I live in the USA and I am concerned about the future. I created this blog to share my thoughts on the economy and anything else that might catch my attention.
This is the End and a New Beginning
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I've been thinking about this for some time.
After 21 years of writing this blog almost daily, I've decided to stop
writing the daily updates on the blog.
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Silver Deep Dive
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Silver had a memorable year (+148%). Some of this can be explained by a
decline in the dollar. I decided to do some ML analysis to look for other
insights....
WASHINGTON (CNN) — Appearing Sunday on the last broadcast of CNN's Late Edition, Vice President Dick Cheney defended the administration's handling of the recession and argued that its premature to call it the worst economic crisis since the Great Depression.
It is premature. Shame on us. These things take time and we need to learn to be patient. Let's promise not to call it the worst economic crisis since the Great Depression until it is actually official. Until that point, we can continue to throw trillions of dollars of taxpayer money at our little banking system mishap.
"I can't say that. I don't think we know that yet. I think certainly if you look at some earlier periods in our history, I remember back in the late '70s when we had a high rate of inflation, stagflation in effect and a high rate of unemployment," Cheney said.
That's what makes the Great Depression so great. It only had one of the three. There was no high rate of inflation. There wasn't any of that pesky stagflation. It was just pure unemployment.
The number of jobs in the nation increased by about 2 percent during Bush's tenure, the most tepid growth over any eight-year span since data collection began seven decades ago. Gross domestic product, a broad measure of economic output, grew at the slowest pace for a period of that length since the Truman administration. And Americans' incomes grew more slowly than in any presidency since the 1960s, other than that of Bush's father.
Outsourcing jobs and giving enormous tax breaks to the rich didn't lead to a massive prosperity trickle down to the average taxpaying worker thereby keeping our entire economy afloat? There must be something seriously wrong with the data. That's just too impossible to believe. Think about it. If it was THAT bad we would not have reelected Bush. Right?
One department, in Romulus, issued 12,040 tickets in 2007 -- a 136% increase since 2002 -- despite a population of just 25,000, according to the newspaper's analysis. Detroit Metropolitan Airport sits within the city and is accessed by two interstate highways. Romulus unmarked patrol cars regularly ticket drivers exiting to the airport or accelerating away from it.
I'm sure we'll be fine once the budgets are balanced, public debt is reduced, the arrogance of our leaders is tempered, and we manage to somehow end the forever wars though.
The budget should be balanced. Public debt should be reduced. The arrogance of officialdom should be tempered, and assistance to foreign lands should be curtailed, lest Rome become bankrupt. - Marcus Tullius Cicero (106 BC-43 BC)
Record numbers of people filing unemployment claims have crashed computer systems in states struggling to keep up with the demand.
Now the good news.
One bright spot: Some people are getting jobs processing claims.
Due to the enormous increase in unemployment, some unemployed are getting jobs processing unemployment claims? Well, we were all wondering what the next growth industry would be after payday loan centers. Now we know.
Payday lending company executives fought the interest rate cap and predicted it would cause them to leave the state as they have had to do in other states where lawmakers took similar actions.
Washington and its suburbs gained 31,000 jobs over the 12-month period that ended in November, according to the Bureau of Labor Statistics. Losses in construction and retail jobs are being offset by gains in federal government positions as well as health and business services, according to senior fellow John McClain of George Mason University's Center for Regional Analysis.
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With government workers and contractors accounting for roughly one-third of the job force, Washington tends to prosper in times of crisis.
Step 1
Eat an egg.
Step 2
Read the article and note where the prosperity is going.
Step 3
Do what comes naturally. Do not fight it.
Step 4
Go to Step 1.
Step 5 (Optional)
Cheater! You should have never reached this step. This technology should have ensured that there was an infinite supply of vomit at essentially no cost (other than the cost of eggs of course). Oh well. What's done is done. Use the tissue to clean it up. You know the drill.
We emptied the nose in the previous article. We emptied the stomach in this one. I guess that just leaves one thingleft to empty as it relates to our economy. I should warn you that it is going to take well over a trillion bowls though. I guess that's why I'm still bullish on toilet paper prices long-term.
It's a bond fund. Long term, it will not outperform the S&P short of some very drastic problems in the US economy. - SleazyD, Submitted April 28, 2008
Step 1
Drink 6 ounces of juice but do not swallow it. If you can already see where this is going and/or the name of the poster is creating giggles, then you may be tempted to spray right now. However, for maximum effect you must hold the juice in. Do not spray, yet.
Step 2
Look at the chart within the link comparing TIP vs. the S&P. Look specifically to the period starting around April 28, 2008. At this point, there should be a serious tickling sensation in your nose and it may become harder to breathe. It will be very difficult, but you must continue to hold the juice in your mouth. Swallowing the juice should be virtually impossible now, so at least you've got that going for you.
Step 3
Contemplate "some very drastic problems in the US economy" going all the way back to 2000. On the way there, visit early 2005 (the peak of the housing bubble) and December of 2007 (the official start date of this recession). Picture trillion dollar (funny money) deficits going forward. Attempt to hold the juice in for at least ten more seconds while your shoulders twitch uncontrollably. This will maximize its eventual escape velocity.
Step 4
Release the juice! At this point, it should have a mind of its own. All you need to do is simply relax. Stop fighting it. It will know exactly where to go. Let it do all the work.
Step 5 (Optional)
Use a tissue to clean the juice off of your monitor. If you have been a long-term reader of this blog, you may already have vast hoards of tissue in reserve. As toilet paper (a top pick of this blog since inception) continues to outperform both TIP and the S&P 500, feel free to tap some of those illusionary profits! You've earned it. Well done!
The S&P 500 closed that day at 965.80. Over seven years later the S&P 500 now stands at 909.73. That being said, the best time to sell the New Economy short (using hindsight of course) was way back in 2000, when the S&P 500 stood at over 1,500.
For one thing, the term largely captured a remarkable evolution in a very old economic system: Capitalism.
With trillion dollar deficits and the American taxpayer flooding the failing banking system with good tidings, it has been a most remarkable evolution indeed. It is almost like we're transforming one very old economic system into another very old economic system. What comes after Socialism? I don't know about you, but I'm looking forward to a really good dictator and some martial law.
Yes, the downturn is getting vicious. Boeing plans on firing as many as 30,000 employees, or some 15% of its workforce. The airlines have laid off tens of thousands of workers. Revenues at many software and hardware companies will evaporate over the next several months, the time of year when, traditionally, about 25% of all sales are recorded. But economists have long recognized that downturns also force management to burn the midnight oil figuring out ways to gain new efficiencies.
There's nothing quite like a vicious downturn to create all sorts of new financial innovation efficiencies. NINJA (no income, no job, and no assets) loans and the impressive growth in structured investment vehicles really went a long way towards making our recovery so impressive on paper. I wonder what they've got planned for an encore this time around? I hope it involves building a lot more roads. If there is one thing we need, it is a way to enjoy the long commute from the city to the suburbs once oil eventually goes up in price again.
Laid-off workers will find new jobs faster than they did during previous downturns, and companies are adjusting quickly to shifts in demand. "It's the New Economy that will help us pull out of the downturn faster," says Arthur J. Rolnick, director of research at the Federal Reserve Bank of Minneapolis.
We're hemorrhaging over 500,000 jobs a month these days as unemployment continues to rise. I suppose laid-off workers will continue to find new jobs faster than ever though, as we've had seven more years of New Economy advancements (outsourcing, automation, and other related productivity miracles).
The economy will be hit hard over the next few months. But the seeds of a recovery are being planted as the Federal Reserve floods the system with money while the federal government cuts taxes and increases spending.
Well, the government does have a technology that can print as many dollars as they want at essentially no cost. If trillions of freshly printed dollars exported to China to buy their goods doesn't eventually make us more competitive with China, then I don't know what will. No really. I don't know what will. They'll work for so much less than us. I guess that comes from having a billion people competing for our jobs.
When the revival finally occurs, the New Economy will reemerge with a vengeance.
I'm not sure how much more economic vengeance we can take. I'm growing weary of economic injury, harm, humiliation, and the like. The New Economy really needs to get over it. What's done is done.
1. infliction of injury, harm, humiliation, or the like, on a person by another who has been harmed by that person; violent revenge: But have you the right to vengeance?
Return of the Living Dead
Hey, these things don't leak do they? Leak? Hell, no. These things were made by the U.S. Army Corp of Engineers.
We shouldn't assume that our children are ignorant of the state of our economy.
It is certainly an easy thing to do. Children are smart though. They can connect the dots at least as well as professional financial analysts, CEOs at Fortune 500 companies, and central bankers.
After all they've just lived through one of the bleakest Christmas celebrations since the Great Depression.
I know what you must be asking yourselves. What exactly have the children done to dig in? Well, you'll just have to wait a moment and let the anticipation build. Imagine what children must have done during the Great Depression. Let that image fester for a moment.
I offer this simple warning. There is still time to stop reading. What you are about to read will be one of the most shocking things I've ever written in this blog. It will disturb some. To others, it will be horrifying. Some may even take their own lives as they read of children facing incredible hardships at the hands of a global economy gone mad. It will forever change us all. If you do decide to continue reading, then at least do yourself the favor of taking a deep relaxing breath first.
What was surprising is that our eleven year old son decided to have a sleep over in our yard - in December - in a snow cave.
A snow cave? In December? How can this possibly be?
It seems that he had been planning this adventure for weeks with his friends with one minor oversight being that he hadn't informed his parents.
Oh the humanity! The children were actually planning in advance? Is this something we can expect from the next generation? Who taught them!
Normally a snow cave is built as an emergency shelter when you are stranded in the snowy wilderness.
This is insanity. There's just no other way to describe it.
Just seven years later, another economic downward spiral has hit California's wine industry, and small wineries, especially new ones, are working hard to stay afloat. With restaurant sales slowing, distributors shrinking and costs going up, smaller, quality-focused wineries, like those located in the hills surrounding Silicon Valley and up in the Santa Cruz Mountains, are caught in an even bigger economic downturn than the one they survived just a few years ago.
Of course, this could just be the same downturn. Stranger things have happened. The DJIA isn't just lower than its 2007 peak. It is also lower than its 2000 peak. Last I saw it wasn't packed with dotcom stocks either.
George Mason University economics professor Walter Williams said he has little faith the deficits will be contracting anytime soon.
"Unless you believe in Santa Claus or the tooth fairy, you have to ask the question, 'Where's Congress going to get that money from?'" he said of the stimulus. "It's like you have a swimming pool, and you try to increase the height of the shallow end by taking buckets out of the deep end. It's foolhardy."
Let's talk foolhardy. $1.2 trillion dollars per year is roughly $4,000 borrowed for every man, woman, and child in America. At least some of it we're borrowing from China, a direct competitor of ours in the global markets. Here's the really odd part. The typical urban Chinese employee doesn't even make $4,000 in an entire year. Foolhardy does seem like a pretty good word to describe it. I'm reasonably confident that there will be serious unintended consequences.
That being said, all the alternatives look foolhardy. We've dug ourselves quite a hole. Who would have ever thought that borrowing money to fight two wars while simultaneously borrowing money to build ourselves a plethora of new homes would have forced us to borrow money to prop up the failing financial system?
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