tag:blogger.com,1999:blog-8515247115132134144.post5012584561981743853..comments2024-02-17T12:34:01.400-08:00Comments on Illusion of Prosperity: Exponential Trend Failure of the DayStagflationary Markhttp://www.blogger.com/profile/04568993350246477976noreply@blogger.comBlogger13125tag:blogger.com,1999:blog-8515247115132134144.post-83318097668104871052013-07-13T23:39:04.769-07:002013-07-13T23:39:04.769-07:00Troy,
I agree, but don't see what's going...Troy,<br /><br /><i>I agree, but don't see what's going to replace these millions of jobs.</i><br /><br />Yeah. *shrug shoulders*Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-88823173935761231982013-07-13T12:40:18.338-07:002013-07-13T12:40:18.338-07:00Mish today:
"Then again, perhaps 650,000 fur...Mish today:<br /><br />"Then again, perhaps 650,000 furloughs is just a tiny down payment for what needs to happen to a very bloated military sector."<br /><br />I agree, but don't see what's going to replace these millions of jobs.<br /><br />Non-institutional population doesn't count military, so my per-capita graphs don't accurately reflect reality.<br /><br />Eg:<br /><br /><a href="http://research.stlouisfed.org/fred2/graph/?g=kyR" rel="nofollow">http://research.stlouisfed.org/fred2/graph/?g=kyR</a><br /><br />is military spending per 25-54 yo.<br /><br />That's $500/mo from every working-age person.<br /><br />In 2012 dollars:<br /><br /><a href="http://research.stlouisfed.org/fred2/graph/?g=kyS" rel="nofollow">http://research.stlouisfed.org/fred2/graph/?g=kyS</a><br /><br />shows the late peak was equivalent to Korea, Vietnam, and the Reagan expansion.<br /><br />But $800B/yr is keeping a lot of money in circulation . . . without Uncle Sugar so many regional economies would contract severely<br /><br />This place is about as dysfunctional as 1980s Soviet Union I think, we've just had the ability to borrow trillions to paper over the imbalances.<br /><br />Troynoreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-52506700161589290522013-07-13T11:49:13.663-07:002013-07-13T11:49:13.663-07:00yeah, the key question is whether CBO's $20T e...yeah, the key question is whether CBO's $20T economy (2012 dollars) is coming in 2020 or not.<br /><br />If it is, then yields can go up from here regardless of the income distribution.<br /><br />If not, something's going to break.<br /><br />Higher yields will be a wealth transfer to the right part of the Gini curve as it is.<br /><br />The only counter-balance to this is the electorate revolting at the polls, like they did 1930-36.<br /><br />They put the fear of god into the plutocrats. Republicans lost ~HALF their seats in the House and ~2/3 of their seats up in the Senate.<br /><br />I know people like Mish don't like to hear this, but the economic imbalances are going to require political solutions.<br /><br />Money in isolation is too powerful on its own. The more concentrated, the stronger its institutional defenses and predatory capabilities.<br /><br />If capitalism were solely about the creation of new wealth, that wouldn't be such a problem. But too much of it nowadays is about rent-seeking in existing wealth -- health, energy, housing.<br /><br />The solutions are available, but it's going to take either the Dems retaking the House or the Republicans rethinking their received dogma.<br /><br />This is not to say politicians can necessarily fix things; to really screw things up requires a government, too.<br /><br />Only relatively recently did I discover that my beloved nordic economies had somehow allowed their consumer debt sectors to balloon so disastrously.<br /><br />Troynoreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-52043708212852574152013-07-13T02:36:53.251-07:002013-07-13T02:36:53.251-07:00Oops. I meant to say if real interest rates rise d...Oops. I meant to say if real interest rates <b>rise</b> due to a truly booming economy...Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-44870553493883225462013-07-13T02:34:24.991-07:002013-07-13T02:34:24.991-07:00In any event, I hope that I'm wrong. The bette...In any event, I hope that I'm wrong. The better the economy does the better I will do. Although my investments would be hurt on paper if real interest rates due to a truly booming economy, it makes absolutely no sense for me to root for lower real yields. As my bonds mature, I'd like to reinvest at higher rates.<br /><br />This means that I am a bear who truly wishes the bulls are right. I just don't think we'll be that fortunate.Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-89033635502709797852013-07-13T02:27:55.073-07:002013-07-13T02:27:55.073-07:00Troy,
More automation and rising productivity isn...Troy,<br /><br /><i>More automation and rising productivity isn't a negative if the added wealth is distributed.</i><br /><br />I would absolutely agree with that. The expanding food stamp participation and the rise in the gini index imply that we aren't on that path though.<br /><br />As I've pointed out in the past, George Jetson seemed to be doing great working just 9 hour workweeks. However, I don't think most workers of today will ultimately be paid 4x more to work 75% less. Sigh.Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-15414298815612021672013-07-12T20:28:07.266-07:002013-07-12T20:28:07.266-07:00I see money as water for the economy, and we need ...I see money as water for the economy, and we need more irrigation.<br /><br />All the debt leverage and charts is secondary to the question of whether we are really living beyond our means.<br /><br />The answer to the affirmative is the trade deficit, but the answer to that is Triffin Dilemma and if the world wants a strong dollar who are we to complain.<br /><br />The argument that we are not living beyond our means is our income disparity. We are simply substituting borrowing for taxes, and consumer debt for wages.<br /><br />More automation and rising productivity isn't a negative if the added wealth is distributed.<br /><br />We have a political problem not an economic problem.<br /><br />Same thing with the Japanese, they've been able to feed themselves, they just, like us, have a problem with the distribution of profit to the actual producers, and an economy that pulls money out of the middle class from every angle.<br /><br />Maybe in the next 20 years We The People will start getting on the same page with all this, the late "99%" movement being the Populists to a later Progressive reform wave.<br /><br />One thing I was thinking today in the shower was what if the Republicans tack away from their Job Creator BS and actually start walking the talk wrt economic mis-structuring.<br /><br />One thing they want is the White House in 2016. If they get it, I expect another round of Reagan-Bush and Bush-Cheney pump & dump -- an economy with debt well out to current Japanese levels.<br /><br />If they can swing that we'd see at least 12 years of Republican leadership, out to 2028.<br /><br />Who knows, maybe our politics won't be so actively stupid by then . . .<br /><br /><br />Troynoreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-63397981537174842202013-07-12T19:57:21.743-07:002013-07-12T19:57:21.743-07:00Troy,
The more they print, the more competitive U...Troy,<br /><br /><i>The more they print, the more competitive US mfg becomes, lessening the trade deficit.</i><br /><br />Yes, but <a href="http://research.stlouisfed.org/fred2/series/MANEMP" rel="nofollow">how many jobs</a> will the fully automated US manufacturing industry of the future actually create? It all comes down to jobs to me and I strongly believe that the employment party ended in 2000. Further, we're hardly the only country trying to competitively devalue a currency. It's a dog eat dog world out there.<br /><br />What's going to happen to recession odds if 4m boomers turn as "risk off" as I have been since retiring in 1999? I can't afford to take big risks. I have no job to fall back on if I swing for the fences and miss.Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-52461809189769821482013-07-12T19:16:33.190-07:002013-07-12T19:16:33.190-07:00that's just it though, recent recessions are t...that's just it though, recent recessions are the aftermath of bubble busts -- 1990, 2001, 2008.<br /><br /><a href="http://research.stlouisfed.org/fred2/graph/?g=kxw" rel="nofollow">http://research.stlouisfed.org/fred2/graph/?g=kxw</a><br /><br />blue is age non-military/non-prison 20-54 population, red is jobs.<br /><br />This economy is on a pretty powerful stimulant again -- QE3 -- and the downside risk is a weaker dollar, which is kinda what we want anyway.<br /><br />Each year 4M boomers are going to hit retirement age now.<br /><br />If the Fed just committed to buy bonds equivalent to our trade deficit -- which is essentially what they're doing now -- we'd be in a pretty stable growth regime.<br /><br />The more they print, the more competitive US mfg becomes, lessening the trade deficit.<br /><br />Except for the oil bit. And the fact that exports are inflationary : )Troynoreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-40951132348311625232013-07-12T18:32:02.646-07:002013-07-12T18:32:02.646-07:00dd,
What could go wrong with this one time opport...dd,<br /><br /><i>What could go wrong with this one time opportunity to buy stark securities?</i><br /><br />Absolutely nothing! The Fed has permanently put a stop to recessions!<br /><br />Oh oh. We managed to blow a fuse in this blog's sarcasm meter. Fortunately, it's not a serious problem. I hoarded some extra sarcasm fuses back in 2004. Whew!!Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-4647107110832237672013-07-12T18:17:42.039-07:002013-07-12T18:17:42.039-07:00Wait one minute. Freddie Mac is introducing Struct...Wait one minute. Freddie Mac is introducing Structured Agency Credit Risk (STACR) securities, designed to offload the first-loss piece of certain government-guaranteed MBS into the private capital markets. http://www.reuters.com/article/2013/06/28/markets-abs-agencies-idUSL2N0F413G20130628<br />What could go wrong with this one time opportunity to buy stark securities?ddhttps://www.blogger.com/profile/05372482865160613159noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-59644295310037111822013-07-12T18:05:00.545-07:002013-07-12T18:05:00.545-07:00Troy,
ten years ago we did the death cross . . .
...Troy,<br /><br /><i>ten years ago we did the death cross . . .</i><br /><br />I became a permabear 9 years ago. I'm continually told that this is a once in a lifetime opportunity to embrace "risk on" assets though.<br /><br />Recently, one such individual on CNBC had data going back to the 1800s to back his claim. I wish I knew what he was smoking. He just looked so darned happy. One might even say euphoric. I can't seem to get that same level of buzz from the charts I create. Your charts don't exactly inspire me to take on extra risk either, lol. Sigh.Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-7636724365174070072013-07-12T17:34:17.469-07:002013-07-12T17:34:17.469-07:00http://research.stlouisfed.org/fred2/graph/?g=kxn
...<a href="http://research.stlouisfed.org/fred2/graph/?g=kxn" rel="nofollow">http://research.stlouisfed.org/fred2/graph/?g=kxn</a><br /><br />ten years ago we did the death cross . . .<br /><br />man the system was wired to go on tilt then.<br /><br />~$2.5T credit overhang still by this chart<br /><br />Adding in per-worker gov't debt:<br /><br /><a href="http://research.stlouisfed.org/fred2/graph/?g=kxo" rel="nofollow">http://research.stlouisfed.org/fred2/graph/?g=kxo</a><br /><br />shows that as consumer debt has gone down $10,000, gov't debt has gone up $50,000 (actually, more like $40,000 not counting Fed's QE buys).Troynoreply@blogger.com