# The economics behind the bull and bear case



## explod (8 February 2010)

Whiskers said:


> I don't subscribe to the theory that there is much worse to come. My logic is that even if the 'authorities' are not aware of more significant issues, they will all certainly be looking much more closely than they were in 07 and react much more promptly.




*Theory:*        that there is much worse to come is not theory, it is based on sound fundamental judgements that have measured the *unsoundness*.    

The boilouts are fading out, it went in the main to buy valueless sludge (Loans on assets that have gone to zero) to save the banking system.  If you read the business sector of Sunday's Age the unsubstanciated jawboning of our so called national economists are a joke, but not funny, downright alarming.

Whiskers, do yourself a favour and download a free issue of "the Privateer" (I have no association just a subscriber for many years) and have a big think about the real picture in the world economy today, and it is all inextricably connected;  and on the facts, which are backed up by respective governments and banks own figures we are in for a bloodbath compared to the crash of 08

In an objective look at inputs on the "Imminenet and Servere Market Correction" and "Gold Price" threads it will be seen that the actual facts have been posted for a number of years.

*Theory (maybe at your peril) by all means but now its time to look at backed up facts*

IMVHO of course

I will shortly post up a brief excerpt from "the Privateer"  on the Imminent and servere market correction thread"


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## prawn_86 (8 February 2010)

*Re: XAO Analysis*

The problem i see with your view explod, is that people have been saying things like this for over 10 years now. Infact the US senate looks set to increase the amount of debt they are 'allowed' to take on.

Yes, on a fundamental basis, pretty much everything is ****ed, but it keeps getting propped up. At some point it will bust, but can you afford to not be involved? What if it takes another 2, 5, or 10 years?

Just my view, meaning that you need to be aware of the possible downside, while still trying to take advantage of any possible upside. That being said, i am slowly beginning to liqudate a few of my holdings, mainly for personal reasons however (re-weighting)


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## Sean K (8 February 2010)

*Re: XAO Analysis*



Whiskers said:


> I don't subscribe to the theory that there is much worse to come. My logic is that even if the 'authorities' are not aware of more significant issues, they will all certainly be looking much more closely than they were in 07 and react much more promptly.



I do now. I thought we could save the situation with some short term measures, put some band aides on, and then rebuild. But, it seems as if the bail out culture is going to persist. They're pooring petrol on the fire. What we might see after the next round of failures is more money printing, causing rampant inflation, and complete destruction of the USD. Might not see another bottom in the stock market for a while because of all the money flowing in. But the economy is cracked.


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## Whiskers (8 February 2010)

*Re: XAO Analysis*

Explod, yeah I'm aware of a lot of the doomsday possibilities... but in the long run I have a general belief that mankind, while ignorant and procrastinating at times a-la G W Bush, is pretty smart and will eventually find ways to overcome adversity... which leads me to Kennas.

Certainly I agree the short term stimulus isn't a permanent fix. What is needed now and what my plan 'A' depends on is fundamental change to the regulation and oversight of the financial markets, particularly in the US.

I also agree that stimulus may keep the market up for a bit longer, but those fundamental changes would need to be showing up soon for the uptrend to be sustainable.


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## explod (8 February 2010)

*Re: XAO Analysis*



prawn_86 said:


> The problem i see with your view explod, is that people have been saying things like this for over 10 years now. Infact the US senate looks set to increase the amount of debt they are 'allowed' to take on.
> 
> Yes, on a fundamental basis, pretty much everything is ****ed, but it keeps getting propped up. At some point it will bust, but can you afford to not be involved? What if it takes another 2, 5, or 10 years?
> 
> Just my view, meaning that you need to be aware of the possible downside, while still trying to take advantage of any possible upside. That being said, i am slowly beginning to liqudate a few of my holdings, mainly for personal reasons however (re-weighting)




Well they have, it was approved and remains only for the President to sign which he may well have done over the weekend.  Pop over to the Imminent and Servere Market Correction Thread.

The G7 at the weekend was more of the same except this time there was no press conference just a nice *press release *of hot air,   the focus on Ireland, Spain, Italy and Greece has been rightly due to a downgrade by a US Agency, the same problems are within the US but no downgrades, wonder why.   Of couse this crisis takes the focas away from the central culprit in all this.

A reading of proper independant economists such as the one outlined clearly substantiate these sorts of facts.


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## Unnamed User (9 February 2010)

*Re: XAO Analysis*



explod said:


> *Theory:*        that there is much worse to come is not theory, it is based on sound fundamental judgements that have measured the *unsoundness*.
> 
> The boilouts are fading out, it went in the main to buy valueless sludge (Loans on assets that have gone to zero) to save the banking system.  If you read the business sector of Sunday's Age the unsubstanciated jawboning of our so called national economists are a joke, but not funny, downright alarming.
> 
> ...




What about the *facts* that support an improving economies then?

There are good and bad *facts* on both sides of the argument but your post comes accross as your facts, or the facts that back up your opinion are the only facts that are vaid.


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## nikemi (9 February 2010)

*Re: XAO Analysis*



Unnamed User said:


> What about the *facts* that support an improving economies then?
> 
> There are good and bad *facts* on both sides of the argument but your post comes accross as your facts, or the facts that back up your opinion are the only facts that are vaid.




I guess that's why there are bulls and bears, bulls give more weight on the good facts and bears on the bad.


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## explod (9 February 2010)

*Re: XAO Analysis*



Unnamed User said:


> What about the *facts* that support an improving economies then?
> 
> There are good and bad *facts* on both sides of the argument but your post comes accross as your facts, or the facts that back up your opinion are the only facts that are vaid.




Well from my studies and reading proper economists, (not ex Bank Clerks) there are really no good facts.

A fact is something that is supported by real evidence.  If you read the business pages you will note that the good feeling statements are not supported by verfiable facts.

I will quote from last Sunday's age on an article by Richard Webb quoting some stock experts saying that good times are not far away.  The three experts are   1. Dr Shane Oliver from AMP,  2.Craige James from Comsec and  3. Austock Senior advisor Michael Heffernan.   Now I have watched these blokes close for a number of years and regard them as industry rampers and they seem to be very closely alaigned to our wonderful Glen Stevens of the /federal Reserve Bank.   Interesting how they gave the economy a ramping last week just prior to the first weekend of propery actions, but thats another story. 

Anyway this Age story had a block of 5 reasons why you should not panic about the market.

1.   *"Recent falls mean shares are attractively priced"*   I say it could mean the market has further to fall.

2.   *"Soverign debt issues in Greece, Portugal and Spain are unlikely to cause contagion"*   Wow, the implications on the Euro are enourmous and a true measure finds that debt problems in the US are just as bad but the US rating agencies have only marked down selected targets to divert attention.

3.   *"The US economy is on a recovery path"* Hogswash, why did the senate just approve an enourmous increase in the Government debt limit.

4.   *"Local profit results have been better than expected"*  There is little evidence to support this, and the term "better than expected", is virtually meaningless hogwash in a literal sense.   We are adopting a recent US trend here now where expectations are set low then on release we can have the great one liner:   *"better than expected"*

5.   *"Its not unusual to get a 10 to 15% correction in a bull market"*.    What bull market, stocks have only recovered half of the loss from the October 08 crash.   

So in all this so called strong statement is very thin on the ground and the whole article is bereft of any solid facts to support the above or a number of other assertions within the article.


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## professor_frink (9 February 2010)

*Re: XAO Analysis*



Unnamed User said:


> What about the *facts* that support an improving economies then?
> 
> There are good and bad *facts* on both sides of the argument but your post comes accross as your facts, or the facts that back up your opinion are the only facts that are vaid.




Perhaps you'd like to counter explod's points with some facts of your own instead of just criticising. I'm sure there are quite a few people(myself included) that would enjoy seeing the bearish case countered with some logical arguments from the bulls


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## Unnamed User (9 February 2010)

*Re: XAO Analysis*



explod said:


> Well from my studies and reading proper economists, (not ex Bank Clerks) there are really no good facts.
> 
> A fact is something that is supported by real evidence.  If you read the business pages you will note that the good feeling statements are not supported by verfiable facts.
> 
> ...




Not one of those examples is a fact, they are opinions. I pointed out to you that there are facts to support improving economies so i'm not sure the relevance of those examples unless your point was that there are no facts so opinions based on little are being substituted.

facts are China GDP, Recent US GDP, 6 straight months of growth in the ISM report with January PMI at 58.4 percent, its highest reading since August 2004 and the job market, (but that one is a lot  more subjective) as a few examples.


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## Unnamed User (9 February 2010)

*Re: XAO Analysis*



professor_frink said:


> Perhaps you'd like to counter explod's points with some facts of your own instead of just criticising. I'm sure there are quite a few people(myself included) that would enjoy seeing the bearish case countered with some logical arguments from the bulls




I am neither a Bull or a Bear as i find a clear direction very difficult to predict but probably have a leaning to improved conditions but acknowledge there are good arguments and facts on both sides of the equation.

My aim wasn't to criticize but to show that there are facts to both sides of the argument. That point wasn't being made in his post.


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## explod (9 February 2010)

*Re: XAO Analysis*



Unnamed User said:


> Not one of those examples is a fact, they are opinions. I pointed out to you that there are facts to support improving economies so i'm not sure the relevance of those examples unless your point was that there are no facts so opinions based on little are being substituted.
> 
> facts are China GDP, Recent US GDP, 6 straight months of growth in the ISM report with January PMI at 58.4 percent, its highest reading since August 2004 and the job market, (but that one is a lot  more subjective) as a few examples.




US GDP is 75% consumption, this is unproductive GDP  (only one third of adults in the US work productively), It can be shown that the substance of released figures are rubbery to the extreme.   Not time tonight but I will detail my take more succinctly when time permits tomorrow.


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## Trembling Hand (10 February 2010)

*Re: XAO Analysis*



explod said:


> US GDP is 75% consumption, this is unproductive GDP  (only one third of adults in the US work productively),






Unproductive? Will look forward to the reasoning on that one.


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## Miro (10 February 2010)

*Re: XAO Analysis*



Trembling Hand said:


> Unproductive? Will look forward to the reasoning on that one.




There's no wealth created by consuming imported products. US has been losing productive manufacturing jobs for decades.

The consumers don't even create any wealth by consuming US made products if the process doesn't lead to increase in productivity. A new car bought on debt destroys capital, it doesn't help the economy. The capital could have been spent productively on building a factory to produce goods for export.

(sorry for the offtopic)


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## zzaaxxss3401 (10 February 2010)

*Re: XAO Analysis*

Agree Trembling Hand. If people are working (productively or otherwise) then aren't they still getting paid and paying taxes which adds to the Government's tax revenue to pay for the running (and debt) of the country?


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## Beej (10 February 2010)

*Re: XAO Analysis*



Trembling Hand said:


> Unproductive? Will look forward to the reasoning on that one.




Me too  There seem to be some interesting definitions/views on what productivity is in the bear-ish camp!


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## Trembling Hand (10 February 2010)

*Re: XAO Analysis*



Miro said:


> There's no wealth created by consuming imported products. US has been losing productive manufacturing jobs for decades.
> 
> The consumers don't even create any wealth by consuming US made products if the process doesn't lead to increase in productivity. A new car bought on debt destroys capital, it doesn't help the economy. The capital could have been spent productively on building a factory to produce goods for export.




Some of these replies are so far removed from reality I think I must live in a parrell universe. 

There is plenty of wealth created "by consuming imported products." As an ex importer who use to bring in products and add to them, even if it was sometimes just distribution, and then sell them for 3 times their import cost I have seen plenty of families (employees and customer & their customer) benefit locally from that. 

Then of course there is just the whole premise that consumption is a negative. If the farmer makes milk, that the truck driver takes to the factory, that the factory sells to the retailer, that then makes a latte' from it, who sells it to the customer who consumes it???? 

Where is the negative in that?? production comes from consumption. Just because its not a Ford falcon sold to an export market you dudes think its the end of the financial world coming.


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## Miro (10 February 2010)

*Re: XAO Analysis*



Trembling Hand said:


> Some of these replies are so far removed from reality I think I must live in a parrell universe.
> 
> There is plenty of wealth created "by consuming imported products." As an ex importer who use to bring in products and add to them, even if it was sometimes just distribution, and then sell them for 3 times their import cost I have seen plenty of families (employees and customer & their customer) benefit locally from that.
> 
> ...




All I'm saying is that when you sacrifice your current consumption you'll be better off in the future. What's happening in the States in unsustainable.


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## Aussiejeff (10 February 2010)

*Re: XAO Analysis*



Trembling Hand said:


> Unproductive? Will look forward to the reasoning on that one.




GDP = Gross Domestic _Product_

Hmmm. I THINK explod means that AS FAR AS US MANUFACTURING & PRODUCERS ARE CONCERNED it is probably less "productive" for them if US citizens continue to increasingly spend money on importing goods rather than buying the local product?

Of course, as far as the foreign exporters are concerned, that very situation is MORE productive for them. Depends on which side of the fence you are sitting!

As far as TOTAL WORLD GDP goes, then it would still be seen as more productive on a global basis.

That makes reasonable sense?


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## Trembling Hand (10 February 2010)

*Re: XAO Analysis*



Aussiejeff said:


> GDP = Gross Domestic _Product_
> 
> Hmmm. I THINK explod means that AS FAR AS US MANUFACTURING & PRODUCERS ARE CONCERNED it is probably less "productive" for them if US citizens continue to increasingly spend money on importing goods rather than buying the local product?
> 
> That makes reasonable sense?



Nah that doesn't wash. Explod is using GDP and Consumption in some mixed up way. He is by saying that their economy is one that consumes 75% of their product therefore is non productive work.

That needs addressing because it makes no sense. Just because they consume big macs, drive huge SUVs and spend a lot on advertising and entertainment does not make the economy a failure. In fact, in terms of living standards, it would seem to be a success would it not?


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## explod (10 February 2010)

*Re: XAO Analysis*



Trembling Hand said:


> Nah that doesn't wash. Explod is using GDP and Consumption in some mixed up way. He is by saying that their economy is one that consumes 75% of their product therefore is non productive work.
> 
> That needs addressing because it makes no sense. Just because they consume big macs, drive huge SUVs and spend a lot on advertising and entertainment does not make the economy a failure. In fact, in terms of living standards, it would seem to be a success would it not?




There is very much more to it than that.  Sometimes one loses some of it in the attempt to explain, and I do that a lot.

We are away off topic so we need to identify a thread to continue the discussion.  Alot of isues to cover to resolve e.g GDP et al.

What we have for example in the US at a personal level on a large scale is people spending above earnings, but in addition borrowing to do that and now at both the personal and national (if like) level, the amount to service these climbing debts is more than income.   

But lets create or find the right thread to continue.


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## professor_frink (10 February 2010)

afternoon folks,

first few posts are split from the XAO analysis thread, very much off topic, but has the making of an interesting discussion

So here's a place for the bulls and bears to put forward their respective cases.

Will keep an eye on it to make sure things stay civil.

Would be great to see both sides put forward an argument based on actual facts, figures, economic data(or why it shouldn't be used in some bearish cases)

Enjoy.


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## Buckfont (10 February 2010)

Just had the same problem. Possibly to do with the new changeover


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## Trembling Hand (10 February 2010)

*Re: XAO Analysis*



explod said:


> Alot of isues to cover to resolve e.g GDP et al.
> 
> What we have for example in the US at a personal level on a large scale is people spending above earnings, but in addition borrowing to do that and now at both the personal and national (if like) level, the amount to service these climbing debts is more than income.




So just to figure out what you were trying to say about non productive workers? and consumption? From the above you're saying its the debt beyond their means that is the problem?

Which has nothing to do with their economy being consumption based?  Correct?


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## explod (10 February 2010)

*Re: XAO Analysis*



Trembling Hand said:


> So just to figure out what you were trying to say about non productive workers? and consumption? From the above you're saying its the debt beyond their means that is the problem?
> 
> Which has nothing to do with their economy being consumption based?  Correct?




It is intertwined, and with other factors also:    in fairness to you and myself I am too tied up to put a full explanation together at the moment.   Bear with it for a day or so and I will be back with it.

cheers explod


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## motorway (11 February 2010)

. 


http://www.olsenblog.com/2010/02/ge...aa-rating-is-geithner-the-captain-of-titanic/


Motorway


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## Dowdy (11 February 2010)

*Re: XAO Analysis*



Trembling Hand said:


> Unproductive? Will look forward to the reasoning on that one.





There are situations where is works and where is doesn't.

Example where it works
Eg. You import tools from overseas in order to make a building company's production more efficient and hence build more homes. 

What makes it not work is when:
> you import TV's and people buy those TV's with borrowed money (credit cards)

What makes an economy grow is when you save you money and use that capital for investment or consumption.

The real problem is the personal and federal debt.


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## Trembling Hand (11 February 2010)

*Re: XAO Analysis*



Dowdy said:


> The real problem is the personal and federal debt.




Which has nothing to do with consumption!!!!! Its about debt.


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## Dowdy (11 February 2010)

*Re: XAO Analysis*



Trembling Hand said:


> Which has nothing to do with consumption!!!!! Its about debt.




Only when you consume things with money that isn't yours.

Have you had a look with our debt levels lately?


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## >Apocalypto< (11 February 2010)

explod said:


> *Theory:*        that there is much worse to come is not theory, it is based on sound fundamental judgements that have measured the *unsoundness*.
> 
> The boilouts are fading out, it went in the main to buy valueless sludge (Loans on assets that have gone to zero) to save the banking system.  If you read the business sector of Sunday's Age the unsubstanciated jawboning of our so called national economists are a joke, but not funny, downright alarming.
> 
> ...




did you just see the latest aussie job figures implode, nothing wrong with AUS last NFP data not great but US unemployment dropped.

did you ever stop to think that your opinion and the people behind the Privateer maybe wrong..........

no one know what will happen not me not u not the Privateer no one knows exactly.

learn to make money off the current signals not the heresy that may or may not happen.

good on ya


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## explod (11 February 2010)

*Re: XAO Analysis*



Trembling Hand said:


> Which has nothing to do with consumption!!!!! Its about debt.




Granted  T/H,       GDP is a measure of economic output.     Consumption is what is purchased, used up, provided or expended.

The US is an enourmous and complex economy and few let alone myself will get round to a satisfactory and clear explation of it all.   I have noted many economists make the statement that the US GDP is made up of 70% consumption.  ie. Mark Faber,  Michael Panzer, James Turk, Chuck Butler et al.

the following overnight on a new count from Money Week:



> “ForgetGreece – the real debt crisis is still to come.”  The story says, in part, “Sure, financial markets are fretting that within two years,Greecewill have racked up public borrowings equal to more than 120% of GDP.  But that’s nothing compared to the global picture.  Dylan Grice, at SociÃ©tÃ© GÃ©nÃ©rale, has crunched the numbers for the whole of the EU, the UK and the US. He’s found that the average total net liabilities – including unfunded pensions, social security and healthcare – of these countries’ governments emerged at a terrifying 400% of GDP.”  (Click here for the full story)


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## explod (11 February 2010)

>Apocalypto< said:


> did you just see the latest aussie job figures implode, nothing wrong with AUS last NFP data not great but US unemployment dropped.
> 
> did you ever stop to think that your opinion and the people behind the Privateer maybe wrong..........
> 
> ...




My interest in posting my views have nothing to do with making money, my trading manner is going fine thank you.   However the popular press and many newcomers to ASF believe that the market is a bed of roses.  Remember on talk back radio a years or so back listening to Michael Heffernan encouraging 3AW listeneers to get right into it, no worries "its a beautiful thing"

Rubbish, it is a dangerous thing and the devils advocate is needed, even if I often do get it and my understanding wrong sometimes (there are plenty to, and they do pick me upon it, yourself included, which I appreciate) but we learn in the process.   Though its written, the forum is after all, lots of *discussions*

And will do a little number for you later on how the US calculate the job numbers.


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## explod (11 February 2010)

From Michael Panzer 09/02/02



> At first glance, today's report from the U.S. Bureau of Labor Statistics that job openings rose 2.6 percent in December from a month earlier could be seen as a positive sign for the labor market, especially considering that official jobless totals have declined for three straight months (through January).
> 
> Since the downturn began, however, the ranks of the unemployed have swelled at a far faster pace than the number of job openings. Back in December 2007, for example, there were 1.8 unemployed workers per opening; at the end of last year, the ratio was 6.1, a jump of nearly 240 percent.
> 
> This dramatic divergence suggests two things: not only are people worried about losing their jobs, they are also concerned that they will have a much harder time finding a new one than before. Given how important a paycheck is to most Americans, no wonder so many remain pessimistic about the outlook.


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## Whiskers (11 February 2010)

explod said:


> Granted  T/H,       GDP is a measure of economic output.     Consumption is what is purchased, used up, provided or expended.
> 
> The US is an enourmous and complex economy and few let alone myself will get round to a satisfactory and clear explation of it all.   I have noted many economists make the statement that *the US GDP is made up of 70% consumption.*




GDP is just a measure of the productivity of a nation. Just because 70% of the GDP comes from 'Consumption' doesn't necessairly make a weak or fragile economy. 

One reason to not put too much weight on the GDP alone is because it is only a measure of 'production' within the borders of the country. Much 'wealth' is related to productivity via subsiduaries in other countries where that GDP is reported on that other countries GDP.

Productivity as in GDP and real wealth (or debt) are two different things.



> ie. Mark Faber,  Michael Panzer, James Turk, Chuck Butler et al.
> 
> the following overnight on a new count from Money Week:
> 
> ...




I agree that the US has a lot of unfunded liabilities... *BUT, this quote distorts/skews the picture*. Again, GDP is about productivity and arguably not the perfect measure of productivity at that, because it doesn't account for underground financial activity not reported to the Gov and we know that the US has a large underground economy in the agricultural and textile industries to mention a couple... not to mention the secret activities of the CIA and other government agencies.  

Other measures of wealth are probably more important in determining the health of a country, such as tangible v intangible assets, the savings rate and debt to equity ratio's of it's citizins and corporations.

Say for example the US is actually holding considerably more gold reserves than we are led to believe and/or they decide to open up those large areas of currently protected coastline for oil exploration and development. If the US changes policy, his would substantially change the equation.

I say don't get too obsessed with 'current' reports assuming the status quo will never change... keep an eye on what other unrealised/unreported assets and income sources may be available.

For me fixing issues in order of priority such as improved accountability, regulation and oversight of the financial industry is what the world needs and wants now for a better degree of trust and confidence in the short term. Once that happens a lot of the other issues will work themselves out in a much more orderly manner.


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## ducati916 (11 February 2010)

*et al*

GDP is the total of all economic activity in one country, regardless of who owns the productive assets. Other measures are GNP & Net National Income.

There are numerous omissions in GDP, the most egregious being:

*Transfer payments
*Gifts
*Unpaid and domestic activities
*Barter transactions
Second-hand transactions
*Intermediate transactions [this is basically *Capital Goods* and is huge]
*Leisure
*Depletion of resources
*Environmental costs [currently very low, underpriced]
*Non-Profits, Inefficient Enterprises
*Changes in quality, Technological evolution.
*Unrecorded transactions [catch-all]

The *output value* measure of GDP is obtained by value added, or, *value of production less cost of inputs.*

The *expenditure measure* of GDP is obtained by adding all spending:

*Consumption + Investment = Expenditure + Exports of Goods/Services = Total Final Expenditure - Imports of Goods/Services = GDP

Of course, the devil is in the details. Each category listed above contains components or the lack thereof, that add, or subtract, to the utility of the final number.

A particularly contentious issue, or category, is the Investment category. Investment is usually defined along the following lines: spending [investment] within factories, machinery, equipment, dwellings, and inventories.

The issue arises with capital goods, and how they are costed and imputed into final GDP. An example:

Iron ore is mined, and sold to a steelworks that turns it to steel, which is sold to a manufacturer of steel metal tools, which manufactures a machine tool, which is sold to a manufacturer [using the tool] to manufacture a component of an automobile, which sells the component to Ford.

In GDP, the calculation is as follows:

Selling price of iron ore - mining costs.
Selling price of Ford - purchase costs of iron ore.

All the intermediate transactions [with associated profits/losses] are lost to the final GDP calculation. Thus we can see immediately that the assertion of consumer purchases constitute 70%+ of the economy, is a fallacy.

Another major problem is in the use of deflators. Essentially, when prices are changing rapidly, their accuracy becomes seriously impaired, in a non-linear manner.

jog on
duc


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## explod (11 February 2010)

ducati916 said:


> *et al*
> 
> Thus we can see immediately that the assertion of consumer purchases constitute 70%+ of the economy, is a fallacy.
> 
> ...




I did not say that: what I did say :_



> Consumption is what is purchased, used up, provided or expended.




And in saying that, health care, work benefits and other costs of the cummonity at all levels of Government should be included.   GDP to be ballanced requires the inputs of all sides of the commercial and social ledger.  That it is just one and one makes two relating to for example "I grow spuds and sell to Bob and buy a shovel off Bob" is not how it is anymore IMVHO


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## GumbyLearner (11 February 2010)

To whoever is reading this thread? 

One question?

Is Australian/US/UK/Euro/Japan etc... GDP calculated the same way as 
China calculates theirs? 

(P.S. You know what I'm talking about explod.)


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## Whiskers (11 February 2010)

GumbyLearner said:


> To whoever is reading this thread?
> 
> One question?
> 
> ...




There is an International Acounting Standard (IAS), but I don't think even Aus completely complies with it... China, maybe less.  Even more reason not to put too much weight on any one measure.


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## Beej (11 February 2010)

GumbyLearner said:


> To whoever is reading this thread?
> 
> One question?
> 
> ...




Rather than just cast mysterious aspersions, can you provide some concrete detail? 

If their method is wrong/flawed how much error margin do you think there is? 

Do you think the error is general (ie could be plus or minus) or do you suggest it is a deliberate over-stating of the true number? Ie do you believe that the Chinese economy is not in fact expanding at all? Or do you just think it's not expanding as fast as they have been claiming?

Cheers,

Beej


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## GumbyLearner (12 February 2010)

Beej said:


> Rather than just cast mysterious aspersions, can you provide some concrete detail?
> 
> If their method is wrong/flawed how much error margin do you think there is?
> 
> ...




Hi Beej

I'm not casting aspersions mate. Or trying to cause any fracas, I'm just looking for facts myself. 

http://en.ce.cn/Business/Macro-economic/201001/30/t20100130_20892265.shtml

http://www.chinadaily.com.cn/bizchina/2010-01/29/content_9399834.htm

http://seekingalpha.com/article/116292-differences-in-calculating-gdp-have-pros-and-cons

Excerpt

I think that Roubini's point on China's GDP being close to zero was based more on the idea that in our current economic environment, the U.S. way of calculating GDP is more accurate or realistic. The China method tends to mask how dramatic their drop was in the last few months of the year. This does not necessarily mean it is more accurate or realistic in other economic environments, but in this environment do not expect a fourth quarter growth rate of 6.8% in China to reflect their true pain at the moment. Anyone understanding this better than me should feel welcome to comment as I am certainly not claiming to be an expert on this.


I was always under the impression that China's GDP was calculated on production, not on sales? 

Maybe I'm wrong? If I'm wrong would you mind pointing me in the right direction? 

DYOR


----------



## Timmy (12 February 2010)

ducati916 said:


> The issue arises with capital goods, and how they are costed and imputed into final GDP. An example:
> 
> Iron ore is mined, and sold to a steelworks that turns it to steel, which is sold to a manufacturer of steel metal tools, which manufactures a machine tool, which is sold to a manufacturer [using the tool] to manufacture a component of an automobile, which sells the component to Ford.
> 
> ...




duc - thanks for the detailed post with plenty of info to think through.

One thing I don't get is what you have said here, that the intermediate steps not being captured.  If we take the final step in the chain (Selling price of Ford in this example) and subtract the first step in the chain (cost of iron ore), wont that capture all the intermediate steps anyway, the value added at each step will be built into price, which is passed on up the line etc.?
(Hope I explained this clearly enough?)

ps. On deflators not working under certain circumstances, bit of homework for me there to grasp this - tks again.


----------



## Whiskers (12 February 2010)

For what it's worth the World Bank, IMF and CIA all do GDP estimates which don't exactly agree, but the general picture tends to be about the same.

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)


Probably what's more important is the differance in accounting standards for bad debt which some argue caused paper/potential losses to be recorded more quickly than in Aus for example... which axcelerates the rate and chain of defaults, margin calls etc... or conversly in Aus delaying the reporting of bad debts.

I'm only generally aware... maybe an accountant can eloberate.


----------



## Beej (12 February 2010)

Whiskers said:


> For what it's worth the World Bank, IMF and CIA all do GDP estimates which don't exactly agree, but the general picture tends to be about the same.
> 
> [snip]
> 
> ...




Not sure about the bad debt accounting question (or how this would effect GDP calcs?), but as far as the different figures from CIA/IMF etc etc, I think that has purely to do with the way exchange rates are used to get a number that can be used to compare countries, rather than any difference in the calc methodology itself. In fact I'm pretty sure all sources would have to start with the GDP figures published by the various countries government agencies, as there isn't really any other source for the data you would need to work GDP out otherwise.

Cheers,

Beej


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## professor_frink (12 February 2010)

> Theory (maybe at your peril) by all means but now its time to look at backed up facts






> Well from my studies and reading proper economists, (not ex Bank Clerks) there are really no good facts.






> US GDP is 75% consumption, this is unproductive GDP (only one third of adults in the US work productively)




Still waiting for those backed up facts explod


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## GumbyLearner (12 February 2010)

Couldn't find any CIA links. How about the *Hoover *Institute at Stanford University?

http://www.hoover.org/research/factsonpolicy/facts/4931661.html

Personal consumption accounts for 70 percent of gross domestic product.
The gross domestic product (GDP) is the generally accepted measure of the size of the national economy.  It is the sum of investment, personal consumption, government spending, and net exports.  *Personal consumption, at 70 percent, is the largest component of GDP.* Other components of GDP include
    –Investment: 17 percent 
    –Government spending: 19 percent 
*–Net exports: –6 percent*

You were 5% off explod. But hey nobody's perfect. 

Also check out this take on economics junkie.

http://www.economicsjunkie.com/true-consumption-as-percentage-of-gdp/


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## ducati916 (13 February 2010)

GumbyLearner said:


> Couldn't find any CIA links. How about the *Hoover *Institute at Stanford University?
> 
> http://www.hoover.org/research/factsonpolicy/facts/4931661.html
> 
> ...







> One thing I don't get is what you have said here, that the intermediate steps not being captured. If we take the final step in the chain (Selling price of Ford in this example) and subtract the first step in the chain (cost of iron ore), *wont that capture all the intermediate steps anyway, the value added at each step will be built into price,* which is passed on up the line etc.?




The fallacy of Personal Consumption is wideranging and pervasive. I have highlighted the question, which is actually the crux of the problem. To answer the question, and demonstrate the fallacy, I shall stay with the original example. I have simplified the numbers for ease.


...........................................................Costs..........Profit.........Gross
Consumer demand: Ford Falcon.................$80.............$20...........$100
Ford demand for parts/components............$60.............$20...........$80
Component Maker supply parts..................$45.............$15...........$60
Toolmaker demand for Steel.....................$30..............$15...........$45
Steelmaker demand for Iron Ore................$20..............$10...........$30
Mining operation demand for Iron Ore...........................$20...........$20
Total...................................................$235...........$100..........$335

Thus the ultimate arbiter of prices and demand are the consumers. It is their final end demand that determines prices, and thus profits [or losses] higher up the productive structure.

You also see that starting from the first producer, viz. the [land] mining operation that provides the iron ore, that the purchaser of the higher order producer, pays the total of that producers costs + profit.

Thus the mining operation, who own the land [and I know I haven't worked the costs all the way back] produce from the [land] $20 in profits, thus, land as a productive factor, earns RENT [or a mortgage payment] Again, ignore for the moment Depreciation/Depletion.

The Steelmaker, purchases for $20 the mines output, and sells the produced steel for $30 and this continues down to the final consumption product, the Ford Falcon, purchased by the consumer.

Looking at the totals:
Costs..............................$235
Profits.............................$100
Gross..............................$335

Now to the question of Consumer Spending equalling 70% of GDP.

Consumer spending = $100 [the cost of the Ford Falcon]
Total Spending = $335 [the cost of all stages involved in production]

Consumer spending = $100/$335 = 29.8%

Herein lies the failing of Keynesian economic theory. Keynesianism postulates that consumer spending is vital to the health of the economy, the 70% of GDP fallacy, and as such, falling prices, or deflation, are highly detrimental to an economy.

Nothing could be further from the truth.

jog on
duc


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## Timmy (13 February 2010)

Thanks for the detailed reply Duc.


----------



## GumbyLearner (13 February 2010)

ducati916 said:


> The fallacy of Personal Consumption is wideranging and pervasive. I have highlighted the question, which is actually the crux of the problem. To answer the question, and demonstrate the fallacy, I shall stay with the original example. I have simplified the numbers for ease.
> 
> 
> ...........................................................Costs..........Profit.........Gross
> ...




Thanks for clearing that up Ducati. 

It is great to have a poster like yourself who can challenge some of the fallacies about GDP *produced by the Ivy league institutions like Stanford University in the USA.*


----------



## ducati916 (14 February 2010)

Timmy said:


> Thanks for the detailed reply Duc.




Hope it helped.

Of course the example I offered is only one possible permutation of a structure of production. Some structures, in a highly technological product might have 30+ stages, some simple products might have only a few.

Either way, you can now see that the fallacy of consumer demand standing at 70%+ leads to some very serious misperceptions from our political masters who seek, for the good of the economy, to stimulate consumer spending.

Certainly by increasing consumption, GDP, as it is measured will increase. This however will not [increased GDP] actually help the economy in any real sense. The answer of course is to increase the stages of production. This has the effect of growing total economic activity.

To create a longer, narrower productive structure, capital, in the form of savings must be made available for capital investment, *or an increase in capital goods*. No scream the Keynesian's - that will only reduce consumer demand [true] and shrink the economy [GDP] as measured by our econometricians.

When consumer [final] demand contracts, the axioms of supply and demand come into effect: viz. falling demand mandates that to clear the market, price must be reduced [law of marginal utility]

By creating a longer, narrower productive structure, lower prices that conform to marginal utility can become profitable, under marginal productivity. Thus consistency in theory and reality.

jog on
duc


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## ducati916 (14 February 2010)

GumbyLearner said:


> Thanks for clearing that up Ducati.
> 
> It is great to have a poster like yourself who can challenge some of the fallacies about GDP *produced by the Ivy league institutions like Stanford University in the USA.*




I had a look at the two links that you provided. This one contains another fallacy. http://www.economicsjunkie.com/true-consumption-as-percentage-of-gdp/



> To follow up on Consumer Goods vs. Factors of Production:
> 
> In that post I illustrated consumer goods production vs. investment goods production in the US. I noticed that the composition of the GDP at bea.gov has one flaw: It includes so called “Residential Investment” under Investment. But what mostly falls under this category are purchases of new homes.
> 
> A home clearly does not qualify as a factor of production and it is thus a mistake to include the production of it under investment goods (factors of production). It makes a lot more sense to include it under consumption.




This assertion is simply incorrect on the following basis. 

As in the case of any other good, the capital value of land is equal to the sum of its discounted future rents. The value of the land increases as the capitalization rate falls with interest rates. Thus when the Fed lowered rates, the present value of the implied future rents on land became more valuable.



> Ground land, then, is ‘capitalized’ just as are capital goods, shares in capital-owning firms, and durable consumers’ goods. Rothbard




Why is land classified as a capital good? Essentially the answer is durability. Land, is for all intents and purposes, eternal and unchanging, as such, it is capitalised, because otherwise it’s value becomes infinite, and it could never be bought or sold for money.



> The raw land cost is generally 10 to 25 percent of a home. In 2001, the Bureau of Land Management (BLM) sold government-owned land to developers for $26,672 per acre in Las Vegas, Nevada. Four years later, BLM acreage was going for $270,000 per acre. So while land prices were increasing tenfold, the medium new-home price shot from $130,000 in December 2000 to $350,615 in early 2006.




Land, quite clearly is an original factor of production. As are Labour and Capital. Thus, we can refute his assertion.

jog on
duc


----------



## ducati916 (14 February 2010)

*Re: XAO Analysis*



Unnamed User said:


> Not one of those examples is a fact, they are opinions. I pointed out to you that there are facts to support improving economies so i'm not sure the relevance of those examples unless your point was that there are no facts so opinions based on little are being substituted.
> 
> facts are China GDP, Recent US GDP, 6 straight months of growth in the ISM report with January PMI at 58.4 percent, its highest reading since August 2004 and the job market, (but that one is a lot  more subjective) as a few examples.




Just to add a little fuel to the fire. The above data series [GDP etc] are not facts, they are obviously simply historical data. Said data is subject to many revisions that can in the case of GDP, stretch to years.

Additionally, data, that is subjected to analysis on a faulty premise, does not yield a factual conclusion.

jog on
duc


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## ducati916 (14 February 2010)

From *Trembling Hand,*

Some of these replies are so far removed from reality I think I must live in a parrell universe. 



> There is plenty of wealth created "by consuming imported products." As an ex importer who use to bring in products and add to them, even if it was sometimes just distribution, and then sell them for 3 times their import cost I have seen plenty of families (employees and customer & their customer) benefit locally from that.




This is an example of a stage of production. The cost of purchasing stock [inventory] was the investment in capital goods. The selling price, returned the original investment + profit, which is the reward to entrepreneurs for correctly supplying a consumer demand.









> Then of course there is just the whole premise that consumption is a negative. If the farmer makes milk, that the truck driver takes to the factory, that the factory sells to the retailer, that then makes a latte' from it, who sells it to the customer who consumes it????




Again, we have the original factors of production, land + cows, that produce the milk - which is then sold to the factory, investment in capital goods [which includes the requirement to transport], who add further capital goods to the onselling price, to be recouped, if they have correctly gauged their market - until it reaches final consumer demand, and is consumed.







> Where is the negative in that?? *production comes from consumption*. Just because its not a Ford falcon sold to an export market you dudes think its the end of the financial world coming.




The highlighted sentence is a correct premise. Production, that has no end use: viz. consumption, are simply wasted resources. That they result in an economic loss, will immediately tell the entrepreneur that this product is not required, and will therefore end it's production, reallocating scarce resources to more profitable [consumption] uses.

jog on
duc


----------



## ducati916 (14 February 2010)

From *explod,*



> Well from my studies and reading proper economists, (not ex Bank Clerks) there are really no good facts.
> 
> *A fact is something that is supported by real evidence.* If you read the business pages you will note that the good feeling statements are not supported by verfiable facts.




Interestingly we are regressing to the origin of economics that evolved out of philosophy. The philosophical argument that developed, essentially finds expression within explod's assertion [highlighted]

The two conflicting area's, and actually there are substantially more, are: Empiricism & Rationalism



> In epistemology and in its modern sense, rationalism is "any view appealing to reason as a source of knowledge or justification" (Lacey 286). In more technical terms it is a method or a theory "in which the criterion of the truth is not sensory but intellectual and deductive" (Bourke 263). Different degrees of emphasis on this method or theory lead to a range of rationalist standpoints, from the moderate position "that reason has precedence over other ways of acquiring knowledge" to the radical position that reason is "the unique path to knowledge" (Audi 771). Given a pre-modern understanding of reason, "rationalism" is identical to philosophy, the Socratic life of inquiry, or the zetetic interpretation of authority (open to the underlying or essential cause of things as they appear to our sense of certainty).






> In philosophy, "empiricism" is a theory of knowledge that asserts that knowledge arises from sense experience. Empiricism is one of several competing views about how we know "things", part of the branch of philosophy called epistemology, or "the Theory of Knowledge". Empiricism emphasizes the role of experience and evidence, especially sensory perception, in the formation of ideas, while discounting the notion of innate ideas (except in so far as these might be inferred from empirical reasoning, as in the case of genetic predisposition).[1]
> 
> In the philosophy of science, empiricism emphasizes those aspects of scientific knowledge that are closely related to evidence, especially as discovered in experiments. It is a fundamental part of the scientific method that all hypotheses and theories must be tested against observations of the natural world, rather than resting solely on a priori reasoning, intuition, or revelation. Hence, science is considered to be methodologically empirical in nature.
> 
> The term "empiricism" has a dual etymology. It comes from the Greek word ἐμπειρία, which translates to the Latin experientia, from which we derive the word experience. It also derives from a more specific classical Greek and Roman usage of empiric, referring to a physician whose skill derives from practical experience as opposed to instruction in theory.[2]




Just in case you find yourself at a loose end this Sunday!

jog on
duc


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## explod (14 February 2010)

professor_frink said:


> Still waiting for those backed up facts explod




And still working on it.   A problem one has is that established facts in ones mind are built up over a period of time and includes many snippets from many sources.   So in order to address this issue I am working back through the various texts to which I subscibe so as to substantiate with exact sources of my *assertions*

And there is an old saying to which we can be caught "a little bit of knowledge can be dangerous".  and  "One should not speak with forked tounge"  Well its Sunday and time to cleans the soul

ducati916, I like you posts and is great to have you in the discussion.  Have a close friend,, a Sociologist, who sums it up just like you can.

This is going to be a great thread, and Professor, will get to your answers in a day or so.

cheers explod


----------



## ducati916 (14 February 2010)

From Whiskers,





> GDP is just a measure of the productivity of a nation. Just because 70% of the GDP comes from 'Consumption' doesn't necessairly make a weak or fragile economy.




Productivity actually has it's own definition, separate from the definition of GDP, although it is related.

Productivity is the econometric measurement of the output for 1 unit of labour or capital. As such, it measures the volume of output produced with given amounts of factor inputs [land, labour, capital] Land, is not used very often, thus, most measures are recorded as data in the following format.

*Output per worker
*Output per man hour

Labour productivity is heavily influenced by capital investment, which accounts for [amongst other variables] the differences in wage scales.








> Productivity as in GDP and real wealth (or debt) are two different things.




Well, actually four different things.



> I agree that the US has a lot of unfunded liabilities... *BUT, this quote distorts/skews the picture*. Again, GDP is about productivity and arguably not the perfect measure of productivity at that, because it doesn't account for underground financial activity not reported to the Gov and we know that the US has a large underground economy in the agricultural and textile industries to mention a couple... not to mention the secret activities of the CIA and other government agencies.




I have included the data detailing the unfunded liabilities estimated in various economies. Ugly data series.





> Other measures of wealth are probably more important in determining the health of a country, such as tangible v intangible assets, the savings rate and debt to equity ratio's of it's citizins and corporations.




I would agree, simply looking at GDP growth/contraction, in isolation, is an almost pointless exercise in of itself.





> Say for example the US is actually holding considerably more gold reserves than we are led to believe and/or they decide to open up those large areas of currently protected coastline for oil exploration and development. If the US changes policy, his would substantially change the equation.




Well if they were holding substantially higher gold reserves, yes, the Fiscal and Monetary pictures would need to be adjusted. With regard to resources held, or believed to be held, it depends on how they decided to access said resources. Therefore far more information would be required prior to any projected figures.






> I say don't get too obsessed with 'current' reports assuming the status quo will never change... keep an eye on what other unrealised/unreported assets and income sources may be available.




The old value investor approach.




> For me fixing issues in order of priority such as improved accountability, regulation and oversight of the financial industry is what the world needs and wants now for a better degree of trust and confidence in the short term. Once that happens a lot of the other issues will work themselves out in a much more orderly manner.




I would disagree. The primary problem is the volume of government regulation and intervention: viz. the increasing socialisation. The answer is shrinking government, and returning to an unhampered market, or laissez-faire. A good start would be winding up all the Central Banks, and returning the money supply to a commodity based money - gold.

jog on
duc


----------



## CanOz (14 February 2010)

Nice chart Duc, have you got something similar for Asian countries or just BRIC?

CanOz


----------



## ducati916 (14 February 2010)

CanOz said:


> Nice chart Duc, have you got something similar for Asian countries or just BRIC?
> 
> CanOz




Nothing for Asia, their data is notoriously difficult to access. Neither do I have anything for the BRIC's.

jog on
duc


----------



## Whiskers (14 February 2010)

ducati916 said:


> I would disagree. The primary problem is the volume of government regulation and intervention: viz. the increasing socialisation.




I agree to some extent there duc... but, by "improved accountability, regulation and oversight of the financial industry" I don't mean more, I mean more efficient as in substantially updated and overhauled laws, many of which were written decades ago and don't capatilise on modern technology for efficiency and effectiveness and mainly in the areas to protect shareholders and consumers from the 'enron' and 'ponzi' type operators. 



> The answer is shrinking government, and returning to an unhampered market, or laissez-faire.




I've not thought too much about that, because it seems like a way far off and remote possibility atm, although some headway is argubly being made in free trade agreements.  BUT, with state owned companies from China for example, permiating the international business scene a state of 'laissez-faire' is surely way off the radar atm, isn't it?



> A good start would be winding up all the Central Banks, and returning the money supply to a commodity based money - gold.
> jog on
> duc




I will not dissagree with your sentiment here, but we seem stuck with it for a long time yet... but assuming it was agreed to do this, what would be some of the main macro economic consequences in converting back, given the situation the world finds itself in now?


----------



## ducati916 (15 February 2010)

*Whiskers*



> I agree to some extent there duc... but, by "improved accountability, regulation and oversight of the financial industry" I don't mean more, I mean more efficient as in substantially updated and overhauled laws, many of which were written decades ago and don't capatilise on modern technology for efficiency and effectiveness and mainly in the areas to protect shareholders and consumers from the 'enron' and 'ponzi' type operators.




The financial industry has been aided and abetted by government, as government is a direct recipient of bank exemptions to the law.

100% demand deposit reserving, would eliminate at a stroke the fractional reserve money creation responsible for the massive credit expansion. This unfortunate development, regrettably, was created again by the British in 1844 and paved the way for todays Central Banks.

Central Banks are essential to provide liquidity, viz. print money for insolvent banks subject to a depositer bank run. Thus, by eliminating the Central Bank, removing the legal ability for banks to use demand deposits in fractional reserve lending, the problem is solved.



> I've not thought too much about that, because it seems like a way far off and remote possibility atm, although some headway is argubly being made in free trade agreements. BUT, with state owned companies from China for example, permiating the international business scene a state of 'laissez-faire' is surely way off the radar atm, isn't it?




Unfortunately that is true. In fact, governments are actively engaged in a power grab currently. 



> I will not dissagree with your sentiment here, but we seem stuck with it for a long time yet... but assuming it was agreed to do this, what would be some of the main macro economic consequences in converting back, given the situation the world finds itself in now?





Consequences:
*Significant curtailment of Welfare State and related spending
*Significant curtailment of all government spending, viz. military etc
*Deficit nations would see interest rates rise in proportion to deficits
*Debtors would suffer, creditors would prosper
*Certain industries may become uneconomic, with resulting unemployment
*Confusion in the financially illiterate, until they adjusted
*World trade would [need] to increase, thus tariffs/subsidies would cease


There are probably many, many more, but these are some of the major ones that immediately come to mind.

jog on
duc


----------



## explod (19 February 2010)

professor_frink said:


> Still waiting for those backed up facts explod




Have not been able to locate the source of 75% US GDP being consumption, but will keep at it.   However the finanical news continues to deteriorate IMHO.

The following quote from Chuck Butler "EverBank" in the US on GDP, employment numbers bears some relevance:-

On 29/01



> Watch the major dumbed down media drool all over themselves today, when they announce that the U.S. 4th QTR, annualized GDP was the strongest growth in 4 years, at +4.7%... These dolts will conveniently forget to mention that the growth was mainly Government stimulus, but don't let that get in the way of a "feel good story"... Someone with a little intestinal fortitude should stand up and ask the question... "How can we have 4.7% growth when 2/3rds of our economy is consumer spending, and we have 20% unemployment?"




and 1/02



> OK... Let's take a step back for a moment... Remember the 3rd QTR GDP that was supposedly showing strong economic growth? Well... A funny thing happened on the way to the forum... Growth in the third quarter was originally estimated at an annualized rate of 3.5%, but was revised down to 2.2% after more information was received. And... Most of the 4th QTR growth came from increased manufacturing to rebuild inventories. Consumer spending - the biggest component of the U.S. economy - was down...


----------



## Trembling Hand (19 February 2010)

explod said:


> Have not been able to locate the source of 75% US GDP being consumption, but will keep at it.




Thats not the question explod. this is,



explod said:


> US GDP is 75% consumption, this is *unproductive *GDP  (*only one third of adults in the US work productively*),




still waiting for the explanation and your ideas as to why anyone whose work goes to internal consumption is "unproductive ".

Its really such a memorable statement I'm still, two weeks latter, waiting for the explanation.


----------



## explod (19 February 2010)

Trembling Hand said:


> Thats not the question explod. this is,
> 
> 
> 
> ...




My statement was nonsensical amd cannot be answered in a satisfactory manner, I will however persist in my general laypersons direction on the subject.   I intimated my stupidity about two of my posts back, I hope now it is clear, and I will also try to be more succinct in the future, "The Prof" has taught me well.  

Lets move on to the problem, again from Chuck overnight:-



> I was reading a great article written by Congressman, Ron Paul, who I believe is the only person in D.C. that understands what we're doing to our country and currency with all this deficit spending. Ron Paul thinks the Fed is in the midst of bailing out Greece with U.S. taxpayer funding... Let's listen in to Ron Paul...
> 
> "Is it possible that our Federal Reserve has had some hand in bailing out Greece? The fact is, we don’t know, and current laws exempt agreements between the Fed and foreign central banks from disclosure or audit.
> 
> ...


----------



## Unnamed User (19 February 2010)

explod said:


> My statement was nonsensical amd cannot be answered in a satisfactory manner, I will however persist in my general laypersons direction on the subject.   I intimated my stupidity about two of my posts back, I hope now it is clear, and I will also try to be more succinct in the future, "The Prof" has taught me well.
> 
> Lets move on to the problem, again from Chuck overnight:-




Well done on admitting that and not avoiding or backtracking.

Big thumbs up.



> but don't let that get in the way of a feel good story




Interesting quote from Chuckey and maybe he should mention himself when it comes to misrepresentation.



> Ron Paul thinks the Fed *is* in the midst of bailing out Greece with U.S. taxpayer funding




Then he quotes Ron Paul



> "*Is it possible* that our Federal Reserve has had some hand in bailing out Greece*?* *The fact is, we don’t know*, and current laws exempt agreements between the Fed and foreign central banks from disclosure or audit.




Quite a jump to make there Chuckey


----------



## explod (19 February 2010)

> Then he quotes Ron Paul



   Yep, maybe a bit off topic.



> Putin calms Greece, says U.S. debt big too
> Russian PM plays down Greece’s economic woes, telling his visiting Greek counterpart the U.S. is no better than Greece in handling its debt and fiscal deficit
> Gleb Bryanski – Moscow
> Reuters Published on Tuesday, Feb. 16, 2010 12:03PM EST Last updated on Wednesday, Feb. 17, 2010 7:39AM EST
> ...




Yep,    but he is not the only one, seems a few others may be smelling rats in all of this.  I have noticed a few other commentators on it and will post as I find them


----------



## Unnamed User (19 February 2010)

explod said:


> Yep, maybe a bit off topic.
> 
> 
> 
> Yep,    but he is not the only one, seems a few others may be smelling rats in all of this.  I have noticed a few other commentators on it and will post as I find them




I think you missed my point.

He claims "Ron Paul thinks the Fed is in the midst of bailing out Greece with U.S. taxpayer funding" yet then quotes Ron Paul as asking the question, "Is it possible? and "the fact is we don't know"

Ron Paul was raising the question and stating that no one knows, so Chuckey is spinning the argument to back up his theory.

Yet he hypocritically criticizes others for spinning their reporting of the unemployment numbers.

I'm sorry but a lot of the conspiracy theorists i read, which i admit isn't that many because they **** me to tears to be honest, you can usually pick holes in their "Versions" of the truth.

My best guess it the truth probably lies somewhere in the middle between them both.


----------



## ducati916 (20 February 2010)

explod said:


> My statement was nonsensical amd cannot be answered in a satisfactory manner, I will however persist in my general laypersons direction on the subject.   I intimated my stupidity about two of my posts back, I hope now it is clear, and I will also try to be more succinct in the future, "The Prof" has taught me well.
> 
> Lets move on to the problem, again from Chuck overnight:-




I have an explanation for *explod's* statement:



> *Trembling hand *perfect equilibrium is a refinement of Nash Equilibrium due to Reinhard Selten. A trembling hand perfect equilibrium is an equilibrium that takes the possibility of off-the-equilibrium play into account by assuming that the players, through a "slip of the hand" or tremble, may choose unintended strategies, albeit with negligible probability.




jog on
duc


----------



## Trembling Hand (20 February 2010)

Duc not sure confirmation bias sits within Trembling hand perfect equilibrium.

Maybe - Denial Bias Imperfect Disequilibrium .


----------



## explod (20 February 2010)

ducati916 said:


> I have an explanation for *explod's* statement:
> 
> 
> 
> ...




Yep, exactly Duc, but just cant' explain it  ???



> Trembling Hand Re:
> Duc not sure confirmation bias sits within Trembling hand perfect equilibrium.
> 
> Maybe - Denial Bias Imperfect Disequilibrium .





And ditto T/H

Are/am     I dealing with what's on the ground at the back of the Bull, because I must take into account that its pile is larger, so of greater intrinsic value perhaps?


----------



## explod (24 February 2010)

Bloomberg articles seem to be writted by all sad sacks this morning.   We need some rain to restore them shoots.  But I spose its late summer over here.

Cheers explod


----------



## motorway (25 February 2010)

http://www.thelauderinstitute.com/pages/pdf/Reinhardt_and_Rogoff_Financial_Crises_NBER_2008.pdf


THIS TIME IS DIFFERENT:
A PANORAMIC VIEW OF EIGHT CENTURIES OF FINANCIAL CRISES
Carmen M. Reinhart
Kenneth S. Rogoff
Working Paper 13882

NATIONAL BUREAU OF ECONOMIC RESEARCH
1050 Massachusetts Avenue
Cambridge, MA 02138

Motorway


----------



## Aussiejeff (25 February 2010)

motorway said:


> http://www.thelauderinstitute.com/pages/pdf/Reinhardt_and_Rogoff_Financial_Crises_NBER_2008.pdf
> 
> 
> THIS TIME IS DIFFERENT:
> ...




Pity it is a report based on data no later than 2006-2007 (ie PRE GFC). Would have been nice to see how all that data and graphs stacked up against the 2008-2009 data!

Thanks for the link anyway. Interesting.


aj


----------



## Aussiejeff (25 February 2010)

Meanwhile, in a BRIC country far, far away....



> Feb. 25 (Bloomberg) -- *India’s government may tomorrow raise excise taxes and slow spending in an effort to shrink a 16-year-high budget deficit* and foster sustainable growth that avoids the asset bubbles emerging in China.
> 
> Finance Minister Pranab Mukherjee will promise to cut the deficit to 5.5 percent of gross domestic product from 6.8 percent in his budget speech, according to the National Council of Applied Economic Research in New Delhi and Morgan Stanley economist Chetan Ahya.
> 
> ...



http://www.bloomberg.com/apps/news?pid=20601068&sid=aaBHWt7_X6u0

I'd suggest that "supporting growth" post GFC via massive stimulus while at the same time "cutting the budget deficit to control inflation" are mutually exclusive - ie mission impossible.

Good luck, India... don't fail us. Remember, the Rest Of The World is counting on you. No pressure, like....


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## explod (27 February 2010)

motorway said:


> http://www.thelauderinstitute.com/pages/pdf/Reinhardt_and_Rogoff_Financial_Crises_NBER_2008.pdf
> 
> 
> THIS TIME IS DIFFERENT:
> ...




The chart from Michael Panzer's webpage today gives perhaps a time scale for when the storm does come


----------



## professor_frink (27 February 2010)

explod said:


> The chart from Michael Panzer's webpage today gives perhaps a time scale for when the storm does come




So where do you(or the author) think that we are along this scale then?

If  our economies were destined to go this way, with the money that has been thrown around to try and get us out of the crisis a couple of years ago, shouldn't it have already started to flow out of the financial system into the real world causing inflation?


----------



## basilio (27 February 2010)

> Re: The economics behind the bull and bear case
> 
> 
> > Quote:
> ...




The situation with the Weimar Republic in 1921 was framed by the huge reparations payments demanded by the Allies after WW1. When combined with the  destruction of the German economy during the war it was in all practical terms impossible for Germany to keep a stable currency. Hence the resort to the printing presses.

The overall point of the paper is that when there is very large national debts and high capital flows there have been debt repudiation, currency crashes and associated depressions. This has happened over many centuries across  scores of countries. Current writers just don't want to look past a short time frame because the look is very scary.

The uncomfortable reality is that historically whenever debt levels have reached anything close to our current situation the result is repudiation and crash. The question is whether it will happen next week, next month, next year or perhaps two years away. 

  __________________________
_Of course this time it *will* be different._


----------



## explod (27 February 2010)

Thank you Basilio.   

Professor, my view is that inflation figures currently produced from Government of say 1 or 2 percent are unrealistic.   Most housewives will say that goods in the supermarketsare up 20 to 30% on a year ago.  A thing noticed also are packets of goods, perporting to be the same have net weights less, fuel is about the same, rates and taxes are increasing a great deal, interest payments up and some reports of saleries down.  All anecdotal to a great degree.  

Reports from the USA, again not empherical (spellin?) suggest a worse scenario in the last six or 12 months.  US Government says 10% unemployment other pundits say between 17 and 20% the numbers certainly getting much worse.   Chinese costs of production going up passing on to goods increasing in price.   From what I can see this is all happening fairly quickly, and my rough take is that USA inflation rate is at least 20% in real terms across the board.   

So if the rate of nasties continues, and the debt problems keep spiralling (California et al, and understand one county is thinking of charging if you want attendance of police for an armed burglary or robbery) then the path to the first stage against the chart posted may only be a year or two away.  If it was to proceed in the same fashion then we are looking at maybe 5 years from now.   If the ability is better today with saturation media to hide it for longer (and is it being held past the breaking point now as we speak) then maybe the breakout/down as you will, may catch most off guard and be very ugly.

Anyway just to promote some other takes or facts perhaps.

In part of his address to the posted chart, Panzer has this to say (full report should be read on Financial Armegeddon website) 



> In fairness, Grice makes it clear that one impetus for the complete abandonment of fiscal discipline is currently lacking:
> 
> I don’t want to overplay the parallels. In fact, there is one very clear difference between the hand Von Havenstein had to play then and those today’s central bankers have to play now, namely the stability of today’s political climate. Clearly this can change, but the class warfare, nationalistic xenophobia and revolutionary spirit poisoning the political atmosphere of 1920s Germany is at the very least dormant today, and certainly not meaningfully visible across the political landscape.
> 
> But as we have seen over the past three years or so, things seem to move so much faster than they used to. Is it really such a stretch to think that the nascent rumblings of political dissent we're already seeing -- Ã  la the tea party movement -- can suddenly escalate into widespread discord, where the torches and pitchforks are out in force?


----------



## Aussiejeff (27 February 2010)

> Is it really such a stretch to think that the nascent rumblings of political dissent we're already seeing -- Ã  la the tea party movement -- can suddenly escalate into widespread discord, *where the torches and pitchforks are out in force?*




I suspect deep inside every "peaceful, law-abiding citizen" lurks a feral peasant on the verge of revolt.

All it takes is a big enough "torch" to light the blue touch paper....so gummints are doing everything they can to soothe the hip pockets right now by pouring cold, hard cash everywhere.

If /when much of that cool, soothing moolah starts to evaporate and harsh reality bites is when sparks might really fly. 

I'll keep my powder dry till then.


----------



## ducati916 (27 February 2010)

> The situation with the Weimar Republic in 1921 was framed by the huge reparations payments demanded by the Allies after WW1. When combined with the destruction of the German economy during the war it was in all practical terms impossible for Germany to keep a stable currency. Hence the resort to the printing presses.




The situation in 1921 was a direct result of the war, not the reparations. War has always historically been inflationary.

Years..........................Expenditures.....................Revenues
1914.............................9,651...............................8,149
1915.............................26,689.............................23,207
1916.............................28,780.............................22,815
1917............................53,261..............................35,215
1918............................45,514..............................31,590

Total...........................163,894............................120,976

The total deficit was filled via the printing of money, thus the inflation was created by the government policy of pursuing a war that they couldn't afford and pay for. The government believed that the war was to be a quick and decisive one, viz. short. Of course, they were spectacularly wrong, hence the ever increasing deficit, that was plugged via unbacked money creation.

jog on
duc


----------



## motorway (27 February 2010)

Wasn't Germany's problem that they had to make repatriations in GOLD ?
So they issued bonds ( paper ) to buy gold ?

A fast way to the POOR HOUSE
and then default broke everything else ?

Motorway


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## professor_frink (28 February 2010)

basilio said:


> The uncomfortable reality is that historically whenever debt levels have reached anything close to our current situation the result is repudiation and crash. The question is whether it will happen next week, next month, next year or perhaps two years away.




So in your view we are looking at default and hyperinflation within the next 2 years. Thanks for your view basilio



explod said:


> Thank you Basilio.
> 
> Professor, my view is that inflation figures currently produced from Government of say 1 or 2 percent are unrealistic.   Most housewives will say that goods in the supermarketsare up 20 to 30% on a year ago.  A thing noticed also are packets of goods, perporting to be the same have net weights less, fuel is about the same, rates and taxes are increasing a great deal, interest payments up and some reports of saleries down.  All anecdotal to a great degree.
> 
> ...




C'mon explod! Facts and figures are the important part:

Best I can come up with as anything relating to facts from your post comes from shadow stats:

http://www.shadowstats.com/

looking at the "old" way of calculating CPI, it still doesn't come close to 20%, let alone 30. But then I'm sure it's not just a supermarket style measurement and includes many other things. Wonder if we can find out some more detail on that one.




On the other hand, the shadow stats site seems to agree with your unemployment stats. What I'd be interested in hearing is how you think having a high unemployment rate is going to contribute to the US defaulting and the hyperinflation that is due in the next 2 years(I'm assuming that you were agreeing with basilio when you thanked him after his prediction previously)

Cheers


----------



## basilio (28 February 2010)

> On the other hand, the shadow stats site seems to agree with your unemployment stats. What I'd be interested in hearing is how you think having a high unemployment rate is going to contribute to the US defaulting and the hyperinflation that is due in the next 2 years(I'm assuming that you were agreeing with basilio when you thanked him after his prediction previously)




The comments I made on the outcomes of  runaway debt come from the analysis offered in the paper that Explod cited earlier on.  The title tried to say it all "This time it will be different".

US Debt is currently $12.4 trilllion  and climbing steeply. They are trying to sell government paper in the hundreds of billions to China, Japan and anyone else who has a pulse and a cheque book. There are serious questions about the continuing capacity of other countries to effectively finance this debt.

As unemployment soars in US the budget comes under even further pressure from loss of tax income and increases in benefits.Thus increasing  deficits,  more attempts at selling bonds to finance these deficits.
*
At some stage there will be a reality check. *Other counties will be unable or unwilling to keep pouring $1 trillion a year + into US debt bank.  How will the government then finance it's deficit? The two traditional choices are repudiation - just refusing to pay or inflating your way out of trouble. Inflation is easier to do initially because it isn't as bad a look as just saying we won't pay. But as it gets out of hand the currency starts to crash, no one wants to hold your money and it becomes worthless.  All this has happened time and again.

If you go down the repudiation path there is an instant cataclysmic shock to all the institutions who originally trusted the government with their money. That includes the banks, pension funds, overseas borrowers, councils. Suddenly all the "wealth" these organisations  based their balance sheets on has evaporated. And we are talking of trillions of dollars. You can fill in the rest.

Take your choice.

http://www.brillig.com/debt_clock/
          ________________________________________
With regard to the crash of the German Mark in the 1920's. It was certainly true that the war laid the groundwork for inflation as a result of the deficit budgets  that were financed by paper. (This also happened  with every other country of course).  But it was the  pressure of the reparations demanded by the Allies - around 27% of the GDP (plus huge amounts of physical goods  ie power poles,  rail cars ect) that tipped the government over the edge. And remember this was in an economy that had been devastated by the war and had lost a big slab of it's economic capacity to the French as the first downpayment of the reparations.


----------



## Unnamed User (28 February 2010)

explod said:


> Thank you Basilio.
> 
> Professor, my view is that inflation figures currently produced from Government of say 1 or 2 percent are unrealistic.   Most housewives will say that goods in the supermarketsare up 20 to 30% on a year ago.  A thing noticed also are packets of goods, perporting to be the same have net weights less, fuel is about the same, rates and taxes are increasing a great deal, interest payments up and some reports of saleries down.  All anecdotal to a great degree.
> 
> Reports from the USA, again not empherical (spellin?) suggest a worse




All these bear and conspiracy sites you are reading seem to be invading your posting as you are just making up numbers and plucking "stats" out of thin air.



> Most housewives will say that goods in the supermarketsare up 20 to 30% on a year ago




Most will will they? 20 - 30%? Looking forward to seeing the link for those survey results....

I do the shopping in my family due to having more time to myself and i would disagree with that.

Sure some items are more expensive but there are many that are actually cheaper or virtually the same price.



> A thing noticed also are packets of goods, perporting to be the same have net weights less




How could they be "perporting to be the same" if they are weigh less? That is false advertising and i doubt many, if any, companies would open themselves up for legal action.

My guess is that you don't do the shopping in your family and all of your references to it are pure guesses to back up your theory.The Safeway i shop at reports the per 100 grams price for virtually every product on the shelf.


> rates and taxes are increasing a great deal




Rates are increasing from emergency lows and are still at low levels historically and what are these tax increases you speak of?



> and some reports of saleries down




I'm sure "some" salaries are down but considering the latest wage growth figures, 24/02/2010, show that wages grew at 2.5% in the december quarter and 2.9% in the last year your "reports" must be more Chinese whispers from your conspiracy sites


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## Trembling Hand (28 February 2010)

Unnamed User said:


> All these bear and conspiracy sites you are reading seem to be invading your posting as you are just making up numbers and plucking "stats" out of thin air.




Hard to argue with a religion. Belief becomes fact.


----------



## Uncle Festivus (28 February 2010)

basilio said:


> As unemployment soars in US the budget comes under even further pressure from loss of tax income and increases in benefits.Thus increasing deficits, more attempts at selling bonds to finance these deficits.






professor_frink said:


> What I'd be interested in hearing is how you think having a high unemployment rate is going to contribute to the US defaulting and the hyperinflation that is due in the next 2 years




Professor, money in must equal money out, otherwise you have a deficit of which has to be derived from somewhere. In the case of the USA & others it comes from 'friends' who would also like their respective ponzi schemes to continue as long as their economies are based on the USA buying their 'stuff' ie China. The old $USD switcheroo - in exchange for trinkets & nick-nacks made by underpaid labour, while the ruling classes make all the money and the rules ie Goldman Sucks. 

They not only make up the rules as they go along they can also print as much currency as they like, so to speak, for they are the owners of the worlds default currency.

I'm not sure about the hyperinflation hypothesis, apart from in China who has rampant money supply inflation problems, because the money supply figures for the USA don't indicate this, in fact they have gone down substantially, indicating credit contraction if anything ie deflation ie the debt written off is greater than the money 'created'???



Trembling Hand said:


> Hard to argue with a religion. Belief becomes fact.




I believe in the US Fed, who supply shiploads of facts to provide ammo for the bear cause - straight from the horses mouth, even though it's bolted a long time ago (try about 1971 when the link to restraint was severed)
And this is the data that they have decided to release to the public! Who knows what the real state of affairs is? Remember M3?

Time we updated the 'Jaws Of Death'? Hey buddy, can you spare a dime?


----------



## professor_frink (2 March 2010)

Uncle Festivus said:


> Professor, money in must equal money out, otherwise you have a deficit of which has to be derived from somewhere. In the case of the USA & others it comes from 'friends' who would also like their respective ponzi schemes to continue as long as their economies are based on the USA buying their 'stuff' ie China. The old $USD switcheroo - in exchange for trinkets & nick-nacks made by underpaid labour, while the ruling classes make all the money and the rules ie Goldman Sucks.
> 
> They not only make up the rules as they go along they can also print as much currency as they like, so to speak, for they are the owners of the worlds default currency.
> 
> ...




Thanks for the reply UF

I agree with you in that things have been more deflationary than anything else of late, hence my questions to explod about us being at risk of hyperinflation.


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## Uncle Festivus (2 March 2010)

Blow-off top in world markets - get ready! 
----------------------------------------

Let's see how the 'recovery' in the US is going -



> -- both consumer confidence and sentiment have fallen unexpectedly;
> -- after-tax personal incomes adjusted for inflation have flattened;
> -- sales of both new and existing homes took a surprising stumble;
> -- orders for most durable goods are down;
> ...




The worlds 5th biggest economy is insolvent? Does anybody care?



> Jamie Dimon, chairman of JP Morgan Chase, has warned American investors should be more worried about the risk of default of the state of California than of Greece's current debt woes.
> 
> Mr Dimon told investors at the Wall Street bank's annual meeting that *"there could be contagion"* if a state the size of California, the biggest of the United States, had problems making debt repayments.
> 
> California however poses more of a risk, given the state's $20bn (£13.1bn) budget deficit, which Governor Arnold Schwarzenegger is desperately trying to reduce.






> LONDON (MarketWatch) -- Allied Irish Banks said Tuesday that it swung to a net loss of 2.41 billion euros ($3.26 billion) in 2009 due to *surging loan loss provisions* from Ireland's property crisis, as the bank said the coming year will remain *extremely challenging*.




Pump & Prime then Dump & Debt

What happens when the stimulis incentives are withdrawn??? We are left with a big debt and new (worse) global recession? This will be a similar story for the Oz car market now it too has had it's pump & dump scheme completed... home insulation - pump & dump too.....



> LONDON (MarketWatch) -- New car registrations in Germany totaled around 195,000 in February, *down 30%* from the same month last year, the German Association of International Motor Vehicle Manufacturers, or VDIK, said Tuesday, according to Dow Jones Newswires. For the first two months of the year, registrations are off 20%, to 376,000 units, compared to the same period in 2009, the report said. *The decline is attributed to the expiration of Germany's car-scrapping incentive program in the fall*.




The UK - mmmm, how will we pay for all this? How about spending cut's & tax hikes - 



> As many as 100,000 jobs could go in councils over the next three years as Government spending cuts start to bite, a leading expert has warned.




And finally, a word from our sponsor, the glorious PRC.....what goes up must come down - with a thud........ 40% less loans......



> China's four-biggest banks made net new loans in February of about 294 billion yuan ($43.1 billion), down about 39 percent from January, banking sources said on Tuesday.


----------



## GumbyLearner (2 March 2010)

Yogi yo

Just one example of the impending Global Supply Glut.
At a time when the stimulus is GONE.

From today's Chosun Ilbo
March 2, 2010

http://english.chosun.com/site/data/html_dir/2010/03/02/2010030200322.html

*Korea's Top 5 Industries Face Oversupply Crisis*

Korea's major industries are at the great risk of being hit by oversupply problems in the global market. If automobiles, steel, petrochemicals, ships and semiconductors end up sinking due to a worldwide glut, the Korean economy is expected to face the greatest shock since the Asian financial crisis.

According to an internal Ministry of Strategy and Finance document obtained by the Chosun Ilbo on Sunday, *the global automobile industry faced a 56.7 percent oversupply last year*, while *the steel industry was hit with a 37.7 percent glut*. _The oversupply ratio refers to the amount of *production capacity* that exceeds demand when production facilities are running at 100 percent._ A ratio of 50 percent means there is enough production capacity to produce 50 percent more products than needed.

*The ratios were 17.9 and 14.4 percent for the petrochemical and shipbuilding industries*. In the semiconductor industry, the threat abated as the world's no.5 chipmaker Qimonda of Germany went bankrupt early last year, but still some products including NAND flash memory chips, a flagship item for Korea, are expected to face an oversupply.

These industries have propped up the Korean economy since the financial crisis last September. But as China and other emerging nations have increased investment in them to stimulate their economy, there have been growing concerns over worsening situations with rising productions, calling for urgent measures to deal with the problem.

◆ Worsening Supply Glut

There are fears that the global automotive industry would face the worst-ever supply glut this year. According to industry consulting agency Global Insight, demand is expected to total 66.1 million vehicles, while output capacity stands at 95.1 million, leading to *a possible record oversupply of 29 million cars.*

Interesting that governments around the world had been subsidizing people to buy new cars and cash in their perfectly workable clunkers. They couldn't give 'em away. 

I smell a terrible waft of bull****.


----------



## Dowdy (3 March 2010)

Unnamed User said:


> Most will will they? 20 - 30%? Looking forward to seeing the link for those survey results....
> 
> I do the shopping in my family due to having more time to myself and i would disagree with that.
> 
> Sure some items are more expensive but there are many that are actually cheaper or virtually the same price.





My mum done the maths -  rice is up 39% in less then a year


----------



## >Apocalypto< (6 March 2010)

More good news out of the USA on the jobs front.


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## MR. (6 March 2010)

Uncle Festivus said:


> Time we updated the 'Jaws Of Death'?
> View attachment JAWS OF DEATH--.bmp




Could the jaws of death be looking even worse now?

Perhaps it is time UF to update the "jaws of death" mid 2009 isn't really up to date. (refer UF's post above on 28/2/2010 for clearer chart)


View attachment JAWS OF DEATH2-A.bmp


I must say I hate charts that arn't set up correctly. I am not a bull, but charting to multiply points I don't agree with. Not intended apon you UF as it is my guess it is not your chart.

Looking at the chart above two larger recessions were also in the early 80's and mid 70's. Expenditure in the 80's was 33% more than receipts.


However expenditure in the 70's was 40% more than receipts. See below (figures used 250 - 350)

View attachment Photo270-b22.bmp



So what is the expenditure in the current US recession as a % of the receipts? (suggested figures 2200 - 3550)

The point of the chart remains intact.  

.


----------



## explod (6 March 2010)

Dan Norcini's take on the job jamboree from JS Minset today :

"The jobs number came out this morning and had Wall Street giddy with excitement that “only” 36,000 jobs were lost. What do we get as comments: “that is a fairly strong employment report.” Let’s see, that means the last 25 out of 26 months this nation has been shedding jobs and folks are excited about that? Are they out of their damn minds?

Tell that to the folks who are out of work and unable to find a decent waged position. By the way, the U6 number, which includes discouraged workers and those working part time who want to work full time but have been unable to do so rose to 16.8% from 16.5% the previous month. Obviously, the spinmeisters did not want to touch that one with a ten foot pole. 

I do not know exactly what the public relations blitz that the Caesar’s were putting out while Rome was disintegrating around them but something tells me that it was probably not all that different than what this current crop of market analysts and financial TV talking heads are serving up for public consumption. How much more of this, “It’s not as bad as we were fearing therefore it is great” BS do we have to endure from these hucksters? Well, one thing is for sure, this so-called, “JOBLESS” recovery is certainly living up to its name.

The way I look at it that is another 36,000 folks who will not be buying LCD TVs, autos, boats or even furniture and other major appliances. "


----------



## MR. (6 March 2010)

explod said:


> The way I look at it that is another 36,000 folks who will not be buying LCD TVs, autos, boats or even furniture and other major appliances. "




http://www1.voanews.com/english/new...-Unemployment-Rate-Holds-Steady-86629122.html



> The U.S. Bureau of Labor Statistics says the economy lost 36,000 more jobs last month than it created. Many analysts see it as good news, because the expectation was for a loss double that figure.




I see reason to rejoice


----------



## Unnamed User (6 March 2010)

Anyone worth their salt will have looked at where some of those jobs lost came from and that they will become hirings next month.

(No i won't state what they were as you should know).

Prepared to put my anaylsis under scrutiny, rather than just cast conspiracy theories or quote end of the world theorists, next months report will have minimum 30,000 jobs growth and i believe it will be closer to 100,000.


----------



## Aussiejeff (6 March 2010)

The "economics" behind the bull & bear case? Hmmm.

In light of Mr Market totally ignoring what some may see as "economic reality" (aka "The Frozen Jaws Of Death"), perhaps the thread title should be changed to "The faux economics behind the bull and bear case"?

I get a distinct an uneasy impression that the Big Boys funding Mr Market now firmly believe they have gotten out of jail SCOTT FREE this time around (thanks in great part to massive financing by taxpayers and much more vigorous positive media hype by their supportive government friends) and that only blue sky beckons (for now at least). 

Let's face it, looking at that graph you have to be mighty impressed at how they have managed to pull off one of the greatest recapitalisation "con" & "boom" tricks of all time, while simultaneously laughing in the face of what some might regard as ominously bearish economic indicators (such as this so-called "Jaws Of Death" scenario).

Can spin, hype & propoganda prevail over "real economics" in the long run? It certainly has so far in this New Age of global media empires.


----------



## explod (6 March 2010)

Unnamed User said:


> Anyone worth their salt will have looked at where some of those jobs lost came from and that they will become hirings next month.
> 
> (No i won't state what they were as you should know).
> 
> Prepared to put my anaylsis under scrutiny, rather than just cast conspiracy theories or quote end of the world theorists, next months report will have minimum 30,000 jobs growth and i believe it will be closer to 100,000.




And another take from our ole Pal Chucky before the numbers came out overnight.   In fact I will find some other US comentators later in the day, off to Doctor now.



> Well... Today, being the first Friday of the month, is a Jobs Jamboree Friday here in the U.S.... I would have to think that the Gov't officials who claim that the stimulus created / saved jobs last year, would be dreading the print of the Jobs report... You see, somewhere along the line, that line about "saving jobs" is nothing but rearranging the deck chairs on the Titanic... All the while, the job losses, albeit not as deep as they were a year ago, continue to mount... And that's what's expected this morning... More job losses...
> 
> I'll tell you this now, so you when you hear it on your cable news station, or wherever you get your news, that February's job losses are going to be blamed on the weather... That's right, all the snow in February will be blamed for the job losses... More rearranging going on I see!


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## MR. (6 March 2010)

Unnamed User said:


> Anyone worth their salt will have looked at where some of those jobs lost came from and that they will become hirings next month.
> 
> (No i won't state what they were as you should know).
> Prepared to put my anaylsis under scrutiny, rather than just cast conspiracy theories or quote end of the world theorists, next months report will have minimum 30,000 jobs growth and i believe it will be closer to 100,000.




What anaylsis?

"next months report will have minimum 30,000 jobs growth and i believe it will be closer to 100,000" ??


----------



## Unnamed User (6 March 2010)

MR. said:


> *What anaylsis?*
> 
> "next months report will have minimum 30,000 jobs growth and i believe it will be closer to 100,000" ??




Part of that is already answered. 

The rest is based off economic statistics that are there for everyone to see for themselves. 

Of course we all put different weightings or interpretations on these statistics but my opinion is there for the record, is yours?


----------



## MR. (6 March 2010)

Unnamed User said:


> Part of that is already answered.
> 
> The rest is based off economic statistics that are there for everyone to see for themselves.
> 
> Of course we all put different weightings or interpretations on these statistics but my opinion is there for the record, is yours?




I know part is already answered "the conclusion" where is the analysis?

You offered the analysis, not me! 

This has nothing to do with my opinion.


----------



## Unnamed User (6 March 2010)

MR. said:


> I know part is already answered "the conclusion" where is the analysis?
> 
> You offered the analysis, not me!
> 
> This has nothing to do with my opinion.




Now i see what you mean and i worded it wrongly, apologies. I can't edit that post now unfortunately.

"Prepared to put my conclusion under scrutiny" is what it should have read.

My analysis is exactly that, mine.


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## MR. (6 March 2010)

Criky Chuckey! 
I hope your figures prove to be correct. Back to topic.

If you throw enough money at anything you can fix it, but only for so long if the problems still exist.  Maybe there really wasn’t any choice. I don’t know. Now I just hope these governments make the hard decisions needed. 


-  If governments don’t change things for "the better" perhaps the bulls will see stock markets return to their highs sooner rather than later. That’s if there isn’t persistent deflation anyway.  ie: The Bull

-  If governments make the hard decisions we will not see markets return to their highs anytime soon. I just hope enough of the problems are addressed. ie: The Bear (which will become the bull)

Of course the governments may still have little control and free markets may yet run their course.


The holders of debt have been rewarded to the disgust of savers. This better not persist as a very clear picture has been painted.

.


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## explod (6 March 2010)

And from Michael Panzer's webpage today,   seems a lot of people think the Wall Street numbers are skewed.  Anecdotal maybe but a groundswell of opinion from the coalface building up.



> How you view today’s jobs report depends on snow.
> 
> Coming into today, many economists believed that last month’s storms on the East Coast ”” which occurred right before the Labor Department conducted its monthly jobs survey ”” would temporarily reduce employment by a significant amount. Macroeconomic Advisers, a well-regarded research firm in St. Louis, thought the effect would be between 150,000 and 220,000 jobs lost. Those jobs effectively would have disappeared in February and largely returned in March.
> 
> ...


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## explod (6 March 2010)

professor_frink said:


> Thanks for the reply UF
> 
> I agree with you in that things have been more deflationary than anything else of late, hence my questions to explod about us being at risk of hyperinflation.




And now getting back to the question.  As U/F pointed out and as indicated by pundits quoted here today, the real state of affairs is very difficult to determine.

Someone above spoke of the 30% increase in rice, my wife confirms that also.  Saw on our local TV through the week on meat in Australia, beef up 20% in the last 3 months, lamb up 9% in the same period but due to tightening supply expected to increase a great deal more during the year.

However in clarification, when I think about inflation I am on about the losing value of paper money.  The big demonstration of this is the rising price of gold against currencies.  This week we again saw record gold prices against the Pound Stirling and the Euro.  And an increase up against the Aussie and US$.   We know that the US is printing money and via a back door buying their own bonds to keep it all propped,  and their deficits continue to grow exponentially to fund basic needs.  And one could go on.

This money dilution, like the issue of too many shares in a Comapny, must lead to a rampant loss of value and then to my mind lead into hyperinflation.  Of course on the surface we do not appear to be there yet but a watchful eye should be cast and pointers as I see them will post up.  All IMVH of course.


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## GumbyLearner (6 March 2010)

explod said:


> And now getting back to the question.  As U/F pointed out and as indicated by pundits quoted here today, the real state of affairs is very difficult to determine.
> 
> Someone above spoke of the 30% increase in rice, my wife confirms that also.  Saw on our local TV through the week on meat in Australia, beef up 20% in the last 3 months, lamb up 9% in the same period but due to tightening supply expected to increase a great deal more during the year.
> 
> ...




Great summary explod. 

It would be great for deflationists/inflationists to also factor in crop failures, increased use in bio-fuels, oil scarcity, increased mining costs, tightening of credit facilities, global recalls of cars, historically extraordinary sovereign GDP debt ratios among certain states, nationalization of resources by certain states, continuing devaluation of US mortgage assets, the coming defaults in US commercial real estate loans, "quantitative easing",  rising Asian consumer affluence etc...  

Don't wait to buy gold but buy gold and wait. IMO


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## ducati916 (7 March 2010)

*explod*



> This money dilution, like the issue of too many shares in a Comapny, must lead to a rampant loss of value and then to my mind lead into hyperinflation. Of course on the surface we do not appear to be there yet but a watchful eye should be cast and pointers as I see them will post up. All IMVH of course.




The devaluation of the dollar, via money creation through the Federal Reserve, would, in normal circumstances, if pursued far enough, result in a hyperinflation.

This is unlikely to happen for the following reason. The US liabilities, predominantly Social Security, currently standing at circa $55 Trillion, are *Index linked.* This means that the liability grows proportionately with the inflation, thus, the liability cannot be inflated away.

On that basis, there can be no hyperinflation, in that the money supply becomes essentially worthless in the home country. However, the cost of imports becomes prohibitive, oil being the prime example.

Therefore the crisis is much closer than many realise. The crisis will be when debt cannot be rolled over to foreign investors, and printing becomes the only course of action. Then, again, imports become prohibitively expensive.

What to do?

Ok, we have the world's most powerful military machine, that we've spent all our wealth on, where should we use it? History is full of examples, Napoleon being one that springs to mind, Rome, being the common analogy.

jog on
duc


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## GumbyLearner (7 March 2010)

ducati916 said:


> *explod*
> 
> 
> What to do?
> ...




Take a brief intermission from the jog duc IMHO. 

Buy some precious metals and keep jogging till your hearts content. JMO

Oh shucks, I'm an Index fund fan myself all the way back to the 1997 Asian Financial Crisis Days.
As long as all the participants report honestly then of course Index Funds are what we should all be looking at. Cheers for the advice duc. 

don't pause to read the full story
keep running, the banana lounge awaits
Gumby


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## ducati916 (7 March 2010)

GumbyLearner said:


> Take a brief intermission from the jog duc IMHO.
> 
> Buy some precious metals and keep jogging till your hearts content. JMO
> 
> ...




I think you missed the point here. Social Security payments are index linked: viz. if inflation rises, the liabilities [payments] rise in a specified proportion. Hence, the liabilities of Social Security, TIP's and other financial liabilities, simply cannot be inflated away.

jog on
duc


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## Trembling Hand (7 March 2010)

explod said:


> Someone above spoke of the 30% increase in rice, my wife confirms that also.  Saw on our local TV through the week on meat in Australia, beef up 20% in the last 3 months, lamb up 9% in the same period but due to tightening supply expected to increase a great deal more during the year.



Jeesus!! So now Today Tonight journalism is being used for the Bears case. Classic!! Classic Explod. Classic BS.

Food inflation is running around CPI has been since I entered the food industry in 92 and to my great surprise things like flour, butter and eggs have remained on course since I left it in 2001 up to today. 



explod said:


> However in clarification, when I think about inflation I am on about the losing value of paper money. The big demonstration of this is the rising price of gold against currencies. This week we again saw record gold prices against the Pound Stirling and the Euro. And an increase up against the Aussie and US$.



 Just on that hyperinflation story Explod. Since the bears case is mostly based around the US/UK/EUR/JPY losing value how you see that effecting the value of the Skippy? After all I don't buy my bread & butter in USD. And in fact I don't buy my gold in USD but rather AUD. And thats been a crap trade since March 08, really crap when you take it against "other" assets.

To link in with your food inflation have a look at wheat. This is in *USD*. In *AUD its lower *than what it was in 2001. *LOWER*.

Rice pretty much steady in AUD terms for 10 years!!!!


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## professor_frink (7 March 2010)

Unnamed User said:


> Anyone worth their salt will have looked at where some of those jobs lost came from and that they will become hirings next month.
> 
> (No i won't state what they were as you should know).




As someone who has no idea, it would be great if you could enlighten me a little


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## explod (7 March 2010)

> Jeesus!! So now Today Tonight journalism is being used for the Bears case. Classic!! Classic Explod. Classic BS.




No worse than Bloomberg. probably *"better than expected".*




> Just on that hyperinflation story Explod. Since the bears case is mostly based around the US/UK/EUR/JPY losing value how you see that effecting the value of the Skippy? After all I don't buy my bread & butter in USD. And in fact I don't buy my gold in USD but rather AUD. And thats been a crap trade since March 08, really crap when you take it against "other" assets.




The Aussie, Canadian and many others may well rise but this is going to effect our trade ballance big time if it goes bananas.   And exports are very important to our economy.





> To link in with your food inflation have a look at wheat. This is in USD. In AUD its lower than what it was in 2001. LOWER.
> 
> Rice pretty much steady in AUD terms for 10 years!!!!




Yep, need to get off the BS and look deeper.  Interesting times and *oh* my bullion has now doubled in value but admit been a bit slow in Auz.


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## explod (9 March 2010)

Uh Oooow, poor ole Chucky, just has to plod away at those better than expected job numbers (from Everbanks "Daily Pfenning" overnight):-



> Well... Welcome back to those that skipped ahead! Friday's Jobs Jamboree turned out to be very interesting, after looking under the hood... According to the Bureau of Labor Statistics (BLS) the U.S. lost 36,000 jobs in February, much less than what was expected (-68K), and the unemployment rate remained at 9.7%... Of course we all know that the "real unemployment rate" is 21%, it all comes back to the games people play now, every night and every day now... The most important piece of the Jobs Jamboree is the Avg. Hourly Earnings, which printed at 1.9% gain... So, those that are working are seeing some increases... Marginal increases, but still!
> 
> And... The BLS did add 97,000 jobs out of thin air, so the job losses were really -133,000... I also found it suspicious that the BLS waited some time on Friday, before posting that +97,000 adjustment... Before they did, the markets were led to believe that job losses were dwindling... Again... The games people play... It sure looks like they tried to pull a fast one on the markets... But, I'm sure it was just a technical thing... Right?


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## GumbyLearner (9 March 2010)

explod said:


> Yep, need to get off the BS and look deeper.  Interesting times and *oh* my bullion has now doubled in value but admit been a bit slow in Auz.




Wish I had been reading your posts earlier on ASF explod. My physical Au holdings have only increased 63% in value in the last 2 years. Not bad but having them double would be nice.


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## Unnamed User (2 April 2010)

Unnamed User said:


> Anyone worth their salt will have looked at where some of those jobs lost came from and that they will become hirings next month.
> 
> (No i won't state what they were as you should know).
> 
> Prepared to put my conclusion under scrutiny, rather than just cast conspiracy theories or quote end of the world theorists, next months report will have minimum 30,000 jobs growth and i believe it will be closer to 100,000.




Seems i was a bit too conservative.



> *Payrolls rise 162,000, best gain in three years
> Excluding Census workers, U.S. payrolls rise by 114,000 in March*




http://www.marketwatch.com/story/payrolls-rise-162000-best-gain-in-three-years-2010-04-02-83000


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## MR. (3 April 2010)

Unnamed User said:


> Anyone worth their salt will have looked at where some of those jobs lost came from and that they will become hirings next month.
> 
> (No i won't state what they were as you should know).






professor_frink said:


> As someone who has no idea, it would be great if you could enlighten me a little






Unnamed User said:


> Seems i was a bit too conservative.




"Construction employment rose by 15,000, likely a rebound from unseasonably bad weather in February."

That's 15,000! Where did the rest come from and why?


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## Unnamed User (3 April 2010)

MR. said:


> "Construction employment rose by 15,000, likely a rebound from unseasonably bad weather in February."
> 
> That's 15,000! Where did the rest come from and why?




Not interested in doing peoples research for them but am happy to provide a link that might help and contains more useful links.

http://www.bls.gov/news.release/empsit.nr0.htm


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## explod (23 May 2010)

Hard to nail the following into a thread, it fits a number of catogories, but here goes.

It touches on what is called "Financial Warfare".   For some time the US were critical of China for not allowing their currency to appreciate, it is currently pegged to the US dollar.   However when pushed it became evident to the US that China may stop supporting T/bills if they persisted and it was soon after that we saw Moodies nail Greece.  This would have been breakneck doom for the US so desperate measures ensued.    Of course this is not unnoticed by other big players so what is spreading is the "every many for himself" at the international level; we appear to be nearing some *criseas* by the look.  That's probably an understatement.

Anyway the above just my own musings and the following from Jim Rickards is not right on that track but got me thinking on it;-

http://www.zerohedge.com/article/jim-rickards-discusses-financial-warfare


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