiring debt came in 1996 to 2000. Those days are definitely over for a long while.
Ruinous monetary aggregates will be created in the next few years as current debt levels are monetized. Does anyone believe these U.S. debt levels will be paid off soon?
Burton Leed
Where we get just damning testimony which Congress then completely ignores and votes however corporate lobbyists want them to....well, it's like a snow show.
On the foreclosure rate some of the banks are voluntarily setting up their own refinancing programs, but there are estimated 4 million foreclosures coming.
Now that the unemployment rate is spiking up yet we hear arguments on the hill about how the UAW (unions) are the problem of the big 3 (lie, lie, lie) and how Americans need to be more productive (we have some of the highest productivity rates in the world) when they mean paid even lower wages....
Well, once again ignoring the fact the economy is the US working and middle class means more disaster ahead.
Damn! Not that this is good for the economy but so glad you are here swimming against the current consensus. I thought for sure that massive spending would immediately bring dollar deflation and I know I'm not alone out there, so hello, dead wrong!
I'm not at all sure a bread and circuses recovery is what we need this time. What we really need is a safe and stable money supply that is tied to real production of goods, rather than pushing paper around in new and innovative ways.
For that, we need a true bottom up bailout- and something to do with our excess labor.
Here's what it looks like to me: Whenever the financial sector tries to take over everything else, it becomes overleveraged and causes debt-destroying deflation.
Any government that tries to avoid the deflation (by printing money) will cause an inflationary bubble. IF they attempt this before enough debt has been destroyed, then they only delay the inevitable- and cause more problems.
Obama and Bush Administrations both have the potential to overreact in this way. Doing so will cause an inflationary bubble, yes, but it will be followed with more drastic deflation when the bubble pops.
EP has been suggesting deflation for some time. RGE also.
The open question is whether a big killer inflation tsunami will follow. This inflation tsunami depends on the torrent of liquidity now frozen, to be thawed.
Credit thaw seems almost a political inevitability but not so fast. The Japanese had 10 years of zombie banks stuffed with liquidity and making no loans in ths 90's. The Obama regime likes the light touch regarding business regulation. So the relations between Treasury and Fed may be some form of status quo with Hanky and Spanky (he won't say where the loans are) today.
Some time soon, the pressure from Congress or the people will build and the torrent will be unleashed from the banks.
The credit reflation will take the size and shape of the liquidity bubble formed this fall. This bubble is larger than Greenpondscum's bubble from late 1987 (around $250 Billion).
Burton Leed
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