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Dec 6th, 2017
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Joined: Aug 2008
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The last cited article is so good, I'm putting it here again, hoping that others will take the time to read it. The "Bear" is as usual far ahead of his time, and this time is no different. Realistic looks at the future, with some historical and analytical basis, are SO much better than the trite airhead talk on some of the financial cheerleader shows... aka ... Fox Business News, CNBC, and often Bloomberg News. The globalization argument, with the effects of GDP in other countries is good and mostly logical... and probably more correct. I believe that the Bear missed the cumulative effect of our advanced infrastructure in his calculations.... I agree with most of your comments, Cousin It. Don't count too much on our "advanced infrastructure," though. Sadly, it is not as "advanced" as it once was. Also, entropy is our enemy. Complicated structures tend to fall apart much more easily than simple ones, and never in history has a society been as unnecessarily and dangerously complicated as American society. As is usual with economists, the article did not deal with the catastrophic effects of the inevitable environmental degradation and ecological collapse which will become evident in the near future. One is looking at the future with rose-colored glasses if one imagines we are facing another Great Depression. We should be so lucky. We are facing something much worse than that. -
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Carpal Tunnel
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Carpal Tunnel
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There is one part of "the Bear's" analysis that just does not compute for me: Today, however, globalization has gone so far that US self-reliance would be economically impossible except at inordinate cost. All kinds of global supply chains and product relationships would have to be unwound, as the US consumer reverted to buying sweatshirts made in North Carolina rather than China or Vietnam. Emerging market manufacturing capabilities would not be lost, and emerging market living standards not much affected. Thus, the main effect of US protectionism would be to reduce US living standards still further. It seems to me that he is making a couple of assumptions here that are unfounded. First, that the only way to stem the flow of capital away from the US is through "protectionism", and second, that the future American will suffer economic hardship due to the lack of foreign made goods at the low end of the cost continuum - offering as an example textiles. It seems to me that much greater suffering would come about due to the lack of foreign made goods at the high end of the cost continuum, which would include items like electronic goods and automobiles. And it further seems to me that, rather than stemming flow of capital to foreign lands, a more favorable outcome would be developing new industries here in the US that would generate more capital flow, the bulk of which would stay in the US. I think that's what the President Elect's economic policy is leading toward, and am therefore more optimistic than the Bear, or our colleague numan.
Steve Give us the wisdom to teach our children to love,
to respect and be kind to one another,
so that we may grow with peace in mind.
(Native American prayer)
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And it further seems to me that, rather than stemming flow of capital to foreign lands, a more favorable outcome would be developing new industries here in the US that would generate more capital flow, the bulk of which would stay in the US. And these new, miracle industries are...? -
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- [b]Days of Treasuries as risk-free benchmark now gone [/b]Market now factoring in much greater chance of default on Uncle Sam's debt. People are only really willing to lend or invest in what they truly know, and as we each individually or as institutions know very little, we will invest very little and at, for the economy, ruinously high rates.
The U.S.’s benchmark status as a “risk free” borrower is based on the idea that it is the best available credit, a solid gold borrower that will not default. And of course as Treasuries are denominated in dollars and as the state ultimately can raise taxes or print money to fulfill its obligations, that is correct.
But investors clearly are becoming increasingly spooked that the United States’ difficult situation and its absolutely huge borrowing plans are making it a less certain risk.
It now costs 60 basis points a year to buy a five-year credit default swap insurance policy against U.S. sovereign default, up from about 15 basis points in August and 100 times more than in January 2007 when it was 0.6 basis points. Clearly, somebody thinks risk free isn’t so risk free any more.
Last edited by numan; 12/16/08 10:23 PM.
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old hand
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Eliot Spitzer argues Steve's thought on imports in his first article on Slate here: Slate article Last month, as the financial crisis and the government rescue plan dominated headlines, almost everyone overlooked a news item that could have enormous long-term impact: GE Capital announced the acquisition of five mid-size airplanes—with an option to buy 20 more—produced by CACC, a new, Chinese-government-sponsored airline manufacturer.
Why is that so significant? Two reasons: First, just as small steps signaled the Asian entry into our now essentially bankrupt auto sector 50 years ago, so the GE acquisition signals Asia's entry into one of our few remaining dominant manufacturing sectors. Boeing is still the world's leading commercial aviation company. CACC's emergence—and its particular advantage selling to Asian markets—means that Boeing now faces the rigors of an entirely new competitive playing field and that our commercial airplane sector is likely to suffer enormously over the coming decades. more....
Last edited by itstarted; 12/16/08 10:40 PM.
Life is Good!
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Joined: Jun 2004
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Carpal Tunnel
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Carpal Tunnel
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And these new, miracle industries are...? Can you say "green"?
Steve Give us the wisdom to teach our children to love,
to respect and be kind to one another,
so that we may grow with peace in mind.
(Native American prayer)
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Joined: Jan 2003
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old hand
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Posted for general interest as part of the financial crisis. Clicking on the charts will show a very clear direction of the economy as measured by the price of commodities. Brings back the question of supply/demand or manipulation by speculators. All commodity - price charts
Life is Good!
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Carpal Tunnel
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Carpal Tunnel
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Clicking on the charts will show a very clear direction of the economy as measured by the price of commodities. Can you say nosedive?
Good coffee, good weed, and time on my hands...
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Joined: Jun 2004
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Carpal Tunnel
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Carpal Tunnel
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That chart looks very different when you stretch it out to five years.
Steve Give us the wisdom to teach our children to love,
to respect and be kind to one another,
so that we may grow with peace in mind.
(Native American prayer)
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Joined: Nov 2006
Posts: 19,831 Likes: 180
Carpal Tunnel
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Carpal Tunnel
Joined: Nov 2006
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That chart looks very different when you stretch it out to five years. As you stretch it out longer it appears it may be more of a correction than a nosedive. Assuming it levels out soon.
Good coffee, good weed, and time on my hands...
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