What is the Motor of the World and why is it stopping?
Let me say from the start, that the world and its financial system are now more interlocked than any other time in history and that the butterfly effect is very real. We have also stepped into the unknown, into a new paradigm and there is no going back!

What is the Motor of the World?
There will be many opinions, some will say China is now the motor of the world, some will say modern computers, some the US, some Oil, some this and some that. The truth is there are nearly 7 Billion opinions and most opinions would be at least partially true, given their particular time frame & perspective.

It would be correct to say that China has been a very significant force in global economics, certainly in the last 10-15 years. Certainly, the impact of computers and related electronics, over the last 50 years, has truly moved the world.

And, over 150 years, the US and Oil have been inseparable, as the driving forces of the global economy. Such a large part of the global economy today can be traced back to the US and it’s partnership with Oil.

But, in back of everything over the last 200 years particularly, has been the steady and un-relenting growth in population that has always been the major Driver or the engine of economic growth, at national and global levels.

However, that motor is stopping!


How did we get here?
Population Growth & Aging -
It took all of history, up to the year 1800 AD, for humanity to reach one Billion people. Baby Boomers had their origins in the population explosion that started during the Great Depression; they were a large part of our 3rd Billion and also part of the 4th Billion.

The population explosion really took off in 1945, it Peaked in 1956, reaching a Total Fertility Rate (TFR) of just under 5 children per woman, then levelled out to 1964, before slowing ever since, to a TFR of about 2.5.
Now, closing in on 7 Billion people, we are starting to exhaust the earth’s capacity to support human species and many others.

A continuation of past growth would have seen the global population increase to 10 Billion by 2050 and 20 Billion by 2150. Clearly, that is not likely to happen, as the TFR approaches the replacement level of 2.1 and the Global population growth continues to slow, the indications are that the global population will actually start to fall, within the next 20-30 years.

Why, because in addition to the already declining Fertility rate, we are now bumping into immovable objects, such as Peak Oil, Climate Change and Peak Food Production & fresh Water restrictions, all driven by the Global population and because most of the largest generation in history, the Baby Boomers, will die within the next 20-30 years.

With a few relatively minor interruptions, the period 1945 to 2005 was the greatest Global economic BOOM in history. In particular, the period 1995-2005 was a Growth Tsunami, driven by the Peak earning and spending capacity of US & other Global Baby Boomer consumers and the Peak Supply of Cheap & easily accessible Energy (Oil).

In addition, around the same time, technology drove massive gains in productivity; financial leverage multiplied tremendously from the historical 10/1 to 30/1 & above and interest rates in the US remained artificially low, for far too long, following the events of 9/11.
This was a perfect storm, for making money.

Link (Dr. Albert A. Bartlett - Arithmetic, Population, and Energy) –
http://www.youtube.com/view_play_list?p=9B70AC68E1D2AA54&search_query=Dr.+Albert+Bartlett%3A+Arithmetic%2C+Population+and+Energy+Parts+1-8
Link (The Crash Course – Chris Martenson) -
http://www.chrismartenson.com/crashcourse

How did we get here? (Cont)
Peak Oil -
To make life more interesting, our number one Global Energy source (Oil) Oil also went from $10 a barrel, to nearly $150, in just a few short years. Whilst there may have been some external influences, the main reason for this huge increase was Supply & Demand.

And, while there are arguments for Abiotic Oil, Coal & Gas, there are drawbacks for these "replacements" and in some cases the source may not even exist (Abiotic), whilst other sources may actually create more problems than they solve, including that the future EROEI (Energy Return On Energy Invested) will continue to shrink and Energy costs (as a % of the National & Global Economy) continue to increase, both of which lessen the likelihood of the Economy staying in a positive growth mode.

Oil prices then retreated to levels lower than $40 a barrel, in expectation of a substantial fall in oil usage, arising from a slowing economy and the Oil price now seeks a new balance, between declining Oil production and the level of Economic Activity, with prices fluctuating in the $70-$80 range.

Transport, Plastics, Medicines, Chemicals, the list is almost endless, that are dependent on oil, no wonder the US has had such a long lasting love affair.

When historians look back, they really will say, "did they just burn all that oil".

Link – (The Inevitable Peaking of World Oil Production by Robert L. Hirsch)
http://www.netl.doe.gov/publications/others/pdf/oil_peaking_netl.pdf
Link (Dr. Albert A. Bartlett - Arithmetic, Population, and Energy) –
http://www.youtube.com/view_play_list?p=9B70AC68E1D2AA54&search_query=Dr.+Albert+Bartlett%3A+Arithmetic%2C+Population+and+Energy+Parts+1-8
Link (The Crash Course – Chris Martenson) -
http://www.chrismartenson.com/crashcourse
Link (The Converging Crisis Ecology, Energy & Economics by Paul Cehurka) -
http://www.paulchefurka.ca/ConvergingCrisis.pdf
Link (PEAK OIL: The Eventual End of the Oil Age by Jonah J. Ralston -
https://www.msu.edu/~ralsto11/PeakOil.pdf
Other Links -
http://tonto.eia.doe.gov/cfapps/ipdbproject/iedindex3.cfm?tid=5&pid=53&aid=1&cid=&syid=1990&eyid=2009&unit=TBPD

Climate Change -
Climate is our greatest asset, but Climate changes are also starting to impact us now, as can be seen in the lack of water in some parts of the planet, increased storm severity in others and the melting of Glaciers and possibly the Polar Ice Caps.

Despite recent furores about some scientists, there is general agreement amongst the great bulk of scientists That Climate Change is indeed happening & to some extent it is “Caused by Man”, which begs the question, do we have the right to play Russian Roulette, with the survival of future generations and indeed the human species.

We have already passed major climate tipping points, the planets climate is set to get very difficult for humanity, including a possible new ice age. Sure, we can take the chance that the scientists have it wrong, but then if their correct, this could be a massive Extinction Event.
NOAA Link –
http://www.climate.gov/#climateWatch
NOAA Mauna Loa CO2 Link –
http://www.esrl.noaa.gov/gmd/ccgg/trends/
NASA Link –
http://www.giss.nasa.gov/research/briefs/



Peak Food Production –
With the total global population still bursting at the seams, for the time being, we must make sure everything possible is done to ensure food production is provided for the increasing population, right?

Wrong, instead we are diverting large parts of agricultural production away from food production and into the production of fuels, as a replacement for Oil.

Even if we wanted to boost Food production, Climate Change is and will continue to, raise serious questions on our present and future capacity, to deliver enough food, to keep the surging global population fed.  

Where are we now and where to next?
Whilst the sub-prime debacle in the US has its own distinct origins, including NINJA mortgages (Greed), it has highlighted falling Real Estate values and New Housing starts, which has separate Demographic origins and had been declining for some time.

In economic terms, the primary driver of the real global economy is consumer demand. The largest demand driver is the 45-55 age group, primarily in the USA, due their large earning and spending capacity.

Demographic levels are already being re-shaped, as nearly two Billion Baby Boomers have commenced a 20 year transition from being big spenders, to big Retirement savers, to thrifty Retirees, before leaving us forever, in increasing numbers.

This massive aging of the global population is changing the dynamics of the world economy, with the bulk of Boomer wealth likely to pass on before they do and as the generations following behind the Baby Boomers, are relatively less in numbers.

In particular, Real Estate and New Housing markets, particularly in the US & Europe have already fallen and continue to do so, arising from a lowering in demand, led by thrifty and retiring Boomers.
Link to Aging Population issues -
http://ezinearticles.com/?The-Economys-Greatest-Depression-Downturn-Ever-Is-Now-Just-A-Few-Years-Away&id=65824

As if housing issues were not enough, the aging process will also introduce some $50 Trillion in unfunded Health and Social Security costs, in the USA.

So, in the short to medium term, we will see:
1) Constraints, both in the Supply of & Demand for, Oil.
2) A massive de-leveraging of financial markets, including some $800 Trillion in the Derivatives markets.
3) Government Budget deficits are set to continue to expand, due to the Global Debt crisis.
4) Massive increases Health and Social Security Costs, again expanding deficits.
5) Problems arising from Climate Change and Food production.

You can guess what awaits with Taxes, in the near future, to pay for past indulgences. This will happen, irrespective of what side of politics is in power.

And, with Debt levels already at historical highs, we will see past fixes, either not able to be used or possibly set to cause more harm, than help.

Now, we are just past the Peak of a once in history Population Growth Mega Cycle.
Now, the reality looms of a slowing economic future, as reflected in stock markets and oil prices, next the Economic Growth Fairy dies.

Now, the perfect storm will reappear, this time as a Cat 5 in financial demolition!

What Futures await?
The very basis of modern life will be shaken, the magnitude of the quake, will be 9.9.
Whether we arrived at this situation, by accident or design, we are never likely to know, although events suggest a mixture of both, seems probable.
So, the design has now been set in motion and we now enter the 2nd quarter, of the highest stakes game, ever played!

Unlike the Great Depression, we are now truly between a rock and a really hard place.

The truth is, there is no magical, Hollywood, easy fix.
The truth is, there is no pot of gold at the end of the Kansas rainbow.
The truth is, we are in DEAP Sh!t –Debt (Global) –
Debt is going into unknown territory, in many countries, heading north towards 100% of GDP & beyond!
Energy Decline (Global) – All the easy to get, cheap Energy has already gone, what’s left is the other side of the Hubert’s Curve.
Aging Population (Global) – The Employment Participation ratio has commenced declining, as Boomers first retire, then die, 2 Billion of them.
Population Decline (Global) – the rate of growth is slowing & the total will actually start to decline, within 20-30 years.

Had corrective decisions been made earlier, then it may have been possible to reduce some of the worst side effects, regrettably, that did not happen.

Regrettably, if we opt for a better now, then future generations will pay for our mistakes and indulgence.
That reasoning is not acceptable and can not be allowed to succeed!
As we look to the future, we need to look thru different eyes, thru different thought processes.
The days of Smoke & Mirrors, of Shock & Awe, of the Desire to Acquire & Retain Power, of Self interest, at the expense of societal interest, must end.

Can we make those changes, the answer is YES!
Will the required changes be made? Now there, is a $64 Trillion question!

The answers will come on these boards and others, in other forums, in politics, in business and the answers will need to come quickly.    

There are discussions that must take place and Mindsets that must change; the time has come to look beyond borders and elections.

Good luck & watch the Debt!

Put your THOUGHTS & REASONING on the line and we will see what history unfolds?

Ten Reasons Why This Has Been a Weak Recovery

Comstock Partners' latest weekly note called "Why it’s Still A Secular Bear Market" is in line with my view of the economy and market. They see the core issue as a longer-term deleveraging that cannot be solved by fiscal and monetary stimulus. I have said that this likely means lower inflation-adjusted stock prices when the stimulus-induced recovery fades. This is a view they also hold.

However, they also provide ten specific reasons why we should see the recovery as already under attack.

1. While May retail sales were up 8% from the early 2009 low they are still 4.4% below the peak reached 2 1/2 years ago in November 2007. By way of comparison, over the last 43 years retail sales have seldom declined at all, even in recessions.

2. May industrial production (IP) was 8.1%% over its June 2009 trough, but still 7.9% below the late 2007 peak. At its current level, IP is still where it was over 10 years ago in early 2000.. Never since the 1930’s depression has IP failed to exceed a level attained 10 years earlier.

3. New orders for durable goods in April were up 21% from the low of March 2009, but still 22% below the top in December 2007. In fact new orders are at the same level as in late 1999, over ten years ago.

4. Initial weekly unemployment claims steadily declined from 651,000 in March 2009 to 477,000 by Mid-November, but have been range-bound with no improvement in the last 6 ½ months. Furthermore the current number of claims is still in recession territory.

5. April new home sales were up 14.8% from a month earlier and are up a seemingly robust 48% since the low. However, the current number is still a whopping 64% below the 2005 monthly peak. Prior to the current recession the last time new home sales were this low was in February 1991.

6. Existing home sales in April were up 27% from the low in late 2008, but still 20% below the peak in late 2005. We also note that both new and existing home sales were boosted by the homebuyers tax credit that has already expired, and that the housing market has weakened considerably since that time.

7. May vehicle sales of 11.6 million annualized were up 14% over the prior month and 26% from the trough. However, this remains far below the annual average of about 16 million vehicles in the decade starting 1997.

8. Personal income for April was up 3.2% from the May 2008 trough with major help from government transfer payments, but is still 0.8% below the peak about two years earlier. We note that prior to the current cycle, personal income was never down year-over-year in any month going back to 1960, and the current figure of plus 2.5% is still at recessionary levels. .

9. Payroll employment in May increased 431,000, but the vast majority of these were government census jobs. Private employment was up only 41,000, leaving the total number of employed still 7.4 million jobs below the pre-recessionary peak. In fact, on a point-to-point basis no new jobs have been added since January 2000.

10. March consumer credit outstanding was 3.4% below a year earlier, the 13th consecutive monthly decline. Prior to the current recession, consumer credit had never been down from a year earlier in any month since the waning days of World War II.

Looks like a pretty good list to me. Going forward I would look most toward job and income growth because consumption growth has outstripped income growth during this nascent recovery. This divergence is unsustainable unless we see greater job and income gains in the second half of the year due to increased hiring. My hope is that companies will decide to invest in rebuilding inventories and service capability in anticipation of further economic gains. My fear is that the recovery is already petering out for many of the reasons Comstock has provided, and that job growth in the second half of the year will be muted as a result. My expectation is that a greater percentage of firms will miss earnings forecasts as the recovery weakens. This will pressure share prices.
Link -
http://seekingalpha.com/article/210679-ten-reasons-why-this-has-been-a-weak-recovery?source=email
===========
With some indicators still lagging 10-20 years, even after massive US government & Fed Reserve interventions, I suggest that current share prices are unsustainable & will collapse later this year, October/November being likely timeframes!

The following TED Spread graph & article confirms that stress levels are again, on the rise.

http://seekingalpha.com/article/210573-ted-spread-creeping-steadily-higher?source=email
http://panzner.typepad.com/.a/6a00d83451591e69e2013484722a9b970c-pi

Greenspan Says U.S. May Soon Reach Borrowing Limit

June 18 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said the U.S. may soon face higher borrowing costs on its swelling debt and called for a “tectonic shift” in fiscal policy to contain borrowing.

“Perceptions of a large U.S. borrowing capacity are misleading,” and current long-term bond yields are masking America’s debt challenge, Greenspan wrote in an opinion piece posted on the Wall Street Journal’s website. “Long-term rate increases can emerge with unexpected suddenness,” such as the 4 percentage point surge over four months in 1979-80, he said.

Greenspan rebutted “misplaced” concern that reducing the deficit would put the economic recovery in danger, entering a debate among global policy makers about how quickly to exit from stimulus measures adopted during the financial crisis. U.S. Treasury Secretary Timothy F. Geithner said this month that while fiscal tightening is needed over the “medium term,” governments must reinforce the recovery in private demand.

“The United States, and most of the rest of the developed world, is in need of a tectonic shift in fiscal policy,” said Greenspan, 84, who served at the Fed’s helm from 1987 to 2006. “Incremental change will not be adequate.”

Rein in Debt

Pressure on capital markets would also be eased if the U.S. government “contained” the sale of Treasuries, he wrote.

“The federal government is currently saddled with commitments for the next three decades that it will be unable to meet in real terms,” Greenspan said. The “very severity of the pending crisis and growing analogies to Greece set the stage for a serious response.”

Yields on U.S. Treasuries have benefitted from safe-haven demand in recent months because of the European debt crisis, a circumstance that may not last, said Greenspan, who now consults for clients including Pacific Investment Management Co., which has the world’s biggest bond fund.

Benchmark 10-year Treasury notes yielded 3.20 percent as of 12:11 p.m. in Tokyo today, down from the year’s high of 4.01 percent in April and compared with as high as 5.32 percent in June 2007, before the crisis began. Yields have remained low “despite the surge in federal debt to the public during the past 18 months to $8.6 trillion from $5.5 trillion,” Greenspan said.

The swing in demand toward American government debt and away from euro-denominated bonds is “temporary,” he said.

“Our economy cannot afford a major mistake in underestimating the corrosive momentum of this fiscal crisis,” Greenspan said. “Our policy focus must therefore err significantly on the side of restraint.”
Link -
http://www.bloomberg.com/apps/news?pid=20601010&sid=aga_wkgMEfDo
Two observations -
1) The USA can not continue to borrow at the $1.5-2.0 Trillion per year that has been suggested, there is not enough in the market to allow  it!

2) Greenspan is not correct, the US economy WILL TANK, as the Government & FED subsidies are withdrawn!

Looks like a pretty good list to me. Going forward I would look most toward job and income growth because consumption growth has outstripped income growth
--------------------------

Heard a good point - when we look around our homes we are already In Surplus. Abundance Surplus of material goods and because of that we don't (& wont) NEED to buy more...
:o  we could be the last  a generation of product waste !

One thing that I can't fathom, is why Western govts have been so reluctant to restore a semblance of progressivity (and proper regulation) into their tax systems...so as to reverse the exponentialy-regressive trends of the past few decades...

Why focus on increasing govt deficits and debts - and imposing counter-productive austerity measures onto the under-privileged majority, when there is plenty of revenue to be clawed-back from the few idle uber-rich who are disproportionately responsible for precipitating the GFC!?

Equitist wrote on Jun 19^th, 2010 at 8:44pm:

Why focus on increasing govt deficits and debts - and imposing counter-productive austerity measures onto the under-privileged majority, when there is plenty of revenue to be clawed-back from the few idle uber-rich who are disproportionately responsible for precipitating the GFC!? Money is power, power to protect your interests. Thats why the masses have been used to bail out the few. Privtise profit, socialise losses

Two good reads;  (*Eventho I heard Sauls speech on ABC Big Ideas...)

1 x What Is Living and What Is Dead in Social Democracy?

http://www.nybooks.com/articles/archives/2009/dec/17/what-is-living-and-what-is-dead-in-social-democrac/


2x John Ralston Saul: Freedom and Globalisation

08 Jun 2010, 11:00
Longtime outspoken critic of globalism and what he calls the "rationalist elite", John Ralston Saul argues it's time for a big shift in our political and corporate thinking. Despite the promise of a shiny new world order of globalism for the past ...

Q1) What is the most important thing is Politics?

A1) Ensuring the best long term interests of the Nation & the Planet!

Q2) What are the issues that will be the most important in Politics, over the next 20-30 years & beyond?

A2) For the answer here, we need to look further than the usual "Party political language", we need to look at the real substance of what will affect human life, in future years.

To gain some appreciation of what those issues will be I recommend you view the following -

Peak Oil & The Party's Over - Richard Heinberg – Part 1 of 5
http://www.youtube.com/watch?v=0Xl3J4Kpy88

Peak Oil & The Party's Over - Richard Heinberg – Part 2 of 5
http://www.youtube.com/watch?v=pf08nF2_INE

Peak Oil & The Party's Over - Richard Heinberg – Part 3 of 5
http://www.youtube.com/watch?v=qk0arwiw6X0

Peak Oil & The Party's Over - Richard Heinberg – Part 4 of 5
http://www.youtube.com/watch?v=qFRPBFSWHgA

Peak Oil & The Party's Over - Richard Heinberg – Part 5 of 5
http://www.youtube.com/watch?v=L1XwXXSlH5A

Dr. Albert A. Bartlett - Arithmetic, Population, and Energy
http://www.youtube.com/view_play_list?p=9B70AC68E1D2AA54&search_query=Dr.+Albert+Bartlett%3A+Arithmetic%2C+Population+and+Energy+Parts+1-8

The Crash Course – Chris Martenson
http://www.chrismartenson.com/crashcourse

Aging & the Economy - Daniel Arnold
http://ezinearticles.com/?The-Economys-Greatest-Depression-Downturn-Ever-Is-Now-Just-A-Few-Years-Away&id=65824

If you want to know what really moves Politics & the Economy, do yourself & all of us a favor, have a look, YOUR VIEWS WILL CHANGE!  

I have disproved perception_now's Peak Oil presentation on numerous occasions

Its based on a theoretical debate of "If a tree fell in the forest and nobody is around to hear it then did it fall"

perception_now believes it has not fallen.

Believe in his lies if you wish - but the facts are inconclusive.

Maqqa wrote on Jun 20^th, 2010 at 12:23pm:

I have disproved perception_now's Peak Oil presentation on numerous occasions Its based on a theoretical debate of "If a tree fell in the forest and nobody is around to hear it then did it fall" perception_now believes it has not fallen. Believe in his lies if you wish - but the facts are inconclusive.

What's with them weasel words, Maqqa!?

Maqqa wrote on Jun 20^th, 2010 at 12:23pm:

I have disproved perception_now's Peak Oil presentation on numerous occasions Its based on a theoretical debate of "If a tree fell in the forest and nobody is around to hear it then did it fall" perception_now believes it has not fallen. Believe in his lies if you wish - but the facts are inconclusive.

For those at OZPolitic, maqqa is the Joker of Yahoo, she seldom quotes facts and is purely into Political spin!

I'm sure some will get something from her comments?

But, before you firm your opinions, look at the articles, video's etc and weigh the facts for yourselves!

Quote:

For those at OZPolitic, maqqa is the Joker of Yahoo, she seldom quotes facts and is purely into Political spin

Well she'd better lift her game because longweekend and Iamtheman are outdoing her in the joke and lack of fact department.

Talk of Double-Dip No Longer Crazy?

Just a month or two ago, opinions that the serious recession that ended in the last quarter of last year will return in a double-dip later this year were blown off as crazy.

However, such opinions are now gathering credibility as prominent names join the chorus of worriers.

I am talking for instance about hedge-fund manager George Soros, who made his billions by being ahead of important trend changes in both directions for many decades.

Like many, Soros is particularly concerned about the ‘austerity’ measures being enacted by governments around the world, including in the U.S., to tackle record budget deficits.

Soros said two weeks ago,

We have just entered Act II . . . . The collapse of the financial system as we know it is real and the crisis is far from over . . . 1930’s style budget deficits are essential as counter-cyclical policies [to pull economies out of recession], yet many governments are now moving to reduce their budget deficits under pressure from financial markets. This is liable to push the global economy into a double-dip.

This week he said it is “inevitable” that Europe will be back in recession by next year.

Paul Krugman, winner of the Nobel Prize for Economics in 2008, who provided a timely warning in advance of the 2008-2009 recession, warned of a next recession in a New York Times column this week. Krugman wrote,

Suddenly creating jobs is out, condemning deficits is in. Many economists, myself included, regard this turn to austerity as a huge mistake. It raises memories of 1937, when FDR’s premature attempt to balance the budget plunged the recovering economy back into severe recession. . . . . Economic policy around the world has taken a major wrong turn and the odds of a prolonged economic slump are rising by the day.

Equally astute Warren Buffett says a “terrible problem” lies just ahead for municipal bonds, that with plunged real estate values and high unemployment, too many cities and towns are just not able to collect enough in taxes and fees to handle expenditures and also make payments on their bonds.

Meredith Whitney, a prominent bank analyst at Oppenheimer in 2007, became famous with her accurate bearish call on Citigroup in October, 2007, and even before the problems that befell Merrill Lynch and Lehman Brothers was quoted as saying, “It feels like I’m in the epicenter of biggest financial crisis in history.”

Now heading her own research firm, Whitney said in a recent interview,

I have the strongest conviction that there’s going to be a double-dip in housing.

And apparently sharing Warren Buffett’s opinion, in the same interview she said,

The issue of the municipal bond market is one that’s very scary to me because you have so many states with under-funded budgets – underfunded by two and a half times the level they were underfunded after the dot-com bubble burst. . . . People worry about the federal budget deficit, but the state budgets are more urgent since 49 states are constitutionally required to have balanced budgets.

Recent economic reports seem to underscore their worries.

There was the very disappointing employment report for May, and the report that retail sales unexpectedly fell 1.2% in May. Those are two critical areas for the recovery, jobs and consumer spending.

I am still of the opinion that the housing industry is of more importance to the recovery, as it creates so many jobs in other areas of the economy. And the early returns regarding housing activity in May and June are certainly not encouraging.

Mortgage applications are down a huge 40% since the home-buyer rebate plan expired in April. It was reported this week that new housing starts plunged 10% in May, with single family home starts plummeting 17%. And permits for future single family home starts fell 10%.
Link -
http://seekingalpha.com/article/210853-talk-of-double-dip-no-longer-crazy?source=email

Well she'd better lift her game because longweekend and Iamtheman are outdoing her in the joke and lack of fact department.
__________________

Skippy, what 'facts' would you me to provide mate?

iamtheman012 wrote on Jun 21^st, 2010 at 5:15pm:

Well she'd better lift her game because longweekend and Iamtheman are outdoing her in the joke and lack of fact department. __________________ Skippy, what 'facts' would you me to provide mate?

iam, it seems you may have lost a little "want"?

iam, it seems you may have lost a little "want"?
___________________

No, i think i lost some 'like'.

:)

Is Global Economic Growth Slowing Already?

Compared to past economic recoveries, this one has not yet kicked into high gear. Now, I’m starting to wonder if it will. The U.S. economy is growing, but we need growth overseas if we are going to maintain our growth. Unfortunately, Europe is very sluggish and that is not likely to change. Some of the emerging markets such as China and India are still growing, but China’s efforts to dampen inflation will almost certainly slow its economy too. As you can see from this chart from UBS, we have barely gotten going and global growth is already showing signs of slowing down:

http://static.seekingalpha.com/uploads/2010/6/20/saupload_ubs_ritholtz_recession_recovery.png

In this chart from Thomas Berner, Chief U.S. Economist, at UBS, we can see how sluggish things are around the world.

The blue lines show the actual gross domestic product for the world. The steady gold line seems to refer to an average growth rate over time. During a recession, actual GDP falls below the line, but then in a recovery it shoots above the line. In the past, growth rates for the world’s economy frequently hit 5%, 6% or 7% per year for a while after a recession ended. Not this time.

There are many factors to which I could point, but I think uncertainty over the future is the number one retardant.
Link -
http://seekingalpha.com/article/210898-is-global-economic-growth-slowing-already?source=email
============
There are reasons, why things are not behaving the same, this time -
Debt increasing Globally
Enegry Declining Gloablly
Aging Population, set to anchor growth, now.
Population total, set to Decline and anchor Growth, in the longer term.

Btw, anyone who wonders what Economics has to do with Politics and both have to do with the future, you may like, want or need a discussion with Bill Clinton!

Money, Faith, Austerity, And a Failed System

If the price of gold were not soaring, baffling the likes of Fed Chief Ben Bernanke who seems to think it is just an ordinary commodity and a monetary relic, it might be a little more difficult to explain to economists like Paul Krugman why there is a big move toward austerity now sweeping the globe. But, it is, so it’s not.

Despite the best intentions of the dismal set that has cajoled governments into printing trillions of dollars in recent years in an ineffectual attempt to sustain that which is unsustainable, a lot of people are now more scared of a currency collapse or some other systemic breakdown of a failed system than they are of breadlines. Sadly, this reality seems beyond the grasp of some economists, the most recent example being this commentary where the author doesn’t even know why no one will explain it to them.

Press German officials to explain why they need to impose austerity on a depressed economy, and you get rationales that don’t add up. Point this out, and they come up with different rationales, which also don’t add up. Arguing with German deficit hawks feels more than a bit like arguing with U.S. Iraq hawks back in 2002: They know what they want to do, and every time you refute one argument, they just come up with another.

Here’s roughly how the typical conversation goes (this is based both on my own experience and that of other American economists):

German hawk: “We must cut deficits immediately, because we have to deal with the fiscal burden of an aging population.”

Ugly American: “But that doesn’t make sense. Even if you manage to save 80 billion euros — which you won’t, because the budget cuts will hurt your economy and reduce revenues — the interest payments on that much debt would be less than a tenth of a percent of your G.D.P. So the austerity you’re pursuing will threaten economic recovery while doing next to nothing to improve your long-run budget position.”

Only those who possesses an unwavering faith in paper money and its central bank stewards fail to see that people are losing faith in the current system and figure that maybe we ought to dial back on the money printing and borrowing because the only real good it’s done is to enrich those bankers who survived. The system is failing and people are realizing this – that’s why they’re buying gold and for a politician to come out and say this would only make the situation worse in the near-term. It’s really not that complicated.
Link -
http://seekingalpha.com/article/210886-money-faith-austerity-and-a-failed-system?source=email
====
"An ineffectual attempt to sustain that which is unsustainable", is like continuing the Exponential Economic Fairy story, by trying to maintain the status quo, knowing that it must fail.

Attracted to the Economic Dark Side

We are where we are. Growing debt. Costs of mandatory social programs is almost equal to government income – and growing rapidly.

http://static.seekingalpha.com/uploads/2010/6/19/226469-127695438303018-Steven-Hansen.jpg
Fiscal control cannot be gained without major revamping of these social programs.

http://static.seekingalpha.com/uploads/2010/6/19/226469-127695444698036-Steven-Hansen.jpg
The above graph courtesy of David A. Rosenberg, Chief Economist & Strategist, Gluskin Sheff shows the percentage of the budget being consumed by mandatory expenditures.

Even if the budget could be balanced, the government would need to pull over $1 trillion per year or 10% out of the economy next year either through taxes or program cuts. This is a recipe for depression. It would initiate a reinforcing downward spiral – less economic activity, government spending reduced to match, economic activity down because of less government spending, another reduction in government spending, etc. And this is not the 1930's and 1940's where a huge potential could be unleashed to grow the economy out of debt.

We are in the no win scenario. Logic tells you that the economic future is grim based on the economic rules we know and understand.
Link -
http://seekingalpha.com/article/210875-attracted-to-the-economic-dark-side?source=email
======
I will leave you to read the balance of the article, which is quite lengthy.

Video including ex BOE panelist, Blanchflower Says U.K. Double Dip `Absolutely Certain'


http://noir.bloomberg.com/avp/avp.htm?N=av&T=Blanchflower%20Says%20U.K.%20Double%20Dip%20%60Absolutely%20Certain'&clipSRC=mms://media2.bloomberg.com/cache/v20YwOlQ78Gs.asf

============
They are talking about the cost of "AUST-ERITY" and the likelihood of that pushing the UK economy into a Double dip Recession and worse.

There is a fair chance that is also what the "Abbott in the Monastery" and the ideologues in the Conservative Liberal Party, would also do, if elected?

Instead of taking easy decisions and reducing the real disposable income of the Public, governments need to reassess the entire structure of Government, of Services, of Revenue & Expenditure AND CHANGE, in a manner that will improve real & efficient government, without gutting the economy.

In OZ, I would start with deleting one entire arm of government, the Local Councils and then move onto the Tax system,  Quangoes and the many other non effective systems of government.

US could be broke in 15 years: economist

One of the world's most eminent experts on public finance says the west is headed for a fiscal crisis of the state, and the United States will be broke within 15 years unless it addresses its unsustainable budget deficit.

Professor Alan J. Auerbach from the University of California, Berkeley, who is director of the Burch Centre for Tax Policy and Public Finance, says western nations must raise taxes and cut spending to meet the huge financial burden of an ageing population.

Yet to do so now risks destabilising the global recovery.

Professor Auerbach is in Sydney for a conference hosted by the Australian School of Taxation and the Institute of Chartered Accountants.

He says G20 leaders face an unenviable task as they prepare to meet in Canada.

"They have a bit of a high wire act going on here. The problem is that the economies in the US and Europe are so weak as the result of the recession and there's a general view of economists that withdrawing stimulus could be dangerous," he said.

"On the other hand, the events in Greece and Spain and other countries have made forcefully evident the need for these countries, as well as countries like the United States and the G20, to make significant fiscal adjustments in the near future.

"The best of all possible worlds would be to maintain fiscal stimulus in the short run while simultaneously making credible policy actions now that will make fiscal adjustments occur in the not-too-distant future."

However, Professor Auerbach says those two actions are contradictory and impossible to implement simultaneously.

"That's impossible and that's the problem. On the one hand you have some people in Europe, for example in Germany, moving toward immediate fiscal consolidation," he explained.

"You have the United States not doing so and frankly, a country that takes only expansionary fiscal actions now and says it will do something about its long-term problems some time in the future, is not very credible in that claim.

He says one problem is the unpopularity of any US moves to reduce its deficit.

"The Obama Administration is bending to political reality in the United States which, at the moment, is unaccepting of the need for fiscal consolidation," he added.

He also describes as "pretty absurd" the position of the 'Tea Party' movement, which is strenuously resisting any potential tax increases.


Broke in 15 years

Professor Auerbach's research over recent years has highlighted how increasingly unsustainable the United States' public finances have become.

"The United States, at the Federal level, has raised a fairly stable share of GDP and taxation, typically around 18 or 19 per cent. On the other hand spending has been rising very steadily and it's projected to continue rising, to a large extent because of our expenditures on what we call entitlement programs - large government transfer programs for old-age pensions and for medical care," he explained.

"These costs are rising in the United States. They're rising in other developed countries as well, both because of the rising cost of medical care and the increasing share of the population that's elderly. And these costs will continue to grow even with measures that the US and other countries are undertaking to adjust these."

He says that raises a serious prospect that the world is headed for a fiscal crisis that extends beyond Greece, Spain and the other heavily indebted European nations.

"Something has to happen to alleviate that risk and may happen but it'll require a lot of courage from politicians," he warned.

"Under current projections, the United States debt to GDP ratio will reach an all time high within the next 15 years. That is it'll be higher than the debt as a share of national income that we left World War II with.

"Unlike, in 1946 though, when we didn't have very significant fiscal commitments and were able to start reducing our debt very rapidly, the US in 15 years will be in no position to stop accumulating debt.

"So we're heading toward an unsustainable level of debt in 15 years, capital markets presumably will look ahead and understand that and not let us get to the end of that 15 year period."

In the worst scenario, he says America could face the same problems that Greece is experiencing where capital markets basically go on strike and refuse to fund the debt.

"We do not have 15 years. The capital markets will react sooner. The US may have a little bit more time than another country in a similar situation as long as the dollar is the currency that people hold and that investors flee to when there's general turmoil in financial markets," he cautioned.

"The US will have a little bit more flexibility and time to respond but this time is not limitless and we will have to respond in a fairly short number of years."

He does not think the US is alone. When asked what other countries may be in a similar fiscal position, Professor Auerbach responded: "Virtually all the developed countries, certainly in Europe."
Link -
http://www.abc.net.au/news/stories/2010/06/22/2933526.htm
============
The prof is right, but he is also wrong.

The USA & Global economy is heading for trouble, but it won't take 15 years to get here!

Niall Ferguson: U.S. Fiscal Crisis Will Likely Occur Within 2 Years

Interesting day Monday. I wanted to start with a video from the highly accomplished Niall Ferguson. This is a must watch so please take the time to watch it in its entirety:

Video link ..

My Take:

This was a great video on the reality of what we are facing as a nation. The best take-home point from this is where Niall brilliantly discusses the bond market and our rapidly increasing debt loads.

The perception of the bulls is that low rates and easy money will eventually get us out of this mess. What Niall counters with here is a mathematical reality check in regards to the sheer magnitude of the amount of debt we are issuing and the cost to service it. The USA's ability to service our Treasury debt is mathematically impossible if we continue to sell $120 billion in treasuries every other week.
As Niall describes, when the debt loads become so large, it only takes a small increase in rates to create a fiscal crisis because you become overwhelmed by the huge amount of debt issuances that you need to service. For example: Increasing interest rates by 2% on bonds with the overwhelming amount of debt we have today might be the equivalent of taking rates to 8-10% in the early 1980's when it comes to the percentage of GDP it will cost us to service the debt (pay interest on the debt).

The bond market will eventually call the Fed out by taking rates higher as they begin to realize that our GDP will simply not be large enough to service the debt.

Will the PIIGS and the rest of Europe get called out before us? Sure, but eventually we will end up in the same place; our situation is no better. We get a pass for now because we are still considered to be the safest haven left. Or as I like to say: The best of the worst!

This is all unsustainable and I think the reality is beginning to set in that we cannot continue to spend like this. Anyone that has a job and pays bills understands that you cannot spend more than you bring in every month over a long period of time without going bankrupt.

The problem we have here is the political will is not there to make painful decisions we need to make in order to clean up our fiscal house. It's going to take a fiscal crisis similar to Greece in order to finally force the government to clean up its balance sheet..

The fact that Niall predicts this will likely happen within 2 years is a pretty alarming statement.
The Bottom Line

We saw a nasty reversal in the markets Monday. I think the market realized by the end of the day that the Yuan devaluation was a big nothing-burger. The markets tried to pump the news and failed miserably.

Tuesday's action should be interesting. We have the G-20 coming up here soon and Germany seems to be pumping fiscal restraint, whereas we are still promoting throwing money out of helicopters. It will be interesting to see how this plays out.

Folks: The jig is about up. The Ponzi scheme is on its last legs. The borrowing path we have chosen is proving to be mathematically unsustainable. Greece went down via the same route. England and Japan are right behind them.

The question is now WHEN, not IF.

When accomplished people like Niall Ferguson are confident enough in their thesis to put time lines on the collapse, it's time to be afraid.
Link -
http://seekingalpha.com/article/211202-niall-ferguson-u-s-fiscal-crisis-will-likely-occur-within-2-years?source=email
============
As Niall says in the video, the USA is set to be paying around 28% of its annual outlays, in interest, by 2014.

And, huge deficits are currently being "planned" in the USA, for the years thru to 2020, at least

Clearly, the time has come to acknowledge that exponential polarisation of income, wealth, opportunity and power is what inevitably precipitates socio-economic and environmental disasters - and to reverse the dangerous trends of REGRESSIVE and inequitable: taxation and evasion/avoidance, WEALTHfare and sanctioning exclusive foreign tax havens at the expense of the majority...

Unfortunately, the restorative advantages of PROGRESSIVE taxation have been largely ignored by post-GFC budget reformists to date...

Maqqa wrote on Jun 20^th, 2010 at 12:23pm:

I have disproved perception_now's Peak Oil presentation on numerous occasions Its based on a theoretical debate of "If a tree fell in the forest and nobody is around to hear it then did it fall" perception_now believes it has not fallen. Believe in his lies if you wish - but the facts are inconclusive.

link me.....  ;)

NOTHING GROWS FOREVER

BASIC BIOLOGY!

LOOK AT THE POPULATION CURVE!!

BatteriesNotIncluded wrote on Jun 23^rd, 2010 at 2:22pm:

Maqqa wrote on Jun 20th, 2010 at 12:23pm: I have disproved perception_now's Peak Oil presentation on numerous occasions Its based on a theoretical debate of "If a tree fell in the forest and nobody is around to hear it then did it fall" perception_now believes it has not fallen. Believe in his lies if you wish - but the facts are inconclusive. link me.....  ;)

Your wish, is my command, following is a link to a thread at Yahoo 7, which involved some "discussions" between myself & maqqa (alias slr2007mclaren) and a specific maqqa post, which I think says something about maqqa.
Peak Oil Debate for Dummies - slr edition -
http://au.messages.yahoo.com/news/politics/572790?p=1
++++++++++++++
By: slr2007mclaren
22/09/2009
4:23 pm

Yahoo! Profile:
 slr2007mclaren

Did this message offend you?
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Re:Peak Oil for Dummies - slr edition Reply to this message
In my opinion, there will be correlating movements up & down, in the general Global economy & Oil Pricing, over the medium term, as Oil Production, Demand & Price find new levels, along with lower economic activity levels.
=====

this comment says nothing and means nothing PN
+++++++++++++++++

Addicted to oil … and to economic growth

While the massive oil spill catastrophe in the Gulf of Mexico is demonstrative of our addiction to oil, it is also the latest example of modern capitalism’s addiction to economic growth.

For the last two centuries, Western economic theory has been based on the untenable proposition and requirement that economies must (and can) grow at substantial rates, indefinitely.

Especially for the last hundred years or so, abundant and inexpensive fossil fuels have allowed an unprecedented rate of economic growth that has brought Americans and much of the rest of the developed world a previously unimaginable, but unfortunately unsustainable materialistically-based standard of living.

By its very nature, an economic system based on constant and inexorable dynamic growth contains the seeds of its own demise. Indeed, capitalism as it is practiced today in America and Europe has become the proverbial anchor that will send us all to the bottom if we can’t find the thoughtfulness and courage to devise a new path forward.

Because of the system’s constant drive for unsustainable growth and desire for excessive profits, humanity has reached a most precarious “tipping” point. Simply stated, it is greed and the belief that profits must be acquired at all costs that have led to the lack of sufficient and effective regulation and oversight that has allowed both the financial meltdown and tragic Gulf oil spill to occur.

Like the giant global Ponzi schemes that characterized the recent financial collapse, a capitalism that puts profits above everything else, and that is based on an unending supply of cheap energy, is doomed to fail. At some point the chickens will come home to roost. Unfortunately, that time has come.

Like it or not, we are faced with no alternative but to change our ways. With Peak Oil at hand, other finite natural resources being depleted at unprecedented rates, overpopulation, a devastating decrease in crucial biodiversity, and the ongoing fossil fuel-caused fouling of our planet, it is inescapable that now is the moment for a new and sustainable course to be charted.

Make no mistake, the changes that will be required are immense and will no doubt come with much pain and dislocation for many. But the future is not hopeless. It will, however, most certainly demand a paradigm shift away from profits-driven growth to something some have called “green growth.”

In addition, surviving in the future will mean more staying at home, working locally and utilizing local resources. There will be more locally grown food and farmers markets, more public transportation; and we’ll need to maximize efficiency and conservation. Everything we produce will need to be fully recyclable and bio-degradable. Food production, while becoming more local, will also need to become organic. Using chemical fertilizers and pesticides and factory farming is simply not healthy, and even more importantly, isn’t sustainable.

Perhaps just as important as changing the way we produce our energy and food, and transport ourselves around, are the needs to transform our politics and the way our corporations function. Corporations can no longer be allowed to possess human rights, but not be required to manifest human responsibility. If corporations are not required to add social justice and ecological responsibility to their existing shareholder mandate to provide profits, then the future for civilization will be dark indeed.

Finally, if any of the above necessary changes are to occur, our politics and democracy must be reborn in a way that reduces the corrupting role and influence of money in deciding the outcomes of elections. Only then will the public interest achieve its deserved exalted status above the private interests epitomized by the corporate greed and profits that so predominate today.

Some will say the above-described scenario for a sustainable and livable future is hopelessly naïve and utopian. On the contrary, what is truly utopian is to believe that we can continue to grow and use our finite resources indefinitely. Now that is the definition of naivety.

Link -
http://www.barnstablepatriot.com/home2/index.php?option=com_content&task=view&id=21511&Itemid=112
======
I agree with the majority of the above article!

Baby Boomers, The U. S. Economic Collapse, And The Future Of Senior Housing

The Baby Boom generation, the nearly 80 million of us who were born between 1946 and 1964, is the largest in U. S. history. Its size alone guaranteed that Boomers would be our most influential generation, and indeed their impact on the country’s social, cultural and economic institutions is unprecedented. A “pig moving through a python,” as the Baby Boom generation has been aptly, if somewhat unpleasantly characterized, is responsible for the youth movements of the sixties, including those advocating civil rights and feminist issues, as well as antiwar protests.
Boom Times. Boomers have spent wildly and lavishly on themselves, certain that the economic prosperity that followed World War II would continue indefinitely. They turned into the “Me” generation, its purpose, “Shop ‘till you drop,” its goal, “He who dies with the most toys wins.” In a direct rebuke to their parents, Boomers spent rather than saved, driven by wants rather than needs. When the first wave of them decided to buy cars, the auto industry instantly responded, gearing up to produce new cars at twice the rate of growth of the American population.

Similarly, the housing supply was insufficient to meet Boomers’ needs, and the unprecedented demand for the limited supply of homes ratcheted up housing prices, which eventually produced the “McMansion” phenomenon. These are 3,000- to 5,000-square foot homes especially designed for Boomer couples wanting luxurious spaces that would confirm their opulent lifestyles. Indeed, the McMansion reflects an especially powerful Baby Boomer trait: success deserves to be visible. Trophies and lifestyle choices are the best evidence of a lifetime of achievement.

Now in early- and mid-middle age, between 45 and 63 years old, the Baby Boom generation was, until very recently, wealthier than any other age group, controlling 70 percent of the total net worth of American households– trillion–owning four-fifths of all money in financial institutions, and accounting for nearly one-half of total consumer demand.

Boom Bust. Unlike their predecessors, whose accumulated savings funded their retirement, Baby Boomers have counted on their assets to deliver needed wealth. The spectacular performance of the stock market and the recent astounding appreciation of housing values produced the results that are summarized above.

However, the stock market lost 47 percent of its value between September 30, 2007, and December 2, 2008, a decline of about trillion. This has primarily impacted older Americans, whose retirement accounts lost .8 trillion, or nearly one-third of their value. (http://www.urban.org/publications/901206.html).

Equally devastating is a recent report by the Center for Economic and Policy Research (http://www.cepr.net), which concludes that the collapse of the housing bubble has decimated the holdings of the vast majority of near retirees, who will have little or no housing wealth this year and will be almost totally reliant on Social Security and Medicare to support them after retirement.
Boom Bust and Senior Housing.

Some senior housing developers and marketers are beginning to pay close attention to the impact of the current economic downslide, which has drained many Boomers’ savings and devastated the value of their housing. The fact is that the collision between economic reality and the expectations of Baby Boomers about the quality of their post-retirement housing will dumbfound this, the “entitlement” generation. Expecting McMansions, nearly destitute Boomers will likely encounter retirement housing on a par with their first apartments.

Link -
http://www.purposedrivennews.com/purpose-driven-news/baby-boomers-the-u-s-economic-collapse-and-the-future-of-senior-housing
====
As of Januray 1st 2011, the first of the Oficial Baby Boomers turn 65 and commence retirement in OZ, the USA & many other countries.

However, the actual rise in Fertility rates started well before, back in the Great Depression days around 1933 and there are countries where official retirement starts prior to 65 (eg - Greece) and after 65 (eg - OZ - for those born after about 1952).

That said, the additional Social Security & Health costs will be large , particularly in the USA & Europe, where few had put aside sufficient reserves for their post working lives and the recent GFC & housing bust has then devastated what assets had been accumulated!

As the USA & Europe have been major driving forces of Growth, in the Global Economy, they will also now be a major anchor on Global  growth!

Btw, I thought the “pig moving through a python” analogy was quite good.

perceptions_now wrote on Jul 7^th, 2010 at 11:52am:

[b][size=16] As the USA & Europe have been major driving forces of Growth, in the Global Economy, they will also now be a major anchor on Global  growth!

They are THE driving forces of growth. Moves in investment and speculation have been driven largely by an over surplus of goods in the last 15 years or so. The move of the US into the Middle East is also driven by this shift: new market share and investment opportunities for the multinationals.

What we now see is a global decline in the economic supremacy of the US, and this will have huge consequences for the world.

Karnal wrote on Jul 7^th, 2010 at 1:11pm:

perceptions_now wrote on Jul 7th, 2010 at 11:52am: [size=16] As the USA & Europe have been major driving forces of Growth, in the Global Economy, they will also now be a major anchor on Global  growth! They are THE driving forces of growth. Moves in investment and speculation have been driven largely by an over surplus of goods in the last 15 years or so. The move of the US into the Middle East is also driven by this shift: new market share and investment opportunities for the multinationals. What we now see is a global decline in the economic supremacy of the US, and this will have huge consequences for the world.

I agree that the USA & Europe are MAJOR economic driving forces, but they are also, in turn, driven by other factors such as Population  growth rates, Energy availability, Innovation & others, all mixed together.

It's like the butterfly effect?
http://en.wikipedia.org/wiki/Butterfly_effect

And, yes, the USA going into the Middle East in involved! It started with the Saudi's some years ago, it continues with Iraq now and it will most likely develop further into Iran & elsewhere, as time goes on.

Peak Oil, Time, And Population

There is a close relationship between peak oil and population. Since the 1950s there have been many estimates of the rise and fall of global oil production, but it was perhaps inevitable that the shift has been from optimistic to realistic. After all, it is better for one’s reputation to make errors on the side of caution than to look like foolish by announcing a catastrophe that does not occur. With increasing studies, however, and with increasing proximity to the critical events, realism at last takes over.

We begin with two basic facts. The first is that the world’s present annual consumption of oil is nearly 30 billion barrels. The second is that the world’s present population is nearly 7 billion. From there we can add some reasonable estimates of both oil decline and population decline.

The peak of world oil production is about 2010, and the most likely rate of decline after the peak is 6 percent. [5, 7, 11] That means production will fall to half of the peak level in 11 years, i.e. in 2021.

Population size is directly correlated with oil supply. Oil has been the main source of energy within industrial society. It is only with abundant oil that a large global population has been possible, and it was oil that allowed population to grow so quickly. [1]

If oil production drops to half of its peak amount in 11 years, therefore, world population must also drop by half, i.e. to 3.5 billion. A drop from 7 billion to 3.5 means that, as with oil production, the annual population decline rate will be 6%.

But how will it be possible to reduce the population from 7 billion to 3.5 billion in 11 years? Would such a reduction be possible with a program of voluntary cessation of all childbirth, but with no other drastic global change in human behavior? Would a no-child policy be workable? Unfortunately, such a program would be quite unlikely to succeed. In the first place, in order to have any significant effect the program would have to be both global and immediate. In addition, most of the world is hardly amenable to the suggestion of a one-child policy, such as that of China, so it is not likely that it would tolerate a no-child policy.

In any case, cutting the birth rate without increasing the death rate would not have a great enough effect on the final numbers. Since most of the people now living would still be alive in 2021, the population would not be reduced sufficiently. There is, in fact, no feasible political means of reducing population by 6 percent annually.

The only solution will be famine, and that solution will not be one that is chosen by humans. It will be chosen by Nature, as she does for so many other species. The process will be set in place by the ubiquitous and systemic decline in resources, and the consequent decline in industrial production. Without fossil fuels, agricultural yields will decline to about 30 percent. [7, 8, 9] The famine has already started, to judge from the decline in world food supplies. [3, 4] Roughly similar declines will occur in everything from mining, electricity, and manufacturing, to transportation and communication. [2, 6]

Planning for such a scenario should have been started long ago. Even at this late date, however, what is needed is to accept the facts and to ease the way for those relatively few who will constitute the future of humanity. At least on a small scale, such a program will succeed.
Link-
http://www.countercurrents.org/goodchild070710.htm
====

The timescale for change away from Oil is 10 years minimum, preferably 20-30, which means that earnest Global change should have started about 10 years ago!

Paul Krugman's Depression Economics

In the aftermath of World War II, General Lucius Clay, Governor of the U.S. military zone in Germany, mentioned to West German Finance Minister Ludwig Erhard that "My advisors tell me that you should not try to balance the budget, but should engage in deficit spending." Erhard's response was, "My advisors tell me the same thing, but we are not going to do it."

If ever a country could justify Keynesian deficit spending, it was West Germany after the war. Having seen its factories destroyed, its wealth plundered, and the death of millions of its youngest and able-bodied, West Germany's ill economic health made our struggles today seem positively pedestrian by comparison. But with no resources to expropriate from a private sector very much on its back, West Germany defied the Keynesian consensus, and moved in favor of real stimulus through tax cuts which stimulated the supply-side of its economy, along with a stable mark made that way through its peg to a dollar defined in terms of gold.

Within a few short years this formerly decimated country was the most prosperous in all of Europe.

All of this takes on great relevance given New York Times columnist Paul Krugman's recent assertion that we may well be headed for a third Great Depression. To believe Krugman, deflationary monetary policy and "belt-tightening" among G20 governments speaks to "a failure of policy" that has us on a path toward economic decline.

Considering growth more broadly, it must be remembered that "recessions" and "depressions" are false notions. Thanks to our ravenous desire for the better things in life, we only know how to be productive and grow. In short, there's no such thing as "economic" recessions or depressions. Instead, our productivity plummets when governments get in the way of our natural desire to produce. Recessions are always and everywhere authored by governments; they're never economic.

Once this is understood, it's easy to see why our economy struggles now, much as it did in the 1930s. When governments increase taxes and regulations, make it more difficult to trade, and devalue money, recessions and depressions are the frequent result. In that sense, President Obama may well oversee our lurch toward depression, but solely because he's copying nearly every economic play from FDR's failed 1930s playbook.
Link -
http://seekingalpha.com/article/213867-paul-krugman-s-depression-economics?source=email
==========
As I said, in a comment on the above site -
==========
"Well, what a load of -
Credible
Reliable
Abundant
Paradoxes

You may have forgotten to mention that the Global Economic basics, after WW2, were pretty much heading north. There was a "small thing called the Baby Boom", which got into gear about then and we are still feeling it's ramification's now, except in reverse.
Population Growth has been THE great DRIVER of Economic Growth of the last century, but the rate of Growth has been slowing, before going into reverse, in about 20-30 years!

You also omit that Oil, which was THE great Economic ENABLER of the twentieth century, had massive discoveries in the Middle East just before & after WW2. The Supply of OIL was ABUNDANT & CHEAP for most of the period following WW2, but Global Supplies are now in Decline, with no EFFECTIVE replacement in sight for many of its uses!

You seem to be of the opinion that, just because we desire something, it will happen, because we will make it so?

Well, all the world may be a stage, but that doesn't mean there will always be a HOLLYWOOD ENDING?

At present, we are facing some DEAP Global sh1t -
Debt
Energy Decline
Aging Population
Population Decline (rate of Growth already slowing, before decline)

And, it will take every last bit of our Innovation, Will Power & Persistence, for the Human Race to escape vaguely in tact, let alone with a roaring Global Economy!"

Why Prechter Is Probably Wrong About a 1000 Dow

We are big bears - to the point where some people consider us a top candidate for the camp of Robert Prechter of the Elliot Wave, who believes that the Dow will return to 1980 levels of about 1000.

We do have one major quarrel with Prechter. He only uses price charts. We like to develop theories of causation to support the patterns contained in his charts (which do capture a great deal of market action and psychology).

Prechter believes (as we do) that the US stock market has been in a bubble since 1980, and that it will therefore return to earlier levels of 1000. We don't take this literally. But we agree with Prechter's unstated premise, that the Dow will return to 1980 levels after adjusting for intervening inflation. With this major caveat, we're talking about a Dow of not 1000, but of more like 3500.

That's because we believe that the "blue chip" US market, as personsified by the Dow, is a "sine wave," not a growth vehicle, and that what passes for growth in the US stock market is mostly inflation. So does Bill Gross of Pimco, who calculated that the "real" investment return, or 90%+ of it, came from dividends in the twentieth century. Taking out inflation, capital gains would be 0.6% real a year.

Some thirty years have passed since 1980. If you compound the Dow for those years at 0.6% real a year, the cumulative gain would be just over 20%. Starting from a base of 1000, the Dow might be 1200 real. If you take the trough as more like 800, then a "real" Dow of 1000 is a genuine possibility today, which means a Dow with a "3" handle at its next trough.

That's because in the past century, the Dow's value can range from one half of our proprietary "investment value" metric (now about 7000), to about three times that, or over 20,000. Yes, Jeff Miller, a 20,000 Dow is within the realm of possibility. But so is a 3500 Dow (half of 7000), which is our "revised Prechter" metric. Consider those the ceiling and the floor. The last two bottoms came in 1932 and 1974, a little over 40 years apart. In 2010, we are not far from the "40" year mark, although it might not be this year.

The problem with Prechter's price charts is that they don't encompass economic variables like inflation, so they don't provide any support for stock prices at one level or another. Contrary to what the academics teach, stock prices don't follow a "random walk." Instead, they go places, based on information (and sometimes misinformation) available in the marketplace. So, I don't want to hear about price levels, except in the context of other, causal, variables. Here are some:

Suppose the S&P 500 earnings ($56 a share in 2009) "flat-lined" for about five years. And suppose that the P/E ratio went to bear market lows of 5 times earnings as a result. That would imply a 300 S&P 500, and a 3500 Dow, which is certainly within the realm of possibility. More to the point, that is our BASE CASE in the quasi-depressionary environment we foresee for that time.

Hence, our "modified Prechter" theory is that the Dow will return to 1980 levels -- adjusted for inflation. This would put the index in the low to mid-3000s, unless you have raging deflation that takes us back to 1980s price levels as well, which would support Prechter's hypothesis. But he didn't specify the appropriate conditions when he made his prediction, which is why it is not as useful as it ought to be.
Link -
http://seekingalpha.com/article/213936-why-prechter-is-probably-wrong-about-a-1000-dow?source=email
=====
There are many predictions about the future of "Financial Markets" and what will influence the outcomes.

And, only time will tell which outcomes will be correct, over various timeframes.

That said, there are many issues which influence Economic events & Global issues in general.

In looking at likely outcomes, some reference to what has happened in the past, will provide some future indicators, but as the inputs change over time, so to will the outcomes and although some future outcomes may have a similar feel to them, they may not be exactly the same as events of past days!

As, I made plain in my initial post on this thread, "What is the Motor of the World and why is it stopping?", I believe the following are THE MAJOR INFLUENCING FACTORS of the next 20-30 years, at least -
Debt is going into unknown territory, in many countries, heading north towards 100% of GDP & beyond!
Energy Decline (Global) – All the easy to get, cheap Energy has already gone, what’s left is the other side of the Hubert’s Curve.
Aging Population (Global) – The Employment Participation ratio has commenced declining, as Boomers first retire, then die, 2 Billion of them.
Population Decline (Global) – the rate of growth is slowing & the total will actually start to decline, within 20-30 years.

So, whilst exactly where we will be in 20 years time, is still conjecture, I believe there is regrettably a very clear & unmistakeable trend in these major factors of influence and unless we break with 200,000 years of human history, quickly, then our own personal wants for now will come back to haunt the future of oursleves & our children.

For the outcomes not to be terribly adverse, we need to pull together for the future benefit of the species and we need to do it, quickly!   

Dear Candidate - What Will You Do if Growth Is Over...?

To me, one of the most surreal phenomena one encounters these days is that no country, no established economic research institute (that I'm aware of), and no international organization (such as the IMF) publicly discusses scenarios that don't plan for a return to stable economic (GDP) growth. Even Greece's government, after 2012, expects growth, which would allow the country to slowly reduce its monster debt load. Similarly, the U.S. government forecasts annual average (real) growth rates of 4.4% for the years 2012-2014, and 2.4% thereafter until 2020. This theme is globally ubiquitous. (ADDENDUM: Today Lloyds of London said global institutions are underestimating impacts of peak oil).

http://www.theoildrum.com/files/risk.jpg

The above graph is one organization's view of the general magnitude of risks facing societies. Whether or not you agree with their projections is secondary to their ranking in mainstream discussions. On a long term horizon, clearly the health of our environment is of upmost importance. And, along with climate change and other potential externalities, resource depletion issues of various stripes pose large risks to the system as we know it. But before we face the long term we have to go through the short term, which will have to navigate the energy/debt/growth gauntlet. For all the effort being undertaken internationally to address climate, little if any is being made towards building bridges through and past a period of declining growth and wealth. Cognitive dissonance meet group think...

Given the stakes, it is quite worrying that in all the institutionalized economic projections of late, decline or zero growth aren't even mentioned as a possibility. One can speculate why this is the case, but I think there is significant evidence that only limited efforts- if any - are being allocated to understanding the possible consequences and required mitigation strategies of such a trajectory. I'm not so sanguine about the fact that so few people seem to be ready to think the not-so-unthinkable.

Given the constraints in natural resources, our currently unprecedented levels of debt on a global scale, and the absence of ideas for the next grand "leap forward" for mankind, it seems plausible that we might have to bid adieu to economic growth, and not just for a year or two, but for a long time. Some models at IIER (and other whisper numbers at boutique firms and the blogosphere) suggest the chances for steady economic growth after 2010 are below 10-20%. Even if you disagree with such low odds and put the probability for "more growth" to, say, 80%, doesn't it seem a bit irresponsible to not at least consider the other 20%? Not buying insurance for a risk that might hit you with some pretty negative consequences with a one in five chance strikes me as not the best strategy for a resilient and forward thinking society.


Why not use upcoming elections to ask a few questions?

Link -
http://campfire.theoildrum.com/node/6713
========
Recently, in "The Peak Energy" thread, I posted number 4 on a list of 6 possible, Future, Major Influencing Events, that one related to Peak Oil.

That list was written in mid 2006 and the following was number 6 on that list.

6)  CLIMATE CHANGE
Event Initiator
- Most likely Carbon overload of atmosphere from vehicles, power plants and the like.

Event Start Date
- Already started.

Event Outcome/s
- Increase in severe weather events, such as Hurricanes, Floods, Droughts.
- Increase in sea levels worldwide, causing mass evacuations of coastal populations and deaths.
- Shutdown of ocean currents circulation between polar caps and equator, due increase    
  in fresh water, arising from melting of large sections of polar ice shelfs. Possible result is new
  ice age.
- Unless action is Worldwide and immediate (which does not seem likely), then the most  
  probable outcomes appear bleak.
- If concerted action not taken immediately, this could be an end game scenario, the results
  could include a Billions plus dead, an economic depression, much worse than the Great Depression
  and major wars.

Event Duration
- How long is a piece of string?

Event Probabilities
- Start 100%.
- Worse case scenario, 65-35.

============

So, why not, ASK A FEW QUESTIONS!!!

But, I suggest you don't expect too many sensible answers!
 

OK thanks for clarifying.


Quote:

But, in back of everything over the last 200 years particularly, has been the steady and un-relenting growth in population that has always been the major Driver or the engine of economic growth, at national and global levels.

I think you got this bit wrong. It is technology that is the ultimate driver. The population boom was in response to this, rather than being the cause. In fact, through most of history the opposite was clearly true - economic growth happened when the population went down because, for a short period at least, people escaped the Malthusian trap.

We did not come up with all these inventions to prop up the population. People just died. But after the inventions came along we could support more people and the people bred to fill the new vaccuum. Fortunately they didn't breed fast enough to actually fill that gap, for a variety of reasons, all of which ultimately hang off the wealth that came from the inventions.

Furthermore, contrary to popular mythology, it was not need that drove invention, but idleness - the sort of idelness you get after a plague or war wiped out a big chunk of Europe's population and people didn't have to constantly scrounge for food any more.

freediver wrote on Jul 15^th, 2010 at 8:25pm:

Furthermore, contrary to popular mythology, it was not need that drove invention, but idleness - the sort of idelness you get after a plague or war wiped out a big chunk of Europe's population and people didn't have to constantly scrounge for food any more.

FD, you are a bigger kook than I ever suspected.  On your model - idleness drives innovation - slaveholding societies would be the biggest innovators.

I always wondered why Nostrodamus could never 'percieve' anything of the 'future' in regards to the Southern Hemisphere, the true Southern Hemisphere (because you know there is a false one working for the Northern Hemisphere ;))?
Is it because, although we are 'Down Under' ...we are indeed a 'Day Ahead'.  :-?

Anyway, lets start. I'm just throwing in a few things that will not provide an immediate answer, instead they will help lead to an answer.

China will, along with its population, experience a 'SuperNova' effect.
It will become the most dominant nation upon the planet for a while, but thats ok - every dog has his day.
The energy needed for this SuperNova effect will be a hellava lot and with places like Australia and the Middle-East charging a fortune for 'Resources', China will be forced by its own internal demand
...to invade the Resource rich SIBERIA  to the north.  :o
Of course this is Russian territory, but to the Chinese, the former Ally turn Traitor, is now just a shadow of its former self.
So Russia suddenly finds itself up against an extremely powerful opponent and to be quite honest, Russia is gonna get its arse kicked.
Especially when a few former Soviet 'satellite' nations decide to take advantage and lay in a few kicks against Russia for their own agendas.
Karelia becomes the latest Scandinavian nation with St Petersburg the capital.

Ironically Russia will call for help for a former Enemy come Friend, to become an Ally - the USA. Of course common sense prevails and the USA holds back a bit, but with crazy North Korea making the big mistake of letting off some firecrackers in the wrong direction, the USA is suddenly thrown into the conflict.

So its on for young and old as the USA/Russia Alliance fights a losing battle against China and its allies. Japan stays neutral but still cops a battering none-the-less for its troubles.
India and Pakistan finally cut loose upon each other and use Nukes more than anyone else - resulting in a very devastated sub-continent.
...a lesson to the entire planet about 'weaponry' and how it too can experience a SuperNova effect.
With the USA deeply involved with Russia v China, the entire Islamic front unites for a final fling at Europe ...especially against France.
In other words, the Moslems will do to the French, what the Germans did to the Jews ("what goes around").
Luckily, the French had been testing some Nukes in French Polynesia not so long ago, so they were no pushovers.
Having experienced the tenacity of the Balkans much earlier at the break-up of the Yugoslavian nation, the Moslems give that part of Europe a wide berth.
The European invasion by the Moslem hordes is but a shadow of its glorious exploits centuries ago and with the Israelis like a dagger in their backs, the invasion is more like a massive Riot more than anything else, except for in France, where things really get nasty. The invasion reaches into Scandinavia. Its a bit hard to nuke the enemy when they are well within your borders, which is what the Moslem invasion did effectively in Europe ...even if it was a bit underarmed.

Australia, of course, sends its usual contigent of Mercenaries ...I mean Diggers. As does a lot of nations around the world to help out upon all sides.

Nukes you say? Don't worry, with the knowledge that 'weaponry' can now destroy the 'human world', comes a nice little defence system (actually kick-started in Adelaide) known as Polaris. The majority of Nukes ignited to impact upon the planet are basically shot down via laser guidance and rendered 'useless'. Sadly the Pakistani-Indian conflict couldn't really 'afford' such defensive systems, hence why that part of the world shows what could have been during the Soviet-USA Cold War. Yes, the Indian population is practically annihilated by 80% and this is what is remembered most about WWIII.

China successfully keeps Siberia, but it loses Tibet and some southern territory in the process to southern Asian nations. But the conflict with the added adversity from the USA and other smaller nations, takes its toll. Famine, pestilence, etc suddenly make the conquest for underground resources seem like a golden fleece. Russia, once the largest nation upon the planet via the Soviet age, is now more its smaller self. But having faced an external enemy at a time when it was riddled with corruption and self mutilation. It found itself a new identity to take into the future, not since the Soviet age.

The Moslem invasion eventually dissipates like butter spread too thinly over toast, along with the fact that Israel had extended its borders considerably. To face Christians meant Wealth but Death. To face Israel meant Poverty but Life.

After this a new age begins, where Nuclear power is in the palm of your hand and oil is just another Museum exhibit.

But all is not golden yet.

You still have WWIV. Remember, the Moslems and Jews will eventually Unite (or face utter annihilation at one anothers hands in many ways beyond just political or militarily) against a common enemy
...Italia !
Do you think the Italians will take a 'dive' in the face of the Islam/Israel wrath?  :P  Or will the Vatican save the day, by giving back something that was lost/stolen a very long time ago?

Come WWIIIV, you will find the Bolivians leading the way Militarily in the world and finally bringing 'peace' under their 'guidance'.

>>>  :)

I forgot to add. (In regards to WWIII)

Papua New Guinea will go nuts and practically genocides Indonesia via its aim to liberate Irian Jaya amongst some other smaller Island Nations. Fiji becomes the military capital of Oceania and finally brings the Indo-Papuan conflict under wraps. Mainly because Australia is too busy fighting for the Anglo-Saxon Empire far afield, rather than worry about its own backyard affairs. This is the beginning of the Australian 'Rift Wars' (random Provincial conflicts)
Papua is officially recognised. Malaysia has increased in territory with Indonesia having diminished by 50%.
Zimbabwe becomes a leading African nation due to Medicine, but Botswana and Congo become the leading African nations due to Farming and Banking. The Congo becomes one of the wealthiest Banking Nations upon the planet, if not the wealthiest.
Madagascar becomes an Eden on Earth.
Bolivia leads Samerican nations against Drug nations like Columbia.

Simon Townsend: "The world really is wonderful" and indeed it is to keep surviving such poo. 8-)
Tasmania becomes an Independent Nation

It's not just Columbia. Drug labs are in every corner of this world.

...'like' Columbia. ;)

freediver wrote on Jul 15^th, 2010 at 8:25pm:

OK thanks for clarifying. Quote: perceptions_now But, in back of everything over the last 200 years particularly, has been the steady and un-relenting growth in population that has always been the major Driver or the engine of economic growth, at national and global levels. I think you got this bit wrong. It is technology that is the ultimate driver. The population boom was in response to this, rather than being the cause. In fact, through most of history the opposite was clearly true - economic growth happened when the population went down because, for a short period at least, people escaped the Malthusian trap. We did not come up with all these inventions to prop up the population. People just died. But after the inventions came along we could support more people and the people bred to fill the new vaccuum. Fortunately they didn't breed fast enough to actually fill that gap, for a variety of reasons, all of which ultimately hang off the wealth that came from the inventions. Furthermore, contrary to popular mythology, it was not need that drove invention, but idleness - the sort of idelness you get after a plague or war wiped out a big chunk of Europe's population and people didn't have to constantly scrounge for food any more.

I say Neither, you say Niether?

The truth, most likely, is that the dramatic Population increase of the last 80 years or so, was because of and arose from a number of factors including Technology, an increased availability of cheap & abundant Energy, as well as purely social issues.

However, these factors all became interlocking  and became the old "Chicken & Egg" conumdrum, of which came first.

That said, we are now at the crossroads of civilisation, as for the HUMAN POPULATION for first time is bumping into the glass ceiling that is the MAXIMUM LONG TERM SUSTAINABLE, given the FINITE ESSENTIAL RESOURCES of this planet!

In any event, the next 20-30 years, WILL go a long way to determining the future of the Human species & the Planet, for thousands of years to come and possibly the duration of our human experience?

As I have said, we are in DEAP sh!t Globally-
Debt is going into unknown territory, in many countries, heading north towards 100% of GDP & beyond!
Energy Decline (Global) – All the easy to get, cheap Energy has already gone, what’s left is the other side of the Hubert’s Curve.
Aging Population (Global) – The Employment Participation ratio has commenced declining, as Boomers first retire, then die, 2 Billion of them.
Population Decline (Global) – the rate of growth is slowing & the total will actually start to decline, within 20-30 years.

And, unless we get underway, very soon, then the likely Climate Changes following the above, may well be beyond us & any Technology/Innovation that we may try to bring to bear.

In the shorter timespan, Global Warming will be difficult enough, but we are now approaching the end of the warming cycle and in the longer term Global Cooling may actually prove a greater problem? Of course, the short & long terms I refer to here are in Planetary periods of time, not human.

Btw, as I have said before, I gather we are in agreement in quite a few areas, but not all.

On America's $1 Trillion Deficit

Funny how the Treasury Dept released the YTD budget deficit for the United States of America and no one from the Obama administration went on TV to pronounce what a fine job they had done. They deserve huge accolades. It ain’t easy to run a $1 TRILLION DEFICIT in just 9 months. Click the link here (.pdf) for the grisly details. Remember in January 2009 when Obama and his minions said we must deficit spend to keep unemployment at 8%. He assured the American people that if we spent this money we would create 3 million jobs. It is now 18 months later. The number of Americans employed in January 2009 totaled 142,099,000. As of June 2010 there are 139,119,000 Americans employed. By my math, we have lost 2,980,000 jobs since Obama promised to add 3 million jobs. I guess a 6 million deviation is just a rounding error in Washington DC. At least the Wall Street bankers got their billion dollar bonuses while real Americans lost their jobs.

The good news is that Obama was able to drive up the deficit by $2.087 trillion during these 18 months. This is Keynesian socialism at its best. Paul Krugman will argue that if Obama hadn’t been so austere with his spending, it would have worked. If government had just dug a few more ditches and then filled them up, the economy would be booming.

The best part of this Treasury Department release is that if you actually go to another part of their website, you can see that the National Debt has gone from $11.910 TRILLION on October 1, 2009 to $13.203 TRILLION on June 30,2010. You may have noticed that the National Debt has gone up by $1.293 TRILLION in 9 months versus the Deficit announced by the Treasury of ONLY $1.004 TRILLION. What prey tell is the difference. It seems that we ignore that nasty interest on the debt of $289 BILLION when taking into account the current year deficit. Isn’t that precious? Wouldn’t you like to ignore the interest on your mortgage, credit card and auto loans when calculating your cash flow?

The truth is that the National Debt will increase by $1.7 TRILLION in 2010. Do you understand what that means? I don’t think you do. It means our politicians are squandering your money, that we do not have, borrowed from the Chinese, at these rates:

$4.7 BILLION PER DAY
$194 MILLION PER HOUR
$3.2 MILLION PER MINUTE
$54,000 PER SECOND
This will surely end well. Time to buy stocks. All is well.
Link -
http://seekingalpha.com/article/214490-on-america-s-1-trillion-deficit?source=email
====================
By way of information, the USA annual budget period ends September 30th.

With the US deficit set to be around US$1.7 Trillion or nearly $2 Trillion in Australian $'s, it reminds me of a variation of the Paul Hogan line, in Crocodile Dundee -
Now, that's a deficit!

Was it Obama & the current Democrats that are purely to blame for this years deficit?

Well, they have had opportunities to head in other directions, but like previous adminisrtations they have tried to postpone the day/s of reckoning, to some future time, some future adminisrtation & to some future Generation, in other words they continued to play the Political Game.  

Like all Games, this one has finite limits and to coin a phrase -
"The end is nigh".

John Taylor: "Cash Is Now King, Worthless Or Not, So Buy Dollars."

In his latest must read letter, John Taylor picks up where Goldman left off a few days ago, and follows up on the implications of Keynes' savings paradox, which as explained by Goldman, and now by Taylor, has to do with the fact that with the entire world entering an austerity phase and thus cutting off public sources of capital to offset private sector contraction and deleveraging (as per the Current Account equality), the slowdown in economic growth is virtually assured.

It also explains why companies are hording cash.

The result is a massive schism in perceptions between micro and macro analysts: "the result is that the vast majority of the analysts that examine individual companies are bullish and almost all of the macro analysts are bearish, many like us, and dramatically so."

Further adding to the dire macro picture, "because nominal GDP is growing more slowly than the outstanding national debt is compounding, it is becoming a more oppressive weight on the “non-S&P” economy, tightening the financial position of small businesses and the consumer." Which leads Taylor to this simplistic and spot on conclusion: "if consumers build up their savings, we know what happens to retail sales and the GDP.

On top of this the money multiplier comes into play.

With the global banking system suffering under an extremely high load of worthless assets – whether recognized or not – and being forced to improve their capital allocation for risk by the Basel II and Basel III rules, banks must cut back the amount of credit that they make available to the economy.

The multiplier will force global economies to shrink in the years ahead. Cash is now king, worthless or not, so buy dollars." Brief, succinct and 100% spot on analysis.
Link -
http://www.zerohedge.com/article/john-taylor-cash-now-king-worthless-or-not-so-buy-dollars
===========
We are now enetring a new Paradigm, where the old rules will have to be adjusted or even completely re-written!

Here in Sydney, I held off buying a house because I knew something was fishy when they had the Royal Commission onto the Building Industry. Luckily I did hold off because suddenly, after the Syd-i-ney Olympics, the price of Housing became inflated. The Houses were going up so quick, that they have been proven to be crap and will come down fast too.
I then posted upon DiveOz, that Petrol will rise to $10 in a few years. A few months later, the CSIRO made a public statement that it expects a rise to $8. This was around when petrol was touching $2.

Then something strange happened. The Economy stopped inflating, Rudd pushed his stimulus package, Obama borrowed more money at 10% interest and somehow the economy dropped and levelled out.
...seems they held the floodwaters back afterall.

But now...I can see the leaks in the Dam Wall. Prices are starting to soar and it seems no-one has learn't from the first experience as everyone is going for broke for the 'quick cash grab'. This time, I think this is it.

Mugabe is apparently sitting comfortably on a chair watching as the Western World led Global Economy is starting to Inflate.
He is eating some popcorn with a shake of his head at Obama who is no Khofi Annan. "Welcome to the Jungle" he whispers, to coin a song by Guns & Roses.

My advice for the next 10 years: CAREFUL OF WHAT YOU BUY.
With that said, I guess the USA and especially the UK are gonna find it tough going especially when a good slice of their market worth is based upon Retail or Service Provider.

Quote:

FD, you are a bigger kook than I ever suspected.  On your model - idleness drives innovation - slaveholding societies would be the biggest innovators.

For that to be true you would have to show that slaveholding societies were more idle. Good luck. Also, you missed a subtle yet crucial aspect of my argument. It was not about societies, but about times.


Quote:

However, these factors all became interlocking  and became the old "Chicken & Egg" conumdrum, of which came first.

The decrease in population came first. There is copious historical evidence to prove this. Boom after boom came as a result of a decimation of the population that had nothing to do with economics. It may have become a full cycle lately with wealth contributing a decrease in birth rate. All of this is the exact opposite of your core argument - that population growth drives the economy. You seem to have taken a few headline quotes out of context and constructed an elaborate economic theory around them that flies in the face of reality and historical evidence.

Lets look at a modern example - China vs India. Both in very bad situations a while back. China took drastic moves to curb population. India keept breeding. The disparity we see today is all down to population - in the opposite way to how you claim it works. If China had kept breeding like in the past, they would be back to scavenging for locusts by now.


Quote:

That said, we are now at the crossroads of civilisation, as for the HUMAN POPULATION for first time is bumping into the glass ceiling that is the MAXIMUM LONG TERM SUSTAINABLE, given the FINITE ESSENTIAL RESOURCES of this planet!

There is no 'maximum long term sustainable'. It is a bit more subtle than that.

http://www.ozpolitic.com/articles/population-sustainability.html#IPAT

Quote:

perceptions_now However, these factors all became interlocking  and became the old "Chicken & Egg" conumdrum, of which came first.

Quote:

freediver The decrease in population came first.

Time to wake up FD, the context of that statement & that conversation was/is about the last 200 years and particularly the last 80 years.

The discussion was/is about Population INCREASES, not decreases.

That said, I just came accross an article I posted in Yahoo on 30/08/2009, which put things into a reason context and I don't see any reason that the main trust is still correct.
=============
For the record
The following is a "Quick" snapshot of where we have been, where we are going and why! My apology for not being able to fit a 200 year history, into a few sentences!
I encourage comment, to agree or disagree & most importantly, I encourage you to propose solutions!

US Influence
Let me dwell for a moment, on the relationship between the USA & the Global Economy.

It has been suggested, in recent times, that the Global economy and in particular the BRIC countries, have De-coupled from the US and the influence of the US is now substantially lessened, on the World economy.

That said, the US economy, in GDP terms, is still greater than the next 3 countries GDP, combined.

For the Record, whilst some countries have room to manoeuvre slightly, they can not swim against the US tide and clearly, the current economic slowdown has put an end to the De-coupling suggestion, at this time!

Where are we Now

Let me put it this way, the US situation is as follows -
1) The Debt to GDP ratio is heading north quickly, to 100% and beyond.
2) Consumers have taken a massive hit, via falling housing equity, lower share values & reduced access to credit.
3) The economy is deleveraging and will do so, for some time to come. Derivatives is the other Elephant in the living room!
4) Two of the three major growth drivers (Oil & Population), have Peaked and are heading south.
5) Unemployment and Taxes are both rising.
6) Business Earnings are falling dramatically and bankruptcies are rising.
7) Tax revenues and consumption are both down.
8) Massive increases in Health and Social Security Costs, are on the way, again expanding government deficits.
9) Problems arising from Climate Change and Food Production are also set to interfere with future plans.
10) Share Markets first fell some 50% and have since increased some 50%, still leaving a massive reduction in total wealth.

How did we get here

There are seldom "Single Reasons or Silver Bullets" for events, such as these and this event is no different!

Going back in time, the last 200 years has seen 3 primary growth drivers -
1) Population Growth
2) Cheap & Abundant Energy (Oil)
3) Innovation

The Global Population attained 1 Billion around 1800, 2 Billion around 1930 and we have now reached over 6.5 Billion, having added 4.5 Billion in just 80 years.

Previous energy supplies Peaked out, as the Global Population expanded, with Wood & Whale Oil giving way to the Cheaper & more Abundant Crude Oil, as it started to come on stream, just on 150 years ago.

Man's Innovation has also expanded incredibly, over the last 200 years, as the Industrial & Information revolutions, increased Production persistently, via means such as the , Steam train, Aeroplane, Television, Medical technology, Nuclear fission, Computer & the Internet.

So, the scene was set and it culminated in the greatest economic boom in history, between 1995 and 2005! This was the "Perfect storm", for making money.

Finally, one of the oldest and most regular players came back into the game, when GREED joined the party, assuming the party would never end. Leveraging, via the Banking/Financial sector, went thru the roof, NINJA Loans came into being and the completely unregulated "Derivates Market", went into the Stratosphere, at over 100 times the Annual Global GDP!

However, there is a dilemma in the current economic/banking system; it REQUIRES exponential growth, within a finite environment!

The inevitable happened around 2005, two of the three major growth drivers (Population & Oil) Peaked and their combined effects had a profound influence in events. Population growth had already started to slow and the Baby Boomer generation had just started a 20 year transition, from their Peak Earning & Spending years, to being thrifty Retirees, before leaving us forever.

The slowing Population growth had already influenced the New US housing market, with construction in long term decline. However, the slowing Growth, combined with the Retiring Boomers, spilled over into Existing housing and that Bubble burst, as Demand slowed, forcing a vicious cycle, of falling housing values and rising Foreclosures, re-enforcing each other, in a race to oblivion.

Around the same time, Global Peak Oil, which had been long talked about, as a theory, became a reality. As Production effectively Peaked around 2005 and then started to fall, the Oil Price raced to $147 a barrel, and then, as the costs ballooned and economic reality set in, together with the perception of a faltering global economy, Oil Prices fell, as Demand also reduced.

The rest of the World joined the Party!

Many countries spent up, mainly by vastly increasing Debt and mortgaging the future, on a bet that the status Quo would return.
With Debt to GDP ratio's approaching 100% and in some cases more, the status quo will not return!

What of the Future/Conclusions?

Now that the calm EYE of the Hurricane, created by Trillions in "government money" has nearly passed over, that "Perfect Storm" is about to re-appear, this time as a Category 5 Financial "Black Swan Event"!
We are now in the final stages of proving that the current system is not working & is actually unworkable, over time.
Recent increases in leverage, in the financial sector and the Peaking of two of the three major Economic drivers (of the last 200 years), are now conspiring, to bring economic growth to a shuddering halt!

The great era of Population Growth is now ending, as costs increase & Revenues fall, in line with an Aging Population and a Slowing Population Growth!
The economic enabler of Cheap & Abundant Oil (Energy), is also ending, as Production levels start to fall and EROEI (Energy Return On Energy Invested) falls from an initial 100/1, to under 10/1 now and still falling! This greatly reduces the Profit motive on some new Production and therefore the incentive to proceed with some new fields, may also lessen?

What proceeds from there, may not be pretty, but nor will be the final judgement of historians and future generations. That said, it is likely that economic Growth will ratchet down, as will share Prices & the Oil price will ratchet up, over the next 3-4 years.

Innovation, is now the final frontier for economic sustainability, the "exponential Economic Growth Fairy" is no more, it died of "shortages of natural causes (oil)", in 2005, but in the long run, we are all dead.

The "fundamentals" are now changing!

What we do or don't do with this new paradigm, over the next 5-10, will set the course of humanity, for the next 200 years. Be advised, this new paradigm may lead back to the future, as Globalisation, gives way more and more to a local economy, unless a NEW Cheap & Abundant Energy source is put into Production, quickly.

That said, we must now go where there is no path and leave a new trail!

We can, the $64 Trillion question is, will we?

I would like to finish with the words of John Fitzgerald Kennedy, "Let us not seek the Republican answer or the Democratic answer, but the right answer. Let us not seek to fix the blame for the past. Let us accept our own responsibility for the future."

In short, irrespective of our Political or Economic leaning, we (globally) need to pull together, NOW, for the sake of our own future and that of future generations!

So, other than those few minor issues, I don't see any reason why share prices shouldn't go straight thru the roof, into the stratosphere??
Link -
http://au.messages.yahoo.com/news/politics/559385?p=1
=======

Quote:

perceptions_now That said, we are now at the crossroads of civilisation, as for the HUMAN POPULATION for first time is bumping into the glass ceiling that is the MAXIMUM LONG TERM SUSTAINABLE, given the FINITE ESSENTIAL RESOURCES of this planet!

Quote:

freediver There is no 'maximum long term sustainable'. It is a bit more subtle than that. http://www.ozpolitic.com/articles/population-sustainability.html#IPAT

You may make it as subtle as you like, but there are limits and if we transgress them, we will find out that there are costs involved.

Btw, I suspect we are already transgressing some of those limits, now!

Quote:

Time to wake up FD, the context of that statement & that conversation was/is about the last 200 years and particularly the last 80 years.

So the rules have suddenly changed? What about the China and India example? Surely that should be included in the last 200 years?


Quote:

The discussion was/is about Population INCREASES, not decreases.

So you think that a rule that applies to population increases does not apply for decreases also?


Quote:

and I don't see any reason that the main trust is still correct

Neither do I.

Do you have any evidence, or even a sound theory, for your claim that population growth has been the driver of economic growth for 200 years? Can you at least explain what you mean by 'in back of'? Can you explain why there is in fact a negative correlation between population growth and economic growth in recent times? Why is it that, apart from China, the wealthiest countries have the lowest birth rates?

Interesting point FREEDIVER, regarding why it is that Wealthiest nations have the lesser population.

Of course if you follow the rule of thumb that having less children means a higher quality of living (wealth). Such good examples are Scandinavia, Switzerland and Australia.
Australia would have to be the best - John Howard putting all the women to work to reach an all-time 'Unemployment Rate' low. So Australian women were working more for little Johnny's fabulous Liberal Profit, rather than having sex ...and if they were having sex, it was just the peice of plastic sex that resulted in multiple relationships and no children.
Now these women are seeking various methods to catch up with having children in their latter years - like the 80% normal IVF or Cougaring young ignorant 'young' males who's higher sex drive leaves little for common sense.
Then you had Rudd with his "We are fairing far better than other Western Nations during these tough economic times".
Yeah well, we only have a population of 21-22 million (if you count those Ferals in the Forest too) so 'compared' to other nations, we have less mouths to feed. If we had the population of the UK or USA, our current Political System would crumble in day and we would be looking to  something else to lead the way for Australian Culture. We would be an absolute shambles in comparison to UK/USA.

Quote:

perceptions_now But, in back of everything over the last 200 years particularly, has been the steady and un-relenting growth in population that has always been the major Driver or the engine of economic growth, at national and global levels.

Quote:

freediver I think you got this bit wrong. It is technology that is the ultimate driver. The population boom was in response to this, rather than being the cause. In fact, through most of history the opposite was clearly true - economic growth happened when the population went down because, for a short period at least, people escaped the Malthusian trap. We did not come up with all these inventions to prop up the population. People just died. But after the inventions came along we could support more people and the people bred to fill the new vaccuum. Fortunately they didn't breed fast enough to actually fill that gap, for a variety of reasons, all of which ultimately hang off the wealth that came from the inventions. Furthermore, contrary to popular mythology, it was not need that drove invention, but idleness - the sort of idelness you get after a plague or war wiped out a big chunk of Europe's population and people didn't have to constantly scrounge for food any more.

==========


Quote:

perceptions_now I say Neither, you say Niether? The truth, most likely, is that the dramatic Population increase of the last 80 years or so, was because of and arose from a number of factors including Technology, an increased availability of cheap & abundant Energy, as well as purely social issues. However, these factors all became interlocking  and became the old "Chicken & Egg" conumdrum, of which came first.

=========

Quote:

freediver The decrease in population came first.

Quote:

perceptions_now Time to wake up FD, the context of that statement & that conversation was/is about the last 200 years and particularly the last 80 years.

Quote:

freediver So the rules have suddenly changed?

==========
What rules, FD?

The context of the statement and the discussion, was the last 200 years & the last 80 in particular, so where did the "decrease in population came first" comment come from, in context" and how did I change "what rules" or did you mean "your rules"???

Btw, as already stated, the population increase came about because of a number of factors, there was/is no silver bullet, as is the case in the declining population birth rate.

Quote:

perceptions_now and I don't see any reason that the main trust is still correct

Quote:

freediver 1) Neither do I. 2) Can you at least explain what you mean by 'in back of'? 3) Can you explain why there is in fact a negative correlation between population growth and economic growth in recent times? Why is it that, apart from China, the wealthiest countries have the lowest birth rates? 4) Do you have any evidence, or even a sound theory, for your claim that population growth has been the driver of economic growth for 200 years?

1) Point taken!
In my opinion, the main trust of my article is still correct!
2) Try, "behind, pushing along everything else.
3) Ask most Politicians & Economists and they will go on about the benefits of Increased growth.
However, that MUST change, as a declining population, which will inevitably arrive, will mean a declining demand for all sorts of products.
We will have to start anew with our "Economic theory", because Exponential Growth of Population &/or the Economy, just is not possible.
There are many reasons that affect a countries birth rate, wealth is one, but not the only one. Technology, an increased availability of cheap & abundant Energy, as well as a number of social issues, as just some of the other factors.
4) There is plenty, to show that Population Growth, in concert with cheap & abundant Energy & Technology Innovations have done exactly that, but I wouldn't want to spoil your chance of doing a little reading, for yourself.

I trust you are having a nive weekend!

Quote:

and how did I change "what rules" or did you mean "your rules"???

Natural rules. The economies actually work. You suggested that a principle that has always applied, and still applies today, can be ignored because your theory only applies to the last 200 years.


Quote:

Ask most Politicians & Economists and they will go on about the benefits of Increased growth.

Growth in what? My last economics lecturer warned of the dangers of increasing population, understood the reality of the Malthusian dillemma, and pointed out the role of population declines in stimulating economics booms in the past.


Quote:

We will have to start anew with our "Economic theory"

The only person who needs a new theory is you. You should start by understanding current economic theory before trying to replace it with your own.


Quote:

There is plenty, to show that Population Growth, in concert with cheap & abundant Energy & Technology Innovations have done exactly that, but I wouldn't want to spoil your chance of doing a little reading, for yourself.

I have done plenty of reading. It is time for you to come up with the goods. For someone who claims to have done a lot of reading on this issue you show remarkably little understanding of economics. Newspaper headlines are not the place to learn the basics. Would you get a medical degree by reading the paper? Would you learn how to build a bridge? What makes you think that you are so special, or economics is so simple, that you can understand it with such little effort?

freediver wrote on Jul 18^th, 2010 at 12:08pm:

Quote: and how did I change "what rules" or did you mean "your rules"??? [quote] freediver Natural rules. The economies actually work. You suggested that a principle that has always applied, and still applies today, can be ignored because your theory only applies to the last 200 years.

That is just a load of -
Credible
Reliable
Abundant
Parardoxes

You simply got it out of context!

I have been talking about the Population explosion, Energy and the last 200 years, particularly the last 80!

YOU said Over-Population was our greatest problem and it is, but it is not our only problem, there are a number of things inputing into a once in history drama.

Whether you agree or disagree, with what I am saying, is up to you!

Have a nice day.

OK, lets go back to the beginning:


Quote:

But, in back of everything over the last 200 years particularly, has been the steady and un-relenting growth in population that has always been the major Driver or the engine of economic growth, at national and global levels.

Are you claiming here that population growth caused economic growth over the last 200 years? I don't see how this is out of context. You are just wrong. Neither evidence nor logic backs you up.

freediver wrote on Jul 18^th, 2010 at 1:10pm:

OK, lets go back to the beginning: Quote: But, in back of everything over the last 200 years particularly, has been the steady and un-relenting growth in population that has always been the major Driver or the engine of economic growth, at national and global levels. Are you claiming here that population growth caused economic growth over the last 200 years? I don't see how this is out of context. You are just wrong. Neither evidence nor logic backs you up.

==========
FD,
I think the following says it all! A Population decrease, in the last 80-200 years???

If you want to go on about it, that is you choice!

Personally, I have better things to do!

===========

Quote:

perceptions_now I say Neither, you say Niether? The truth, most likely, is that the dramatic Population increase of the last 80 years or so, was because of and arose from a number of factors including Technology, an increased availability of cheap & abundant Energy, as well as purely social issues. However, these factors all became interlocking  and became the old "Chicken & Egg" conumdrum, of which came first. =========

Quote:

freediver The decrease in population came first.

======

I didn't say there was a population decrease in the last 200 years. There is however, a negative correlation between population and economic growth, both within the last 200 eyars and before that.

Population growth does not drive economic growth.

Now, where is that evidence you claimed you had?

Freediver,
In looking at some of your posts, both recent & some older, it seems that some of your concerns include GHG’s & over-population and one of your favoured solution factors, is taxation!

I agree that these two concerns are well placed, that WE need to address them, sooner rather than later and that taxation is one of the measured that will be used to influence desired outcomes!

However, these problems and others do not exist in isolation, nor is there a silver bullet that will remedy all problems.

For example, we (in Australia) could apply a “Green Tax” of sufficient size, which would reduce our GHG emissions substantially or even down to zero (over time).

But, if that resulted in the complete collapse of the current Energy market, which is currently derived from “carbon based Energy”, then what have we actually done, if the “alternative Energy Sources” are either not available to replace the existing sources, particularly in the short to medium term &/or the “alternative Energy Sources” are hugely more expensive?

In my opinion and that of others, there is a lengthy transition time required to smoothly move away from our existing “carbon based Energy” system, to another, even if such a replacement were to exist, which is debateable.

Highlighting this was the Hirsch Report, in the 2005, for the US Department of Energy, where he said the following:
•      “Initiating a mitigation crash program 20 years before peaking appears to offer the possibility of avoiding a world liquid fuels shortfall for the forecast period.”
•      “Initiating a mitigation crash program 10 years before world oil peaking helps considerably but still leaves a liquid fuels shortfall roughly a decade after the time that oil would have peaked.”
•      “Waiting until world oil production peaks before taking crash program action leaves the world with a significant fuel deficit for more than two decades.”  “Late initiation of mitigation may result in severe consequences.”

Perhaps we could say that some of the actions taken over the last several years, due to oil price signals, would count for a year or two of preparation; essentially, though, we are set up for Dr. Hirsch’s “severe consequences” scenario.

What WE needed to do, was to plan for a balanced set of outcomes, including GHG’s, Energy transition, a reasonably stable Economic outcome and a Population slowly declining over time, but these had to be Global! WE did not do so!

For example, there is little point in the US, Europe & Australia finally achieving zero GHG emissions, after say 20 years, only to have China, India & a few others convert their massive populations into GHG emitting middle classes and have the total Global emissions continue to rise, perhaps bringing on Climate Change of massive proportions later this century.

It has proved to be a task of “Gordian Knott” proportions, to pull together all of the major players, into a workable action plan, involving all of the major factors and I suspect that the final solutions may well come too late and the remedies far too harsh, for most of the Global Public!    

Purely in terms of GHG’s & Tax, as I have said before, I suggest a mixture of the Carrot, Stick & mandatory GHG emission reductions. If Business, Government Depts & Individuals achieve set reductions, then they get the carrot (less tax); if they fail to achieve the target, then they get the Stick (more tax).

In terms of Energy, we may already be too late, as Oil HAS PEAKED and Coal & Gas will follow, in the not too distant future! Whilst WE may muddle thru, the changes involved for the longer term, must be Paradigm changing, as will be the Political issues.

Within 50-100 years, we may need to REPLACE PRACTICALLY EVERY CURRENT ENERGY SOURCE, with something new! That will be impossible, if we are to maintain a reason economy, unless the Global Population shrinks to much lower levels of perhaps around 2-3 Billion.

Is this my theory? No!
Are any of my other postings, my theory? No!
Is this posting & my other posts, simply observations of current & future scenarios? Yes!

What will become future fact, we will all find out and the next 5-10 years, will reveal a heck of a lot about future directions!

freediver wrote on Jul 18^th, 2010 at 5:57pm:

Population growth does not drive economic growth.

How about we set up a trial and see how we go, by reversing 2 of the 3 major Economic Drivers/Enablers.

Let's round the figures out & take say 2%, as the average Population Growth & Energy (Oil, Coal, Gas production) Growth, of the last 80 years.

Then, let's set up various policies to reverse that trend, because we want to save the planet from a huge climate crisis?

That said, what would you suggest would be the comparison between current Demand/Consumption/Economy and the Demand/Consumption/Economy, around the end of this century?

It does not matter, what happens to the 3rd of the 3 major Economic Drivers/Enablers, which is Technology/Innovation, if Population & Energy Growth slow & go into reverse, then the Global Economy will be subject to a massive slowdown, just as the last 80 years has seen a massive increase in Growth in the Global Economy!

Quote:

How about we set up a trial and see how we go

Or, we could just look at the evidence we already have. No need to rely on your imagination when we have reality to guide us. Didn't you say you had some evidence that backed up your position?

Quote:

perceptions_now How about we set up a trial and see how we go

Quote:

freediver Or, we could just look at the evidence we already have.

And what evidence is that?

Let's face reality, the only evidence, fact &/or opinion that is of interest to you, are the ones that suit your purpose/s, whatever that may be!

This time is different?

http://static.seekingalpha.com/uploads/2010/7/17/226469-127937320163399-Steven-Hansen_origin.jpg

Link -
http://seekingalpha.com/article/215028-welcome-to-the-dreaded-japanese-l?source=email

The dip in US Employment IS & WILL BE, much greater & prolonged!

I expect that Q3 & Q4 of 2010 will see the Global Economy begin to Double Dip and with that, goes any chance of the US Employment stats improving, any time soon, which is very different to most past slowdowns/recessions!

That looks like a Cityrail map perceptions. LOL.

;D

Why This Summer, The Odds Favor a Declining Market

paramount reasons -
Housing
Jobs
Taxes
Debt

JOBS
If you are looking for good news here, look elsewhere. The “official” unemployment rate stands at a shade under 10%. If you are inclined to believe that, I have some jumbo Pacific Ocean shrimp raised in a rocky little cliffside cove in Nebraska to sell you. Even the administration’s own “fine print” level of unemployment, the broader “U6” measure, owns up to something more like 18%. And shadowstats.com, a great website devoted to truth-in-statistics, counts as unemployed those who no longer collect benefits or those who have despaired of ever finding a job, and reports it as closer to 22%

http://static.seekingalpha.com/uploads/2010/7/18/142982-127949756862077-Joseph-L--Shaefer.jpg

BONUS ROUND: DEBT

In my article on MINNOWs and CO-MINNOWs, states that are walking bankruptcies and whose debt should be avoided (here) we must now add another, even bigger debtor: the USA. As well as a number of other sovereign nations around the world.

As California, New York, Illinois, et al beg for money from the feds to bail them out, there will be a quid pro quo – some sort of plan to pay it back. If you think this won’t involve layoffs, yes, even of public sector workers, you are a candidate to be a partner in that Nebraska ocean shrimp farm.

http://static.seekingalpha.com/uploads/2010/7/18/142982-127949780813877-Joseph-L--Shaefer.jpg

And how long, for that matter, will the rest of the world run to US Treasuries, rather than Canadian Treasuries or gold or Chinese Yuan or whatever, every time there is a hint of danger in the world. The question is not whether the US will be forced to pay more on its Treasury obligations, but when.
Link -
http://seekingalpha.com/article/215068-why-this-summer-the-odds-favor-a-declining-market?source=email
========
Lies, damned lies & Government stats! Shadow stats is a respected check on US government stats.

Whilst I think the Debt map stats may be a little old & perhaps not entirely accurate, it does relate that OZ is relatively better placed than many other countries, when it comes to Debt.

That said, Debt does need to be kept in check, but not at the expense of decimating the Publics NET DISPOSAL INCOME!

Quote:

And what evidence is that?

Do we really need to go over this again? One recent example is a comaprison of China and India. There are also plenty of examples of 'good times' following plagues and wars in Europe that killed off a big chunk of the population.


Quote:

Let's face reality, the only evidence, fact &/or opinion that is of interest to you, are the ones that suit your purpose/s, whatever that may be!

Can you explain then why I keep asking you for evidence that fits your theory? You did say you have some evidence didn't you?

Credit Crunch 2010

It seems like almost everyone is using the words "double dip" these days.

It is almost as if it was already a foregone conclusion.

But the truth is that this would have just been one long economic decline if the U.S. government (and many of the other governments around the globe) had not pumped so much "stimulus" into their economies over the past several years.

Now that governments around the world are pulling back and are beginning to implement austerity measures, the "sugar rush" of the stimulus money is wearing off and the original economic decline is resuming.

All that the trillions in "stimulus" did was to give the world economy a temporary boost and get us into a whole lot more debt.

The truth is that the United States is in the early stages of a truly historic financial implosion.

Without direct intervention from the U.S. government, the U.S. financial system is headed for a world of hurt.

The truth is that the credit markets are freezing up, and without efficiently operating credit markets, the economic system we have constructed simply will not work.
Link -
http://seekingalpha.com/article/215105-credit-crunch-2010?source=email
========
the following article can also be accessed via the above article & both are worth a read!
=========
Fed's volte face sends the dollar tumbling

Mr Bloom said a deep change is under way in investor psychology as funds and central banks respond to the blizzard of shocking US data and again focus on the fragility of an economy where public debt is surging towards 100pc of GDP, not helped by the malaise enveloping the Obama White House. "The Europeans have aired their dirty debt in public and taken some measures to address it, whilst the US has not," he said.

The Fed minutes warned of "significant downside risks" and a possible slide into deflation, an admission that zero interest rates, $1.75 trillion of QE, and a fiscal deficit above 10pc of GDP have so far failed to lift the economy out of a structural slump.

"The Committee would need to consider whether further policy stimulus might become appropriate if the outlook were to worsen appreciably," it said. The economy might not regain its "longer-run path" until 2016.

The signs of a deep and sudden slowdown in the US are becoming ever clearer as the "sugar rush" from the Obama fiscal stimulus wears off and the inventory boost fades. California, Illinois and other states are cutting spending, tightening US fiscal policy by 0.8pc of GDP.

Thursday's plunge in the Philadelphia Fed's July index of new manufacturing orders to –4.3 suggests that the economy may have buckled abruptly, as it did in mid-2008. The Economic Cycle Research Institute's ECRI leading indicator has tumbled, reaching –8.3pc last week. This points to a sharp slowdown or recession within three months.

The US workforce has shrunk by a 1m over the past two months as discouraged jobless give up the hunt. Retail sales have fallen for the past two months. New homes sales crashed to 300,000 in May after tax credits ran out, the lowest since records began in 1963. Mortgage applications have fallen by 42pc to 13-year low since April. Paul Dales at Capital Economics said the "shadow inventory" of unsold properties has risen to 7.8m. "The double dip in housing has begun," he said.
Link -
http://www.telegraph.co.uk/finance/currency/7893238/Feds-volte-face-sends-the-dollar-tumbling.html
===============
Whilst I regrettably agree with much of their assessments, I can not see that any form of possible direct intervention or levers available to & from the U.S. government, which would achieve a return to the old status quo, in short there is no Hollywood ending!

Is that the evidence you think backs up your claim? Can you explain how?

freediver wrote on Jul 21^st, 2010 at 6:14pm:

Is that the evidence you think backs up your claim?

No!

Quote:

perceptions_now There are no silver bullets and GHG emissions (in particular), Climate Change (in general), Energy & Population issues are all inter-related.

Quote:

freediver I did not claim there are silver bullets. What I claim is that carbon taxes are the best solution.

Did I say, you had claimed there was a silver bullet? No!

I simply said, "there are NO SILVER BULLETS" and that "GHG emissions (in particular), Climate Change (in general), Energy & Population issues are all inter-related" and I should have added, the general Global Economy is also inter-related to all of that, as well!

Quote:

perceptions_now To claim that you have a simple solution, even if only to the GHG emissions, is too simple and ignores the complex nature & interactions of the various issues involved, including be limited to the economy.

Quote:

freediver 1) It is not just me. It is the vast majority of economists. And it is that simple PN. 2) Not sure why you keep trying to make it more complicated.

1) Well, at this point, the vast majority of Economists, did not predict any GFC, let alone one which is 2nd only (so far) to the Great Depression, so I will stay with my views of what is happening, why & when! And, NO, it is not simple!

2) Because it is, complicated!

Quote:

perceptions_now As previously stated, I believe a mixture of Carrot (Less TAX), Stick (More Tax) and prescribed or set levels of Emmissions & usage (lower), would be needed!

Quote:

freediver 1) And this is based on ... nothing? An uneducated guess? A gut feeling? The road to poverty is paved with gut feelings. 2) I agreed with you partially in the sense thatthe taxes should be used to lower other arbitrary taxes, but not if you mean subsidies or tax breaks targetted at the energy sector. Is that what you mean?

1) 40 years in the Financial sector, a lot of research & some logical assessments! How about you?

2) My preferred model would be to -
a) Set lower levels of Emmissions & Usage, accross all industries, say 5-10% per year.
b) Use the Tax Carrot, to reward the achievement of those lower levels, by providing tax credits.
c) Use the Tax Stick, to penalise those who do not achieve the target levels, by hitting them with a Carbon Tax Excise, for want of a better term.

perceptions_now wrote on Jul 21^st, 2010 at 7:53pm:

freediver wrote on Jul 21st, 2010 at 6:14pm: Is that the evidence you think backs up your claim? No!

So the evidence does not actually support your position?

freediver wrote on Jul 22^nd, 2010 at 8:09pm:

perceptions_now wrote on Jul 21st, 2010 at 7:53pm: freediver wrote on Jul 21st, 2010 at 6:14pm: Is that the evidence you think backs up your claim? No! So the evidence does not actually support your position?

You asked, "Is that the evidence you think backs up your claim?"

I said, "No!"

I would think that is self explanatory!

Quote:

perceptions-now And what evidence is that?

Quote:

freediver Do we really need to go over this again? One recent example is a comaprison of China and India. There are also plenty of examples of 'good times' following plagues and wars in Europe that killed off a big chunk of the population.

Quote:

perceptions-now Let's face reality, the only evidence, fact &/or opinion that is of interest to you, are the ones that suit your purpose/s, whatever that may be!

Quote:

freediver Can you explain then why I keep asking you for evidence that fits your theory? You did say you have some evidence didn't you?

In looking at some of your posts, both recent & some older, it seems that some of your concerns include GHG’s & over-population and one of your favoured solution factors, is taxation!

I agree that these two concerns are well placed, that WE need to address them, sooner rather than later and that taxation is one of the measured that will be used to influence desired outcomes!

However, these problems and others do not exist in isolation, nor is there a silver bullet that will remedy all problems.

For example, we (in Australia) could apply a “Green Tax” of sufficient size, which would reduce our GHG emissions substantially or even down to zero (over time).

But, if that resulted in the complete collapse of the current Energy market, which is currently derived from “carbon based Energy”, then what have we actually done, if the “alternative Energy Sources” are either not available to replace the existing sources, particularly in the short to medium term &/or the “alternative Energy Sources” are hugely more expensive?

In my opinion and that of others, there is a lengthy transition time required to smoothly move away from our existing “carbon based Energy” system, to another, even if such a replacement were to exist, which is debateable.

Highlighting this was the Hirsch Report, in the 2005, for the US Department of Energy, where he said the following:
•      “Initiating a mitigation crash program 20 years before peaking appears to offer the possibility of avoiding a world liquid fuels shortfall for the forecast period.”
•      “Initiating a mitigation crash program 10 years before world oil peaking helps considerably but still leaves a liquid fuels shortfall roughly a decade after the time that oil would have peaked.”
•      “Waiting until world oil production peaks before taking crash program action leaves the world with a significant fuel deficit for more than two decades.”  “Late initiation of mitigation may result in severe consequences.”

Perhaps we could say that some of the actions taken over the last several years, due to oil price signals, would count for a year or two of preparation; essentially, though, we are set up for Dr. Hirsch’s “severe consequences” scenario.

What WE needed to do, was to plan for a balanced set of outcomes, including GHG’s, Energy transition, a reasonably stable Economic outcome and a Population slowly declining over time, but these had to be Global! WE did not do so!

For example, there is little point in the US, Europe & Australia finally achieving zero GHG emissions, after say 20 years, only to have China, India & a few others convert their massive populations into GHG emitting middle classes and have the total Global emissions continue to rise, perhaps bringing on Climate Change of massive proportions later this century.

It has proved to be a task of “Gordian Knott” proportions, to pull together all of the major players, into a workable action plan, involving all of the major factors and I suspect that the final solutions may well come too late and the remedies far too harsh, for most of the Global Public!    

Purely in terms of GHG’s & Tax, as I have said before, I suggest a mixture of the Carrot, Stick & mandatory GHG emission reductions. If Business, Government Depts & Individuals achieve set reductions, then they get the carrot (less tax); if they fail to achieve the target, then they get the Stick (more tax).

In terms of Energy, we may already be too late, as Oil HAS PEAKED and Coal & Gas will follow, in the not too distant future! Whilst WE may muddle thru, the changes involved for the longer term, must be Paradigm changing, as will be the Political issues.

Within 50-100 years, we may need to REPLACE PRACTICALLY EVERY CURRENT ENERGY SOURCE, with something new! That will be impossible, if we are to maintain a reason economy, unless the Global Population shrinks to much lower levels of perhaps around 2-3 Billion.

Is this my theory? No!
Are any of my other postings, my theory? No!
Is this posting & my other posts, simply observations of current & future scenarios? Yes!

What will become future fact, we will all find out and the next 5-10 years, will reveal a heck of a lot about future directions!

==========
The onus on evidence seems to vary?

Quote:

perceptions-now And what evidence is that?

Quote:

freediver Do we really need to go over this again? One recent example is a comaprison of China and India. There are also plenty of examples of 'good times' following plagues and wars in Europe that killed off a big chunk of the population.

Quote:

perceptions-now Let's face reality, the only evidence, fact &/or opinion that is of interest to you, are the ones that suit your purpose/s, whatever that may be!

Quote:

freediver Can you explain then why I keep asking you for evidence that fits your theory? You did say you have some evidence didn't you?

In looking at some of your posts, both recent & some older, it seems that some of your concerns include GHG’s & over-population and one of your favoured solution factors, is taxation!

I agree that these two concerns are well placed, that WE need to address them, sooner rather than later and that taxation is one of the measured that will be used to influence desired outcomes!

However, these problems and others do not exist in isolation, nor is there a silver bullet that will remedy all problems.

For example, we (in Australia) could apply a “Green Tax” of sufficient size, which would reduce our GHG emissions substantially or even down to zero (over time).

But, if that resulted in the complete collapse of the current Energy market, which is currently derived from “carbon based Energy”, then what have we actually done, if the “alternative Energy Sources” are either not available to replace the existing sources, particularly in the short to medium term &/or the “alternative Energy Sources” are hugely more expensive?

In my opinion and that of others, there is a lengthy transition time required to smoothly move away from our existing “carbon based Energy” system, to another, even if such a replacement were to exist, which is debateable.

Highlighting this was the Hirsch Report, in the 2005, for the US Department of Energy, where he said the following:
•      “Initiating a mitigation crash program 20 years before peaking appears to offer the possibility of avoiding a world liquid fuels shortfall for the forecast period.”
•      “Initiating a mitigation crash program 10 years before world oil peaking helps considerably but still leaves a liquid fuels shortfall roughly a decade after the time that oil would have peaked.”
•      “Waiting until world oil production peaks before taking crash program action leaves the world with a significant fuel deficit for more than two decades.”  “Late initiation of mitigation may result in severe consequences.”

Perhaps we could say that some of the actions taken over the last several years, due to oil price signals, would count for a year or two of preparation; essentially, though, we are set up for Dr. Hirsch’s “severe consequences” scenario.

What WE needed to do, was to plan for a balanced set of outcomes, including GHG’s, Energy transition, a reasonably stable Economic outcome and a Population slowly declining over time, but these had to be Global! WE did not do so!

For example, there is little point in the US, Europe & Australia finally achieving zero GHG emissions, after say 20 years, only to have China, India & a few others convert their massive populations into GHG emitting middle classes and have the total Global emissions continue to rise, perhaps bringing on Climate Change of massive proportions later this century.

It has proved to be a task of “Gordian Knott” proportions, to pull together all of the major players, into a workable action plan, involving all of the major factors and I suspect that the final solutions may well come too late and the remedies far too harsh, for most of the Global Public!    

Purely in terms of GHG’s & Tax, as I have said before, I suggest a mixture of the Carrot, Stick & mandatory GHG emission reductions. If Business, Government Depts & Individuals achieve set reductions, then they get the carrot (less tax); if they fail to achieve the target, then they get the Stick (more tax).

In terms of Energy, we may already be too late, as Oil HAS PEAKED and Coal & Gas will follow, in the not too distant future! Whilst WE may muddle thru, the changes involved for the longer term, must be Paradigm changing, as will be the Political issues.

Within 50-100 years, we may need to REPLACE PRACTICALLY EVERY CURRENT ENERGY SOURCE, with something new! That will be impossible, if we are to maintain a reason economy, unless the Global Population shrinks to much lower levels of perhaps around 2-3 Billion.

Is this my theory? No!
Are any of my other postings, my theory? No!
Is this posting & my other posts, simply observations of current & future scenarios? Yes!

What will become future fact, we will all find out and the next 5-10 years, will reveal a heck of a lot about future directions!

==========
The onus on evidence seems to vary?

And, your idea of evidence and mine seem a little different?

Then, there is a question of what is evidence, what is opinion & what can be verified, particularly when many of the current circumstances of recent & current events, are unprecedented.

Bernanke Is 'Unusually Uncertain' - Is That an Improvement?

In response to Bernanke Says Economic Outlook is "Unusually Uncertain", Fed Prepared for "Actions as Needed" I received this comment from "Economics Teacher".

ET Writes...

Ben is forecasting uncertainty and saying the Fed's prepared for action as needed. Did Uncle Ben strain his cerebrum coming up with that one (forecasting uncertainty)?

I suppose there's a difference between "unusually uncertain" and "typically uncertain." Either way it comes out this way -
Ben doesn't know squat!

Is "Uncertain" an Improvement?

Bernanke was pretty certain there would not be a recession, that housing was not in a bubble, that the unemployment rate would peak at 8.5%, that paying interest on reserves would enable the Fed to hold short-term rates above 2%.

Bernanke was wrong on every count. At least now he admits he is guessing.

Let's recap the Fed Uncertainty Principle to see what it suggests may be certain or uncertain.

Fed Uncertainty Principle:
The fed, by its very existence, has completely distorted the market via self reinforcing observer/participant feedback loops. Thus, it is fatally flawed logic to suggest the Fed is simply following the market, therefore the market is to blame for the Fed's actions. There would not be a Fed in a free market, and by implication there would not be observer/participant feedback loops either.

Corollary Number One: The Fed has no idea where interest rates should be. Only a free market does. The Fed will be disingenuous about what it knows (nothing of use) and doesn't know (much more than it wants to admit), particularly in times of economic stress.

Corollary Number Two: The government/quasi-government body most responsible for creating this mess (the Fed), will attempt a big power grab, purportedly to fix whatever problems it creates. The bigger the mess it creates, the more power it will attempt to grab. Over time this leads to dangerously concentrated power into the hands of those who have already proven they do not know what they are doing.

Corollary Number Three: Don't expect the Fed to learn from past mistakes. Instead, expect the Fed to repeat them with bigger and bigger doses of exactly what created the initial problem.

Corollary Number Four: The Fed simply does not care whether its actions are illegal or not. The Fed is operating under the principle that it's easier to get forgiveness than permission. And forgiveness is just another means to the desired power grab it is seeking.

That was written on April 03, 2008. Many of the Corollaries have played out time and time again.

Things to Be Certain About

When Bernanke says he is prepared to take action "as needed", you can be certain of it.

Moreover, you can be pretty certain that he is about to take action soon, whether action is needed or not. The pertinent question is "What Action?"

On that, we cannot be certain. However, we can be certain that one or more of corollaries two, three, and four will be in play.

Finally, we can also be certain that whatever Bernanke tries will ultimately be a failure given Bernanke's Deflation Preventing Scorecard is a perfect zero.

Hopefully this clarifies things you can and cannot be certain about, even if Bernanke himself is "Unusually Uncertain".
Link -
http://seekingalpha.com/article/215803-bernanke-is-unusually-uncertain-is-that-an-improvement

===========
So, it seems that Ben, now has two words for us, "Unusually Uncertain".

I seem to recall the previous FED chairman (Greenspan), also had two words for us, "irrational Exuberance".

Well, perhaps what we have actually had for some time is, "unusual exuberance" in the face of some "rational certainties"?

Which is , in fact, what we have had, when the Federal Reserve, the US & most (if not all) other governments, including Australia, has refused to face the certainties that -
1) The Global Population was Aging & a severe Economic bottleneck would occur, commencing around 2005!
2) Global Energy (Oil) & other essential Resources were finite and that Supply would Peak and commence an irreversible decline, which has actually started (around 2005) in the case of Oil!  
3) That one of the major Economic Drivers (Population Growth) of Demand, would Peak around 2030-2040 and then go into Decline for the balance of this century!
4) We have no choice, but to allow 2 & 3 to take place, as to do otherwise, would pretty much guarantee a Climate Catastrophe later this century!  

So, are we faced with Central Banks & governments doing nothing in the face of known certainties or are we faced with Central Banks & governments doing nothing, because  they are "Unusually Uncertain"?

One choice is an accident of fate, the other is by design?

Whichever is true, we are faced with some "unusually difficult" times ahead, as is confirmed by looking at the Debt situation of many countries now!

And, for most of the Central Bankers, Politicians & Economists, I say to them, "you should have told us & trusted us, so that we could prepare" and that I also, have "2 words for you"!

You seem to be trying to change the topic yet again. Or maybe you have forgotten it. Remember this in your opening post:


Quote:

But, in back of everything over the last 200 years particularly, has been the steady and un-relenting growth in population that has always been the major Driver or the engine of economic growth, at national and global levels.

You claimed you had evidence to support this. You asked me for the evidence for my view, which is the opposite of yours. I provided that evidence. I have asked you several times to provide the evidence you mentioned. You always respond with a copy and paste bomb, but it never seems to be about the same topic.

Would you mind directing me to the evidence you claim you have that supports your view on the relationship between population growth and economic growth?

Quote:

FD You seem to be trying to change the topic yet again. Or maybe you have forgotten it. Remember this in your opening post: [quote] Perceptions_now But, in back of everything over the last 200 years particularly, has been the steady and un-relenting growth in population that has always been the major Driver or the engine of economic growth, at national and global levels.

[/quote]


Quote:

FD 1) You always respond with a copy and paste bomb, but it never seems to be about the same topic. 2) You claimed you had evidence to support this. I have asked you several times to provide the evidence you mentioned. Would you mind directing me to the evidence you claim you have that supports your view on the relationship between population growth and economic growth? 3) You asked me for the evidence for my view, which is the opposite of yours. I provided that evidence.

1) Perhaps because I post quite a few articles, on things that will affect the future and do not directly relate to you or your posts. Its not all about you, you know?
2) I did? That IS news to me!
What I did post, in response to your continued question was the following, in this thread, on July 19th -
Is this my theory? No!
Are any of my other postings, my theory? No!
Is this posting & my other posts, simply observations of current & future scenarios? Yes!
Btw, just because you continually say something, doesn't give it any validity &/or truth!
3) Yes, to highlight that your so called "evidence", is no more evidence that anything I am saying.

The current set of circumstances are unique in history and "your evidence", is essentially the same as my observations, it is all supposition about future scenario's.

Whatever we post here, may or may not eventually happen, it is not evidence that would be the sort admissable in a court, as the circumstances & how all the factors will interact with each other, are absolutely & completely unknown & unknowable!

That said, you have indicated that Economists had warned of the GFC & that there was general agreement within Economists.

Can I suggest that the British Queen, like a few others, were unaware of the warnings from much of the "Economist profession", as can be seen in the following article titled -
"Sorry Ma’am — we just didn’t see it coming"

http://www.msnbc.msn.com/id/32156155/ns/business-world_business/  

Whilst some Economists, commentators etc did see it coming, such as Roubini & Schiff and they were battered from pillar to post, by many of the other so called experts.

Both Schiff & Roubini got quite a few issues correct, more than many of the establishment, but their record is by no means perfect, not subject discussion on some issues or just plain wrong on some things, as well! But they did do a lot better than many Economists & other experts.
Peter Schiff Link -
http://www.youtube.com/watch?v=2I0QN-FYkpw  
With Schiff, many critised him for his observations (in fact they laughed at him) and future scenario's and much of what he said, has now proved to be correct. Those that went with the recommendations of others, against Schiff, would now be substantially worse off!

Nouriel Roubini predicted a global financial meltdown -
http://www.theaustralian.com.au/business/opinion/dr-doom-the-prophet-of-loss/story-e6frg9if-1111117871795

Finally, you say my views are opposite to yours, which I find odd, because I actually agree with you in a number of areas and have said so, repeatedly.

Quote:

Is this posting & my other posts, simply observations of current & future scenarios? Yes!

This does not look like an observation of the future to me:


Quote:

But, in back of everything over the last 200 years particularly, has been the steady and un-relenting growth in population that has always been the major Driver or the engine of economic growth, at national and global levels.

Quote:

Yes, to highlight that your so called "evidence", is no more evidence that anything I am saying.

Didn't you just change your mind and say you had no evidence? Or is your opinion just as valid as evidence as what actually happened?


Quote:

The current set of circumstances are unique in history

Are you suggesting that our understanding of economics no longer applies? We should throw out the knowledge accumulated over the centuries?


Quote:

and "your evidence", is essentially the same as my observations, it is all supposition about future scenario's.

Actually, my evidence was relevant to the relationship between population growth and econoic growth. If you want to argue that things work backwards in the future go right ahead, but you also made a statement about this relationship in the past, for which you should be able to provide evidence, if it is true. Furthermore, this claim you made about the historical relationship seems to be fundamental to your predictions of the future.

Are you claiming to be able to predict the future by ignoring everything that happened in the past and present?

Quote:

perceptions_now Yes, to highlight that your so called "evidence", is no more evidence that anything I am saying.

Quote:

FD Didn't you just change your mind and say you had no evidence?

No!

Ah, so you do have evidence? Is it relevant to that theory of yours?


Quote:

But, in back of everything over the last 200 years particularly, has been the steady and un-relenting growth in population that has always been the major Driver or the engine of economic growth, at national and global levels

.

Quote:

perceptions_now The current set of circumstances are unique in history

Quote:

FD Are you suggesting that our understanding of economics no longer applies? We should throw out the knowledge accumulated over the centuries?

No, there are still lessons to apply from history!

However, whilst some of the outcomes may look similar, at present, many of the major inputs ARE DIFFERENT, THEY ARE UNIQUE and so WILL BE SOME OF THE FINAL LONGER TERM OUTCOMES!  

Quote:

No, there are still lessons to apply from history!

So you agree we need to get our understanding of history right in order to have any meaningful insight into the future?

Quote:

perceptions_now and "your evidence", is essentially the same as my observations, it is all supposition about future scenario's.

Quote:

FD Actually, my evidence was relevant to the relationship between population growth and econoic growth. If you want to argue that things work backwards in the future go right ahead, but you also made a statement about this relationship in the past, for which you should be able to provide evidence, if it is true. Furthermore, this claim you made about the historical relationship seems to be fundamental to your predictions of the future. Are you claiming to be able to predict the future by ignoring everything that happened in the past and present?

Let me out it this way, TRY REDUCING THE GLOBAL & AUSTRALIAN POPULATION by say 2-3% per year, for the next 80 years and you give me your scenario's of what you think will happen to the Global & Australian Economy?

Now, after that, also apply a 4-8% decline in Global Energy Production and then tell me, where you think we will be in 80 years?  

I don't see much point in arguing different predictions of the future with you if we can't even agree on what happened in the past and you keep trying to avoid discussing it.

It will still boil down to this claim of yours:


Quote:

But, in back of everything over the last 200 years particularly, has been the steady and un-relenting growth in population that has always been the major Driver or the engine of economic growth, at national and global levels

We would just waste ten or so pages of discussion getting back to where we started.

freediver wrote on Jul 25^th, 2010 at 11:00am:

Ah, so you do have evidence? Is it relevant to that theory of yours? Quote: But, in back of everything over the last 200 years particularly, has been the steady and un-relenting growth in population that has always been the major Driver or the engine of economic growth, at national and global levels .

No, I didn't change my mind!

Is this my theory? No!
Are any of my other postings, my theory? No!
Is this posting & my other posts, simply observations of current & future scenarios? Yes!

You keep saying it & I'll keep repeating it!
How's that?

So whose theory is it?

freediver wrote on Jul 25^th, 2010 at 11:15am:

I don't see much point in arguing different predictions of the future with you if we can't even agree on what happened in the past and you keep trying to avoid discussing it. It will still boil down to this claim of yours: Quote: But, in back of everything over the last 200 years particularly, has been the steady and un-relenting growth in population that has always been the major Driver or the engine of economic growth, at national and global levels We would just waste ten or so pages of discussion getting back to where we started.

What happened, did you come to the conclusion, that the following scenario's would cause an economic decline?

"Let me out it this way, TRY REDUCING THE GLOBAL & AUSTRALIAN POPULATION by say 2-3% per year, for the next 80 years and you give me your scenario's of what you think will happen to the Global & Australian Economy?

Now, after that, also apply a 4-8% decline in Global Energy Production and then tell me, where you think we will be in 80 years? "

Just as the increase in Population & Cheap Energy were major drivers of Economic Growth over the last 80 years?

The Ghosts of Milton Friedman and John Maynard Keynes

I originally penned this article for the August 2007 issue of the HS Dent Forecast–nearly three years ago.  My comments on deflation and consumer spending turned out to be right on the mark.

The late Milton Friedman may be the most accomplished economist of his generation. Just as his predecessor John Maynard Keynes influenced every aspect of economic thinking and policy in the 1930s, 40s, and 50s, virtually every significant development in recent decades towards free and open markets bears Friedman’s mark.

Consumption, driven by end-user demand, was merely an afterthought, something that just “happened” and didn’t need to be explained. This was best summarized by Say’s Law, a maxim memorized by every freshman economics student: “Supply creates its own demand.” By virtue of manufacturing something, you have created a demand for that something, since it can be traded for other goods. This could be called a “build it and they will come” strategy, to borrow a line from the movie Field of Dreams.

But what happens when supply doesn’t create its own demand. What happens – as in the Great Depression and in 1990s Japan – there is not sufficient demand to absorb a plentiful supply?

Keynes also fails to note that spending and saving habits are affected by level of wealth and – most importantly to our research – age and stage of life. We’ll give credit to Keynes for being the first person to approach consumption scientifically, but it is obvious that his model was incomplete and not reflective of the real world.

HS Dent Modified Life Cycle Hypothesis
http://4.bp.blogspot.com/_xwXK9DWd6Pc/TEihRqFrjdI/AAAAAAAAAHQ/Qnn0Tb84HQs/s320/Slide3.

This familiar chart is the basis for the Spending Wave. We know, based on data from the US Bureau of Labor Statistics, that consumer spending is largely a function of age. We spend increasingly more raising our families until our late 40s, after which time we pare down our spending and save for retirement.

Conclusions
Demographic trends suggest a decade-long lull in consumer spending starting around 2009 or 2010 as the Baby Boomers begin to spend less and save more for retirement. This will be a repeat, almost twenty years later, of the same scenario that Japan faced during the 1990s. When US consumer spending begins to falter, there will no doubt be plenty of economists attempting to explain the phenomenon by using some variation of Friedman’s permanent income hypothesis: “Americans are spending less money today because they see dark economic times ahead with declining incomes and standards of living….”

Then, any and every policy under the sun will be recommended on how to “fix” the problem. No doubt, Keynes’s Depression-era work will also be resurrected, and phrases like “liquidity trap” will become popular again in economic circles. [Note: Real world events followed this part of the forecast like a movie script.]

None of these ideas are likely to make much difference in spurring demand. They certainly didn’t in Japan, and there was no lack of trying. Japan eventually recovered to an extent, as the US will too. But the recovery in demand was a result of changes in demographic trends, not a policy miracle.
Link -
http://www.benzinga.com/10/07/391822/the-ghosts-of-milton-friedman-and-john-maynard-keynes
===========
What also happens, when Supply of essential resources, such as Oil in particular & Fossil Fuels in general, start to decline with no suitable replacement in sight, to meet the expected Demand?

I could quibble about the duration of the Economic malaise that has now satrted and I could point out that Japan was assisted somewhat because the rest of the world were not infected with a similar problem between 1990 to 2005, but the bottom line is that there are some tough times ahead!

Btw, Harry Dent, like the rest of us, correct sometimes & not others, unless your name is FD & then you are correct all the time - Joking!?

But, Dent's work is worth a read & you might try the following to start -
http://www.hsdent.com/the-great-depression-ahead-a-new-book-by-harry-s-dent-jr-and-the-perfect-storm/

Monetary Policy Cannot Solve Current Economic Weakness

Well, Chairman Bernanke said a lot of things but the only part which was heard was just two words in one paragraph:

Of course, even as the Federal Reserve continues prudent planning for the ultimate withdrawal of extraordinary monetary policy accommodation, we also recognize that the economic outlook remains unusually uncertain. We will continue to carefully assess ongoing financial and economic developments, and we remain prepared to take further policy actions as needed to foster a return to full utilization of our nation's productive potential in a context of price stability.

I listened on and off to the Chairman's testimony. The market dived just hearing a brief window of honesty in hours of testimony looking at the economy through rose colored glasses. The famous Jack Nicholson line in the movie A Few Good Men rang loudly – “You cannot handle the truth”.

Most analysts covering the economy (such as myself) have been painting a picture of an economy slowing – the only difference between the analysts is the how dire the future will be. Universally, all admit the future is uncertain as in this weaken state – events that a strong economy would shrug off can now pull the rug out.

I suspect one of the reasons for the negative reaction to the Chairman's statement was they believed he was Superman. They believed the Fed can solve any economic crisis. They would be correct if this was the normal run-of-the-mill recession, but this Great Recession is different.
Link -
http://seekingalpha.com/article/216311-monetary-policy-cannot-solve-current-economic-weakness
===========
Well, I agree with a few of the major assertions -
1) Monetary Policy & the US FED in particular, can not wave a magic wand & solve the current Economic slowdown!
2) Monetary Policy could & has solved many smaller, run of the mill Recessions!
3) There are many, who can not handle the truth, because it is outside the square.
4) THIS TIME IS DIFFERENT!

Economics & Financial Attacks

Central Bankers and Finance Ministers and Treasury Secretaries speak glibly about systemic risk while rarely stopping to think about what they mean by the word “system,” which is at the root of systemic.
They have a concept of the system of money and banking (and the institutions that conduct those operations that create money and extend credit) that connects directly to macroeconomic theories expressed variously as Keynesian or Monetarist.
This understanding translates into misnamed stimulus packages, which are, in fact, redistributionist inflation packages to be carried out by Treasury borrowing and Federal Reserve monetization of the resulting debt (Cogan et al., 2009 [2]).
The circularity of this superficial understanding of system and the ineffectuality of macroeconomics in a systemic crisis is thus complete.

The empirical failures of the General Equilibrium Paradigm are well known. Consider the 19 October 1987 stock market crash in which the market fell 22.6 percent in one day; the September 1998 Russian Long-Term Capital Management (LTCM) crisis in which capital markets almost ceased to function; the March 2000 .com collapse during which the National Association of Securities Dealers Automated Quotation (NASDAQ) numbers fell 80 percent over 30 months; and the 9/11 attacks in which the New York Stock Exchange (NYSE) first closed and then fell 14.3 percent in the week following its
reopening.
Of course, to this list of extreme events must now be added the financial crisis that began in July 2007.

No explanation is given for what causes such events; it is simply a matter of fitting the curve to the data (or ignoring the data) and moving on without disturbing the paradigm. Of course, many critics, notably Nassim Taleb (2007) [3] in his book, The Black Swan, have made the point that analytics based on normal distributions do not accurately describe market behavior in many instances.

If the financial system is a self-organized critical system, as both empirical evidence and deductive logic strongly suggest, then the single most important question from a national security perspective is: what is the scale of the system?
Simply put, the larger the scale of the system, the greater the potential collapse with correlative macroeconomic and other real world effects. The news on this front is daunting. There is no normalized scale similar to the Richter Scale for measuring the size of markets or the size of disruptive events that occur within them; a few examples will make the point.

According to recent estimates prepared by the McKinsey Global Institute, the ratio of world financial assets to world GDP grew from 100 percent in 1980 to 200 percent in 1993 to 316 percent in 2005. Over the same period, the absolute level of global financial assets increased from $12 trillion to $140 trillion and is projected to increase to $240 trillion by 2010. The drivers of this exponential increase in scale are globalization, derivative products, and leverage.

Derivative products have exhibited even faster growth than the growth in underlying financial assets. The total notional value of all swaps increased from $106 trillion to $531 trillion between 2002 and 2006 (New York Times, 2008 [9]). The notional value of equity derivatives increased from $2.5 trillion to $11.9 trillion over the same period while the notional value of credit default swaps increased from $2.2 trillion to $54.6 trillion (New York Times, 2008 [9]).

There can be no doubt that capital markets are larger and more complex than ever before. In a dynamically complex critical system, this means that the size of the maximum possible catastrophe is exponentially greater than ever. Recalling that systems described by a power law allow events of all sizes and that such events can occur at any time, particularly when the system is supercritical, the conclusion is inescapable that the greatest financial catastrophe in history is not only inevitable but could well be what we are experiencing today.
Since the system is larger than ever, there is nothing in historical experience that provides a guide to the size of the largest catastrophe that can arise today.

The fact that the financial crisis which began in July 2007 has lasted longer, caused greater losses, and been more widespread both geographically and sectorally than most analysts predicted or can explain is a function of the fact that the vastly greater scale of the financial system is producing an exponentially greater catastrophe than has ever occurred before.

This is why the past is not a guide and why the crisis may be expected to produce results not unlike the Great Depression of 1929–1941.

Economics & Financial Attacks (Cont)

Vulnerabilities Due to Persistent Economic Stagnation
Picking a bottom in financial markets is a popular pastime for investors and market analysts, but national security analysis should be more concerned with what happens once the bottom is reached. All falling markets find a bottom eventually. The Dow Jones Index may fall to 5,000 or even lower, but it will stabilize at some point. The important issue for the economy, and therefore national security, is what happens then? There seems to be an a priori assumption, or maybe just a large dose of wishful thinking, that when the markets bottom they will bounce back and quickly recover. This is certainly the mantra of “buy and hold” analysis

But what if markets do not bounce back? What if they go down and stay down?

But the evidence from bubble behavior shows that once we hit bottom, we should expect a prolonged and pernicious period at the bottom itself without any appreciable gains for years.
The implications of this for tax revenues, fiscal stability, U.S. economic power, and the ability of the U.S. to project hard or soft political power are daunting.

Market technicians refer to this as the “LUV problem” using the letters “L” “U” and “V” to denote types of market behavior following a collapse of the kind we are now experiencing.
Most optimistic and quite common in cyclical downturns is the V-shaped recovery in which the economy as a whole declines rapidly, hits bottom, and bounces back quickly to the former high level and beyond.
Also not uncommon is the “U” shaped recovery in which the economy or certain indices first fall, then remain at or near the bottom for an extended period before regaining their old highs.
The difference between the “V” and “U”, of course, is the time spent bouncing along the bottom, but investors in both situations are encouraged some rebound is in sight.

Which brings us to the last of our trio of market graphs, the “L” shaped recovery—which, in fact, means no recovery at all; at least not in any time frame in which the recovery is causally linked to the original decline. An L-shaped phenomenon represents a sharp decline followed by a prolonged and open-ended period of stagnation or malaise in which the recovery, when it does finally arrive, probably needs to be jump-started by some extreme event such as a war.

The most famous example of this is the Great Depression, in which the initial industrial contraction lasted 43 months (August 1929 through March 1933) followed by a weak recovery and a second decline of 13 months (May 1937 through June 1938) followed by a second weak recovery.

Another famous example of “L” behavior is the Nikkei 225 index of leading Japanese stocks traded on the Tokyo Stock Exchange. After reaching an all-time closing high of 38,915 on 29 December 1989, it dropped precipitously and reached an interim low of 14,517 on 30 June 1995—a spectacular decline of 63 percent in 4-1/2 years (Figure 1). But the story does not end there. After several rallies and new declines, the index ground down to other interim lows of 7907
on 2 May 2003 and then 7162 on 27 October 2008, a breathtaking 81.6 percent below the all-time high reached almost 19 years earlier

What the Depression, Nikkei, NASDAQ, and other similar episodes all have in common is that they were preceded by bubbles. The Depression and the Nikkei collapses both followed bubbles in real estate and stocks.
Bubble behavior shows up clearly in the preceding graphs and is characterized by a sudden rise from a previous low level, which feeds on itself until it achieves a hyperbolic spike followed by an equally violent downward break then a prolonged period at a relatively low level compared to the previous peak.

What is most striking is the enormous amount of time between the spike and the return to anything approaching that level. The Depression took over 10 years in terms of industrial production, although some markets including commercial real estate did not recover until the mid-1950s, 25 years after the 1929 crash.
The Nikkei has still not returned to its peak after 19 years.

What the U.S. has just experienced is the breaking of numerous bubbles in residential housing, credit card debt, consumption versus savings, growth in derivative products, growth in structured products, and the willingness of investors to use leverage and sell volatility in order to chase illusory gains.

These breaks are not characteristic of normal cyclical downturns of the type which occurred in 1990–1991 and 2001 or even the more severe downturn of 1973–1975.

We expect that the U.S. economy has entered a prolonged and steep decline that could reduce real GDP by 20 percent or more over the next several years with no immediate prospects for recovery.

Economics & Financial Attacks (Cont)

Collapse of the U.S. Economy and Collapse of the U.S. Dollar as a Reserve Curency

Worse even than the long, slow grind along the bottom described in the foregoing section is a sudden catastrophic collapse.
In that context, the greatest threat to U.S. national security is the destruction of the U.S. dollar as an international medium of exchange.

By destruction we do not mean total elimination but rather a devaluation of 50 percent or more versus broad-based indices of purchasing power for goods, services, and commodities and the dollar’s displacement globally by a more widely accepted medium.
This can happen more easily and much more quickly than most observers imagine.

China could engage in its own attack on the U.S. economy quite apart from whether it chose to join Russia in the use of the gold standard based on a new unit of account or even lead such an effort itself. China’s other line of attack runs through its voluminous holdings of U.S. Treasury debt (estimated to be approximately
$1 trillion), and the need of the U.S. for China to continue to purchase new issues of such debt (likely to be $5 trillion or more taking into account base line deficits, temporary stimulus spending, new budget proposals, financial rescues [such as the Troubled Assets Relief Program (TARP), Term Asset-Backed Securities Loan
Facility (TALF), Bear Stearns, General Motors, and others] and as yet unrealized losses and associated bailouts arising from new losses in credit cards, student loans, auto loans, corporate bonds, commercial real estate, and other nonsustainable credit).
China could simply dump say $100 billion of its longest maturity U.S. Treasury securities on the market at one time combined with an announcement that it intended to sell far more when, as and if market conditions warranted.
The end result would be to force the economy into an unpalatable choice between hyperinflation and protracted economic decline resembling the Great Depression, perhaps worse.

Conclusion
Notwithstanding an earlier period of globalization during 1880–1914, there can be little doubt that the current period of globalization from 1989–2009, beginning with the fall of the Soviet Union and the end of the Cold War, represents the highest degree of interconnectedness of the global system of finance, capital, and banking the world has ever seen.

Despite obvious advantages in terms of global capital mobility facilitating productivity and the utilization of labor on an unprecedented scale, there are hidden dangers and second-order costs embedded in the sheer scale and complexity of the system. These costs have begun to be realized in the financial crisis that began in late 2007 and have continued until this writing and will continue beyond.

Among the emergent properties of this complexity are exponentially greater risks of catastrophic collapse leading to the complete insolvency of the global financial system. This dynamic has already begun to play out and will continue without the implementation of appropriate public policies, which, so far, are not in evidence.

More to the point, this ongoing instability lends itself to amplification through the actions of adversaries who can accelerate destabilizing trends through market manipulation and the conduct of marginal transactions in critical securities and commodities such as U.S. Treasury debt, oil, and gold.

The U.S. response should include three components:
• Improved public policy to stabilize the system including temporary nationalization of banks to remove bad assets, preemptive study and consideration of a return to the gold standard, higher interest rates to support the value of the U.S. dollar, increased tolerance of failure in financial institutions to reduce moral hazard, and mandatory use of central counterparty clearing in order to mitigate the impact of institutional failure and descale the system to make it more robust to attack.
• An expert market watch function and all source fusion with improved financial counterintelligence and clandestine action to detect and disrupt attempted malicious acts in global capital markets by adversaries.
• An offensive capability in global capital markets including asset freezes, asset seizures, and preemptive market manipulations.

Finally, the vulnerability of companies and technologies to control and diversion by adversaries must not be overlooked.
This requires improved interagency coordination of the various legal and forensic tools at the disposal of the U.S. in the areas of securities, antitrust, tax, banking, export restrictions, direct foreign investment restrictions, sanctions, and emergency economic powers. These tools should be supplemented by improved financial counterintelligence and new automated tools focused on supply-chain linkages, nonobvious relationship awareness (NORA), and market price anomalies

Economics & Financial Attacks (Cont)

Link -
http://www.jhuapl.edu/urw_symposium/proceedings/2009/Authors/Rickards.pdf
=========
This article addresses a number of issues, but if I can go to the numerous bubbles breaking in the USA & elsewhere, as that brings us to THE central reasons for the existence of those bubbles & why they are breaking.

There are a few things to keep in mind at this point -
1) Population Growth = Demand Increase
2) The 50 year Rule = the average age, for Consumers Maximum Earning & Spending capacity.

Ok, now let’s go all the way back, back in time to about 1933, when the “worm” turned (so to speak) and the Global Fertility rate started to slowly increase.

Then, as WW2 ends in 1945, the worm really got active and gave birth to the greatest baby bump started, “in history”, now referred to as “The Baby Boomer Generation”.
That Boom continued, Peaking around 1956 (at just under 5 children per woman), before “officially” ending in 1964 and then started a long decline until today it stands at about 2.5 children per woman and it is still in decline.  

Now, back to the future!

As I said, the Consumers maximum Earning & Spending average age is 50 years old.

Ok, so let’s apply what we know, to the 50 year rule –
1933 - Fertility rates start to lift
1983 - Stock Markets begin to climb
http://stockcharts.com/charts/historical/images/djia1900s.png
The DOW, which had hovered around 1,000 points for about 20 years, started to climb & hit 4,000 points around 1994
   
1945 - Fertility Rates Take off (official Baby Boom starts)
1995 - Stock Markets take off, the DOW goes from 4,000 points to 11,722 points before 9/11 hits, sending stocks crashing to 7,286 and then rebounding again to 14,164.  


1956 – Fertility rates Peak, then start slow decline since.
2007 – Stock Markets Crash from their top of 14,164 in October 2007, to a low of 6,547 in March 2009, before rebounding again to 11,205 in April 2010 and it has since traded in a range between 9,700 to 10,450.

So, this is the Demand part of the greatest bubble in history.

Economics & Financial Attacks (Cont)
There were also two great enablers of this Population driven Demand bubble, Oil was one & Technology/Innovation was the other.
Whilst some may argue whether Population was the “Chicken & the Egg”, I am of the opinion that it was the increasing Population which set the “Field of Dreams” and Oil & Technology/Innovation came to play, as they saw the fields being built!  

Oil, in particular, has gone in lock step with Population, starting in the 1930’s & 1940’s there were Oil Reserves discovered in the Middle East, including Ghawar (in Saudi) & Burgan (in Kuwait), which have proven with time to have been the greatest in history and we are still reliant on them today, for the lions share of the worlds Oil Production.

Ever since, Oil production continued to increase, along with the Population increase and until around 2000, it remained extraordinarily cheap.

The uses of & for Oil are almost endless in our modern society including Transport, Plastics, Medicines, Chemicals Agriculture, the list is almost endless, that are dependent on oil, no wonder the US has had such a long lasting love affair.

But, after 2000, the Price of Oil began to rise from around $10 P/Barrel, to a high of $147 P/barrel in 2007.

The party was over, Oil Production had effectively Peaked in 2005 and has since hit a plateau, before commencing an inevitable decline, on the other side of the Hubbert Bell Curve!

The long love affair, between exponential Population Demand Growth, enabled by ever-increasing Cheap Oil Production was over and in 2007, some caught a glimpse of what was to come.

So, what is to come?
As Fertility went in decline, after the 1956 Peak, we can expect a continuation declining growth in the Population driven Demand and eventually an actual decline in Demand, for many years into the future.

In addition, there will be an inevitable decline of the great enabler, Post Peak Oil, of Oil Production, starting at lower Global decline rates of 2-3%, before those declines start to approach double digit declines, over the next 20-30 years.  

But, can’t we just start another Baby Boom & find another Energy source?

The short answer is No! The are no other suitable Energy sources, on the scale required, nor would the EROEI (Energy Return On Energy Invested) be sufficient on any of the likely alternatives, to permit a return to “business as usual”.

In any event, even if there was some extremely well hidden alternative to Oil, in all its forms & uses, we could not use it, unless it was completely removed from GHG emissions, as to do otherwise, would invite a Climate Catastrophe and with another Baby Boom we would only exacerbate the exhaustion of essential resources & bring on the Climate problems, quicker!

So, what can be done & what is being done?  
Well, I agree that crashes can be deliberate, but they can also be accidental, a product of neglect or simply a failure to properly plan.

If we were we to rely on the accidental, the product of neglect or a failure to plan, then I suspect NOTHING WOULD HAPPEN, as the ME SYNDROME, would prevent any solution and we (humans) would eventually disappear up our own backsides, whilst the Planet would continue as if nothing had happened.

If a crash were to be deliberate, then its just possible that the Energy decline may be matched by a Population decline and whilst there would be quite a bit of short to medium term Economic pain,  it may be possible to come out the other side with humanity in tact, whilst admittedly smaller and perhaps, but only perhaps, with GHG emissions reduced to levels where humanity may survive a Climate Catastrophe?

Let's hope the crash was deliberate, for the sake of humanity. I very much doubt it though, considering I can't recall any governmental programs/policies being put into place that would back up that theory. I think the majority of us got carried away with the 'ME SYNDROME', and didn't or don't give a toss about future generations.

I think we've left it too late, since environmental history is a relatively new study and we don't have a great deal of expert factual material to look back on.

Anyway, there's still hope, if we change our ways immediately, or miraculously discover an alternative to oil, or both.

FUTURE WINDOWS

Written in mid 2006, this contained 6 Possible, Major Influencing Events, including this one, relating to -

4) PEAK OIL

Event Initiator
- First reports that production can not keep pace with consumption, due to insufficient reserves.

Event Start Date
- Within 5 years.

Event Outcome/s
- Significant, to rampant increase in Oil related product pricing.
- Significantly increase inflationary pressure.
- Significant problems, in replacing Oil base, in many product lines.
- Immediate, knee-jerk reaction to implement Nuclear power.
- Increased, subsequent push for Green alternatives.

Event Duration
- 20 to 30 years

Event Probabilities
- Within 5 years, 80 to 20.
- Worse Case Scenario, 60-40.


5)  BABY BOOMER RETIREMENT

Event Initiator
- Commencement of post WW2 babies going into retirement.

Event Start Date
- Already commenced recently – 2005.

Event Outcome/s- Significant reduction in Workforce Participation is likely, notwithstanding government efforts to delay.
- Immigrant intake dilemma likely, some will want a greater intake, to offset bottlenecks in some workforce sectors, whilst others will seek lower intake, to offset rising unemployment.
- Significant cost factor increases will enter the economy, due to population aging and lower Participation Rate, causing inflationary & deflationary pressures to grow.
- Significant reduction in Property values is likely, as event shifts thru to retirement and to the death of Baby Boomer generation. The generation birth rates that followed the Boomers reduced to 60%, then 40% in more recent times. As the asset rich Baby Boomers die, those left will be less well off and there will be less of them – the laws of supply & demand will take over.
- Significant reduction in Share Market values is likely and an extended depression, commencing around 2010, give or take a couple of years.

Event Duration
- 20 to 30 years.

Event Probabilities
- Start 100% - Has been guaranteed for over fifty years.
-Worst case scenario, 60-40


6)  CLIMATE CHANGE

Event Initiator- Most likely Carbon overload of atmosphere from vehicles, power plants and the like.

Event Start Date - Already started.

Event Outcome/s
- Increase in severe weather events, such as Hurricanes, Floods, Droughts.
- Increase in sea levels worldwide, causing mass evacuations of coastal populations and deaths.
- Shutdown of ocean currents circulation between polar caps and equator, due increase    
 in fresh water, arising from melting of large sections of polar ice shelfs. Possible result is new
 ice age.
- Unless action is Worldwide and immediate (which does not seem likely), then the most  
 probable outcomes appear bleak.
- If concerted action not taken immediately, this could be an end game scenario, the results
 could include a Billions plus dead, an economic depression, much worse than the Great Depression
 and major wars.

Event Duration
- How long is a piece of string?

Event Probabilities
- Start 100%.
- Worse case scenario, 65-35.

Investment Outlook
Privates Eye

I really do have a serious message this month, an adjunct to the New Normal that will likely impact growth and financial markets for years to come. Our New Normal, to repeat ad nauseam, is predicated upon deleveraging, reregulation and deglobalization, all of which promote slower economic growth and lower inflation in developed economies while substantially bypassing emerging market countries that have more favorable initial conditions.

In recent months, Mohamed El-Erian has added a developing corollary that emphasizes the lack of an appropriate policy response to what is a structural as opposed to a cyclical development, are constructively suggesting a way back to the old normal.

That return journey will be all the more difficult to accomplish, however, because of demographics, an influence that much like gravity is hard to see but whose effect is all too powerful. Demographics – or in this case population growth – is so long term in its influence that economists and observers are inclined to explain the functioning of economic society without ever factoring in the essential part that it plays in growth. Production depends upon people, not only in the actual process, but because of the final demand that justifies its existence. The more and more consumers, the more and more need for things to be produced. I will go so far as to say that not only growth but capitalism itself may be in part dependent on a growing population.

Capitalism, I would assert, thrives on more, more, and more, but not so well when there is less or an expectation of less.
This is not the Malthusian thesis, which maintained that at some point the world would run out of food to satisfy a growing population; it is an assertion that capitalism depends upon final demand and that if there ever comes a time when population growth slows, then the world’s most efficient economic system will be tested.

The danger today, as opposed to prior deleveraging cycles, is that the deleveraging is being attempted into the headwinds of a structural demographic downwave as opposed to a decade of substantial population growth. Japan is the modern-day example of what deleveraging in the face of a slowing and now negatively growing population can do.

Prior deleveraging periods such as what the U.S. and European economies experienced in the 1930s exhibited a similar demographic with the lowest levels of fertility in the 20th century and extremely low population growth. Things did not go well then. Today’s developed economies almost assuredly offer substantially less population growth than the 1.5% rate experienced over the prior 50 years. Even when viewed from a total global economy perspective, population growth over the next 10–20 years will barely exceed 1%.

The preceding analysis does not even begin to discuss the aging of this slower-growing population base itself. Japan, Germany, Italy and of course the United States, with its boomers moving toward their 60s, are getting older year after year.

And while older people spend a larger percentage of their income – that is, they save less and eventually dissave – the fact is that they spend far fewer dollars per capita than their younger counterparts. No new homes, fewer vacations, less emphasis on conspicuous consumption and no new cars every few years. Healthcare is their primary concern. These aging trends present a one-two negative punch to our New Normal thesis over the next 5–10 years: fewer new consumers in terms of total population, and a growing number of older ones who don’t spend as much money. The combined effect will slow economic growth more than otherwise.

PIMCO’s continuing New Normal thesis of deleveraging, reregulation and deglobalization produces structural headwinds that lead to lower economic growth as well as half-sized asset returns when compared to historical averages. The New Normal will not be aided nor abetted by a slower-growing population nor by cyclical policy errors that thrust Keynesian consumption remedies on a declining consumer base.
Link -
http://www.pimco.com/Pages/PrivatesEyeBillGrossAugust2010.aspx
==========
New Normal = New Paradigm

As you would guess, I agree with the basic thrust, but there are also additional factors to consider, such as Peak Energy, Debt & Climate Change, to name a few!

Beyond the Limits to Growth

The Pivotal Role of Energy
During the past two centuries, an explosion in population, consumption, and technological innovation has brought previously unimaginable advances in health, wealth, transport, and communications.
These events were largely made possible by the release of enormous amounts of cheap energy from fossil fuels starting in the mid-nineteenth century. Oil, coal, and
natural gas, produced by natural processes over scores of millions of years, represent far more concentrated forms of energy than any of the sources previously available to humanity (food crops, human and animal muscles, and simple windmills or water mills) and, with even basic technology, are comparatively easy to access.

With this abundant energy available to drive production processes, it became possible to increase rates of extraction of other natural resources—as, for example, chain saws and powered trawlers could harvest timber and fish at rates previously unimaginable. Meanwhile, fuel-fed tractors enabled a relatively small number of farmers to support many specialists in industrial or commercial enterprises, leading to massive urbanization in nearly every country.

Modern chemistry (largely based on organic compounds derived from fossil fuels) led also to modern pharmaceuticals—which, together with improved sanitation likewise dependent on cheap energy), enabled longer life spans and growing populations.
And so, increased consumption of fossil fuels has produced both economic growth and population growth.

However, a bigger population and a growing economy lead to more energy demand. We are thus enmeshed in a classic self-reinforcing (“positive”) feedback loop.

Crucially, the planet on which all of this growth is occurring happens to be limited in size, with fixed stores of fossil fuels and mineral ores, and with constrained capacities to regenerate forests, fish, topsoil, and freshwater. Indeed, it appears that we are now pushing up against these very physical limits:
. The world is at, nearing, or past the points of peak production of a number of critical non-renewable resources—including oil, natural gas, and coal, as well as many economically important minerals ranging from antimony to zinc.
. The global climate is being destabilized by greenhouse gases emitted from the burning of fossil fuels, leading to more severe weather (including droughts) as well as melting glaciers and rising sea levels.
. Freshwater scarcity is a real or impending problem in nearly all of the world’s nations due to climate change, pollution, and overuse of groundwater for agriculture and industrial processes.
. World food production per capita is declining and the maintenance of existing total harvests is threatened by climate change, soil erosion, water scarcity, and high fuel costs.
. Earth’s plant and animal species are being driven to extinction by human activities at a rate unequaled in the last 60 million years.

The exact timing of peak oil (the maximum point of global oil production) can still be debated, as can the details of climate science. Experts can further refine their forecasts for food harvests based on expectations for new crop varieties. Nevertheless, the overall picture is incontrovertible:

The growth phase of industrial civilization was driven by the cheap energy from fossil fuels, and the decline phase of industrial civilization (now commencing) will be led by the depletion of those fuels as well as by environmental collapse caused directly or indirectly by the burning of coal, oil, and natural gas.

Beyond the Limits to Growth (cont)

At the End of Abundance, on the Verge of Decline
Our starting point for future planning, then, must be the realization that we are living today at the end of the period of greatest material abundance in human history—an abundance based on temporary sources of cheap energy that made all else possible. Now that the most important of those sources are entering their inevitable sunset phase, we are at the beginning of a period of overall economic contraction.

Limits to Growth foresaw this inflection point nearly forty years ago. But the world failed to heed the warning; as a result, adaptation now will be much more difficult than would have been the case if growth had been proactively curtailed decades ago. Global leaders now face the need to accomplish four enormous tasks simultaneously:
1. Rapidly reduce dependence on fossil fuels. We must do this to avert worse climate impacts, but also because the fuels themselves will be more scarce and expensive. Ending our reliance on coal, oil, and natural gas proactively with minimal social disruption will require a rapid redesign of transportation, agriculture, and power-generation systems.
2. Adapt to the end of economic growth. This means reworking, even reinventing, our existing economic system, which functions only in a condition of continuous expansion. Banking, finance, and the process of money creation will all need to be put on a new and different footing.
3. Design and provide a sustainable way of life for 7 billion people. We must stabilize and gradually reduce human population over time, using humane strategies such as providing higher levels of education for women in poor countries.
But even in the best case, this objective will take decades to achieve; in the meantime, we must continue to support existing human populations while doing a better job of providing basic services for those at the bottom of the economic ladder.
We must accomplish this in the context of a nongrowing economy and with a shrinking stream of resource inputs, and we must do it without further damaging the environment.
4. Deal with the environmental consequences of the past 100 years of fossil-fueled growth. Even if we cease all environmentally destructive practices tomorrow, we still face the momentum of processes already set in motion throughout decades of deforestation, overfishing, topsoil erosion, and fossil-fuel combustion. First and foremost of these processes is, of course, global climate change, which will almost certainly have serious impacts on world agriculture even if future carbon emissions decline sharply and soon.

Each of these four tasks represents an enormous challenge whose difficulty is multiplied by the simultaneous need to address the other three. The convergence of so many civilization-threatening planetary crises is unique in our history as a species.

Limits Are Unavoidable
Here’s a real-world example: Over the past two centuries, human population has grown at rates ranging from less than 1 percent to more than 2 percent per year.

In 1800, world population stood at about 1 billion; by 1930 it had doubled to 2 billion. Only 40 years later (in 1975) it had doubled again to 4 billion; currently we are on
track to achieve a third doubling, to 8 billion humans, around 2025. No one seriously expects human population to continue growing for centuries into the future.

In nature, growth always slams up against nonnegotiable constraints sooner or later.
Here is another real-world example. In recent years China’s economy has been growing at 8 percent or more per year; that means it is more than doubling in size about every 9 years. Indeed, China consumes more than twice as much coal as it did a decade ago—the same with iron ore and oil. How long can this go on? How many more doublings can occur before China has used up its key resources—or has simply decided that enough is enough and has stopped growing?

Beyond the Limits to Growth (Cont)

Economists Tend to Ignore Environmental Limits
It makes sense that economies should follow rules analogous to those that govern biological systems. Plants and animals tend to grow quickly when they are young, but then they reach a more or less stable mature size.
Beyond a certain point, growth becomes more of a problem than an advantage. But economists generally don’t see things this way.

That is probably because most current economic theories were formulated during an anomalous historical period of sustained growth. Economists are merely generalizing from their experience: They can point to decades of steady growth in the recent past, and they simply project that experience into the future.

Moreover, they have ways to explain why modern market economies are immune to the kinds of limits that constrain natural systems; the two main ones concern substitution and efficiency.

If a useful resource becomes scarce its price will rise, and this creates an incentive for users of the resource to find a substitute. For example, if oil gets expensive enough, energy companies might start making liquid fuels from coal. Or they might develop other energy sources undreamed of today. Economists theorize that this process of substitution can go on forever.

It’s part of the magic of the free market.

Increasing efficiency and finding substitutes for depleting resources are undeniably effective adaptive strategies of market economies. Nevertheless, the question remains open as to how long these strategies can continue to work in the real world—which is governed less by economic theories than by the laws of physics.
In the real world, some things don’t have substitutes, or the substitutes are too expensive, or don’t work as well, or can’t be produced fast enough. And efficiency follows a law of diminishing returns: The first gains in efficiency are usually cheap, but every further incremental gain tends to cost more, until further gains become prohibitively expensive.

Unlike economists, most physical scientists recognize that growth within any functioning, bounded system has to stop sometime.

But this discussion of limits has very real implications, because “the economy” is not just an abstract concept; it is what determines whether we live in luxury or poverty, whether we eat or starve.

If economic growth ends, everyone will be impacted, and it will take society years to adapt to this new condition. Therefore it is important to be able to forecast whether that moment is close or distant in time.

Hence the Limits to Growth study and book. Its authors fed in data for world population growth, consumption trends, and the abundance of various important resources, ran their computer program, and concluded that the end of growth would probably arrive between 2010 and 2050. Industrial output and food production would then fall, leading to a decline in population.

The Post-Carbon Transition
Alternative energy sources and greater efficiencies are important, but the post-carbon transition will not be limited merely to building wind turbines or weatherizing homes, for two key reasons:
First, there are no alternative energy sources (renewable or otherwise) capable of supplying energy as cheaply and in such abundance as fossil fuels currently yield, in the brief time that we need them to come online.
Second, we have designed and built the infrastructure of our transport, electricity, and food systems—as well as our building stock— to suit the unique characteristics of oil, natural gas, and coal.

Changing to different energy sources will require the redesign of many aspects of these systems.

It will also require a fundamental rethinking of our financial institutions and cultural values.

Beyond the Limits to Growth (Cont)

Leading the Transition
Ideas from environmentalists that for decades have been derided by economists and politicians—reducing consumption, relocalizing economic activity, building self-sufficiency—are suddenly being taken seriously in households that can no longer afford to keep up with the consumerist treadmill.

This new economy would not be a “free market” but a “real market,” much like the one fabled economist Adam Smith originally envisioned; it would be, as author David Korten has said, an economy driven by Main Street and not Wall Street.

Many globe-spanning corporations—unable to provide a continuous return on investment or to rely on cheap energy and natural resources to turn a profit—will fail, whereas much smaller local businesses and cooperatives of all kinds will flourish. Local governments facing declining tax revenues will be desperate to find cheap, low-energy ways to support basic public services like water treatment, public transportation, and emergency services.

Now that “business as usual” is ceasing to be an option for mainstream society, these strategies need to be rethought and rearticulated coherently, and they need to become
the mainstream.

What we need now are clarity, leadership, coordination, and collaboration. With shared purpose and a clear understanding of both the challenges and the solutions, we can manage the transition to a sustainable, equitable, post-carbon world, though the urgency of the need to fully and immediately engage with the transition process at all levels of society can hardly be overstated.

Link -
http://www.postcarbon.org/Reader/PCReader-Heinberg-Limits.pdf
=========
We may need clarity, leadership, coordination, and collaboration, but I suspect what we are actually getting, falls far short of those requirements!

Russia "Gets" Climate Change

And it unfolds:

Russian President Dmitry Medvedev declared a ban on grain exports for the rest of the year. Since Russia is the third largest grain exporter in the world, grain prices immediately shot up, and fears of the consequences circulated around the world. Particularly in Middle Eastern countries like Egypt, which is a large grain importer.

Imagine, for a moment, what it would take for President Obama to declare a ban on all corn exports from the US for the rest of the year. Remember that he has had to struggle both politically and in court just to effectively ban offshore oil drilling for a similar time frame. It would take a catastrophe of nearly unimaginable proportions to provoke such a thing.

A catastrophe of nearly unimaginable proportions is just what is happening in Russia right now. The magic of instant internet news can give us some idea:


http://www.youtube.com/watch?v=Os5istn1pG8&feature=player_embedded


In an appearance before the Russia Security Council, President Medvedev said

"...our country has not experienced such a heat wave in the last 50 or even 100 years... Overall, we need to learn our lessons from what has happened, and from the unprecedented heat wave that we have faced this summer. None of us can say what the next summer will be like. The forecasts vary greatly. Everyone is talking about climate change now. Unfortunately, what is happening now in our central regions is evidence of this global climate change, because we have never in our history faced such weather conditions in the past. This means that we need to change the way we work, change the methods that we used in the past."

Our ability to make predictions about the consequences of global warming is extremely poor. There has been a lot of confusion about this. In their debate with "denialists," climate scientists have had to go to great lengths to stress their certainty in the fundamental science of the greenhouse effect. Certainty that climate change is underway, however, is very different from being able to predict what the exact consequences of global warming will be in different regions of the planet and at different times. Wildfires and drought in Russia, for example, have not been singled out in as first possible dire consequences, but watch that video above, and there it is.

Thus every political in the leader ought to be as in-gear about this as President Medvedev is right now. The fires may be in Russia, but the process of warming is planetary. And in today's globalized economy, even our most basic food supplies rely on global networks.
Link -
http://www.huffingtonpost.com/bob-ostertag/russia-gets-climate-chang_b_672652.html
==============
Why is this not in the Enviroment section?

Because everything is now interlocked and this Russian situation will provide an indication of what Climate Change will mean to things, such as Global Food Scarcity, increasing Global Food Prices & Global Political instability!  

I suggest you put aside more in your budgets, because Food Prices here in OZ & elsewhere, will take a hit, particular on Wheat, but also in other produce as well!

Japan, The U.S., Bubbles and Deflation

The latest Japanese Consumer Price Index, released on July 30th with data through June, shows that Japan has experienced seventeen consecutive months of deflation.

Here is a series of real (inflation-adjusted) monthly close charts of the Nikkei 225 and the S&P 500 since 1970 with their respective annualized rates of inflation shown below. This series also includes an overlay chart with the two index peaks aligned. The overlay retains Japan's inflation to illustrate a point discussed later in this post.

http://static.seekingalpha.com/uploads/2010/8/4/saupload_n225_sp500_overlay_real_peaks_thumb1.png

The left sides of the two bubbles are remarkably similar. More conspicuous, however, are the dissimilar contours of the post-bubble declines. A key difference is the fact that Japan experienced nearly simultaneous bubbles in equities and real estate; the former peaked in December 1989, the latter in early 1991. The equity and real estate peaks in the US were separated by approximately five years, and the 2005 peak wasn't generally recognized for another year or two because of the highly regional nature of the real estate market.

Inflation or Deflation?
Many economists and market experts predict high US inflation as a result of the massive government intervention in the current financial crisis. However, over the past year, the US economy slipped into an eight-month period of deflation unparalleled in nearly 60 years.

The decade following the Japanese twin bubbles was accompanied by mild inflation averaging around 1.4% with occasional brief periods of deflation. Thereafter, the Japanese economy has tended more toward deflation (see the circled area).Link -
http://seekingalpha.com/article/218641-japan-the-u-s-bubbles-and-deflation?source=email
==========
US & Global markets may well follow trends similar, but not identical to those experienced in Japan between 1990-2010.

The current Global outcomes, will have some similarities & some variations, compared to Japans outcomes.

For example, the rest of the world is now infected by some of the issues, which had earlier afflicted only japan, such as the Aging then of Japan and now of the rest of the world.

Now however, there is also Peak Oil (which commenced in 2005), an upcoming total Population decline (set to commence within 20-30 years) & Climate Change, which is already impacting, but the major effects may not be for another 50-100 years.  

John Williams: Times That Try Our Souls

The Energy Report: A few months back, John, you said, "if you strangle liquidity you always contract an economy and deliberately or not, liquidity is being strangled, resulting in sharp declines in consumer credit, commercial and industrial loans." Does this mean it would spur more economic growth if banks actually started lending?

John Williams: It sure wouldn't hurt. We're still seeing contractions in liquidity, and that's adjusted for inflation. In real terms, M3 money supply is down almost 8% year-over-year. It's the sharpest fall in the post -World War II era. It's not so much the depth of the decline in the liquidity or the duration, but the fact that the liquidity turns negative year-over-year that signals the economy turning down.

TER: And you say that a contracting money supply is a sure sign of trouble?

JW: When it contracts year-over-year adjusted for inflation, that's a signal for a downturn or an intensified downturn. It happens every time.
So we'll see how it develops, but we're at that turning point. It is happening as we speak.
I think we'll see GDP down again in the third quarter. With the bulk of the reported GDP in the first half due to inventory building, the stage for renewed contraction has been set. By then we'll find the consensus pretty much in the camp that we're in a double-dip recession. The popular press will describe it as a double dip, but we never had a recovery. Actually, this is just a very protracted, very deep downturn that has had a pattern of falling off a cliff, bottoming out, having a little bit of bump due to stimulus and then turning down again.

TER: But we've been in recession for three years now?

JW: The second leg that I'm talking about is the one now underway as we get to the middle of 2010. December 2007 is when this recession officially started, although I contend that it started earlier in 2007. At any rate, the economy plunged through 2008 and well into 2009. The numbers were pretty much bottom-bouncing during the second half of 2009. The auto deals and the homebuyer deals added a little spike to the growth pattern, but that growth was stolen from the future. It didn't create new demand.
So what we're seeing now just looks like an ongoing deep recession. The next down leg is going to be particularly painful and I'm afraid particularly protracted.

TER: Can the governments pull any more stimulus levers yet this year?

JW: Oh, I think they'll try, but nothing much they can do will have anything other than short-term impact. If they write everyone a check, people go out and buy things. That would give the economy a quick boost but do nothing to change the underlying fundamentals or to correct the structural problems in this recession. Those are tied to the lack of robust growth in consumer income.

TER: So consumer income is a key factor.

JW: Absolutely. If you put in housing that's related to the consumer, that's three-quarters of the GDP. The average household is not staying ahead of inflation, and unless income grows faster than inflation, the economy won't grow faster than inflation—and that means that GDP is not growing. Income sustains consumption. When income grows, consumption grows. The only way to have sustainable long-term economic growth is to have healthy growth in income. You can buy some short-term economic growth, though, without growth in income, through debt expansion, which is what Greenspan tried.

Most of the growth we'd seen in the last decade prior to this downturn was due to debt expansion.
Absent debt expansion and/or significant growth in income, no way can the consumer expand personal consumption. You have to address employment, quality of jobs.

John Williams: Times That Try Our Souls (Cont)

TER: We no longer really have the option of expanding the debt and it's doubtful that even short-term stimulus will have much impact. Looking at this next leg down against that backdrop, what projections would you make about unemployment, housing prices, GDP as we look through the end of 2010 and into '11?

JW: Unemployment will be a lot worse than most people expect. Housing will continue to suffer in terms of weak demand. But in this crazy, almost perverse circumstance, the renewed weakness to a large extent will help push us into higher inflation.

The government is effectively bankrupt. Using GAAP accounting principles, the annual deficit is running in the range of $4 trillion to $5 trillion. That's beyond containment. The government can't cover it with taxes. They'd still be in deficit if they took 100% of personal income and corporate profits. They'd also still be in deficit if they cut every penny of government spending except for Social Security and Medicare. Washington lacks the will to slash its social programs severely, to change its approach to ever bigger government. The only option left going forward is for the government eventually to print the money for the obligations it cannot otherwise cover, which sets up a hyperinflation.

All of what I just described was already in place when the systemic solvency crisis broke. Before this crisis the government was effectively bankrupt. In response to the crisis, the government may have gone beyond what it had to do, but you err on the side of conservatism when you're trying to prevent a systemic collapse. That was a real risk. It still is. Irrespective of the politics of big government spending, quantitative easing, renewed bailing out of banks, whatever is involved, I'd argue that the government still will do whatever it takes to prevent a systemic collapse. That last series of actions had the effect of rapidly exploding the deficit. In just a year, we went from something under $500 billion in official reporting, on a cash basis as opposed to GAAP basis, to something close to $1.5 trillion.

TER: How big will that deficit grow in this second painful and protracted period?

JW: I can't give you a hard number, but I can tell you this. The markets came into this year on consensus projections that we'd have positive economic growth. Forecasts for the federal deficit, treasury funding, banking system solvency, etc. all were based on assumptions of recovery, of positive growth. Those assumptions presumably still underlie what I consider to be an irrational stock market.

But those projections and assumptions were wrong. We're going to have negative growth. The downturn will intensify. We're not in recovery. We have states on the brink of bankruptcy. The federal government isn't going to let California or New York or Illinois collapse. Those are threats to the systemic survival. They're also going to spend a lot more to support people on unemployment. Again, putting aside election year politics and such, the banking industry will need further bailout as solvency issues come to a head again. The federal deficit is going to balloon. It's going to blow up much worse than any formulas would give you, and Treasury funding needs will explode.

TER: Clearly you see us spiraling out of control.

JW: We've been talking about an economic recession, but we are headed for something far worse. I define a depression as a 10% peak-to-trough contraction in the economy. In terms of the broad economy, we're not down 10% in GDP yet. So while we're not formally in depression, we're certainly seeing it in a number of indicators and I think we'll be in a depression, with GDP down 10%, in the near future.

A contraction greater than 25% peak-to-trough puts you in a great depression. That is what I envision, but we'll be taken there by hyperinflation and a resultant cessation of normal commerce.

TER: I'm almost afraid to ask, but how will the stock markets fare when the system breaks down?

JW: Stocks generally tend to reflect inflation, since revenues and profits are in inflated dollars. If you look at stock prices adjusted for inflation, you can have a bear market as well as a bull market. But these are not going to be good economic times. So I think we're going to have a real bad stock market adjusted for inflation. I'd stay out of stocks in the U.S. With the U.S. markets in serious trouble, the rest of the world probably will see lower stock prices as well, but they're not going to have the hyperinflation.

John Williams: Times That Try Our Souls (Cont)

TER: What will plunge us into this abyss? And when?

JW: I think the odds are extremely high that we'll see it break within the next year. I would put it six months to a year, outside. We're getting extraordinary protestations from other central banks about the U.S. finances, its solvency, risk of the dollar. Before the current crisis you never would have heard any central banker making such comments. As this breaks, it's going to be obvious that the U.S. is moving to debase its dollar. It'll have no option to do otherwise.

With the dollar plunging, the Treasury won't be able to get the funding that it needs from a practical standpoint in the open markets.

The Fed will come in to salvage that situation, becoming the lender of last resort to the Treasury—literally monetizing the Treasury debt. The Fed might have a couple different ways to address the dollar situation, from raising interest rates to direct intervention, slapping on currency controls. I can't tell you exactly how it's going to go. But you'll have an environment that's effectively creating a perfect storm for the U.S. dollar.

Heavy dollar selling will be exceptionally inflationary. Oil prices will spike in response to the weakness in the dollar. Oil is a primary commodity that drives consumer inflation; that's how you can have inflation in a recession.

Most of the recent volatility in the CPI has been due to swings in oil prices, which have been directly tied to swings in the value of the U.S. dollar.

TER: How do we get through this, John?

JW: If there's no solution for the system—and I don't see one; I think it just has to run its course—there still is good news. We as individuals have ways of protecting ourselves, our families, our friends, our businesses—whatever is important to us. To do that we have to preserve the value of our wealth and assets in order to ride out the storm. As terrible as it will be, it will end.
A time will come when things become self-righting and the people who have been able to survive will be able to do some extraordinary things.

TER: Well on that note is there anything that we can do as voting citizens to turn this around? Or minimize the impact?

JW: If things break slowly enough that people can see what's coming and respond, tremendous change may result from what comes out of elections. Incumbents are going to have a rough time. The circumstance is open for the development of a major third party that could knock out either the Republicans or the Democrats as a second party. Over time, pocketbook issues tend to dominate elections. If things are going well, if people are prosperous, they ignore the corruption in political circles as being just part of the system. But when they're hurting, they turn out the bastards and look to put in some change. We sure need change. I can tell you that. It's not just one party. Both major parties have an equal share of guilt in what's unfolding. Whichever one is in power keeps making it worse.
TER: Not very happy thoughts, John, but we appreciate your insights and look forward to talking with you again as we move through these trying times.

Walter J. "John" Williams, is a Baby Boomer who has been a private consulting economist and a specialist in government economic reporting for more than 25 years, working with individuals and Fortune 500 companies alike. He received his AB in economics, cum laude, from Dartmouth College in 1971, and earned his MBA from Dartmouth's Amos Tuck School of Business Administration in 1972, where he was named an Edward Tuck Scholar. John, whose early work prompted him to study economic reporting and interview key government officials involved in the process, also surveyed business economists for their thinking about the quality of government statistics. What he learned led to front page stories in the New York Times and Investor's Business Daily, considerable coverage in the broadcast media and a joint meeting with representatives of all the government's statistical agencies. Despite a number of changes to the system since those days, he says that government reporting has deteriorated sharply in the last decade or so. On the bright side, it keeps John and his economic consultancy, Shadow Government Statistics, in the limelight. His analyses and commentaries have been featured widely in the popular domestic and international media.
Link –
http://www.theenergyreport.com/pub/na/7005
============
John has said a lot of what needs to be said, most of which I agree with!

Regrettably, we will all be in for a lot tougher period ahead, but even at this late stage there are still actions that could be taken?

As always, it is up to us!

Russian fires prompt Kremlin to abruptly embrace climate change

Amid what is called the worst Russian fires in history, President Dmitry Medvedev – who recently dismissed concerns over emissions –embraces the need to address climate change.

Moscow
Russia's ongoing heat wave, along with its disastrous fallout, may have finally persuaded the Kremlin to combat climate change

Russian officials, who have until now resisted dramatic action out of fears it would dampen economic growth, have lately issued strong statements linking global warming to the emergency Russia is currently facing. Some hope the abrupt change of tune will result in more effective environmental policies, even after the smog dies down.

"There is no question that we need to get ahead of climate change," says Vladimir Slivyak, co-chair of Ecodefense, a grass-roots Russian environmental group. "This is a wake-up call."
Moscow-region fires triple in size
The crisis, which seems to have taken the Kremlin by surprise, features a fierce and unremitting heat wave that's now well into its second month, a drought that has ruined up to a third of the vitally important grain crop, and a wave of seemingly irrepressible wildfires that have blanketed half of European Russia – including the capital, Moscow – in a cloud of smoke.

Russia's state meteorological service said smog conditions in Moscow have eased from a Saturday peak, but the Ministry of Emergency Services warned that Moscow-region fires have tripled size in the past week, spreading from 65 to 210 hectares. Meanwhile, an average of 700 people are dying per day in Moscow – a doubling of the average rate, which health officials blamed on the smog.

"Our country has not experienced such a heat wave in the last 50 or even 100 years," Russian President Dmitry Medvedev said last week in a speech published in English on the Kremlin's website. "We need to learn our lessons from what has happened, and from the unprecedented heat wave that we have faced this summer.

"Everyone is talking about climate change now," he continued. "Unfortunately, what is happening now in our central regions is evidence of this global climate change, because we have never in our history faced such weather conditions in the past. This means that we need to change the way we work, change the methods that we used in the past."

Those are arguably the strongest words a Kremlin leader has ever delivered to a domestic audience on the subject of climate change.
Link -
http://www.csmonitor.com/World/Europe/2010/0809/Russian-fires-prompt-Kremlin-to-abruptly-embrace-climate-change
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Why is this not in the Environment section?

WE can not wait for the future to arrive, before we act to mitigate the effects, in the case of Climate Change!

Because the timelines for mitigation of the Climate related risks are on a planetary clock, not a human clock.

WE can't just click our fingers and say problem solved, but our demise from Climate related risks, would simply be the blink of an eye, on a Planetary scale!

The Worst Is Yet to Come

What happens when a sovereign issuer of its currency decides that it’s going bankrupt? Well, in the case of England, David Cameron happens. We’re just beginning to see some signs of what’s to come as austerity sets in:

LONDON — Last month, the British government abolished the U.K. Film Council, the Health Protection Agency and dozens of other groups that regulate, advise and distribute money in the arts, health care, industry and other areas.

It seemed shockingly abrupt, a mass execution without appeal. But it was just a tiny taste of what was to come.

Like a shipwrecked sailor on a starvation diet, the new British coalition government is preparing to shrink down to its bare bones as it cuts expenditures by $130 billion over the next five years and drastically scales back its responsibilities. The result, said the Institute for Fiscal Studies, a research group, will be “the longest, deepest sustained period of cuts to public services spending” since World War II.

Until recently, the cuts were just election talking points, early warnings of a new age of austerity. But now the pain has begun. And as the government begins its abrupt retrenchment, the implications, complications and confusions in the process are beginning to emerge.

In Coventry, Mr. Mutton said that the City Council was bracing for an uncertain future.

“The worst bit is yet to come,” he said. “We’re not just talking about cuts in services, but real people losing their jobs, not being able to pay their mortgages, families becoming homeless. I don’t want to be scare-mongering, but these are the kind of consequences we face.”

I am the last person to advocate wasteful spending programs and misallocation of resources, however, in this time of deflationary risk you just have to wonder why David Cameron is so concerned that England is the next Greece. Surely, cuts would be in order were there serious signs of inflationary threats, but this is simply not the case*. Throwing fuel on the fire is the downtick in housing prices:

A U.K. housing-market gauge showed the first decline in prices for a year in July as demand for homes fell, in a sign the economic recovery may be losing steam. The number of real-estate agents and surveyors saying prices fell exceeded those reporting gains by 8 percentage points, compared with a positive reading of 8 in June, the London-based Royal Institution of Chartered Surveyors said in an e-mailed report today. A third more real-estate agents reported an increase rather than a drop in properties for sale. The housing market is faltering just as services and manufacturing also show signs of weakening after the economy’s fastest quarter of expansion for four years.

David Cameron has called for the pain. It looks like pain is what the people are getting.
Link -
http://seekingalpha.com/article/219909-the-worst-is-yet-to-come?source=email
============
Conservatives have their place, just not now.

Is this the FUTURE that awaits?

The Fusion of Peak Oil & Climate Change

Peak Oil and Climate Change deal are two historic events for humans and life on earth. The first threatens modern industrial ways of living and the latter threatens the climatic systems that are an integral part of our world and the way we live and survive.

A quick recap on both. Peak Oil is the point of historic maximum global oil flow, Climate Change is the alteration of established climate systems due to (in this case, anthropogenic) global warming. The onset of both will affect food & water supplies, mortality rates, conflict, migration and much more. The evidence that climate change is underway and almost past the point of no return is very strong and Peak Oil day by day gathers more credence as many studies point to an imminent peak.

How do these two events affect each other though?

The decline of global oil supply and the increasing cost of everything as a consequence means we will see our ability to deal with the consequences of Climate Change reduced.

Let us take a look at Britain. The decline of oil and gas will of its own accord make it harder to keep Britain warm but if the Gulf Stream does switch off as a result of Global Warming, the gap between what is needed and what will be available will get wider. The change to a colder climate would have a negative affect on crop growing, at a time when declining oil and gas supplies make the agriculture business more expensive. Warming sea temperatures are pushing fish stocks further afield, out of traditional (and already over-fished) fishing waters. Fishermen, so dependent on oil for their boats, will have to pay more for their fuel to go after these already dwindling and increasingly distant fish stocks. The insurance industry is already facing increasing pressures from Climate Change, but when the economy nose-dives past the oil peak, this double whammy could knock out the insurance industry. Will those in increasingly flood prone areas be able to pay the insurance costs during the recessions brought on by the decline of oil supplies?

The European Environment Agency recently pointed to how Germany is now at risk from more extreme weather, such as heavy rain - which raises the risk of flooding, especially the densely populated plains of central Europe. Cleaning up and repairing that damage costs money and requires energy. The economic climate, post peak, is going to be less able to deal with it. At the other extreme, Italy's coming crisis is drought, and there is a need there to improve irrigation to improve agriculture. Once again, money and energy are needed, and both will be harder to come by.

Further afield we are seeing glaciers melting and other regions becoming more arid and water flows changing. The ability to process and transport water to these regions will become more expensive, if it is at all possible, since drinking water is already tight in many areas. For example, desalination plants are an energy-intensive way of getting drinking water from sea water. Another option is to build pipelines to transport the water, but this is an expensive and complicated option. What we are likely to see, according to Tearfund, a relief and development agency, is an increase in water refugees.

As river and rain patterns change abruptly, the agriculture that has been grown for those climates will have to change, but the patterns may alter so much that the ability to grow food is severely impaired, and the need for oil and gas for fertiliser and food transportation will go up. This will lead to increases in, for example, famine and drought. With the world economy going into a long-term downturn as a result of Peak Oil, and the cost of everything going up, the willingness and ability from the wealthier (but increasingly less wealthy) world to deal with the problems brought on by Climate Change will decline.

The list goes on. Forest fires will increase, but the ability to fight them will decrease. Disease will spread but the cost and transportation of medicines will increase as a result of the great oil decline, while the ability to pay for them by those in need will decrease. As the world economy goes into recession as a result of oil decline, the ability and willingness of the rich to give to the poor in regions directly affected by Climate Change will wane. Cheap oil has enabled us to tackle many of the world's problems - to varying degrees - when we have been willing, but Peak Oil marks the beginning of a very big change as far as that goes.

The Fusion of Peak Oil & Climate Change (Cont)


A recent article on the website Gristmill.org entitled 'Peak Oil : Not an environmental silver bullet' argued that environmentalists hoping that awareness of peak oil will increase support of renewable, decentralised energy is naïve when the likely situation is that there will be a stronger turn to environmentally damaging, dirtier fossil fuels. Does that mean that Climate Change activists should shun Peak Oil? Absolutely not. Peak Oil and Climate Change have to be understood as an overall package, not separately, and we should all be looking at this, shouting clearly that "If we're not careful, we might just end up where we're heading!"

The main thing about Peak Oil - and this could be what everyone needs to grasp hold of - is that it is symbolic of much more than just oil supplies. Because oil is so important to everything that modern industrial society is based upon, including the assumptions of continuous growth, we can see that the decline of oil will pose serious questions about how we live and the systems, structures and culture we have developed. Peak Oil is therefore a symbol of the high-watermark of the hydrocarbon human and everything associated with it. Care for our environment and our climate should be a big part of the answer because that is what we will have left when the hydrocarbons are gone, and we must place proper value on that. The confluence of Peak Oil and Climate Change means that it is now time to ask ourselves, as a species, the biggest questions we can.

So let's ask those questions now. What do we want to achieve with our remaining oil (and gas) resources? What do we want our legacy to be? What are we aiming towards as a species and does that meet what we want to achieve as individuals? How do we want to achieve this? Do we want to make the transition as easy as possible? Do we eschew personal responsibility and have blind faith that 'the markets' or 'technology' will solve everything, thus putting off doing anything?

We can clearly see that things are going to change, but are we going to be led by events or do we lead them? Do we create a way of living that brings us more in balance with the environment and dramatically reduces greenhouse gases through a combination of efficiency and absolute reduction in greenhouse gas emissions? Or is the current way of doing things so important to try to cling on to (even though it is so ultimately futile that we'll destroy so much in the process) way beyond the point of no return?

It simply does not make sense to expand the use of energy resources that will increase Climate Change if our ability to deal with those magnified consequences will be even more depleted further down the road. This is what has to be made absolutely clear. The great decline of global oil production is bad enough without Climate Change and vice versa - but do we want to make things worse for ourselves and those who follow? Is that to be our legacy? What kind of fool would cover an infected wound with a poisoned bandage?

Peak Oil and Climate Change are a bigger threat together than either are alone. Our biggest hope is to similarly converge our understanding of them, and how to deal with the problems they present. Peak Oil and Climate Change must be fused as issues - an approach is needed to deal with them as a package. If we are looking for answers, the environmental movement has pushed suitable ones for a long time. Peak Oil presents a tremendous chance to push those solutions ahead, failure to incorporate a full understanding of Peak Oil into the solutions argument for Climate Change would be an abject failure.

The bottom line is that business can live with Climate Change to an extent but it is the threat of declining oil supplies that really strikes fear into politicians, economists, and many other people who prefer to ignore Climate Change as a problem, because it will hit them financially, and soon. The Climate Change movement can sell the green solutions to the challenge of oil decline. The Climate Change movement has been saying for a long time that we should change, Peak Oil means categorically we have to change. Fuse them together and hopefully we'll get more momentum moving us in the right direction.
Link -
http://environmental-science.cn/517184-The-Fusion-of-Peak-Oil-Climate-Change.html
==========
There are some areas where I would differ, but there is also some food for thought!

Seven Faces of The Peril.
James Bullard_
Preprint
Federal Reserve Bank of St. Louis Review
September-October Issue


In this paper I discuss the possibility that the U.S. economy may become enmeshed in a Japanese-style, deflationary outcome within
the next several years.

Conclusion
The global economy continues to recover from the very sharp recession of 2008 and 2009. During the recovery, the U.S. economy is susceptible to negative shocks which may dampen inflation expectations. This could possibly push the economy into an unintended, low nominal interest rate steady state.

Escape from such an outcome is problematic.

Of course, we can hope that we do not encounter such shocks, and that further recovery turns out to be robust. But hope is not a strategy.

The U.S. is closer to a Japanese-style outcome today than at any time in recent history. In part, this uncomfortably close circumstance is due to the interest rate policy being pursued by the FOMC. That policy is to keep the current pol-icy rate close to zero, but in addition to promise to maintain the near-zero interest rate policy for an .extended period.

But it is even more than that, because the reaction to a negative shock in the current environment is to extend the extended period even further. delay the day of normalization of the policy rate farther into the future. This certainly seems to be the implication from recent events. When the European sovereign debt crisis rattled global financial markets during the spring of 2010, it was a negative shock to the global economy, and the private sector perception was certainly that this would delay the date of U.S. policy rate normalization. One might think that is a more inflationary policy, but TIPS-based measures of inflation expectations over five and ten years fell about 50 basis points.

Promising to remain at zero for a long time is a double-edged sword.

The policy is consistent with the idea that inflation and inflation expectations should rise in response to the promise, and that this will eventually lead the economy back toward the targeted equilibrium of Figure 1. But the policy is also consistent with the idea that inflation and inflation expectations will instead fall, and that the economy will settle in the neighborhood of the unintended steady state, as Japan has in recent years.

To avoid this outcome for the U.S., policymakers can react differently to negative shocks going forward. Under current policy in the U.S., the reaction to a negative shock is perceived to be a promise to stay low for longer, which may be counterproductive because it may encourage a permanent, low nominal interest rate outcome. A better policy response to a negative shock is to expand the quantitative easing program through the purchase of Treasury securities.Link –
http://research.stlouisfed.org/econ/bullard/pdf/SevenFacesFinalJul28.pdf
==========
There are at least some in the US Federal Reserve, who see things somewhat differently?

Intern shortage at crisis point: AMA

The internship shortage for medical students has reached crisis point, says the Australian Medical Association (AMA).

Faced with a growing ageing population, the AMA says the shortage could have severe implications on the nation's ability to provide adequate health care.

AMA President Dr Andrew Pesce said that while student numbers were growing, their ability to help the medical workforce shortage was being hindered by a lack of training available.

"Unless we devote more resources to medical training after medical school, the reality is that as graduate numbers grow, more and more graduates will miss out on an intern place and be forced to look overseas to complete their training," Dr Pesce said in a statement on Wednesday.

"Given our current workforce shortages, this is an enormous waste of our investment in boosting medical school places."

The most recent estimate from the former National Health Workforce Taskforce shows a shortage of around 4500 doctors in Australia, he said.

A strategy has been put in place to increase student numbers so that by 2012 there will be about 3500 medical school graduates every year.

But students can't get full recognition as a doctor unless they complete an intern year after medical school.

"To illustrate the challenge, in 2009 there were 2243 intern positions across the country, which falls well short of the 3500 positions that are needed in 2013," Dr Pesce said.

Medical schools have expressed their concerns after it appeared NSW, Tasmania and Queensland would not be able to offer intern places to all applicants in 2010.

International students will be the first to miss out, as Australian students are given preference.

"But as domestic graduate numbers continue to grow, they too will face the same problem in a year or two," Dr Pesce said.

Dr Pesce asked that there be no more increases in student places until the training issues were addressed and has called on federal and state governments to help find a solution.
Link -
http://news.smh.com.au/breaking-news-national/intern-shortage-at-crisis-point-ama-20100825-13rmz.html
===============
A future, in which Health Services fails to deliver to young & old, will surely lead to our demise!

The entire Health system will shortly crumble, under the weight of the Aging Baby Boomers, a lack of sufficient trained health professionals coming thru the ranks and the weight of Federal & State Public Debt, unless sweeping, systemic change starts soon!

Congratulations !!!!!!!
(Slow sarcastic handclap)

the last horse comes home !!!!!!!!

ask mad mod mozzaok what his ideas on it are!!

Sprintcyclist wrote on Aug 25^th, 2010 at 11:35pm:

Congratulations !!!!!!! (Slow sarcastic handclap) the last horse comes home !!!!!!!! ask mad mod mozzaok what his ideas on it are!!

sprint,
I would think that if anyone, including you or mozzaok, wants to comment, then they will!

It's the nature of the beast (internet forums)!

Futurenomics

We need to be clear here, this is not merely a matter of Stimulus versus Austerity or Keynesians versus the Austrian approach.

Both have there place, given the right circumstances, but both have zero chance of being successful, in the current circumstances!

What are the right settings for now?

Let me say 2 things very clearly, the right settings should have started about 50-60 years ago, but that did not happen and there are now no Hollywood endings!

For any complex society, to exist for an extended period of time, the Society & its Economy MUST be mutually INCLUSIVE, they must support each other.

At present, the Global & OZ Society & Economy are mutually exclusive, they will destroy each other, in a relatively short period of time!

To put it into perspective, we have spent 50-60 years, drawing down on the future surpluses, to pay for our excesses of today and now our future has arrived!

We are quickly coming to the point where the major Economic drivers will cease providing the Productivity that is required to generate the surplus needed to enable a complex society - OURS!

One of the major Economic enablers, being Energy (Oil, Coal & Gas) is already on the "Road to nowhere", with Oil having already Peaked and Coal & Gas are set to follow within 40-50 years.

The other great enabler is Population Growth and that has been spiralling down for some time and will start going into Decline with 20-30 years (see Japan), with us being unable to take actions to prevent that from ocurring, as the Decline in our Essential Resources of Energy, Food & fresh water making that impossible!

So, leaving the past alone, as it only leads to recriminations, we are now essentially faced with 2 choices -
1) Live for today & screw the future consequences.
2) Take the pain now & leave future generations with a fighting chance, for their survival & that of the human race.

I vote for the later!

We have 2 basic future options -
1) Extinction, via the status quo.
2) Life, via the Society & Economy finding ways to become mutually sustaining!

But what will that mean?

It will mean 20-30 years of higher taxes & lower benefits.

It will mean heading to ZPG, over the next 20-30 years, then a gradual reduction in the Global Population, by natural regression, over time.

It will mean an urgent "Manhattan Style Project" to locate any possible replacement/s for Oil, Coal & Gas, as quickly as humanly possible. A large part of that project will be to enable the transition away from Fossil Fuels, to their replacements, in the shortest time possible, to assist in restricting the flow of GHG's into the environment.

It will mean changing the Political & Economic status quo, into something new, which will allow us the time needed to extricate ourselves from the CRAP that we ALL created! And, to do that, it will mean dragging every nation into a common agreement, on the actions needed, by any & all means available.

Now, I don't know IF we will be allowed to make our own decisions, which may result in better outcomes, as I suspect that some contingency plans are already under way.

Whether we like it or not & whether they work or not, are entirely different questions!

So, as George Bernard Shaw said, "life wasn't meant to be easy" and I suspect we are in the process of confirming that to be a fact?

True to their usual form, Economists & Politicians, will shortly come to the realisation, as does Wile E Coyote, that gravity sucks!

The floor will disappear from under their feet and reality crashes back to earth, with them & what is left of the Global economy.

http://paulandlayne.com/wp-content/uploads/2009/12/wile-e-coyote-gravity1.jpg

Australia to hit “peak labour” in 2011

Managing organisational risks related to changing demographics, particularly around aging, will soon become a major focus of management, according to social researcher and futurist, Mark McCrindle.

Speaking at the recent Security 2010 Conference in Sydney, McCrindle said that similar to the concept of peak oil – the point where the maximum rate of petroleum extraction is reached ­– Australian industry was facing the point where the maximum number of labour could be extracted.

“Next year in Australia marks the point of peak labour… from 2011 there will be more people exiting full time roles than there will be entering fulltime roles,” he said.

“It’s not so much peak labour, but peak easy labour. We have to work harder from now on to really sell the industry to the next generation, to train them, retain them and create raving fans who can encourage other successful and competent young people to join.”

Compounding this problem was the emerging pattern of job tenure, particularly among Generation Y (Gen-Y) employees, who were eager to jump between roles in a bid to gain rapid career expansion, often at the expense of experience and training, McCrindle said.

“Your average Gen-Yer stays an average of two years in a job in Australia today – that doesn’t build the experience and doesn’t bring the skills required for the leadership of the future,” he said.

In contrast the current national normative tenure per employer was four years. In turn this contrasted to some 12 years per employer back in 1970.

“That churn rate just won’t do if we are trying to build up the leadership, the knowledge and experience…” McCrindle said.

At the top end of the skills market, the trickle of Baby Boomer staff now beginning to retire would within 10 years turn into a flood.

“One third of today’s senior leaders, business owners and senior managers across industry in Australia today will be of retirement age within a decade,” McCrindle said.

“If you have a third of your leaders walk out the door in a ten year time window that is a massive loss of knowledge. That means training, leadership succession, transitioning and ensuring that that next generation can be attracted and retained.

To address this organisations should look to create roles for older staff to encourage them to stay in the workforce well beyond retirement age, McCrindle said. Link -
http://www.cio.com.au/article/359442/australia_hit_peak_labour_2011/
============
In fact, the next 20 years will see some 4 Million working age Australians, enter their retire years!

In terms of Population growth, the largest generational growth ever were the Baby Boomers, who saw a growth of 54% in 20 years from 1945-1965. The following generation growth was around 39% from 1965-1985 and the most recent from 1985-2005 was only 28%.

Whilst there will no doubt be a great deal of pain involved during the run off of the Boomer generation retirements, there wound be MUCH GREATER PAIN, if we tried to expand our population again & invoking a massive decline in our essential Resources, such as Energy, Food & fresh water!  

Back to the Future?

This chart series overlays the current S&P 500 with the L-shaped "recoveries" after the Dow Crash of 1929, the Nikkei 225 after Japan's 1989 bubble, and the post Tech Bubble NASDAQ. Click the chart below for a larger version and use the links to see various comparisons.

http://static.seekingalpha.com/uploads/2010/9/6/saupload_mega_bear_quartet_thumb1.png

I've also included a two-decade inflation-adjusted chart, which gives us a fascinating visualization of the impact of inflation on long-term market prices. The higher the rate of inflation during a bear market, the greater the real decline. Compare, for example, the peak of the Dow rally in year seven with the same peak in the two-decade nominal chart. The difference is the result of deflation during the Great Depression.

http://dshort.com/charts/bears/mega-bear-quartet-real-extended.gif

It's rather stunning to see the real (inflation-adjusted) decline of the Nikkei, two decades years after its crash. The recent lows rival the traumatic Dow bottom in 1932, less than 3 years after its peak.

These charts remind us that bear markets can last a long time. And it's not necessary to go back to the Great Depression for an example.

Note: These charts are not intended as a forecast but rather as a way to study today's market in relation to historic market cycles.
Link -
http://seekingalpha.com/article/223977-the-mega-bear-quartet-and-l-shaped-recoveries-bear-markets-can-last-a-long-time?source=email
============
Whilst the past does not repeat exactly, some of the outcomes to the current situation will have some similarities to the past.

That said, I think this GFC may have already had its "dead cat bounce" and I would now look to the inflation adjusted charts and consider -
1) That all of these events will take a downward trend, after the initial "dead cat bounce".
2) The duration will be 20 years, plus!
3) When will this event hit the DOWN 80% LINE?
Btw, that would equate to an ALL ORDS of around 1,360?


It may also be of interest to see how US Unemployment compares now, to other post WW2 downturns?

http://1.bp.blogspot.com/_pMscxxELHEg/TFwOTBPOi-I/AAAAAAAAJA4/DyEqvCJU1Cs/s1600/EmployRecessionAlignedJuly2010.jpg

'After the Fall': Why the Economic Future Looks Bleak

The next decade will have slow income growth and elevated unemployment. This is not only my opinion, but that of Carmen M. Reinhart and Vincent R. Reinhart in their paper entitled After the Fall – an analysis of past financial crises and forecasts how the Great Recession will play out. This paper was presented to 110 central bankers and economists at Jackson Hole in late August and the primary conclusion was dire for the aftermath of severe financial events such as the Great Recession:
Real per capita GDP growth rates are significantly lower during the decade following severe financial crises and the synchronous world-wide shocks. The median post-financial crisis GDP growth decline in advanced economies is about 1 percent.

After the Fall is saying the biggest mistake is governments believing the effects are temporary. Thinking that – a stimulus would cure the recession and moving to other business – appears to be criticized. The reaction of local and state governments in not assuming lower revenues were permanent stretches out resetting finances to a sustainable level. After the Fall took a swipe at central bankers also.

Economic contraction and slow recovery might also feed back on the prospects for aggregate supply. A sustained stretch of below-trend investment and depreciation of human capital prompted by elevated and lengthy spells of unemployment could hit the level and growth rate of potential output.

After the Fall warns that there are political moves which will magnify the crisis. In adverse economic circumstances, political leaders sometimes grasp for quick fixes that impair, not improve, the situation.

Economic leaders must paint rosy economic pictures or there is a danger that a negative economic perception will be self fulfilling.

After the Fall attacks the definition and meaning of “new normal”. Here again, we are faced with a dynamic missing from most of the previous crises – demographics or “baby boomers”. The Great Recession was not triggered by the boomers, but once the recession set in – the boomers hunkered down because of a loss of net worth. Boomers represent a disproportionately sized portion of the American economy. This segment was at nearing retirement This severe financial recession morphed into the perfect storm.

My take is that After the Fall is advocating not to worry about inflation. History has demonstrated that excessive capacity after severe financial events literally removes inflation as a possibility. It is hard to read After the Fall and not be depressed. It offers no real solutions. I hope it is wrong about our future.
Link -
http://seekingalpha.com/article/224762-after-the-fall-why-the-economic-future-looks-bleak?source=email
=============
In my opinion, Baby Boomers were/are one of the unique factors that precipitated the current GFC, along with Peak Energy and rising Global Debt levels.

There is a phrase in the report, which reads -
"The human temptation to credit good fortune to good character and bad results to bad luck further complicates matters."

This reminds me of another human perception that the glass is either half full or half empty.
Of course, the real truth lays not in the current content of the glass, but whether that level is trending up or down and what, if anything can be done to change the trend?

Double-dip recession: bulls and bears diverge over future economic prospects

In a difficult environment for economic forecasting, consensus is disappearing and the debate on the likelihood of a second recession has polarised.
http://static.guim.co.uk/sys-images/Business/Pix/pictures/2010/9/16/1284655200295/The-bull-and-bear-statues-006.jpg


The bears
There is growing evidence that since June, the burgeoning confidence among retailers, manufacturers and economic commentators in the economy's ability to bounce back from the financial crisis has evaporated.

Most City economists believe the risk of the UK sinking back into recession has risen in recent months as the effects of the unprecedented fiscal stimulus seen across the western world comes to an end. Albert Edwards of French bank Société Générale is known as an super-bear who has consistently warned, Cassandra-like, that the western economies are heading back into recession. Despite some strong recovery stories in Europe, he repeatedly tells his investors the worst is yet to come. In a recent note he said:

"The current situation reminds me of mid-2007. Investors then were content to stick their heads into very deep sand and ignore the fact that The Great Unwind had clearly begun.

"The recent reaction to data suggests the market is in a similar deluded state of mind. Yet again, equity investors refuse to accept they are now locked in a Vulcan death grip and are about to fall unconscious."

In another typically downbeat update he said last month that there was "too much hope" among investors and that once that optimism had been washed away, stock markets were in for a "bloodbath".

The City's money men are a bearish lot and Neil Woodford, who runs the £17bn Invesco Perpetual income fund, warned this week that Britain had edged closer to a double-dip recession, focusing his analysis on the prospect, or lack thereof, of house price rises.

Economists can be even more gloomy, led by the doyen of doom-mongers, Nouriel Roubini, and Paul Krugman, both of whom have nagged governments to boost spending to prevent an impending double dip. Roubini, a New York University professor nicknamed Dr Doom for having predicted the financial crisis, reckons the chances of renewed recession are 40% and rising.

Krugman, a professor of economics at Princeton, has berated the US and European governments for their decision to put deficit reductions ahead of securing economic growth. "Let's be clear: a recovery that involves growth so slow that unemployment and excess capacity rise, not fall, isn't really a recovery. If we have only have 1.5% growth, that will amount to a double dip in all the senses that matter," he said in July.

The bulls
Most sectors of the UK and US economies have slowed in recent months, but there are reasons to be cheerful, with stock markets heading back towards their year highs, manufacturing activity growing and many retailers still upbeat.

One of Britain's best known business figures, Tesco boss Sir Terry Leahy, said earlier this year that the recession was over, despite ongoing fears about the health of the economy.

A strong performance at Christmas and lower fuel prices were chief among the indicators that encouraged him to say in February that the worst was behind us: "I would say that the consumer has come out of recession, and I'm confident that will build."

When he announced in June that he was stepping down from Tesco, he reiterated his positive outlook. "By March 2011 we'll be into a strong recovery and that's a good time for a new team to take over," he said.

And then there are China and India, the world's two most populous nations, enjoying near double-digit growth and promising to soak up goods and services from all over the globe for some time to come.

Both are, of course, members of the "Bric" group of fast-developing nations, the acronym formed along with Brazil and Russia. The man credited with coining that term, Goldman Sachs chief economist Jim O'Neill, is, fittingly, among the bulls. Last week it was revealed that he will have the chance to put his bank's money where his mouth is when he moves from his current post to be head of Goldman Sachs's asset management business, with a whopping $800bn under management.

Warren Buffett, the world's most influential investor, said earlier this week that harbingers of doom were looking at the wrong data. He said the companies he owns – and he owns large slices of lots of them, including Coca-Cola and Wells Fargo bank – were doing well, with no sign of a new decline.

"We will not have a double-dip recession at all," Buffett said. "I see our businesses coming back almost across the board. I've seen sentiment turn sour in the last three months or so, generally in the media, but I don't see that in our businesses. I see we're employing more people than a month ago, two months ago."

Central bankers Mervyn King and Ben Bernanke – the Bank of England governor and the chairman of the Federal Reserve respectively – have also both argued that they expect their economies to struggle through without a second recession.
Link -
http://www.guardian.co.uk/business/2010/sep/16/double-dip-recession-bulls-bears
============
We will all make up our own minds!

However, for most, it will be too late, one way or the other!

Btw, I posted the article, because I liked the picture.

The Global systemic crisis – Spring 2011: Welcome to the United States of Austerity / Towards a very serious breakdown of the world economic and financial system

As anticipated by LEAP/E2020 last February in the GEAB No. 42, the second half of 2010 is really characterized by a sudden worsening of the crisis marked by the end of the illusion of recovery maintained by Western leaders (1) and the thousands of billions swallowed up by the banks and the economic « stimulation » plans of no lasting effect.

First of all, there is a very depressing widespread reality, a real trip « to the heart of darkness », which is that tens of millions of Americans (nearly sixty million now depend on food stamps) who no longer have a job, no longer have a house, no longer have any savings, are wondering how they will survive in the years to come (11).

The coming months will reveal a simple, yet especially painful reality: the Western economy, and in particular that of the United States (2), never really came out of recession (3).

The startling statistics recorded since summer 2009 have only been the short-lived consequences of a massive injection of liquidity into a system which had essentially become insolvent just like the US consumer (4).

Now the first half of 2011 will dictate that the US economy take an unprecedented dose of austerity plunging the planet into new financial, monetary, economic and social chaos (7).

http://www.leap2020.eu/photo/2349781-3288312.jpg?v=1284628704

The coming quarters will be particularly dangerous for the world economic and financial system.

The Chairman of the Fed Ben Bernanke passed on the message as diplomatically as possible at the recent meeting of world central bankers at Jackson Hole, Wyoming:
even though the policy to revive the US economy has failed, either the rest of the world continues to fund US deficits at a loss and hopes that at some point the bet will pay off, avoiding a collapse of the global system, or the United States will monetize its debt and turn all the Dollars and US Treasury Bonds held by the rest of the planet into funny money.

Unemployment hasn’t stopped growing and between the stability shown in official figures and the exit, in six months, of more than two million Americans from the workplace (LEAP/E2020 believes that the real unemployment figure is now at least 20% (9));

the U.S. housing market remains depressed at historically low levels and will resume its fall from the fourth quarter 2010;

last but not least, as one can easily imagine in these circumstances, the US consumer is and will be absent on a permanent basis since his insolvency continues and even gets worse (10) for the one American in five without work.

Behind these statistical factors hide three realities that will radically change the US and global political, economic and social landscape in future quarters as and when they dawn on the public consciousness.

The Federal Reserve now knows that it is powerless

Finally, there is a financial and monetary effect that is particularly tragic since the players are aware of their unenviable situation: the U.S. Federal Reserve now knows that it is powerless.

Despite the extraordinary efforts (zero interest rates, quantitative easing, huge support to the real estate mortgage market, massive support to banks, tripling its balance sheet, ...) that it carried out from September 2008, the U.S. economy will not restart.

Fed leaders are finding they are only a part in the system, even if it is a vital part and, therefore, can do nothing against a problem that affects the very nature of the system, in this case, the US financial system, designed as the solvent heart of the global financial system since 1945.

But the US consumer has become insolvent (20), the consumer who, during the last thirty years, has gradually become the central economic player of this financial heart (with more than 70% of U.S. growth dependant on household spending). It is this insolvency of US households (21) that has broken the Fed’s efforts.

Until summer 2010, they did not believe in the systemic nature of the crisis or they did not understand that what was causing the problems was out of reach of the tools of a central bank, as powerful as it may be. Only in recent weeks have they discovered two pieces of evidence: their policies have failed and they have neither arms nor ammunition.

Hence the very depressed tone of the discussions at the central banks meeting in Jackson Hole

In future quarters the Fed, like the federal government, will find that when the United States is no longer synonymous with juicy profits and / or shared power, its ability to convince its partners declines quickly and heavily, especially when the latter question the relevance of the chosen policies (25).

The consequence of these three realities that are gradually making their presence felt in US and global consciousness will, therefore, for the LEAP/E2020 team, come to pass in Spring 2011 by the United States entering an era of austerity unprecedented since the country became the heart of the global economic and financial system.
Link -
http://www.leap2020.eu/GEAB-N-47-is-avai....very_a5168.html
=========
Time will reveal if their predictions are correct!

That said, I am not sure about their timing? The US may get one more dose of that which can not work, Stimulus?

Chris Martensons Crash Course

Anyone wanting to get a holistic handle on current & future events, including Financial issues, would do well to review all of the following!

Personally, I would view Chapter 19, for an overview, then go back to Chapter’s 1 thru 18, to get a full perspective. Finally, look at Chapter 20 to view, What should we do?

The following observation of Arthur Schopenhauer is included in these videos and is very apt!

All Truth passes through three stages.

First, it is ridiculed.
Second, it is violently opposed.
Third, it is accepted as being self-evident.

Chapter 1 – Three Beliefs
http://www.youtube.com/watch?v=XnXZzx9pAmQ&feature=player_embedded

Chapter 2 – The three E’s
http://www.youtube.com/watch?v=JTEHUbfP7OA&NR=1

Chapter 3 – Exponential Growth
http://www.youtube.com/watch?v=EXd66gP53fk&NR=1


Chapter 4 – Compounding is the Problem
http://www.youtube.com/watch?v=iIwyMif5EOg&NR=1

Chapter 5 – Growth Vs Prosperity
http://www.youtube.com/watch?v=k1KsFDLZ3B4&NR=1

Chapter 6 – What is Money?
http://www.youtube.com/watch?v=U8dq1bH1X6s&NR=1

Chapter 7 – Money Creation
http://www.youtube.com/watch?v=qIxhsF6JLEA&NR=1

Chapter 8 – The Fed & Money Creation
http://www.youtube.com/watch?v=p3_Q1SiRN-A&NR=1

Chapter 9 – A brief History of US Money
http://www.youtube.com/watch?v=kM7rITeNW6U&NR=1

Chapter 10 - Inflation
http://www.youtube.com/watch?v=afWqKcqntfs&feature=channel

Chapter 11 – How much is a TRILLION?
http://www.youtube.com/watch?v=caMRBGmja3w&feature=channel

Chapter 12 – DEBT (1 of 2)
http://www.youtube.com/watch?v=wsTblStwiuM&feature=channel

Chapter 12 – DEBT (2 of 2)
http://www.youtube.com/watch?v=w8ECro3HwPo&NR=1

Chapter 13 – A National Failure to Save (1 of 2)
http://www.youtube.com/watch?v=lKn3jROgznM&feature=channel

Chapter 13 – A National Failure to Save (2 of 2)
http://www.youtube.com/watch?v=ZuJIEscbKGI&NR=1


Chapter 14 – Assets & Demographics (1 of 2)
http://www.youtube.com/watch?v=Y23zmnocxdM&feature=channel

Chapter 14 – Assets & Demographics (2 of 2)
http://www.youtube.com/watch?v=6EcXKzRNBVE&NR=1


Chapter 15 – Bubbles (1 of 2)
http://www.youtube.com/watch?v=9v2QynM0V2E&feature=channel

Chapter 15 – Bubbles (2 of 2)
http://www.youtube.com/watch?v=O0QStbuLRLc&NR=1


Chapter 16 – Fuzzy Numbers (1of 2)
http://www.youtube.com/watch?v=zsNgJVD8KgY&feature=channel

Chapter 16 – Fuzzy Numbers (2of 2)
http://www.youtube.com/watch?v=01KIOjTe2CM&NR=1


Chapter 17a – Peak Oil (1 of 2)
http://www.youtube.com/watch?v=Ni8s7orGZbY&feature=channel

Chapter 17a – Peak Oil (2 of 2)
http://www.youtube.com/watch?v=uoFTNurAcws&NR=1


Chapter 17b – Energy Budgeting
http://www.youtube.com/watch?v=WeBtdwPpTQM&feature=channel

Chapter 17c – Energy & the Economy
http://www.youtube.com/watch?v=6w6gf3tSGTg&feature=channel

Chapter 18 – Environment Data (1 of 2)
http://www.youtube.com/watch?v=3lRkB6gvBC0&feature=channel

Chapter 18 – Environment Data (2 of 2)
http://www.youtube.com/watch?v=BafOxXU13sk&NR=1

Chapter 19 – Future Shock
http://www.youtube.com/watch?v=YDNvr82gqd0&feature=channel

Chapter 20 – What should I do?
http://vodpod.com/watch/1239314-crash-course-chapter-20-what-should-i-do-chris-martenson

Arithmetic, Population & Energy
Dr Albert Bartlett

(Part 1 of 8)
http://www.youtube.com/watch?v=F-QA2rkpBSY&p=230E06A93105883E&index=1

(Part 2 of 8)
http://www.youtube.com/watch?v=Pb3JI8F9LQQ&p=230E06A93105883E&index=2

(Part 3 of 8)
http://www.youtube.com/watch?v=CFyOw9IgtjY&p=230E06A93105883E&index=3

(Part 4 of 8)
http://www.youtube.com/watch?v=yQd-VGYX3-E&p=230E06A93105883E&index=4

(Part 5 of 8)
http://www.youtube.com/watch?v=t-X6EpvWWu8&p=230E06A93105883E&index=5

(Part 6 of 8)
http://www.youtube.com/watch?v=-3y7UlHdhAU&p=230E06A93105883E&index=6

(Part 7 of 8)
http://www.youtube.com/watch?v=RyseLQVpJEI&p=230E06A93105883E&index=7

(Part 8 of 8)
http://www.youtube.com/watch?v=VoiiVnQadwE&p=230E06A93105883E&index=8

The Bacteria comparison in Chapter 3, is apt!

But, there are a few other apt observations –
1) Technology Optimists will always be able to solve all of our Population Growth, Food, Energy & Resources problems?
2) Thinking is upsetting, it tells us things, we’d rather not know!
3) The chief source of problems, is solutions!
4) Facts do not cease to exist, simply because they are ignored1
5) The 1st Law of Sustainability, is that Population growth &/or growth in the rates of Consumption of Resources
CAN NOT BE SUSTAINED!
6) The greatest shortcoming of the human race, is OUR INABILITY TO UNDERSTAND THE EXPONENTIAL FUNCTION!

September 17, 2010 | Ronda Jambe
Connecting the dots: climate change, peak oil and global justice

http://www.ambitgambit.com/2010/09/17/connecting-the-dots-climate-change-peak-oil-and-global-justice/

Some coverage has been given recently to a report ‘leaked’  early September from the German military about the implications of peak oil.  The article by Stefan Schultz in Der Spiegel is:

http://www.spiegel.de/international/germany/0,1518,715138,00.html
‘Peak Oil’ and the German Government

Now this discussion has moved from mailing lists to The Age business pages. Both are worth reading, both say it is time we start to deal with the realities of our changing resources and climate. The loss of cheap oil and the disruptions of wilder weather will shake our fundamental securities. The related issue of human conflict over diminishing security has to be dealt with also.

Two examples are New Orleans after Katrina and Pakistan after the floods. If Victorians fare better it will be due to their decent goverance. Overall however, Australia is not meeting these challenges squarely, as David Ingles  from the Australia Institute points out:
http://www.crikey.com.au/2010/09/02/the-dirty-topic-of-peak-oil-get-ready-to-reduce-your-reliance/

Let’s hope our refreshed government is reading these reports and paying attenion.

wrote on Sep 22^nd, 2010 at 9:05am:

September 17, 2010 | Ronda Jambe Connecting the dots: climate change, peak oil and global justice

There are certainly some interesting views in there, Vegi!

Part 2: A Litany of Market Failures

According to the German report, there is "some probability that peak oil will occur around the year 2010 and that the impact on security is expected to be felt 15 to 30 years later." The Bundeswehr prediction is consistent with those of well-known scientists who assume global oil production has either already passed its peak or will do so this year.

Market Failures and International Chain Reactions

The political and economic impacts of peak oil on Germany have now been studied for the first time in depth. The crude oil expert Steffen Bukold has evaluated and summarized the findings of the Bundeswehr study. Here is an overview of the central points:


■Oil will determine power: The Bundeswehr Transformation Center writes that oil will become one decisive factor in determining the new landscape of international relations: "The relative importance of the oil-producing nations in the international system is growing. These nations are using the advantages resulting from this to expand the scope of their domestic and foreign policies and establish themselves as a new or resurgent regional, or in some cases even global leading powers."

■Increasing importance of oil exporters: For importers of oil more competition for resources will mean an increase in the number of nations competing for favor with oil-producing nations. For the latter this opens up a window of opportunity which can be used to implement political, economic or ideological aims. As this window of time will only be open for a limited period, "this could result in a more aggressive assertion of national interests on the part of the oil-producing nations."

■Politics in place of the market: The Bundeswehr Transformation Center expects that a supply crisis would roll back the liberalization of the energy market. "The proportion of oil traded on the global, freely accessible oil market will diminish as more oil is traded through bi-national contracts," the study states. In the long run, the study goes on, the global oil market, will only be able to follow the laws of the free market in a restricted way. "Bilateral, conditioned supply agreements and privileged partnerships, such as those seen prior to the oil crises of the 1970s, will once again come to the fore."

■Market failures: The authors paint a bleak picture of the consequences resulting from a shortage of petroleum. As the transportation of goods depends on crude oil, international trade could be subject to colossal tax hikes. "Shortages in the supply of vital goods could arise" as a result, for example in food supplies. Oil is used directly or indirectly in the production of 95 percent of all industrial goods. Price shocks could therefore be seen in almost any industry and throughout all stages of the industrial supply chain. "In the medium term the global economic system and every market-oriented national economy would collapse."

■Relapse into planned economy: Since virtually all economic sectors rely heavily on oil, peak oil could lead to a "partial or complete failure of markets," says the study. "A conceivable alternative would be government rationing and the allocation of important goods or the setting of production schedules and other short-term coercive measures to replace market-based mechanisms in times of crisis."

■Global chain reaction: "A restructuring of oil supplies will not be equally possible in all regions before the onset of peak oil," says the study. "It is likely that a large number of states will not be in a position to make the necessary investments in time," or with "sufficient magnitude." If there were economic crashes in some regions of the world, Germany could be affected. Germany would not escape the crises of other countries, because it's so tightly integrated into the global economy.

■Crisis of political legitimacy: The Bundeswehr study also raises fears for the survival of democracy itself. Parts of the population could perceive the upheaval triggered by peak oil "as a general systemic crisis." This would create "room for ideological and extremist alternatives to existing forms of government." Fragmentation of the affected population is likely and could "in extreme cases lead to open conflict."
Link -
http://www.spiegel.de/international/germany/0,1518,715138-2,00.html

Future Planet- The Future of Economics

David Hunter Tow- Director of the Future Planet Research Centre, argues the need to urgently rethink the fundamental theoretical basis of our economic model, to avoid the possibility of global social catastrophe.  

The recent failure of classical economics to predict and manage the catastrophic failure of the world’s financial system has triggered a re-evaluation of the whole basis of current economic theory, which has been applied to sustain capitalism for the last 100 years. .

By the end of the 20th century traditional economics was dominated by the classical paradigm based on notions of rational consumers making rational choices in a simple supply/demand world of finite resources, with prices constrained by decreasing returns; all driving the economy to an optimal equilibrium point.

Twentieth century economists had finally realised their dream of creating a rational, rigorous and well-defined mathematical model for describing the workings of the global economy. This standard model has been applied by business leaders, finance ministers, central bankers and presidential advisers ever since.

Up until recently classical economic theory has appeared to work adequately by a process of trial and error. In times of growth people are generally optimistic and the theory describes reality reasonably well.

Unfortunately such a clockwork model has proved over the last four decades to be seriously out of synch with reality, as global markets have been roiled by a series of disastrous credit, market, liquidity and commodity crises. The predictions of the standard model have failed to match real world outcomes, generated in succession by the Savings and Loan, Asian, Mexican, Dotcom and now GFC bubble disasters.

In this latest incarnation of excess greed debacles, high risk mortgage loans were repackaged many times over into opaque risk financial instruments, such as Collateralised Debt Obligations or CDOs, which ended up through an unregulated banking system in the portfolios of nearly every bank and financial institution around the world. Because of lack of controls, members of the shadow system such as hedge funds and merchant banks borrowed scores of times their own worth in cash. When the CDOs finally failed, the losses rippled through the world economy. The banks stopped lending, leading to further business failures and investors were then forced to sell previously sound stocks causing a stock market crash.

But this crash was far more serious- perhaps even more so than the Great Depression, as it could be contained within borders as easily or so simply solved by pump priming mass lending and job creation programs. Now we’ve seen the biggest banks, car manufacturers, miners, energy suppliers and national economies toppling like dominoes around the world, under trillions of dollars of debt.

The current global interventions have now staunched the haemorrhaging but not cured the disease.

In fact a number of interdisciplinary thinkers, starting in the seventies, began to question the credibility of the entire basis of the classical economic model, likening it to a gigantic academic think tank experiment rather than a serious science. And it gradually began to dawn on this group that at a number of the key premises or axioms underpinning the existing model were seriously flawed.

But perhaps the most critically flawed assumption is that an economic system always reaches an ideal equilibrium of its own accord. In other words, the market is capable of benign self-regulation- automatically allocating resources and controlling excesses in an optimum way, best effected with minimum outside interference.

Tinkering around the edges with the old reactive tools is not an option anymore.
To have any real chance of harnessing the economic machine of the 21st century for the benefit of all human society, not just the wealthy, it must be modelled at the network level and managed autonomously according to adaptive evolutionary principles.

If a business as usual economic philosophy prevails, it is likely that the resulting ultra-massive waste of resources and social turmoil of a second GFC would be catastrophic for our civilisation.
Link -
http://australia.to/2010/index.php?option=com_content&view=article&id=4421:future-planet-the-future-of-economics&catid=76:david-tow&Itemid=230

The economy can’t grow forever
Commentary: The whole planet must live within its means

WASHINGTON (MarketWatch) — Those of us who believe that the economy should serve us instead of the other way around are conflicted.

We know that the only way to end unemployment at home and poverty around the world is to make the economy grow faster. But we also know that nothing can grow forever, that the faster the global economy grows, the sooner we’ll run out of essential resources, including fossil fuels, water, arable land, healthy ecosystems and moderate climate.

Economists and politicians can’t admit it, but the laws of physics apply, no matter what the latest polls tell us. The Earth has finite resources that will someday limit our economic growth.

The Earth cannot forever support 7 billion people consuming as much as Americans consume. And yet we’ve staked our future — individually, nationally, and maybe even as a species — on that impossible dream.

Some people are in denial. They believe that the Earth’s resources are limitless and that a bean stalk can grow to the sky. Or perhaps they know deep in their heart that we are on the road to an environmental and economic catastrophe, one that they think they alone will survive through wits, gold, and guns.

Others believe fervently that technology will bail us out yet again, that clever primates will always find a new tool that will help us extract ever more stuff from the planet. They laugh at the warnings of the Rev. Thomas Robert Malthus, who warned in the 19th century that the population would inevitably outgrow the food supply, leading to periodic mass death due to wars, famines and plagues.

Malthus was wrong, of course...so far. Improvements in agriculture, finance, government, manufacturing and transportation kept pace with the population growth. Even with the population about seven times greater than in Malthus’s time, the percentage of the human race that is truly poverty stricken has fallen. On average, we live longer and better lives than our ancestors did. More people have enough to eat, clean water to drink, a secure shelter and basic health care.

Precarious poor
But the position of those poor billions in Asia, Africa, Latin America and even in America is precarious. The global recession hurt the poor and the nearly poor the hardest, showing in high relief just how dependent they are on our high-living ways.

The only working model of growth the developing world knows is to export more stuff to the rich countries. It turns out that the best way we’ve found to reduce poverty in Asia is for the rich in North America and Europe to consume more.

It’s the ultimate trickle-down economics. It takes ever-increasing consumption by those of us in the developed world to keep the hands of the developing world busy and their bellies full. We’ve outsourced the production, but not the consumption, except for a few crumbs.

But because we’ve outsourced the productive jobs, many of us in the developed world can’t afford to increase our consumption. The answer? More debt to pay for more stuff to keep the economy growing.

Debt is merely a claim on tomorrow’s real wealth — actual productive assets and actual goods and services. Unfortunately, paper wealth (debt) has grown faster than real wealth, which is constrained by those silly laws of physics. I wonder what Malthus would say about that?

Money can’t buy me love
Everyone knows money can’t buy happiness, but we run our economy as if it does. Although it is plainly true that we do need to eat to survive, our well-being cannot be accurately measured by the sum of what we produce and consume.

A few economists have rejected the premise that the economy must grow forever. In Britain, the New Economics Foundation has created a Happy Planet Index as an alternative to the traditional measures of economic progress that focus on only growth, not on well-being or sustainability.

According to the Happy Planet Index, people who live in the richest countries aren’t any happier than those who consume less of our dwindling resources. A certain level of economic development is essential to our well-being, but our quality of life is also determined by how free we are politically, how equal we are socially, and by the opportunities we have to be creative or to live in a loving community. Read more about the New Economics Foundation.

This might shock you, but it’s possible to live a long, healthy, happy life without taking more than your share of the world’s limited resources.

Whether we like it or not, we in the rich countries are going to have to live less extravagantly in the near future.

We can downsize the right way, or the wrong way. The right way is to voluntarily rearrange our priorities so we don’t consume more than the Earth can produce, but to do that some of us will have to sacrifice and we’ll all have to share the only planet we’ll ever have. We’ll have to consume to live, not live to consume.

The wrong way is Malthus’s way: War, famine and plague.

Neither way will be easy. Nothing is more important.Link -
http://www.marketwatch.com/story/the-economy-cant-grow-forever-2010-09-24
==========

This Time Different Calling Trough as NBER Sees Not Much Rebound

Sept. 27 (Bloomberg) -- The panel of U.S. economists that calls the beginnings and ends of recessions may be a lot busier in the coming decade than it was in the past quarter century.

The average time between contractions might fall back toward its long-term average of about every four years compared with about eight years during the past two decades, said Robert C. Doll, chief equity strategist for BlackRock Inc. in New York, which oversaw about $3.15 trillion at the end of March.

“The cyclical recovery is under way now, but more recessions are down the line,” Doll said. While he says he’s buying U.S. stocks because he doubts the economy will relapse in the immediate future, he is betting returns in the next decade will fall short of their traditional average gains of about 12 percent.

This rebound “is very different from other cycles, especially 1981-82, when employment had grown vigorously by this time in the recovery,” said Robert Hall, a Stanford University economics professor who heads the National Bureau of Economic Research’s Business Cycle Dating Committee. “An important reason is that changes in the financial system resulting from the crisis, a factor absent in recoveries since the Depression, have hindered expansion” by limiting the supply of credit.

Reluctant Lenders
Consumers are cutting back on spending to reduce debt and build savings, and banks are reluctant to lend, while policy makers have little room to assist growth because they’ve cut interest rates to near zero and pushed budget deficits to record highs.

Such imbalances leave economies that rely on leverage and credit such as the U.S. less resilient to shocks, making them “unusually vulnerable to the risk of recessions” at a time when their economic growth is already near “stall speed,” said Mohamed El-Erian, chief executive officer at Newport Beach, California-based Pacific Investment Management Co., which had more than $1.1 trillion of assets as of June 30.

Hunkering Down
His outlook was borne out in a quarterly poll this month of 1,408 global investors, analysts and traders who subscribe to Bloomberg. More than 40 percent of those surveyed are still hunkering down, while one in three is taking on more risk. The rest said they are returning to normal.

‘Negative Shock’
“If an economy’s growing at 4 percent, it can live with a negative shock,” Harvard University professor Martin Feldstein, a member of the NBER’s business-cycle committee, said in an Aug. 27 interview. “If it’s stuck at 1 to 2 percent, then a negative shock can easily push it into recession territory.”

The U.S. government’s debt burden might intensify such a push. The deficit will reach $1.47 trillion, or 10 percent of gross domestic product, this year and $1.42 trillion, or 9.2 percent of GDP, in fiscal 2011, which begins Oct. 1, the White House Office of Management and Budget projected in July.

Among consumers, the ratio of U.S. household debt to disposable income was 118 percent in the second quarter, above the 30-year average of 90 percent, according to data from the Federal Reserve and the Commerce Department.

‘Great Repercussions’
“Small shocks can have great repercussions” for countries that are “highly leveraged,” said Reinhart, who co-wrote the 2009 book “This Time Is Different: Eight Centuries of Financial Folly” with Kenneth Rogoff, a Harvard professor.

Now, banks are proving less willing to provide loans, and regulators are forcing them to hold more capital. Financial institutions worldwide have logged writedowns and losses totaling $1.8 trillion since the crisis began in 2007, according to Bloomberg data.

“There’s not going to be as much access to credit to absorb shocks,” said Soss, a former Fed economist. When they do occur, “they’ll be delivered to the body of the economy, and recessions will be more frequent and possibly more severe.”

Rate Support
To compensate, U.S. central bankers will need to provide support through low interest rates “for a very long time,” Soss said. He predicts the Fed will keep its benchmark rate for overnight loans among banks near zero through 2011.

The nightmare scenario is that the U.S. repeats Japan’s recent history. Having suffered 10 recessions in the four decades before 1991, it has fallen into four since then as it struggled to regain momentum after the 1980s asset bubble burst.

That has thwarted recoveries in the Nikkei 225 Stock Average, which has failed to sustain rallies above 20,000, almost half its 1989 peak. The average stood at 9,471.67 at the 3 p.m. close on Sept. 24 in Tokyo, and the economy remains plagued by deflation.

‘Vulnerable’ Economy
“The financial weaknesses in Japan left its economy very vulnerable,” Kang said. “Macro stimulus can help but can only provide a supportive environment for restructuring. I can see the argument that as long as financial weaknesses remain, economies are more vulnerable to shocks, and this could lead to more frequent recessions.”
Link -
http://www.businessweek.com/news/2010-09-27/this-time-different-calling-trough-as-nber-sees-not-much-rebound.html
=====
This time IS DIFFERENT in some respects, but not others!

12 Ominous Signs for World Financial Markets

Can anyone explain the very strange behavior that we are seeing in world financial markets right now? Corporate insiders are bailing out of the U.S. stock market at a very alarming rate. Investors are moving mountains of money into gold and other commodities.

In fact, there is such a rush towards gold that shortages are starting to be reported in some areas. Meanwhile, some very, very unusual option activity has started to show up. In particular, someone is making some incredibly large bets that the S&P 500 is going to absolutely tank during the month of October.

Central banks around the world have caught a case of "loose money fever" and are apparently hoping that a new flood of paper money will shock the global economy back to life. Meanwhile, the furor over the foreclosure procedure abuses of the major U.S mortgage companies threatens to bring even more turmoil to the U.S. housing industry.

There are some very ominous signs that something is just not right in world financial markets right now. Some of the signs listed below may be related. Others may not be. That is for you to decide. Often, just before something really bad happens, you can actually see the rats leaving a sinking ship if you know where to look. The truth is that if things are going to go south, it is the insiders who know before anyone else.

So are some of the signs below actually clues for what we should expect in the months ahead?

Maybe. Maybe not. You make your own call. But, it is becoming hard to deny that there are some serious danger signs out there at this point....

1.Corporate insiders are getting out of the U.S. stock market at an absolutely blinding pace. It is being reported that the ratio of corporate insider selling to corporate insider buying last week was 1,411 to 1, and this week the ratio has soared even higher and is at 2,341 to 1.

2.Many of the world's wealthiest people are buying absolutely massive quantities of gold right now.

3.It is being reported that J.P. Morgan (JPM) is gobbling up the rights to as much physical gold as it possibly can.

4.The United States Mint has announced that it has run out of 1-ounce, 24-karat American Buffalo gold bullion coins and that it will not be selling any more of them in 2010.

5.It is becoming increasingly difficult to explain the unusually high option volume that we are witnessing right now.

6.Some very large investors are making massive bets that the S&P 500 is going to take a serious tumble during the month of October.

7.On Tuesday, the Bank of Japan shocked world financial markets by cutting interest rates even closer to zero and by setting up a 5 trillion yen quantitative easing fund.

8.The president of the Federal Reserve Bank of New York and the president of the Federal Reserve Bank of Chicago are both publicly urging the Fed to do much more to stimulate the U.S. economy, including beginning a new round of quantitative easing, even if it means a significant rise in the U.S. inflation rate.

9.Nobel Prize-winning economist Joseph Stiglitz told reporters on Tuesday that the loose monetary policies of the Federal Reserve and the European Central Bank are throwing the world into "chaos".

10.At the end of September, federal regulators announced a $30 billion bailout of the U.S. wholesale credit union system.

11.Bank of America (BOC), JPMorgan Chase and GMAC Mortgage have all suspended foreclosures in many U.S. states due to serious concerns about foreclosure procedures. Now, Texas Attorney General Greg Abbott is actually demanding that all mortgage servicing companies in the state of Texas immediately suspend all foreclosures, the selling of foreclosed properties and the eviction of people living in foreclosed properties until they have completed a review of their foreclosure procedures.

12.Not only that, but Nancy Pelosi and 30 other members of Congress are requesting a federal investigation of the foreclosure practices of U.S. mortgage lenders. Needless to say, this controversy has the potential to turn the entire U.S. mortgage industry into an absolute quagmire.

So are dark days ahead for world financial markets? Well, yeah, but it is incredibly hard to predict exactly when things are going to fall apart. The truth is that there are going to be a whole lot more "crashes" and "collapses" in the years ahead. The important thing is to keep your eye on the long-term trends.

The U.S. economy is undeniably in decline. The only thing keeping the economy going at this point is a rapidly growing sea of red ink. Debt is literally everywhere. It is what our entire financial system is based on in 2010.

In the months and years to come, the major players are going to try very hard to keep all the balls in the air and to continue the massive shell game that is going on, but in the end the whole thing is going to collapse like a house of cards. Unfortunately, we have been destroying the U.S. economy for decades and there is simply not going to be a happy ending to this story.
Link -
http://seekingalpha.com/article/228650-12-ominous-signs-for-world-financial-markets?source=email
=============
13. The US Fed Reserve chairman, shocked Global markets in a speech, where he confirmed that the USA was in deep crap and he reminded us mere mortals that, WE (mere mortals) are going to pay for it!

<<The US Fed Reserve chairman, shocked Global markets in a speech, where he confirmed that the USA was in deep crap and he reminded us mere mortals that, WE (mere mortals) are going to pay for it!>>
............................................................................

lol, I'm glad he explained that, and here I was thinking that the perpetrators would pay for it.

It is pleasing to see that the US congress are looking into the foreclosure debacle over there, too little, too late for many, but it could have a positive outcome for a considerable number of unfortunate families in the future.

The Wall St brigade are carrying on exactly the same as before the crash, except they are being a lot less exuberant about it.They haven't learnt a lesson, but who would expect them to? The only good thing to come out of a stock market crash is to see their crying faces.

Do you think our dollar is over valued perce?

Ex Dame Pansi wrote on Oct 8^th, 2010 at 6:32pm:

<<The US Fed Reserve chairman, shocked Global markets in a speech, where he confirmed that the USA was in deep crap and he reminded us mere mortals that, WE (mere mortals) are going to pay for it!>> ............................................................................ lol, I'm glad he explained that, and here I was thinking that the perpetrators would pay for it. It is pleasing to see that the US congress are looking into the foreclosure debacle over there, too little, too late for many, but it could have a positive outcome for a considerable number of unfortunate families in the future. The Wall St brigade are carrying on exactly the same as before the crash, except they are being a lot less exuberant about it.They haven't learnt a lesson, but who would expect them to? The only good thing to come out of a stock market crash is to see their crying faces. Do you think our dollar is over valued perce?

It would be even better, IF they actually took some real & positive action! However, I suspect the only reason it is "being looked at", is the amount of publicity involved & the practical difficulties of continuing at this point.
We await the outcome!

Well, anything is possible, but at this point, it would seem likely that there is more upside for the OZ$, mainly because there is more downside likely for the US$, with another bout of Quantitative Easing (Money Laundering printing), seeming likely in the USA !

Yep, everything is going up and thankfully I don't have a Home Loan to wring me dry and put me into further debt than the one I originally borrowed.
Word of advice - pay off everything you owe as quick as possible !!!!

Mugabe has this to say:  ;D ;D ;D
...I told everyone that the UK was in the wrong 'twice' in Zimbabwe.
::)

This time though - I don't think there will be a 'crash' to bring the Hyper-Inflation back down to earth for at least 10 years. Everyone is going out to rip everyone else off!!!

Words of advice: Don't buy anything, especially anything that will cost you $$ching-ching to maintain, run, etc.
(...like children ::) ;D)

And with this Yazz would like to say
http://www.youtube.com/watch?v=UtKADQnjQmc
as we head into another Economic Adversity as tough as the Great Depression was.
You know so - because we were all given fair warning a year or so back. ;)

All the Best and may the Force be with you. :)

It_is_the_Darkness wrote on Oct 9^th, 2010 at 8:28pm:

Yep, everything is going up and thankfully I don't have a Home Loan to wring me dry and put me into further debt than the one I originally borrowed. Word of advice - pay off everything you owe as quick as possible !!!! Mugabe has this to say:  ;D ;D ;D ...I told everyone that the UK was in the wrong 'twice' in Zimbabwe. ::) This time though - I don't think there will be a 'crash' to bring the Hyper-Inflation back down to earth for at least 10 years. Everyone is going out to rip everyone else off!!! Words of advice: Don't buy anything, especially anything that will cost you $$ching-ching to maintain, run, etc. (...like children ::) ;D) And with this Yazz would like to say http://www.youtube.com/watch?v=UtKADQnjQmc as we head into another Economic Adversity as tough as the Great Depression was. You know so - because we were all given fair warning a year or so back. ;) All the Best and may the Force be with you. :)

I'm not sure that everything will be going up, you may find a split between some things goin up, whilst others may go down?

I agree with you comment on Debt, as I have put it, many times -
Good luck & watch the Debt!

For those interested in a perspective of the Future of the OZ$ / US$ exchange rate.

http://noir.bloomberg.com/avp/avp.htm?N=av&T=Kyriakopoulos%20Says%20Australian%20Dollar%20May%20Rise%20to%20US%241.10&clipSRC=mms://media2.bloomberg.com/cache/vZIOZXBsP8mA.asf
==========
I tend to agree there is more upside left, but I am less certain on the suggested RBA rate hikes suggested in the above video.

Social Security Going Bust … Not on the Boomers Watch!

On Aug. 5, the Social Security Board of Trustees released its annual report on the financial health of the Social Security Trust Funds and the long-range outlook remains unchanged. The Social Security Trust Funds will be exhausted in 2037; the same as projected last year (note that in 2008 it was projected to be exhausted in 2041). The Trustees also project that program costs will exceed tax revenues in 2010 and 2011, be less than tax revenues in 2012 through 2014, and then permanently exceed tax revenues beginning 2015, one year earlier than estimated in last year’s report. The worsening of the short-range outlook for the Social Security Trust Funds is due in large part to the recent economic downturn and the fact that Social Security is funded by a payroll tax. Thus, less Americans working in turn means less revenue for Social Security.

To understand how Social Security got to this point you probably need a little history lesson on how the program began. In 1933 America was in the deepest and darkest depths of the Great Depression. Social conditions had reached an explosive point because of the unemployment of one-fourth of the labor force. Franklin D. Roosevelt (FDR) and the New Dealers were in a precarious and potentially disastrous situation with masses of angry young men demonstrating in the streets. Roosevelt had already seen where these situations could lead by the examples set in Germany and Italy. It was exactly these conditions that gave rise to both Hitler and Mussolini. The New Dealers’ plan to get young people working again was to offer a public pension so the older men would retire, hence the birth of Social Security.

FDR and the New Dealers settled on the age of 65 in 1935 to collect Social Security benefits, however keep in mind that the average life expectancy in America at that time was 63 years.

With all of this bad news, it is no wonder that Americans are beginning to feel very concerned about the solvency of the Social Security system and whether or not it will be there for them. However, it is my opinion that it will and has to be there. Consider that nine out of 10 Americans, age 65 and older receive Social Security and for 32% of these people it is 90% or more of their income. For middle class America, Social Security ends up replacing close to 40% of their pre-retirement income. I don’t believe these statistics are going to change much. Given that the median 401(k) account balance for long tenured employees (employees with over 20 years with same employer) within a salary range of $40,000 to $60,000 per year is approximately $74,000 and the fact that 48% of individuals not yet retired believe they will not have enough money to maintain their current lifestyle in retirement, how can Social Security just simply float away? Imagine the economic turmoil this would cause. Many Americans would not be able to afford the basics such as food and shelter. States would see their sales tax revenues decrease sharply as many retirees would simply be forced to limit consumption. So, how do we “fix” the System? Remember, that we have the largest generation in history just starting to become eligible for benefits.
Link -
http://insurancenewsnet.com/article.aspx?id=228132
=================
And, that is only part of the story!

There is also Health Services that are set to increase massively and a rapid decline in essential personnel, as massive numbers of Baby Boomers now start to retire!

I find it interesting how a slight increase in interest rates in China can rattle Wall street so easily as shown in the last couple of days, and of course there was a feed on to the stockmarket and the Aussie dollar dropped a cent.  

muso wrote on Oct 21^st, 2010 at 8:03am:

I find it interesting how a slight increase in interest rates in China can rattle Wall street so easily as shown in the last couple of days, and of course there was a feed on to the stockmarket and the Aussie dollar dropped a cent.

There are plenty of games being played out!

Certainly, one rate increase isn't huge, in normal times, but these are far from normal times and markets are very flighty.

Those same markets ARE also being massages/manipulated to accentuate certain outcomes.

One of the problems being that there are different ideas on what the desired outcomes should be and the possibility of miscalculations are high.

Btw, there are suggestions that China may raise again another 4 times next year? There are also suggestions that China is angling for the Yuan to take over as the US$ exits?

Of course, it could simply be that there was a DOWn day with no apparent reason, so the media found one?

Mind you, there have been a few unexplainable market increases recently, so perhaps we were due for an unexplainable market decrease?

Beware the 'baby bust' - boomers to retire and stop paying taxes

A study from KPMG and research firm Ipsos says taxpayers need to be prepared for the start of a 'baby bust' over the next decade, as baby boomers start retiring from the workforce.

The report, called 'Future Focus' and which examines what Australia will look like in 2020, is based on demographic trends and feedback from focus groups of key business leaders and consumers.

It concludes that the Australian economy has benefited from 45 years of baby boomers moving into and remaining in the workforce, including their contributions to the spending and investment spree that preceded the global financial crisis. The oldest baby boomers, born just after the war, start to turn 65 next year.

Some commentators warn that this change could have huge financial ramifications as baby boomers sell their houses and businesses, but Salt says he is not so pessimistic, and holds that many boomers will probably need to work longer than expected to fund retirement.

'From 2011 onwards, the demographic underpinning the workforce, and to the tax base provided by the boomers, slowly unravels,' Salt says.

Many of them have inadequate superannuation, given the compulsory superannuation system only began in 1992. The study predicts that, because of the demands on the government's coffers as this generation looks to tax-supported retirement funding, the boomers are also likely to boost the growing acceptance of older workers staying on in the workforce for longer, at least part-time.

While Salt says most of the next decade's demographic trends are set, the report underlines a number of trends that will occur over the next 10 years:

•Our population will increase by three million to around 25 million. Populations of Melbourne, Sydney and south east Queensland to increase by 500,000.
•The strongest population growth will be in the 30 to 34 years and the 64 to 75 year age groups.
•The 30 to 34 year olds will need affordable housing options, with an emphasis on apartments.
•Migrant uptake is likely to continue to mostly come from New Zealand, China and India
Link -
http://www.taxpayersassociation.com.au/latest-news/beware-the-baby-bust-boomers-to-retire-and-stop-paying-taxs.html
=============
There are a number of things that are likely to happen & some that will not, including -

1) The tax base, Will shrink!
2) Government Expenses (State & Federal), Will increase!
3) Demand for Goods & Services, Will Decline!
4) Immigration, Will NOT continue to rise exponentially!
5) Our Total Population, Will NOT continue to expand exponentially! In fact, it will actually start to Decline, within the next 20-30 years!
6) Our Energy Cost to GDP ratio, Will increase significantly, great increasing all costs and putting new infrastructure at risk!
7) Our Food Production, Will Decline per capita, to a point where we can no longer sustain a growing Population!

Why Bernanke Can't Win, But Will Kill the Dollar Trying

Fed Chairman Bernanke faces three huge deflationary forces, but he only sees part of one of them – the credit deleveraging. He doesn’t realize that there has been a generational change to the Millennials and GenXers who are averse to debt.

He doesn’t realize the deflationary impact of demographics as 71 million baby boomers retire. He doesn’t have a clue about the Moore’s Law-driven deflationary impact of technology.

He doesn’t know that neither monetary nor fiscal policy can do anything useful against these forces. And that’s why he will QE the dollar to death, never realizing that he’s trying to hold back the tide with a strainer.

The US economy is in the grip of three powerful deflationary forces
The first is deleveraging and the credit bust. Everyone sees this one, but few realize there is a powerful generational driver behind it that will not respond to fiscal stimulus, monetary expansion, cheerleading or any other of the arrows in the government's quiver.

The second powerful deflationary force is demographics – the aging and retirement of the baby boomers. For some reason, little attention is paid to this one either, even though the numbers are obvious and huge. And again, this demographic driver will not respond to government tinkering with the macro, top-down economy.

The third powerful deflationary force, which no one seems to see except me and, now, you, is the accelerating spread of technology.

So should you position yourself for a serious deflation – Great Depression II

One powerful inflationary force
We are not going into a downward spiral because these three deflationary forces are up against a far more powerful countervailing force: Fed Chairman Ben Bernanke. He is an expert on the Great Depression, he wrote his thesis on it, he taught it, and he has every intention of avoiding Great Depression II on his watch at the Fed.

But Bernanke has chosen – had to choose, given his background – the way of the oak. Stand tall, be strong, be rigid, don’t give an inch to the storm and there’s a 99% chance you’ll survive. Which leaves a 1% chance we lose the whole country.

Those are the percentages in his mind, because he only sees the credit deleveraging part of the storm. Demographics and technology have not crossed his mind, although they are up front in this book. And they make the odds of the oak still standing something closer to 70% than 99%. As Bernanke applies his powerful, inappropriate tools to avoiding Great Depression II, there is a 70% chance he is going to cause the Great Inflation.

There is a 30% chance he will make a misstep or be blindsided by demographics and technology, and cause a Hyperinflation. In a Hyperinflation, society breaks down. No one will accept the currency.

Either the Great Inflation or a Hyperinflation might be followed by Great Depression II sometime in the future, but Bernanke will be long gone from the Fed by then.
Link -
http://seekingalpha.com/article/231094-why-bernanke-can-t-win-but-will-kill-the-dollar-trying
==============
As usual, I don't agree with everything in the article, but the author does make some valid points!

For starters, he does not refer to THE TWO primary macro forces, Peak Oil &/or the Global Decline in Population Growth and the eventual, actual fall in Global Population.

He also refers to 71 million Baby Boomers, whereas its closer to 80 million, just in the USA & around 1.75 Billion Globally.

And, I'm not sure about GenXers already being averse to debt, but they will learn, as time passes!

But he does make the point, that Bernanke has pre-conceptions about what the problems & solutions are, as do others and that is why Bernanke is now FED chairman.

However, if your basic perceptions are incorrect, then the chance of fixing the actual problems, is pretty zero or at a minimum, the chances of making miscalculations are high!

The end of the world. That is, the end of the world we’ve known since WWII

Summary:  A status report about the end of the post-WWII world.  The great recession has accellerated the process, revealing its weaknesses and showing the people of the rapidly growing emerging nations that they have outgrown it.  The US is almost its lone defender, a futile effort wasting time and resources that could be spent adjusting to the new world being born.

The post-WWII era slowly winds down, slowly but noisily.  It consists so far of two sets of interrelated dynamics.  

First, a reversion to the mean of history:  the center of economic power returns to the East, ending a few hundred year long aberration.

The economic and political regimes of the developed nations (US, Japan, Europe) are failing under pressure of aging demographics and their accumulated public policy errors.
Growth in the Emerging Nations (EM’s) is accelerating as they adopt modern social and technological patterns.

Second, the foundations of the post-WWII’s geopolitical and financial regimes are washing away:
western leadership, with the US and Russia as hegemonic powers,
US dollar as the reserve currency,
free trade, and
(since 1970) free capital flows between nations.

How long will the transition take?
Large transitions take one or even two generations. The long peace (1815-1914) was the greatest period of peace and prosperity in recorded history.  The transition which followed, 1914-1945, was painful. Poverty during the Great Depression.  Megadeaths from two world wars and several civil wars, and a plague (the 1918 flu).

The pace and nature of this transition are unknowable, despite the gurus who speak as if they read the 2100 AD Britannica. We can only guess about the shape of the new world that lies beyond.  It depends on choices we all will made, choices we do not yet understand.

A note about inflation
The US government has thrown a “Hail Mary” pass (i.e., QE2) to prevent deflation, deflation potentially lethal for a high-debt economy like ours.  Despite that, many are hysterical about prospect of inflation or even hyperinflation.  This confusion is typical of the confusion brought about by transitions. People run about with fire extinguishers while their house floods.

A note about oil
Global growth, from the EM’s, is boosting oil consumption.  At some point, peak oil will further complicate our lives.  First comes political peaking, as OPEC becomes unwilling to expand investment and production.  Eventually production will hit geological constraints.

When this happens depends on investment decisions (especially in OPEC), global growth, and geological constraints. Already the precursor to peak oil, falling EROI (energy return on investment), is pushing up energy prices.

What happens as production costs rise and production constraints multiply?  Oil prices must rise to destroy the excess demand.  Since oil demand is inelastic with respect to prices, prices must rise a lot to destroy demand.  Spikes in energy price rises are deflationary (as we saw in 2008), unless central banks (CB’s) respond with monetary easing (as they did in the 1970s). CB’s of emerging nations experiencing the inflationary effects of rapid growth and a falling US dollar are unlikely to easy and exacerbate the inflation.  CB’s of most developed nations are unlikely to do so, for different and complex reasons.

A note about the pace of change
Crowds are often poor at recognizing the early stages of change. Sometimes they remains delusionally complacent and then experiences rapid collective recognition. The classic example is WWI. The crisis started on June 28 with the assassination of Archduke Ferdinand of Austria. People (and markets) remained calm despite rapidly rising geopolitical tensions until major mobilizations began on July 30. Then people freaked out, too late.
Link -
http://fabiusmaximus.wordpress.com/2010/11/07/23244/
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I believe we are now at a point where Oil Prices will rise again, due to Production not being able to keep up with Demand.

Those rising Prices will again take too large a % of disposable income, for Individuals, Businesses & Government/s, the Global Economy will relapse again and along with it, so to will share markets also collapse.

Oil Prices will then start a relentless rise in Prices, Oil scarcity will then commence and so starts the long decline of the age of Oil.

I suppose you have to roll with the punches to a certain extent, but I think we're a bit complacent (nay apathetic) here in Australia.

It wasn't too long ago that our dollar was under 50 cents U.S.
A bit further back, our interest rates were 18% and unemployment was very high.

I wonder how we'd handle such a situation nowadays?
It would seem that we have an almost realistically-perfect economy atm; low unemployment, low interest rates, low inflation.
The politicians and economists of yesteryear would surely see this day as an almost economic nirvana wouldn't they?

On the down side:
Fuel prices are still comparatively high vs. disposable income.  Household debt vs. disposable income is extremely high, mainly due to increased property prices.. and credit card debt also plays a smalliish role.

Food costs have also risen, so there seems to have been a bit of a "trade off" with food and shelter there...because food and shelter ain't really that important are they?

Energy prices have also risen sharply. Forego some warmth and cooling.
Most of us find it hard to make savings on energy costs nomatter how hard we try.
We switched to gas, and now gas is expensive. We fill our homes with energy saving light globes and appliances. It's still expensive, to the point that going back to the days of wasting energy would be unaffordable to an average Australian wage.

If we sway from our current economic nirvana, we may find it a bit harder to handle than we did 20 years ago. And 20yrs is really nothing to the economic plan that we must employ. Though it's a long time in a person's life.i

perceptions_now wrote on Nov 7^th, 2010 at 10:30pm:

I believe we are now at a point where Oil Prices will rise again, due to Production not being able to keep up with Demand. Those rising Prices will again take too large a % of disposable income, for Individuals, Businesses & Government/s, the Global Economy will relapse again and along with it, so to will share markets also collapse. Oil Prices will then start a relentless rise in Prices, Oil scarcity will then commence and so starts the long decline of the age of Oil.

Yeah, I knew that this would come. The poor performance of the US economy is holding it back at this moment in time, but eventually it will happen. It's all a question of timing, that's all. I'm thinking March 2011 at this stage.

My strategy up to now is to convert my Super to cash units near the top, and convert again to High Risk when the market is at its lowest. Purchasing High risk units when they are cheap like that has worked up to now, but the risk is always a prolonged bear market.

Do you think that the next bear market will be as bad as the last or worse?

Nice to see your "spiritual" self Muso. so concerned about the world's wellbeing  ;D

muso wrote on Nov 8^th, 2010 at 9:31am:

perceptions_now wrote on Nov 7th, 2010 at 10:30pm: I believe we are now at a point where Oil Prices will rise again, due to Production not being able to keep up with Demand. Those rising Prices will again take too large a % of disposable income, for Individuals, Businesses & Government/s, the Global Economy will relapse again and along with it, so to will share markets also collapse. Oil Prices will then start a relentless rise in Prices, Oil scarcity will then commence and so starts the long decline of the age of Oil. Yeah, I knew that this would come. The poor performance of the US economy is holding it back at this moment in time, but eventually it will happen. It's all a question of timing, that's all. I'm thinking March 2011 at this stage. My strategy up to now is to convert my Super to cash units near the top, and convert again to High Risk when the market is at its lowest. 1) Purchasing High risk units when they are cheap like that has worked up to now, but the risk is always a prolonged bear market. 2) Do you think that the next bear market will be as bad as the last or worse?

1) You are correct, that has been THE strategy, for quite some time, buy at the height of the risk and sell nearing the top of the market!

But there are always rules & exceptions, buy low & sell high is the rule and this is THE exception!

2) Unless there is some very well hidden or brand new discovery, to replace Oil, particularly in the LIQUIDS FOR TRANSPORT ARENA, then the current GFC is likely to become the longest & worst bear market in history.

And, even if there is some well hidden or new discovery regarding Oil, there are a number of other factors in play, which are & will continue to prevent the usual Economic bounceback. There are also lengthy timelines involved to transition to new Energy sources and we are already well behind that clock!

That's not to say there won't be many ups & downs, it just means the trend will be down for quite some time.

So, this is the exception because there are  now so many basic macro factors affecting the market ups & downs, which have never been in play before and TPTB have spread so much confusion, it is & will be, difficult for most of us mere mortals to pick whats happening, until it is too late.

In other words, the share market may drop 20-40% in a week, any week and we may normally have started to buy back in, but given all that is going on, the markets could bouceback a little or continue to fall another 20-40%.

There are just too many variables and as I had retirement in view back in 2006, that's why I decided safety was the only option for me, that's why I got completely out of shares and given the long term nature of this beast, that's why I am unlikely to return to the share market!  

Amadd wrote on Nov 8^th, 2010 at 10:19am:

Nice to see your "spiritual" self Muso. so concerned about the world's wellbeing  ;D

Oh I'm concerned about the world's wellbeing. I'm also concerned about sustained personal wealth  :P

The two are not necessarily at odds with each other.  ;)

Perceptions - I agree totally with your take on shares. It's all a question of age and risk acceptance.

good discussion

Yes it was.
Perceptions_Now was a great contributor to the Forum in his younger days.
He hasn't posted much for years now. Really nice guy and it's just 'old age' that keeps him away now.

Some old good names there: Muso, Amadd and Mozzaok mentioned at least before he became frustrated in being a Gmod but not being supported as he stated in a one off visit a few years back out of nowhere. Stating 'still the same trolls here', nothing has 'improved'. Must have been a dig at FD?

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