Topic: Recession Imminent - page 7. (Read 11410 times)
gross public debt
debt/GDP is now 100%.
read Reinhart and Rogoff as to what this means.
read Reinhart and Rogoff as to what this means.
I have not read the Reinhart and Rogoff book. I have been told that apart from presenting the data in an excellent way they do not really present any new or original economic idea, and are very tame as to why the crisis happens. Can you make a short explanation of why the crisis happened according to their thesis? Im specially interesting in knowing why they think the financial system behaved like they did.
PS: Ludites, that is the ideas that technology is going to "eat us" or/and cocentrate power have been always wrong. The record is out there for anyone to check. Bitcoin is the best example on how technology increases people's choices.
hugolp: i must admit i did not read the entire book; its a tome. i did skim it and read parts i thought were relevant. i've listened to several interview podcasts of both Rogoff (Harvard) and Reinhart(U of Maryland) as well as read several write ups and summaries.
in short, their emphasis is on the debt accumulation of sovereign nations as being an inhibitory factor to growth. they analyzed statistically several nations going back hundreds of years. the book is filled with pretty graphs and loads of numbers. in essence they "averaged" debt/GDP ratios of the nations that got themselves into trouble and came up with 90% as the tipping point for when a nation begins to pay too much in interest as a % of their output. these nations then entire a significant decline.
i think the work is unique and significant. in being primarily an empirical study going back 800 years and looking at 60 countries they in essence went into the forest and examined the trees unlike most economists who never look at the trees but stand back and try to wrap a theoretical model around the forest. of course the skeptics of their work are the same old Keynesian clowns that we know so well who only know how to stimulate or QE. these same clowns take pride in not knowing the details or inner workings of how an economy work but instead have "physics envy". that is they want to believe economics can be precisely described in terms of mathematics and predictable models. anyone who invests and studies markets like i do know this is just ridiculous. markets are inherently unpredictable and unstable given our dependence on the immoral manipulative Fed.
Carmen Reinhart was asked to testify before Congress as to their results and findings back in 2009 i believe. their work has been discussed worldwide and is generally regarded as credible work. their emphasis on sovereign debt as being the root of the problems is right on as far as i'm concerned. they recommend decreasing spending and more fiscally responsible gov't. they have been as pessimistic on where the nation is heading as we are. when they wrote the book i remember the debt/GDP being only around 60% and thinking to myself that it would take many, many years to get to 90%. now we're at 100% or so. so sad.
When you say debt to GDP you mean government debt or all the debt (private + government)?
Im a bit surprised that they saw that 90% is the tipping point because I had seen empirical studies previously where they found that there was not a clear tipping point and the amount of debt (total debt to GDP) was not related to the crisis directly. Ill see if I can get a copy.
debt/GDP is now 100%.
read Reinhart and Rogoff as to what this means.
read Reinhart and Rogoff as to what this means.
I have not read the Reinhart and Rogoff book. I have been told that apart from presenting the data in an excellent way they do not really present any new or original economic idea, and are very tame as to why the crisis happens. Can you make a short explanation of why the crisis happened according to their thesis? Im specially interesting in knowing why they think the financial system behaved like they did.
PS: Ludites, that is the ideas that technology is going to "eat us" or/and cocentrate power have been always wrong. The record is out there for anyone to check. Bitcoin is the best example on how technology increases people's choices.
hugolp: i must admit i did not read the entire book; its a tome. i did skim it and read parts i thought were relevant. i've listened to several interview podcasts of both Rogoff (Harvard) and Reinhart(U of Maryland) as well as read several write ups and summaries.
in short, their emphasis is on the debt accumulation of sovereign nations as being an inhibitory factor to growth. they analyzed statistically several nations going back hundreds of years. the book is filled with pretty graphs and loads of numbers. in essence they "averaged" debt/GDP ratios of the nations that got themselves into trouble and came up with 90% as the tipping point for when a nation begins to pay too much in interest as a % of their output. these nations then entire a significant decline.
i think the work is unique and significant. in being primarily an empirical study going back 800 years and looking at 60 countries they in essence went into the forest and examined the trees unlike most economists who never look at the trees but stand back and try to wrap a theoretical model around the forest. of course the skeptics of their work are the same old Keynesian clowns that we know so well who only know how to stimulate or QE. these same clowns take pride in not knowing the details or inner workings of how an economy work but instead have "physics envy". that is they want to believe economics can be precisely described in terms of mathematics and predictable models. anyone who invests and studies markets like i do know this is just ridiculous. markets are inherently unpredictable and unstable given our dependence on the immoral manipulative Fed.
Carmen Reinhart was asked to testify before Congress as to their results and findings back in 2009 i believe. their work has been discussed worldwide and is generally regarded as credible work. their emphasis on sovereign debt as being the root of the problems is right on as far as i'm concerned. they recommend decreasing spending and more fiscally responsible gov't. they have been as pessimistic on where the nation is heading as we are. when they wrote the book i remember the debt/GDP being only around 60% and thinking to myself that it would take many, many years to get to 90%. now we're at 100% or so. so sad.
debt/GDP is now 100%.
read Reinhart and Rogoff as to what this means.
read Reinhart and Rogoff as to what this means.
I have not read the Reinhart and Rogoff book. I have been told that apart from presenting the data in an excellent way they do not really present any new or original economic idea, and are very tame as to why the crisis happens. Can you make a short explanation of why the crisis happened according to their thesis? Im specially interesting in knowing why they think the financial system behaved like they did.
PS: Ludites, that is the ideas that technology is going to "eat us" or/and cocentrate power have been always wrong. The record is out there for anyone to check. Bitcoin is the best example on how technology increases people's choices.
I believe the QE(s) had a profound effect. Bad money (M2,3,MZM) contracted massively. The stock and housing markets should have collapsed worse than 1929. But the Fed "learned from that mistake" and instead printed money 360%. So instead of collapse, deflation, and ten year recovery, we'll have a long painful collapse, inflation, and no recovery.
QE was just an extension of Keynesian failed economic policies that got us into this mess. it was meant to bailout the speculating elite at the taxpayer expense. now its just gonna be harder during the next crash.
how do the unemployed adapt? larger unemployment checks? oh wait...
As the efficiency of corporations increases, they will need less workers. This reduces total purchase power, so customers will have less money to buy the produced goods and services. More people will reduce their cost of living. If people's needs are not taken care of, they will just steal to survive and some will behave violently. Either resources are distributed voluntary or taken by force.
now that sounds more realistic and not necessarily better for us all.
I believe the QE(s) had a profound effect. Bad money (M2,3,MZM) contracted massively. The stock and housing markets should have collapsed worse than 1929. But the Fed "learned from that mistake" and instead printed money 360%. So instead of collapse, deflation, and ten year recovery, we'll have a long painful collapse, inflation, and no recovery.
todays GDP with its past revisions were appallingly bad. it's amazing our gov't and banking institutions get away with these manipulations.
neither of the QE's worked for the real economy except to line the pockets of the financial elite via bailouts who widened their wealth disparity from the common American by a significant amount.
when will it end?
neither of the QE's worked for the real economy except to line the pockets of the financial elite via bailouts who widened their wealth disparity from the common American by a significant amount.
when will it end?
Our stimulus program wasn't anywhere near as aggresive as the Chinese one. The Chinese are still doing well at the cost of more rapid inflation. Weakness of our democracy in responding to crises. Japan in the 90s all over again. Sad.
Machines pushed workers from agriculture and production to service industries. Now self-service terminals and (increasingly artificial intelligent) robots will push workers out of the service industries at an exponential rate. Many workers have nowhere to go. We just adapt like we have done in the past.
Yes good point. With increased automation you need less and less people to do the work. This causes the concentration of power and capital to move towards an ever smaller group of people. Extrapolating that, at a certain moment, you're either part of the super-rich or you're not needed anymore and have nowhere to go.And all those people that have nowhere to go will have to fend for themselves, maybe start their own sub-economy...
Of course, simple extrapolation is usually wrong.
Quote
I'm sure it will eventually be better for us all.
How are you so sure about that?I also really, really hope that the spoils of technology and automation will eventually mean that everyone can work less, with the machines taking care of the rest. That it will somehow be fairly distributed. But I'm certainly not sure of that. It could also get really messy.
todays GDP with its past revisions were appallingly bad. it's amazing our gov't and banking institutions get away with these manipulations.
neither of the QE's worked for the real economy except to line the pockets of the financial elite via bailouts who widened their wealth disparity from the common American by a significant amount.
when will it end?
neither of the QE's worked for the real economy except to line the pockets of the financial elite via bailouts who widened their wealth disparity from the common American by a significant amount.
when will it end?
It's not all due to banksters. Machines pushed workers from agriculture and production to service industries. Now self-service terminals and (increasingly artificial intelligent) robots will push workers out of the service industries at an exponential rate. Many workers have nowhere to go. We just adapt like we have done in the past. I'm sure it will eventually be better for us all.
how do the unemployed adapt? larger unemployment checks? oh wait...
cypherdoc I know what you mean, but the USA and half of the world is already in a depression. We never got out. GDP is a horrible measure for growth. GDP only measures economic activity, not growth. It does not say anything about the productivity or sustainability of said economic activity. Also, the GDP we all use is a government statistic, so it should be taken with caution.
Hurrah! Someone knows what they are talking about.
The dummies in power just need to start owning up to their responsibilities rather than pointing fingers.
don't hold your breath.
todays GDP with its past revisions were appallingly bad. it's amazing our gov't and banking institutions get away with these manipulations.
neither of the QE's worked for the real economy except to line the pockets of the financial elite via bailouts who widened their wealth disparity from the common American by a significant amount.
when will it end?
neither of the QE's worked for the real economy except to line the pockets of the financial elite via bailouts who widened their wealth disparity from the common American by a significant amount.
when will it end?
It'll end when you come up with a program to stop it and have the political will to do so. The Depression that we're in can be stopped practically overnight, but you must know what is causing the problem and what to do about it. I started a "Economic Recovery Program" thread if you care to join the conversation.
Just keep in mind that the elite of this country want to turn the USA into a mirror image of China (just the bad parts, none of the good).
We've got a LOOOOOONG way to go down. The outer cities will soon look like the 3rd world slums if we continue on the path that we are on - problem is, there is no political opposition to this outcome in our political establishment.
i'm a little more optimistic than that. i think this next downturn/market crash is gonna take out some large actors which needed pruning from the very start. Leh, Mer, BS, CFC, DSL, IMB, WM, WB wasn't nearly enough.
BAC is next and i'm hoping for more like MS. the others will probably make it unfortunately.
BTC is a revolution but it will take time to play out.
todays GDP with its past revisions were appallingly bad. it's amazing our gov't and banking institutions get away with these manipulations.
neither of the QE's worked for the real economy except to line the pockets of the financial elite via bailouts who widened their wealth disparity from the common American by a significant amount.
when will it end?
neither of the QE's worked for the real economy except to line the pockets of the financial elite via bailouts who widened their wealth disparity from the common American by a significant amount.
when will it end?
It'll end when you come up with a program to stop it and have the political will to do so. The Depression that we're in can be stopped practically overnight, but you must know what is causing the problem and what to do about it. I started a "Economic Recovery Program" thread if you care to join the conversation.
Just keep in mind that the elite of this country want to turn the USA into a mirror image of China (just the bad parts, none of the good).
We've got a LOOOOOONG way to go down. The outer cities will soon look like the 3rd world slums if we continue on the path that we are on - problem is, there is no political opposition to this outcome in our political establishment.
There's no doubt in my mind that quantitative easing resulted in nothing more than an increase in speculation (equities up) and also fueled a rise in commodities. For the average Joe, this equated to very little benefit and more likely increased impoverishment via higher gas prices, heating, etc.
We could easily fall back into a recession (as it is defined in economics we are not in a recession or depression right now). Unemployment is 9%+ not counting underemployment and those who have just given up on seeking work. The debt crisis, which has been discussed ad nauseum here. The economy is very fragile.
As we saw in 2008, the financial markets can most definitely bully Congress into action. I'm of the opinion that we take our medicine now before we have to pay the piper even more down the road. The US is NOT insolvent. All this debt talk is political posturing. A debt default would be a self-inflicted wound unlike several European countries, which are truly insolvent and in crisis mode.
Tl;dr - America is in a bad state but it's not time to store up on food and guns just yet. The dummies in power just need to start owning up to their responsibilities rather than pointing fingers.
We could easily fall back into a recession (as it is defined in economics we are not in a recession or depression right now). Unemployment is 9%+ not counting underemployment and those who have just given up on seeking work. The debt crisis, which has been discussed ad nauseum here. The economy is very fragile.
As we saw in 2008, the financial markets can most definitely bully Congress into action. I'm of the opinion that we take our medicine now before we have to pay the piper even more down the road. The US is NOT insolvent. All this debt talk is political posturing. A debt default would be a self-inflicted wound unlike several European countries, which are truly insolvent and in crisis mode.
Tl;dr - America is in a bad state but it's not time to store up on food and guns just yet. The dummies in power just need to start owning up to their responsibilities rather than pointing fingers.
+1
but i have stored up on food and guns just in case. i'm also short.
debt/GDP is now 100%.
read Reinhart and Rogoff as to what this means.
read Reinhart and Rogoff as to what this means.
We've been there before. The last time, if I recall correctly, was WWII. Now there is one major difference between then and now. In WWII just about all of that debt was owed to Americans via war bonds. As we all know, countries like China and Japan own about half of our debt today.
Debt/GDP of 150% is really the end game. No country in history (except Britain a long time ago I THINK) has ever recovered from that much debt.
There's no doubt in my mind that quantitative easing resulted in nothing more than an increase in speculation (equities up) and also fueled a rise in commodities. For the average Joe, this equated to very little benefit and more likely increased impoverishment via higher gas prices, heating, etc.
We could easily fall back into a recession (as it is defined in economics we are not in a recession or depression right now). Unemployment is 9%+ not counting underemployment and those who have just given up on seeking work. The debt crisis, which has been discussed ad nauseum here. The economy is very fragile.
As we saw in 2008, the financial markets can most definitely bully Congress into action. I'm of the opinion that we take our medicine now before we have to pay the piper even more down the road. The US is NOT insolvent. All this debt talk is political posturing. A debt default would be a self-inflicted wound unlike several European countries, which are truly insolvent and in crisis mode.
Tl;dr - America is in a bad state but it's not time to store up on food and guns just yet. The dummies in power just need to start owning up to their responsibilities rather than pointing fingers.
We could easily fall back into a recession (as it is defined in economics we are not in a recession or depression right now). Unemployment is 9%+ not counting underemployment and those who have just given up on seeking work. The debt crisis, which has been discussed ad nauseum here. The economy is very fragile.
As we saw in 2008, the financial markets can most definitely bully Congress into action. I'm of the opinion that we take our medicine now before we have to pay the piper even more down the road. The US is NOT insolvent. All this debt talk is political posturing. A debt default would be a self-inflicted wound unlike several European countries, which are truly insolvent and in crisis mode.
Tl;dr - America is in a bad state but it's not time to store up on food and guns just yet. The dummies in power just need to start owning up to their responsibilities rather than pointing fingers.
debt/GDP is now 100%.
read Reinhart and Rogoff as to what this means.
read Reinhart and Rogoff as to what this means.
cypherdoc I know what you mean, but the USA and half of the world is already in a depression. We never got out. GDP is a horrible measure for growth. GDP only measures economic activity, not growth. It does not say anything about the productivity or sustainability of said economic activity. Also, the GDP we all use is a government statistic, so it should be taken with caution.
i know hugolp. you're perfectly right. but the whole world does look at GDP despite its inherent drawbacks. what was printed today is psychologically devastating and will have an effect. its the rate of change that matters...
not to mention all the revisions to the downside.
Im sure it will have some effect, but I am also convinced that the whole financial world knows that the GDP is a sham so Im not convinced it will have a devastated effect. They already know.
I see all this more as a way to justify QE3 (or however they call it this time). They need to start soon, so they can create a mini-bubble for the elections of 2012 so Obama can have some numbers to point to.
its a crazy world. is it priced in, is it not? do they know, do they not?
all i know is the stock mkt has ramped the last 2.5 yrs on every whiff of extra liquidity injected by the Bernank desperately trying to imply that we were on our way to recovery. i was never convinced as like you said, none of the problems were ever solved, only exacerbated. now we have an extremely unstable, unbalanced situation. i don't see how they continue their iron grip control over markets. its unsustainable.
cypherdoc I know what you mean, but the USA and half of the world is already in a depression. We never got out. GDP is a horrible measure for growth. GDP only measures economic activity, not growth. It does not say anything about the productivity or sustainability of said economic activity. Also, the GDP we all use is a government statistic, so it should be taken with caution.
i know hugolp. you're perfectly right. but the whole world does look at GDP despite its inherent drawbacks. what was printed today is psychologically devastating and will have an effect. its the rate of change that matters...
not to mention all the revisions to the downside.
Im sure it will have some effect, but I am also convinced that the whole financial world knows that the GDP is a sham so Im not convinced it will have a devastated effect. They already know.
I see all this more as a way to justify QE3 (or however they call it this time). They need to start soon, so they can create a mini-bubble for the elections of 2012 so Obama can have some numbers to point to.
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