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  • Was just checking if something changed this time.
    No such thing as a good tax - Churchill

    To make mistakes is human. To blame someone else for your mistake, is strategic.

    Comment


    • Crocodylus,

      As for the demographic of 16-19 year olds not producing positive numbers, most of these either go to high school or college, so most of the time it's part-time jobs they take.
      That’s long been the case. My comment was that there is a decline in this age group, not that they are unlikely to be taking jobs.

      = = = = =

      snapper,

      Naturally your graph says nothing about the potentially toxic debt the Fed is sitting on.
      Very observant of you. What the graph does say is this:

      Something changed.

      Hence, following the same trends and patterns as in the past is more risky now. That isn’t to say we should abandon all history, but posting a graph of what happened over the past 13 years without noting that The World Changed deserves comment.

      When The Way Things Work fundamentally changes, and not in a good way, there are two possible responses: react or don’t. Not reacting is irresponsible, so governments react. The proper reaction, as seen from the last several years of economic data is the way the US reacted, not the way Europe reacted.

      . . . . .

      Why are financial markets divorced from the real world? Because it is extremely profitable for people who play the markets, and their greed drives them to engineer products that accelerate or otherwise exaggerate underlying trends to the point where there is no longer a reason for financial markets to exist, except to make money for the people who play. This isn’t all that new; the bond traders did it to us in the 1980s.

      If you want to play the game, go for it. I don’t, because I don’t trust those who set the rules. That’s why I avoid casinos, too (a friendly game at home is different).

      . . . . .

      Remember the days when a young married man would work all day and then drive a cab at night, to save enough for a down payment on the first house? Or, Mom would take a part-time job to help pay for something special, say a new car or a family holiday. Just reminiscing . . .

      I don’t skew the inflation calculations; those who refuse to accept what the vast majority uses to compare price movements from one period to the next are the ones skewing things. I also don’t exclude food and fuel, except when discussing “core inflation,” which is a valid macroeconomic topic useful for getting to the underlying factors driving an economy. To use “core inflation” to deflate wages, for example, would be conceptually wrong. Therefore, is no longer necessary to bring the concept of core inflation into these discussions.

      . . . . .

      Here’s another version of the graph, with weekly data and only covering 2007-11. Note the timing of the unprecedented upsurge in borrowing.
      Attached Files
      Trust me?
      I'm an economist!

      Comment


      • Who says not reacting is irresponsible?
        No such thing as a good tax - Churchill

        To make mistakes is human. To blame someone else for your mistake, is strategic.

        Comment


        • Originally posted by DOR View Post
          Very observant of you. What the graph does say is this:

          Something changed.

          Hence, following the same trends and patterns as in the past is more risky now. That isn’t to say we should abandon all history, but posting a graph of what happened over the past 13 years without noting that The World Changed deserves comment.

          When The Way Things Work fundamentally changes, and not in a good way, there are two possible responses: react or don’t. Not reacting is irresponsible, so governments react. The proper reaction, as seen from the last several years of economic data is the way the US reacted, not the way Europe reacted.
          Well considering that what changed was caused by the Fed creating bubbles with low interest rates and the sub prime market caused by Government support for people to buy houses via the Community Reinvestment Act one might ask if 'more of the same' was a rational response. The right thing to do was precisely what you reject; nothing! Let the market find an equilibrium of it's own, cut taxes if anything to increase disposable income and let if you want to subsidise anything throw some money at fuel costs. Instead taxes rose to pay for 'stimulus', thus destroying 'real' jobs, borrowing went up - increasing potential debt servicing costs and interest rates were floored... more of the same. A form of insanity. The US (and UK) are Japan in slow motion.

          Originally posted by DOR View Post
          Why are financial markets divorced from the real world? Because it is extremely profitable for people who play the markets, and their greed drives them to engineer products that accelerate or otherwise exaggerate underlying trends to the point where there is no longer a reason for financial markets to exist, except to make money for the people who play. This isn’t all that new; the bond traders did it to us in the 1980s.

          If you want to play the game, go for it. I don’t, because I don’t trust those who set the rules. That’s why I avoid casinos, too (a friendly game at home is different).

          The markets are skewed by Central Bank policy mostly. $85bn per month, whether you like it or not, skews the markets.

          Originally posted by DOR View Post
          Remember the days when a young married man would work all day and then drive a cab at night, to save enough for a down payment on the first house? Or, Mom would take a part-time job to help pay for something special, say a new car or a family holiday. Just reminiscing . . .
          Now they ALL have to take 2nd and 3rd part time jobs.

          Originally posted by DOR View Post
          I don’t skew the inflation calculations; those who refuse to accept what the vast majority uses to compare price movements from one period to the next are the ones skewing things. I also don’t exclude food and fuel, except when discussing “core inflation,” which is a valid macroeconomic topic useful for getting to the underlying factors driving an economy. To use “core inflation” to deflate wages, for example, would be conceptually wrong. Therefore, is no longer necessary to bring the concept of core inflation into these discussions.
          Don't worry I won't her HMG that you think their inflation calculation is wrong, nor the French or the Germans...

          Comment


          • Originally posted by Doktor View Post
            Who says not reacting is irresponsible?
            [raises hand]
            Trust me?
            I'm an economist!

            Comment


            • snapper,

              I’d love to go back in time and undo what lead to the flustercluck since 2007. That’s a bit out of my reach, so I don’t obsess about it. But, one thing I do pay attention to is whether what happened pre-2007 is happening again.

              It isn’t.
              Not even close.
              Magnitudes different.

              So, I move on.

              . . . . .

              Doing nothing is the wrong thing to do; ask the Japanese. The lesson learned from Japan’s Lost Decade (x2) is that reacting too slowly or too late is worse than not reacting at all. Hence, the openly stated decision by Paulson and later Geithner to “go big.”

              Andrew Mellon thought the best thing to do would be to “let the market find an equilibrium of its own.” Actually, what he said was “liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate.” That was in 1929. The results that can only be described as sub-optimal, and we’ve learned not to do that ever, ever again.

              . . . . .

              Daily market turnover dwarfs central bank intervention. Sure, CBers can talk markets up or scare the bejesus out of markets, but when it comes to heavy duty firepower, markets win. cf Markets v Central Banks, Asian Financial Crisis, 1997-99.
              Trust me?
              I'm an economist!

              Comment


              • Originally posted by DOR View Post
                snapper,

                I’d love to go back in time and undo what lead to the flustercluck since 2007. That’s a bit out of my reach, so I don’t obsess about it. But, one thing I do pay attention to is whether what happened pre-2007 is happening again.

                It isn’t.
                Not even close.
                Magnitudes different.

                So, I move on.
                This is where Snapper and I disagree with you. It is happening again and you gloss over it.

                . . . . .

                Doing nothing is the wrong thing to do; ask the Japanese. The lesson learned from Japan’s Lost Decade (x2) is that reacting too slowly or too late is worse than not reacting at all. Hence, the openly stated decision by Paulson and later Geithner to “go big.”
                The US is suffering a lot decade from going big... Employment and inflation adjusted real wages are not expected to return to 2007 levels until 2015. With the recent decision to shift the main job and major recession causing killing part of Obamacare in to 2015, I think we are looking at a second recession and a real risk of a multi-decade situation because we went big.

                I also take umbrage at your assertion that Japan took a do nothing approach. They went BIG, trillions of yen spent on stimulus and it generated the exact same results were are seeing after our stimulus efforts- prolonged recession, distorted markets and a lack of job creation.


                Andrew Mellon thought the best thing to do would be to “let the market find an equilibrium of its own.” Actually, what he said was “liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate.” That was in 1929. The results that can only be described as sub-optimal, and we’ve learned not to do that ever, ever again.

                Daily market turnover dwarfs central bank intervention. Sure, CBers can talk markets up or scare the bejesus out of markets, but when it comes to heavy duty firepower, markets win. cf Markets v Central Banks, Asian Financial Crisis, 1997-99.
                Which should have been a lesson to governments to not tamper with markets and let things work- sharp and painful but at least short.
                Last edited by astralis; 12 Jul 13,, 05:05. Reason: inserted in quoted paragraph from DOR

                Comment


                • Welcome back Eric :)

                  Comment


                  • only temporarily, i'm afraid; work schedule will get a lot worse over the next few months
                    There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

                    Comment


                    • Originally posted by DOR View Post
                      [raises hand]
                      What about about your food for thought example?

                      What about making dangerous precedents? Like socializing private debt? No reaction is better then just about any not thoroughly planned/executed reaction.
                      No such thing as a good tax - Churchill

                      To make mistakes is human. To blame someone else for your mistake, is strategic.

                      Comment


                      • Originally posted by DOR View Post
                        I’d love to go back in time and undo what lead to the flustercluck since 2007. That’s a bit out of my reach, so I don’t obsess about it. But, one thing I do pay attention to is whether what happened pre-2007 is happening again.

                        It isn’t.
                        Not even close.
                        Magnitudes different.

                        So, I move on.
                        But what has been the Fed's response? Just magnitudes greater of what Greenspan did in 2001. Greenspan floored interest rates and resigned. Bernanke floored interest rates, printed and will resign in January. More bubbles...

                        zraver is correct on Japan - they have tried nothing but throwing money at their perceived deflationary problem. 'Abenomics' is just a fiscal and monetary two pronged approach.

                        Regarding the Fed's action in the bond markets - it's own about 30% of US 10 year equivalents... some dwarf.

                        Comment


                        • i'm still waiting for that terrible, terrible hyperinflation and the collapse of the housing market...
                          There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

                          Comment


                          • Originally posted by astralis View Post
                            i'm still waiting for that terrible, terrible hyperinflation and the collapse of the housing market...
                            I'm still waiting for the Euro to collapse - that was supposed to happed 2 1/2 years ago.

                            On more recent predictions, I think the market was supposed to sink or swim' quite a few weeks back. Perhaps Snapper can tell us which of those happened. Oh, and don't forget that 'Hindenburg' thingy that Snapper insisted DOR respond to. That must be just about due to happen....or not. Still, it will no doubt make for a good talking point at the next permabear cocktail party.

                            The PermaBear to English Translation Guide | The Big Picture

                            So many predictions, so few correct.
                            sigpic

                            Win nervously lose tragically - Reds C C

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                            • Who saw 2008 coming? Not Bernanke yet many people warned it was coming and were laughed as you scoff now. Even astralis accepts that too much QE can be bad and the Fed appears split on the issue.

                              Why did 2008 creep up on so many people? Weren’t there plenty of economists out there “preaching to the choir” at that time? Weren’t there plenty of signals? Weren’t there plenty of practical conclusions being made about the future? And yet, the world was left stunned.

                              The truth is, human beings have a nasty habit of ignoring the cold hard facts of the present in the hopes of using apathy as a magical elixir for future prosperity. They want to believe that disaster is a mindset, that it is a boogeyman under their bed that can be defeated through blind optimism. They refuse to accept that disaster is a tangible inevitability of life that pays no heed to our naïve, happy-go-lucky attitudes. The American people allowed themselves to be caught off guard in 2008, just as they are setting themselves up to be caught off guard again today.
                              Guest Post: Get Ready For The Next Great Stock Market Exodus | Zero Hedge

                              As I said before regarding 'Hindenburgs' there has never been a crash without the Hindenburg, however not all Hindenburgs result in a crash. They are a sign of increasing risk, like small volcanic eruptions before the whole lots blows.

                              As for the PermaBear Guide... very amusing. I assume they were asleep in 2008.

                              Attached Files

                              Comment


                              • Originally posted by snapper View Post
                                Who saw 2008 coming? Not Bernanke yet many people warned it was coming and were laughed as you scoff now. Even astralis accepts that too much QE can be bad and the Fed appears split on the issue.
                                No idea what Bernanke has to do with your serial predictions Snapper. What I scoff at is not only the amount of stuff you get ridiculously wrong - there is a LONG list, I'm just cherry picking the silliest - but the fact that despite such a record of being wrong you remain so impressed with your own analytical abilities and your sources that you continue to make predictions undaunted.

                                Guest Post: Get Ready For The Next Great Stock Market Exodus | Zero Hedge

                                As I said before regarding 'Hindenburgs' there has never been a crash without the Hindenburg, however not all Hindenburgs result in a crash. They are a sign of increasing risk, like small volcanic eruptions before the whole lots blows.
                                Cool, we're back to what I once described as 'vague predictions of doom on the never never'. Sort of a specialty of yours. What I particularly like about them is that they are always sufficiently vague to be shrugged off when they don't happen but contain just enough info to be used as proof of 'Cassandra' status if something that remotely fits actually does happen. Bit like fortune telling or 'cold reading'.

                                Oh, and I noticed you indulging in another specialty - refusing to discuss your own predictions. I mentioned two recent predictions. By sheer coincidence you only replied to the one that you had already refused to commit to. What happened to this one:

                                I think the market was supposed to sink or swim' quite a few weeks back
                                So, did it 'sink' or 'swim'. You only gave yourself two options. Deadline has long passed. Perhaps you can produce a graph like the one you made below to explain which outcome took place. It can't be that hard.

                                As for the PermaBear Guide... very amusing. I assume they were asleep in 2008.
                                Well they've clearly been reading your posts. It is actually quite amusing to find the extent to which someone conforms to cliché. Too much 'zerohedge' in the formative years I suspect.
                                sigpic

                                Win nervously lose tragically - Reds C C

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