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The Future/s? (Read 49591 times)

perceptions_now

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The Future/s?
Jun 18^th, 2010 at 5:08pm

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...
Link (The Crash Course – Chris Martenson) -
http://www.chrismartenson.com/crashcourse

« Last Edit: Jun 21^st, 2010 at 4:59pm by perceptions_now »

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perceptions_now

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Re: The Future?
Reply #1 - Jun 18^th, 2010 at 5:14pm

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...
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...

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.

« Last Edit: Jun 19^th, 2015 at 6:13pm by perceptions_now »

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perceptions_now

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Re: The Future?
Reply #2 - Jun 18^th, 2010 at 5:22pm

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-...

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?

« Last Edit: Jul 15^th, 2010 at 7:41pm by perceptions_now »

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perceptions_now

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Re: The Future?
Reply #3 - Jun 19^th, 2010 at 8:14pm

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-reco...
===========
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?sourc...
http://panzner.typepad.com/.a/6a00d83451591e69e2013484722a9b970c-pi

« Last Edit: Jun 19^th, 2010 at 8:19pm by perceptions_now »

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perceptions_now

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Re: The Future?
Reply #4 - Jun 19^th, 2010 at 8:30pm

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!

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vegitamite

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Re: The Future?
Reply #5 - Jun 19^th, 2010 at 8:40pm

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...
Shocked

we could be the last a generation of product waste !

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Equitist

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Re: The Future?
Reply #6 - Jun 19^th, 2010 at 8:44pm

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!?

Lamenting the shift in the Australian psyche, away from the egalitarian ideal of the fair-go - and the rise of short-sighted pollies, who worship the 'Growth Fairy' and seek to divide and conquer!

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Dsmithy70

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ire futuis vobismetipsis

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Re: The Future?
Reply #7 - Jun 19^th, 2010 at 8:52pm

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

REBELLION is not what most people think it is.
REBELLION is when you turn off the TV & start educating & thinking for yourself.
Gavin Nascimento

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vegitamite

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Re: The Future?
Reply #8 - Jun 19^th, 2010 at 9:00pm

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 ...

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perceptions_now

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Re: The Future?
Reply #9 - Jun 20^th, 2010 at 12:16pm

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...

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-...

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!

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Maqqa Gold Member Offline 14% - that low?! Posts: 16000	Re: The Future? Reply #10 - 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.
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Equitist

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Re: The Future?
Reply #11 - Jun 20^th, 2010 at 12:24pm

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!?

Lamenting the shift in the Australian psyche, away from the egalitarian ideal of the fair-go - and the rise of short-sighted pollies, who worship the 'Growth Fairy' and seek to divide and conquer!

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perceptions_now

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Re: The Future?
Reply #12 - Jun 20^th, 2010 at 12:31pm

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

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!

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skippy. Gold Member Offline Posts: 20882 Gender:	Re: The Future? Reply #13 - Jun 20^th, 2010 at 12:36pm 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.
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perceptions_now

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Re: The Future/s?
Reply #14 - Jun 21^st, 2010 at 5:04pm

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...

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