tag:blogger.com,1999:blog-8515247115132134144.post4832655300145199549..comments2024-02-17T12:34:01.400-08:00Comments on Illusion of Prosperity: Wrong Way Siegel Strikes AgainStagflationary Markhttp://www.blogger.com/profile/04568993350246477976noreply@blogger.comBlogger15125tag:blogger.com,1999:blog-8515247115132134144.post-1467000301721764092012-03-27T17:06:42.972-07:002012-03-27T17:06:42.972-07:00March 9, 2012
Getting Real in China
It’s a red le...<b>March 9, 2012</b><br /><a href="http://blogs.wsj.com/overheard/2012/03/09/getting-real-in-china/" rel="nofollow">Getting Real in China</a><br /><br /><i>It’s a red letter day for China’s savers: For the first time since the beginning of 2010, real interest rates have edged into positive territory.</i><br /><br />Get out the party hats.<br /><br /><i>If savers have a way to beat inflation without piling into property, that also has significant implications for the real estate sector.</i><br /><br />You think?<br /><br /><i>Average house prices rose just 0.7% in the year to January. Anyone opening a 1-year deposit account in January 2011 could have earned a 2.75% return without the trouble and expense of dealing with real estate agents and mortgage brokers.</i><br /><br />Yeah, stick it to those pesky real estate agents and mortgage brokers! Just say no!<br /><br />*cringe*Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-71415294462785406122012-03-27T16:21:22.940-07:002012-03-27T16:21:22.940-07:00Bonus thought from my post just because I think it...Bonus thought from my post just because I think it needs to be repeated.<br /><br /><i>And lastly, I'm not suggesting that interest rates can't rise. I'm simply saying that our economy cannot tolerate higher interest rates.</i>Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-71086149102041944432012-03-27T16:19:10.916-07:002012-03-27T16:19:10.916-07:00MaxedOutMama,
I forgot to mention one more thing....MaxedOutMama,<br /><br />I forgot to mention one more thing.<br /><br /><i>So we all have to run out and buy Japanese/Chinese products. Quick!</i><br /><br />Nicely played. THAT will surely help our economy over the long-term, lol. Sigh.Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-48735697424595233202012-03-27T16:17:45.327-07:002012-03-27T16:17:45.327-07:00MaxedOutMama,
The Fed will do its damndest never ...MaxedOutMama,<br /><br /><i>The Fed will do its damndest never to raise rates - ultimately Mr. Market will raise them.</i><br /><br />I hear you. Picture what would happen if the Fed raised interest rates to 0.25% tomorrow though. Wouldn't that be a fireworks show!<br /><br />I've used this argument before when interest rates were even higher but... I am part of Mr. Market. I'm about as far from being a bond vigilante as they come. Nobody is holding a gun to my head forcing me to own TIPS and I-Bonds. I do so willingly because the alternatives seem worse. It is our debt that's propping everything else up.<br /><br /><i>History suggests that changing trade surpluses in Asia will have more to do with eventual US rates. 46% of the debt is owned outside the country; a relatively small change in demand there could push US rates up quite a bit over a few years.</i><br /><br />My opinion would be different if I could be bullish on those <a href="http://illusionofprosperity.blogspot.com/2007/11/savvy-chinese-know-exactly-when-bubble.html" rel="nofollow">savvy Chinese</a> or those austere Europeans! I could be wrong of course.Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-41294461696012199022012-03-27T16:02:38.124-07:002012-03-27T16:02:38.124-07:00Troy,
If I had been able to put the pieces togeth...Troy,<br /><br />If I had been able to put the pieces together better I might not given myself a stagflationary name.<br /><br />That said, Stagnationary Mark doesn't have a nice ring to it. Fortunately, stagflationary type investments have done well (oil, precious metals, TIPS, I-Bonds).<br /><br />Deflationary type investments have done well too though (treasuries without inflation protection). Go figure.<br /><br />Behold the power of stagnation.Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-47933516779182299652012-03-27T15:57:49.698-07:002012-03-27T15:57:49.698-07:00Mark - even the first graph made me burst out laug...Mark - even the first graph made me burst out laughing.<br /><br />The Fed will do its damndest never to raise rates - ultimately Mr. Market will raise them. <br /><br />There is a limit to how much of the debt that even the Fed can buy, but we haven't reached it yet and currently we are in the land of the "Fed Fix". <br /><br /><a href="http://www.reuters.com/article/2012/03/10/us-china-economy-trade-idUSBRE82904820120310" rel="nofollow">History suggests</a> that changing trade surpluses in Asia will have more to do with eventual US rates. 46% of the debt is owned outside the country; a relatively small change in demand there could push US rates up quite a bit over a few years. <br /><br />So we all have to run out and buy Japanese/Chinese products. Quick!MaxedOutMamahttps://www.blogger.com/profile/08011469804162511617noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-72831589568477670472012-03-27T15:57:48.449-07:002012-03-27T15:57:48.449-07:00AllanF,
Since recessions only come after higher h...AllanF,<br /><br /><i>Since recessions only come after higher highs, and we've clearly fallen off the TCMDO exponential, ergo no more higher highs and no more recessions.</i><br /><br />You got a serious laugh out of me. The sarcasm is so thick I can't even cut it with a chainsaw!<br /><br />Oh wait. The chainsaw's made in China, it's got quality issues, and I'm out of gas.<br /><br />I'll try to think up a better analogy next time. ;)Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-38171266794256408432012-03-27T15:54:51.618-07:002012-03-27T15:54:51.618-07:00Skye,
That FF x TCMDO chart is absolutely terrify...Skye,<br /><br /><i>That FF x TCMDO chart is absolutely terrifying. Thanks!</i><br /><br />I'm a big fan of H.P. Lovecraft. I'm not even in his league. Hahaha! ;)Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-84095124160565835262012-03-27T14:05:54.278-07:002012-03-27T14:05:54.278-07:00Well, Troy, if you're right (and I think you&#...Well, Troy, if you're right (and I think you're easily more right than wrong) what does that bode for the 2010-20's, with the baby boom ratcheting down to 1 and 0 income households? 10-20 years of skipping recession at best or depression at worst?AllanFnoreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-12984306271076941092012-03-27T13:51:33.178-07:002012-03-27T13:51:33.178-07:00It's my thesis that the 1970s & 1980s infl...It's my thesis that the 1970s & 1980s inflation was simply the baby boom establishing dual-income households.<br /><br />Double household income instantly like that and we're going to get massive housing inflation.<br /><br />The housing inflation became a wage-price spiral, and food & energy came along for the ride, especially after OPEC started insisting on getting paid in real dollars and not the 1960s royalty rates.<br /><br /><a href="http://users.rcn.com/jkimball.ma.ultranet/BiologyPages/B/BabyBoom75.gif" rel="nofollow">http://users.rcn.com/jkimball.ma.ultranet/BiologyPages/B/BabyBoom75.gif</a><br /><br />Shows how total household income was going to more than double as the baby boom filtered into the workforce, 1970-1985.<br /><br />Not helping matters was that systemic debt leverage had been held extremely low in the 1950s & 1960s -- we were running a tight ship back then, just didn't know it.Troynoreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-13041911182494507192012-03-27T13:32:52.942-07:002012-03-27T13:32:52.942-07:00Very interesting post Mark. I've not seen the ...Very interesting post Mark. I've not seen the economy shown this way anywhere else.<br /><br />As for FF*TCMDO scary? Ha! Are you kidding? We'll never have another recession ever again. Since recessions only come after higher highs, and we've clearly fallen off the TCMDO exponential, ergo no more higher highs and no more recessions.<br /><br />Well, no more higher high short of any thing but a bout of hyper-inflation, but the Fed would never let that happen. They are much more sophisticated at monetary controls than they were in the 20's or 30's or 70's.AllanFnoreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-46554457998238135782012-03-27T13:11:29.157-07:002012-03-27T13:11:29.157-07:00That FF x TCMDO chart is absolutely terrifying. T...That FF x TCMDO chart is absolutely terrifying. Thanks!Skyehttps://www.blogger.com/profile/08196423340793582824noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-35173244331958514682012-03-27T12:56:31.641-07:002012-03-27T12:56:31.641-07:00Mr Slippery,
Awesome idea. Let them take cake!
T...Mr Slippery,<br /><br />Awesome idea. Let them take cake!<br /><br /><b>The more you take the more you make!</b><br /><br />There's just one problem. I'm not sure our system is designed to distribute the prosperity like that. Maybe there needs to be a mechanism that can undo it after the feeding frenzy. I know. Windfall profit taxes!<br /><br /><b>The more you make the more we take!</b><br /><br />Now combine them.<br /><br /><b>The more you take the more we take!</b><br /><br />Perfect. Now, in the words of Bush, we simply need to make the pie higher, lol. Sigh.Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-15807845940165183612012-03-27T10:37:09.937-07:002012-03-27T10:37:09.937-07:00I am not sure how it would work, but what if we co...I am not sure how it would work, but what if we could figure out a way to pay people interest on their debt, to encourage them to take on more debt?<br /><br />The Fed and banks could charge negative interest on savings, and pay interest on credit card balances, auto loans, and mortgages. Congress could bring back income tax deductions on all interest paid. <br /><br />Maybe something modeled on the cash back credit cards now? That would give us a system with room for more debt growth, which is the only kind of growth we've had since 1980.<br /><br />I CAN HAZ MOAR DEBT?Mr Slipperynoreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-84758157370184770712012-03-27T10:09:30.087-07:002012-03-27T10:09:30.087-07:00I should mention that the first chart's starti...I should mention that the first chart's starting point is the week that interest rates peaked. It's been downhill ever since.Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.com