Wednesday, November 2, 2011

Record Low 20-Year TIPS Rate


Click to enlarge.

As economic growth recovers and real rates rise, the price of Tips will fall leaving Tips investors with large losses in the face of accelerating inflation. - Jeremy Siegel, February 2, 2011



October 7, 2011
39.1 Million Missing Jobs

Click to enlarge.

Got economic recovery?

Update:

November 2, 2011
Bernanke: Economic growth to be frustratingly slow

WASHINGTON (AP) -- Federal Reserve Chairman Ben Bernanke on Wednesday acknowledged that the pace of economic growth is likely to be "frustratingly slow," after the Fed downgraded its forecast for the next two years.

See Also:
Jeremy Siegel's Mythic Places
More Dangerous Advice from Jeremy Siegel
Does Jeremy Siegel Live in a Cave?
The Real Math Behind Siegel's Mythical 3.5% Real Yields

Source Data:
FRB: Selected Interest Rates
U.S. Treasury: Real Yield Curve Rates

43 comments:

tj and the bear said...

WOOHOO!!! TIPS returning 1/2%! Based upon compounded interest you'll be rich in, what, a few thousand years? ;-)

Troy said...

If I hadn't discovered -- on my own mind you -- that US households were taking on $1T+ of mortgage debt during the boom times, I wouldn't understand why thing suck so bad now.

http://research.stlouisfed.org/fred2/graph/?g=38Q

But I did, so I do.

I post that goddamn graph at Delong's every chance I get.

captcha: "suban" (third-person plural present subjunctive in Galician for "to ascend, go up)

ayup

Stagflationary Mark said...

tj and the bear,

They were practically giving TIPS away in February as Siegel claimed they were in a bubble. It was one of my biggest purchases of the last decade. No joke!

One word: Whew!

Stagflationary Mark said...

Troy,

My "WTF!!" moment came in 2004 as I was sifting through junk mail mortgage offers.

0% teaser rates for home refinancing spooked me and I opted to awake from my complacent slumber. In hindsight, I was a bit early. It's okay though, because 1/3rd of my nest egg went straight into gold and silver. In hindsight, I sold too early in 2006. It's okay too though, because I built a long-term TIPS ladder that's treated me quite well. I'll be riding it from here on out.

Pardon my language, but the 0.5% rates on 20-year TIPS implies the economy will SUCK for 20+ years. I do not doubt it in the slightest. I just don't see how it is even remotely possible to restore the illusion.

tj and the bear said...

Mark,

Yes, the TIPS imply we're Japan. Unfortunately we're not.

http://www.chrismartenson.com/page/transcript-eric-janszen-we-are-witnessing-death-dollar

Anonymous said...

Troy, et al.,

http://research.stlouisfed.org/fred2/graph/?g=38Q

What does this graph tell us about the state of peonite debt today? If we've overcorrected to the negative side and are un-accumulating debt to the tune of ~$300B/yr. what's the problem?

This is not an attempt at humor. I'm interested in knowing exactly what the reversal in that chart means. If it's as simple as .gov purchasing of mortgages then I'll put my dunce cap on and go sit in the corner. ;)

Troy said...

This is not an attempt at humor. I'm interested in knowing exactly what the reversal in that chart means.

It basically means the home ATM is empty.

My thesis is that our economy has a distribution problem -- too much money at the top, too much leaking out in the middle, too much free cheese at the bottom, and not enough money actually sticking within the working class economy.

Our $500B/yr trade deficit is sucking all that money out of paychecks, off to God knows where. That's $4000 per household.

Then there's our $4000/yr (per household) gasoline habit, again pulling most of that out of local economies and off to the ME or some offshore financial center.

Then the $8000 per capita health care cost, 2X the global norm. This at least funds 14M health care jobs, about 1/16 the adult population, so some money from that does stick within the paycheck economy before ending up bled out.

These are the structural leaks in the economy, the gauntlet wage earners must run each and every day.
What the above chart http://research.stlouisfed.org/fred2/graph/?g=38Q showed is that during most of the previous decade $800B to $1T+ per year was being redistributed directly into the working class economy via the home ATM and general housing bubble sector action.

On a per-capita basis:

http://research.stlouisfed.org/fred2/graph/?g=3a6

you can see that this was $4000 to $5000 of funny money being pushed into the economy -- PER ADULT.

Now this credit spigot is largely cut off. People are either paying down their debt or going BK on it.

This is a $5000 to $6000 PER ADULT swing in the flows.

If Uncle Bennie starting cutting $500/mo checks to every adult over the age of 16, and did it for the next 6 years, we'd have a close simulation of the effect of the departed housing bubble, 2002-2007.

They've got to turn the bubble machine back on or find a new one, otherwise this country is going to go down, worse than Greece.

Anonymous said...

* I double-counted the oil in the discussion/rant above -- the $500B/yr deficit includes oil imports.

To balance, I didn't mention housing rents, which extract a median $15,000 from each renting household nationwide, most if not nearly all of this money being sucked from labor to capital.

Troy said...

** hmm, then again one-third of our oil consumed is from domestic sources, so there's still plenty of rents being tapped here.

IIRC, domestic productivity in the oil business is around $1M/employee, so even though some money we spend on gasoline comes back into the paycheck economy directly as domestic oil-sector wages, it's not much, really (total sector employment is 180,000 chart).

Anonymous said...

Troy,

One of the things I'm reading in your thesis is that the loss of equity in residential real estate is one of the biggest factors. What about homeowners who bought before 2001, or who currently own their homes (no mortgage)? They may have their notes largely paid down and they may have purchased for prices that leave them at nearly break even or still many 1000's of dollars to the good leaving them with time to absord further house price declines.

If you're a person who simply maintains a house as a place to "hang your hat" and is not relying upon it to fund retirement do you still place this person in jeopardy?

Another question I have...can you expand a little on what you mean by "swing in the flows"? I'm assuming this is where the high unemployment rate fits into your thesis. We probably think alike in that we both feels it's going to go higher or stay "structurally" high for a long time.

When you say "this country is going to go down" I can buy into that for a portion of the population. I would guess that in 20 years there may be 25% of Americans who will be out of luck and out of everything else. But the country?

Stagflationary Mark said...

tj and the bear,

Yes, the TIPS imply we're Japan. Unfortunately we're not.

If not for our cumulative trade deficit nightmare, I might have considered treasuries without inflation protection. That is a major difference between Japan and us and it does greatly concern me.

That said, I think the whole world is at risk of turning Japanese. It's not like I have been or am bullish on China since starting this blog. I even compared their situation to our Great Depression.

We've finally found a sure thing that simply can't lose. May the Olympics do far better for the Chinese than the Olympics did for the Americans!

I also felt no great need to diversify into Euros.

Oh well, there's always the paper fiat Euro. It still always goes up. Further, the one-way, can't lose, sure thing technical chart analysis says she's goin' from 160 to 246! That's like having money then getting 50% free money! Woohoo! Forget hoardin' toilet paper. Time to start filling pillowcases with Euros!

As seen in the link, I said that in 2008 as part of a sarcasm report. Needless to say, that same site has changed their Euro price target a bit. It's now apparently heading from 138 to 116. So much for 246, lol. ;)

Stagflationary Mark said...

Anonymous (& Troy),

Great discussion. I'm coming in a bit late and wish to comment on your recent question.

If you're a person who simply maintains a house as a place to "hang your hat" and is not relying upon it to fund retirement do you still place this person in jeopardy?

I am the person you describe. I have no mortgage on my home. I am in some jeopardy because I am a retired saver, but more importantly my jeopardy puts the economy in jeopardy.

As real interest rates have fallen, my ability to earn money off of money has declined (just as it did for Japanese savers heading into their multiple decades of stagnation).

Since I am a saver, my first reaction is to spend less money so that I don't run out over the long-term. This feeds back into the economy of course. Strip malls cannot afford debtors cutting back because they are tapped out AND savers cutting back because they are adjusting to the new long-term income stream reality.

Further, it is difficult to force a saver to spend money. If you do then this tends to happen. It does not help the economy in the long run because it simply pulls future demand into the present (much like a chipmunk does when he hoards nuts for the winter season).

Stagflationary Mark said...

Continued...

When you say "this country is going to go down" I can buy into that for a portion of the population. I would guess that in 20 years there may be 25% of Americans who will be out of luck and out of everything else. But the country?

We built restaurant habits based on a prosperity wave that was mostly fake (hence the name of my blog). My biggest concern is what happens if that continues to unwind. I do not think it is a trivial risk.

A Consumption Sugar Rush (Musical Tribute)

Ouch. The chart above shows our preference for eating out over eating at home. There were probably better times in all of recorded history to open a new restaurant. Let's just put it that way.

Troy said...

One of the things I'm reading in your thesis is that the loss of equity in residential real estate is one of the biggest factors.

Nah, the equity only had indirect effects, allowing people to feel wealthier and thus spend more of their income, or cash out the equity (thereby losing it) via HELOCs and serial refis as rates dropped 2002-2004 (and new & exciting loan products started appearing 2003-2006).

and is not relying upon it to fund retirement do you still place this person in jeopardy?

No, but this person was a rare bird, 2002-2007. My mom actually qualifies, she finally paid off her 25 year loan in 2007.

can you expand a little on what you mean by "swing in the flows"?

AFAICT all the money being loaned out via mortgages is essentially new money being injected into the consumer economy, as money from savers -- sovereign wealth funds, pension funds, whatnot -- was wrapped around and given to people with houses.

This was a minor flow until 2002, then boom!

http://research.stlouisfed.org/fred2/graph/?g=3ae

shows the jump, up from 5% of wages in the 1990s to approaching 20% during the peak mania.

I'm assuming this is where the high unemployment rate fits into your thesis.

Yes, this $1T+ flow of money didn't just stay in the real estate sector. Aside from all the agent, broker, and hammer-swinging jobs this flow paid, it also funded middle America's entrepreneurial and general consumption -- all the stuff we bought on HELOC money, all the food we ate paid by HELOC money, etc etc.

This was such an immense bolus of economic activity that it turned around the entire global economy, eg. the Nikkei doubled from 2003 to 2007.

I would guess that in 20 years there may be 25% of Americans who will be out of luck and out of everything else. But the country?

Yes. One man's debt is another man's savings.

And we borrowed owe-so-much -- $6T, between 1999 and 2008:

http://research.stlouisfed.org/fred2/series/CMDEBT for the big-picture, http://research.stlouisfed.org/fred2/graph/?g=3af for 1995-now.

If the economy of 2001-2008 was fraudulent, the debt we took on then isn't going to be repaid.

We're running $1T+ Federal deficits to try to ease the overall system's deleveraging, but we've still got trillions to write down and/or pay off.

Then there's demographic stresses on the horizon. Peak boomer birth year was 1957, so early retirement for them is 2019.

http://research.stlouisfed.org/fred2/graph/?g=3ag for the shape of postwar population YOY growth.

Now, I think things are easily fixable. Just cut the defense budget 50%, devalue the dollar 50%, raise marginal rates to 50% on high incomes, do some sort of de-facto debt jubilee, cut medical costs 50% by going with Canadian-style single payer, and move the economy off of hydrocarbons.

Piece of cake.

Troy said...

*correction: And we borrowed owe-so-much -- $8T, between 1999 and 2008, not $6T. $6T was between the recessions.

Anonymous said...

Mark,

"...then this tends to happen"

Do you have two-sided access to those shelves? I mean, do you do a FIFO system with all those cans of tuna, soup, and beans? Two-sided access seems like it would help.

Stagflationary Mark said...

Troy,

No, but this person was a rare bird, 2002-2007. My mom actually qualifies, she finally paid off her 25 year loan in 2007.

It's not that rare.

U.S. Census: Construction & Housing: Homeownership and Housing Costs

Out of 76.4 million owner occupied housing units, 24.2 million are owned free and clear. I would argue that the kind of person who lives in a paid off house is also the kind of person to be a saver (someone like me).

It doesn't undermine your case though.

One man's debt is another man's savings.

As you suggest, if I am in a home that's free in clear that does not mean that I am safe. Sigh.

November 16, 2009
Why Income Inequality Really Matters

Most economists base much of their understanding of the economy on average and median income, savings, and debt data. Our very own Ben Bernanke looks to this type of data as seen in the Federal Reserve's Flow of Funds reports. There's just so much data to look at and the only way it seems even remotely manageable is to average it and summarize it.

I am now going to point out how this type of data can effectively hide problems within the economy and thereby confuse and shock mainstream economists as things fall apart. This is especially true when the problems start in subprime loans and are expected to remain there. The average person doesn't even have a subprime loan, right?

Consider the following two hypothetical economic situations. They are based on an economy with just three workers (which I have named "A", "B", and "C").


[Click link above to see the table]

As seen through the eyes of "average" and "median" data, both situations are 100% identical. I would ask you these questions though.

1. Which situation is more unstable?
2. Which situation would be hurt most by rising oil prices?
3. Which situation would see payday loan stores become a growth industry?

Anonymous said...

Troy,

"AFAICT all the money being loaned out via mortgages is essentially new money being injected into the consumer economy, as money from savers -- sovereign wealth funds, pension funds, whatnot -- was wrapped around and given to people with houses.
"


Are you saying that mortgages where created by fract. res. lending leverage while second lines where funded with money markets and pension fund money?

Do you know that for a fact? Is that something that happened only during the mania of the 2000's?

Anonymous said...

Mark,

"I would argue that the kind of person who lives in a paid off house is also the kind of person to be a saver (someone like me).'

Not necessarily. My mother lives in a paid-off house. And she spends like a drunken sailor. And why shouldn't she, she's 75 with pension and SS money for...as long as they hold out.

And there's millions and millions just like her. Trouble is, each passing day their number is reduced by...

Stagflationary Mark said...

Anonymous,

Do you have two-sided access to those shelves? I mean, do you do a FIFO system with all those cans of tuna, soup, and beans? Two-sided access seems like it would help.

I certainly wish I had two-sided access.

I even do FIFO on the toilet paper. That means I have to keep rearranging it.

It's not quite as bad as it looks though. I tend to rearrange it every other Costco run (and I do those once a month). The new stuff simply piles up in cases elsewhere until I am ready to add it individually to the "herd".

Stagflationary Mark said...

Anonymous,

And she spends like a drunken sailor. And why shouldn't she, she's 75 with pension and SS money for...as long as they hold out.

Serious question because I am curious. Feel free to pass if it's too personal.

Does your mother keep a balance on her credit card? In other words, does she pay it in full each month?

If she does not have credit card debt then I would argue that she is not spending money like a drunken sailor but instead is simply living within her means (and may not realize that her means may shrink).

If she is accumulating credit card debt then I would argue that my premise is wrong and that perhaps I am more rare than I first thought (based on your anecdotal evidence).

If I am wrong and I am an exception to the rule, then my bearishness has only increased. Sigh.

Stagflationary Mark said...

As a side note, if I am 75 and my nest egg is still doing pretty well (due to years of saving for a near worst case situation that never played out), then I may very well spend like a drunken sailor too. It's not like I'll be taking it with me once I'm dead.

The bulk of it may go to my significant other (girlfriend) though, who may very well need it far more than me. I doubt there will be much of a pension or Social Security in her future. Sigh.

Anonymous said...

Mark,

"If she does not have credit card debt then I would argue that she is not spending money like a drunken sailor but instead is simply living within her means (and may not realize that her means may shrink)."

I don't mind you asking at all.

1. Most sons speak with their mother regularly. I fit into that category.
2. My mothers son is a regular reader of IOP and many other sources of wisdom and insight regarding our future.
3. I want nothing more than for my mother to finish out under the best possible circumstances.

Therefore, you better believe she's paying down each month!;)

I'm a person who is probably more closely aquainted with their mother's finances than most. We're candid with each other regarding these matters.

I firmly believe in the expression "Mind your own business". I take that to mean that there is nothing more important than your own family's affairs. I know some people have a different ordering of importance but for me it's family first.

Still, I joke with her sometimes that if she doesn't spend the money it will be confiscated eventually. And I remind her I'm just joking.;)


"I even do FIFO on the toilet paper."

There's a joke here...but I'm off to get a shower and get ready for bed, lol.

If I have to count sheep to get to sleep tonight I'll think of your "herd".

Stagflationary Mark said...

Anonymous,

It would seem your anecdotal evidence keeps me at my same bearish level. Whew! :)

Perhaps we need a new term.

Were drunken sailors of the past able to spend more than they had?

Perhaps our country needs to adopt a drunken sailor mentality.

Spend until you don't have any money and then actually stop!

Stagflationary Mark said...

Anonymous,

Still, I joke with her sometimes that if she doesn't spend the money it will be confiscated eventually. And I remind her I'm just joking.;)

I've shared this before so apologies to those who have heard it before.

I was once asked (by a spender) why I wanted to save money. I'd be too old to enjoy it later in life.

I said that if I wouldn't enjoy money when I was older then I certainly wouldn't enjoy working when I was older. Go figure.

Troy said...

Are you saying that mortgages where created by fract. res. lending leverage while second lines where funded with money markets and pension fund money?

Fractional reserve lending just means money loaned out comes from checking accounts and not CDs.

But it doesn't matter where the money came from (even if it was printed by the Fed), the flow into consumers' hands peaked at 20% of income during the bubble.

That was one helluva stimulus, and now the flow is negative, and thus consumers don't have the spending power they had 5+ years ago.

Yet their debts of 5+ years ago largely remain.

Something's gotta give here, I think.

Though I also think the PTB have a lot of policy leeway to keep the debt thing going. 10 year rates at 2% tell us money has nowhere else to go now, except back into the maw of the Treasury.

Stagflationary Mark said...

Troy,

Something's gotta give here, I think.

Waiting for the $30,000 answer

For now, the rest of the wall is unstable but still in place.

Oops. That story is about a retaining wall. I got economics and the real world mixed up there for a moment. Never mind. ;)

Anonymous said...

Troy, et al.,

"If Uncle Bennie starting cutting $500/mo checks to every adult over the age of 16, and did it for the next 6 years, we'd have a close simulation of the effect of the departed housing bubble, 2002-2007."

Allow me to don my tin-foil hat for a moment and suggest a theory:

1. Corporations are squeezing profits from employees in a last gasp effort to meet earnings expectations during the current administration. Corp's are anticipating a more lenient environment after the next election and, as is well known, have been saving cash and not capital spending or hiring new employees.

2. Savers are sitting on $6T.

3. Vacant lands are for sale all across the country at pre-bubble prices.

Bring these three elements together for the perfect bubble reflation storm. A new republican president, a return of de-regulation and laissez-faire economics, corporations spend like drunked sailors and go on hiring binges with the money they have to do it with, fed frauds rates go up to %5, savers earn real money again, builders build again, and it's party like it's....2005! And the republicans ride in as savior's to the democratic induced depression of the Obama era.

What exactly stands in the way of this scenario? (Assuming that Obama is actually defeated next year.)

In this scenario do eggs go to $10/dozen? Gas to $10/gal?

Troy said...

Yes, I do suspect that if the R's retake control of the system things will be rejiggered such that the economy "turns around" by 2014.

but as for:

What exactly stands in the way of this scenario?

The national debt is going to be pushing $12T when the next congress is seated. The treasury simply can't pay 5% interest on that, that's $600B per year on interest alone.

Gas will go to $10/gallon, but if wages at Walmart don't go up to $20/hr there's going to be no inflation, just reallocation.

We can't inflate away our medicare and social security burdens, either.

Anonymous said...

"We can't inflate away our medicare and social security burdens, either."

The more you subsidize medical care, the more you inflate medical care. Take away the subsidies, and watch the enrollment rate in community college health care classes crash.

Busting up medicare will lead to much pain in the last remaining industry to actually be hiring anyone and paying decent wages. For how much longer I don't know.

Let's say that your thesis laid out above is true. What data will you be watching for clues that things are coming in as you suggest? What data aside from the obvious ones such as retail restuarant sales?

Troy said...

Good question!

It might be easier to look for data that says things are turning around.

I'm just such a massive permabear that any change will probably blindside me.

The 1990s featured the financial sector levering up, which got everything else moving forward again.

http://research.stlouisfed.org/fred2/graph/?g=3bg

Something unseen like that might happen again.

Personal income: http://research.stlouisfed.org/fred2/series/PI is higher now than ever.

I can't really see what's going to happen this decade.

I focus on the negative so much that I don't see any positive forces arriving to help us out.

It's going to take a deus ex machina at this point . . .

Stagflationary Mark said...

Great discussion.

For what it is worth, I spent yesterday topping off the "Apocalypse Pantry" (tongue mostly in cheek) with my girlfriend.

There will be no meaningful economic recovery as long as oil continues to be the fastest appreciating asset. That's the problem with the reflation trade long-term. The wrong things inflate first. Oil inflation isn't just a poor substitute for wage inflation, it's far worse than that.

Further, it is my belief that we have overbuilt our service based economy (think restaurants) based on prosperity that wasn't real. If that's true, then more pain is coming (think Detroit) and there is little that can be done to stop it.

I hope I am too bearish. I am braced for our decline somewhat (by owning TIPS and I-Bonds) but would be far better off over the long-term if I am proven wrong. It's a plan for the near-worst and hope for the near-best mindset.

Stagflationary Mark said...

Anonymous,

I feel like such a downer.

Vacant lands are for sale all across the country at pre-bubble prices.

There are vacant lands for sale all across Detroit at prices that few would have thought possible (even before the national housing bubble popped). It all comes down to jobs. Will they or won't they be there long-term? I think not and it concerns me immensely.

Troy said...

it is my belief that we have overbuilt our service based economy (think restaurants) based on prosperity that wasn't real

I disagree with this tho.

The US has had great prosperity, productivity across the board has risen.

This graph:

http://research.stlouisfed.org/fred2/graph/?g=3bT is kinda lame but it's one estimate, showing that per-worker productivity has increased from $65,000 to $100,000 since 1980 (2005 dollars).

Granted, much of this productivity is merely from the debt bubble, trade deficit float, and thus-far affordable if not downright cheap oil.

But Krugman's recent graph showing the top 0.1%'s share of income increasing from 3% in 1980 to 8% in 2007 did shake me up a bit.

That 500bp rise, on a $10T income base, is $500B/yr!

Per household it's $4000 that the masses could be getting if everything was restructured to capture that rent-taking and redistribute it.

$4000 is also the PER-CAPITA difference in health care costs between us and eg. Canada. It's also the per-capita debt-take on during the bubble:

http://research.stlouisfed.org/fred2/graph/?g=3bW.

But our political arrangement is far, far from allowing any sort of movement towards Canadian- or heaven forfend, Norwegian-style S-word redistribution.

I think it's more likely we're just going to drive ourselves off the cliff, Thelma & Louise style.

Troy said...

http://www.macworld.com/article/163406/2011/11/apple_supplier_foxconn_may_start_building_robots.html

Funny how something that creates new wealth will make us poorer!

Stagflationary Mark said...

Troy,

Per household it's $4000 that the masses could be getting if everything was restructured to capture that rent-taking and redistribute it.

If "ifs" and "buts" were candy and nuts then we'd ALL have a Merry Christmas.

Fritz_O said...

OK, this post is a catch-up from my Anonymous 11/04 9:45am post, I'm just going to cover a whole 'lotta ground and do it all at once...and I'm using a name too!

"I'm just such a massive permabear that any change will probably blindside me...

I focus on the negative so much that I don't see any positive forces arriving to help us out."


This is the main reason I'm asking so many questions. I often fear that I fall into this same trap and it can leave me open to criticism from those I'm debating with. It's easy on boards like this one because we're all "preaching to the choir" so to speak. But I need to play devil's advocate on occasion just so I don't let my thinking get to skewed and so I don't let myself get skewered (grilled) on other boards.;)

Your graphs and insights are very enlightening and in some cases, because of the depth of the subject, very enabling. For example, the graph that shows per capita dept pushed to each person during the bubble. What an eye opener! And a useful tool to illustrate the magnitude of the course correction that is going to have to happen.

On the other hand I'm wary of suggestions that the necessary course correction is going to result in situations where Greece will look like a pre-game show. I'm not that scared...yet.

I had to google "deus ex machina". You're probably right.


"There will be no meaningful economic recovery as long as oil continues to be the fastest appreciating asset. That's the problem with the reflation trade long-term. The wrong things inflate first. Oil inflation isn't just a poor substitute for wage inflation, it's far worse than that."

tj and the bear posted a link to an interview. I read the whole thing. I'm going to plagarize from it just a little to respond to this point.

Politicians do not want to address future oil price trajectory because they're elected. And elected means temporary.

There is alot of oil out there and thanks to technology we know where it is. But it is not as easily available as it once was. Prices will continue to rise because of all the energy required to extract the energy. That's pretty much it in a nutshell.


"Granted, much of this productivity is merely from the debt bubble, trade deficit float, and thus-far affordable if not downright cheap oil."

I'm not sure I agree with this completely. Employees have had the bejesus squeezed out of them by corporations. In my view, much of this recent productivity miracle is illusory productivity. Put another way, employees are being asked to do far less in terms of hours worked, while only a little less in terms of the actual work. But they are doing less work for sure, even if that sounds counter-intuitive.

Stagflationary Mark said...

Fritz_O,

It is always good to question one's beliefs (especially before others do ;)).

September 23, 2007
Productivity Miracle

If I'm wrong to be a stagflationist, this is the sort of thing that would do me in. It is also something one needs to factor in when hoarding hard assets in general.

It is my hope that we master fusion energy within my lifetime. That would take a lot of stress out of the system (and me too for that matter).

Fritz_O said...

"Productivity Miracle"

This caught my eye: "Why don't we just agree on this."

At some point, if a bank is producing more than its own body weight in credit each day we're just that much closer to a really, really tragic reality check.

Troy said...

I had to google "deus ex machina". You're probably right.

It is my hope that we master fusion energy within my lifetime.

heh, when the cold fusion news broke in 1989 I was clicking my heels with joy. The 1990s were going to be alright!

Oil was $20 -- $12 in 2010 money, LOL.

Later that year I faced the choice of taking Japanese or Mandarin. I chose the former because all the industry stuff seemed propitious (I absolutely loved Namco back then).

The future is a very strange place!

Fritz_O said...

Earlier this week I wrote:

"Corp's are anticipating a more lenient environment after the next election and, as is well known, have been saving cash and not capital spending or hiring new employees."

Now tonight I come across this:

Tea Party Nation tells business owners not to hire anyone

"...the Tea Party Nation has sent out a statement to its members requesting that they don't hire anyone in order to further hurt the president.

...

I, an American small business owner, part of the class that produces the vast majority of real, wealth producing jobs in this country, hereby resolve that I will not hire a single person until this war against business and my country is stopped."


Get ready for the once in a lifetime recovery that is coming in 2013!

Stagflationary Mark said...

Fritz_O,

At some point, if a bank is producing more than its own body weight in credit each day we're just that much closer to a really, really tragic reality check.

"Yessir, the check is in the mail."

Stagflationary Mark said...

Troy,

The future is a very strange place!

It's a two-fer. ;)