Jump to content
House Price Crash Forum

Recommended Posts

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7871421/With-the-US-trapped-in-depression-this-really-is-starting-to-feel-like-1932.html

The Telegraph is as bleak about the US and World economies as it can get without calling for an outright change of political direction.

Now we see the consequence of 'light touch' supervision which wrecked our economies.

If part of the answer is closer control of the finance sector, why believe other sectors will serve their purpose without intervention?

Share this post


Link to post
Share on other sites

View from Jan Hatzius, Chief US Economist, Goldman Sachs & Co. Bit long winded but might be of interest to some

US Views: Disturbing Signs

1. Friday’s jobs numbers were disturbing. At best, they show an economy that is growing only quickly enough to keep the unemployment rate flat near 10%. At worst, they suggest that the labor market is once again turning down. Both the manufacturing workweek (the only part of the employment report included in the index of leading indicators) and the employment/population ratio (the broadest job market measure in the household survey) dropped significantly in June. Given the noise in these series and—in the case of the workweek—the potential for substantial revisions, both fortunately fall short of a clear-cut signal that another labor market downturn has begun. But we will need to see at least a partial reversal of these declines next month.

2. This comes at a time when the end of the inventory cycle has triggered the inevitable slowdown in the manufacturing sector. With inventory investment now again close to a normal rate, GDP growth is likely to converge to final demand growth, which has averaged only 1½% since mid-2009 and is unlikely to accelerate given the various headwinds facing the economy. The resulting slowdown in GDP growth is likely to be concentrated in the goods-producing sector, which previously received the largest boost from the inventory cycle. Hence, further declines in the ISM index following last Thursday’s drop to 56.2 are likely; our GDP forecast implies a decline to around 50 by early 2011.

3. The weak labor market implies not only a great deal of hardship for workers, but also a growing risk of deflation. Although the last couple of core CPI/PCE releases were a bit higher than those earlier in 2010, the trend still seems to be downward and other measures such as wage growth and inflation expectations have been declining. In particular, the 5-year 5-year forward breakeven inflation rate in the TIPS market has fallen 75bp since April and now stands at 2% for on-the-run securities, the lowest level since mid-2009.

4. Our recently released Global Economics Paper No. 200 entitled “No Rush for the Exit” argues that policymakers should react to the combination of a sluggish recovery and declining inflation with additional policy easing, either via a return to unconventional monetary policy or via further fiscal stimulus. The obvious counterargument is that monetary and fiscal easing carries long-term costs in the form of, respectively, a risk of a renewed asset bubble and a higher public debt burden. But our study shows that these costs look far from prohibitive at present. On the monetary side, US financial markets are nowhere close to bubble territory. On the fiscal side, it is difficult to argue that the US government has reached the limits of its debt capacity when long-term bond yields are low and falling, and when federal interest payments stand at just 1½% of GDP. When compared with the risk of a renewed economic downturn and/or a descent into deflation, the cost of additional stimulus seems to be well worth paying.

5. So what is to be done? On the monetary side, the possibilities include additional purchases of Treasuries and mortgage-backed securities, as well as TALF-like structures—i.e., special purpose vehicles that lend to nonbanks using equity provided by the Treasury and debt provided by the Fed. Whether these will happen anytime soon is another matter. Additional purchases of Treasuries and/or MBS mortgages do not yet seem to command a sufficient majority on the FOMC. This might change if growth and/or inflation ease further. But even then it is unclear just how effective they would be. After all, Treasury purchases did not seem to have much impact in 2009, and MBS spreads are already quite compressed, limiting the potential for further narrowing. A TALF-like structure could be more powerful, but it would need the Treasury’s cooperation and the Fed’s authorization under article 13.3 of the Federal Reserve Act, i.e. the Fed would need to invoke “unusual and exigent circumstances.” This is a very high hurdle.

6. On the fiscal side, we hope that Congress passes the extension of emergency unemployment insurance, continued aid to state and local governments, and at least a temporary extension of the bulk of the 2001/2003 tax cuts beyond the end of 2010. If some of the tax cuts are left to expire, then this should be offset by temporary fiscal easing elsewhere. The point is that a tightening of the overall fiscal stance at a time when the economy is already struggling to maintain the current, unacceptably low level of resource utilization is a bad idea. In fact, we favor additional deficit-financed stimulus, coupled with a commitment to cut the longer-term deficit more aggressively than currently envisaged in the administration’s 10-year plan. The consolidation could include cuts in discretionary expenditures, slower growth in entitlement spending, and gradual hikes in both direct and indirect taxes. The precise mix is a matter of political preferences, and reasonable people can disagree about the pros and cons of different measures. But the need for long-term budget restraint should not stand in the way of a near-term boost when the economy clearly needs it.

7. A failure to enact additional stimulus—at a minimum, extended unemployment benefits, state fiscal assistance, and extension of the bulk of the 2001/2003 tax cuts—would imply a downside risk to our GDP and employment forecasts, specifically for 2011. Right now, we are showing a gradual reacceleration to 3% on a Q4/Q4 basis in 2011, but we worry that this might end up being too optimistic. We will evaluate developments both on the policy front and in the US economic data closely over the next few weeks to see whether any adjustments are warranted.

Edited by david m

Share this post


Link to post
Share on other sites

The meat is at the bottom.

A failure to enact additional stimulus—at a minimum

Please give us some more free money to gamble with.

Share this post


Link to post
Share on other sites

The meat is at the bottom.

A failure to enact additional stimulus—at a minimum

Please give us some more free money to gamble with.

Yep.

Go long green ink and paper suppliers.

Share this post


Link to post
Share on other sites

Now we see the consequence of 'light touch' supervision which wrecked our economies.

what has wrecked our economies is 60 years of trying to avoid the 0% rates bound at any cost.

60 years of alternating tory tax cuts and labour keynsian debt ramping have all been designed to achieve the same end using different tools, with a ever so slightly diffentiated veneer of helping this group or that group. That is where the vast private and public debt has come from. Tory governments ramp private debt, labour governments ramp public debt. They have taken it in turns to run up the total national public/private debt to insane levels.

Since the dot com crash the corporate sector has been ramping private debt (while labour ran a surplus 1999-2002), and then after that both labour and the corps ramped private sector debt AND public sector debt together, because both sectors were so desperate to keep households spending.

its not about light or heavy touches.

balanced budget and keynsian policies have each done an equal amount of long term harm to our economies.

Share this post


Link to post
Share on other sites

What happens when theyve scared everyone out of cash?

Isnt the problem businesses and indivuals dont want to take out more debt (sorry, credit)

Are they going to pry our hands open and shove wads of cash into them?

Share this post


Link to post
Share on other sites

Is anyone else getting a tad nervous about all this?

I know over the past 2 years many of us were warning to be careful what we wish for, warnings of it being like the 1980s again if the Tories got in... but now it is looking like the 1980s will be a trifle... there s eveng talk of getting on yer bike.

In the 1980s there was at least the SE of England that was flourishing. You could go there and, as people might remember at the time, there were entire programmes on the box about the mass exodus from northern towns. Or you could go to Germany - 'Auf Wiedersehen Pet' was not just a cheeky comedy idea but a reflection of the times. Or you go to the US.

Well, there will still be Germany but how long before they close the borders.

The US looks fecked.

The SE of England here - can we all work in banks? I think not.

I was always aware that it would get nasty and dire and had always planned to be mobile and go where the work is... but I increasingly wonder where that actually might be.

Share this post


Link to post
Share on other sites

Is anyone else getting a tad nervous about all this?

I know over the past 2 years many of us were warning to be careful what we wish for, warnings of it being like the 1980s again if the Tories got in... but now it is looking like the 1980s will be a trifle... there s eveng talk of getting on yer bike.

In the 1980s there was at least the SE of England that was flourishing. You could go there and, as people might remember at the time, there were entire programmes on the box about the mass exodus from northern towns. Or you could go to Germany - 'Auf Wiedersehen Pet' was not just a cheeky comedy idea but a reflection of the times. Or you go to the US.

Well, there will still be Germany but how long before they close the borders.

The US looks fecked.

The SE of England here - can we all work in banks? I think not.

I was always aware that it would get nasty and dire and had always planned to be mobile and go where the work is... but I increasingly wonder where that actually might be.

Foxconn are hiring.

Share this post


Link to post
Share on other sites

View from Jan Hatzius, Chief US Economist, Goldman Sachs & Co. Bit long winded but might be of interest to some

US Views: Disturbing Signs

1. Friday's jobs numbers were disturbing. At best, they show an economy that is growing only quickly enough to keep the unemployment rate flat near 10%. At worst, they suggest that the labor market is once again turning down. Both the manufacturing workweek (the only part of the employment report included in the index of leading indicators) and the employment/population ratio (the broadest job market measure in the household survey) dropped significantly in June. Given the noise in these series and—in the case of the workweek—the potential for substantial revisions, both fortunately fall short of a clear-cut signal that another labor market downturn has begun. But we will need to see at least a partial reversal of these declines next month.

2. This comes at a time when the end of the inventory cycle has triggered the inevitable slowdown in the manufacturing sector. With inventory investment now again close to a normal rate, GDP growth is likely to converge to final demand growth, which has averaged only 1½% since mid-2009 and is unlikely to accelerate given the various headwinds facing the economy. The resulting slowdown in GDP growth is likely to be concentrated in the goods-producing sector, which previously received the largest boost from the inventory cycle. Hence, further declines in the ISM index following last Thursday's drop to 56.2 are likely; our GDP forecast implies a decline to around 50 by early 2011.

3. The weak labor market implies not only a great deal of hardship for workers, but also a growing risk of deflation. Although the last couple of core CPI/PCE releases were a bit higher than those earlier in 2010, the trend still seems to be downward and other measures such as wage growth and inflation expectations have been declining. In particular, the 5-year 5-year forward breakeven inflation rate in the TIPS market has fallen 75bp since April and now stands at 2% for on-the-run securities, the lowest level since mid-2009.

4. Our recently released Global Economics Paper No. 200 entitled "No Rush for the Exit" argues that policymakers should react to the combination of a sluggish recovery and declining inflation with additional policy easing, either via a return to unconventional monetary policy or via further fiscal stimulus. The obvious counterargument is that monetary and fiscal easing carries long-term costs in the form of, respectively, a risk of a renewed asset bubble and a higher public debt burden. But our study shows that these costs look far from prohibitive at present. On the monetary side, US financial markets are nowhere close to bubble territory. On the fiscal side, it is difficult to argue that the US government has reached the limits of its debt capacity when long-term bond yields are low and falling, and when federal interest payments stand at just 1½% of GDP. When compared with the risk of a renewed economic downturn and/or a descent into deflation, the cost of additional stimulus seems to be well worth paying.

5. So what is to be done? On the monetary side, the possibilities include additional purchases of Treasuries and mortgage-backed securities, as well as TALF-like structures—i.e., special purpose vehicles that lend to nonbanks using equity provided by the Treasury and debt provided by the Fed. Whether these will happen anytime soon is another matter. Additional purchases of Treasuries and/or MBS mortgages do not yet seem to command a sufficient majority on the FOMC. This might change if growth and/or inflation ease further. But even then it is unclear just how effective they would be. After all, Treasury purchases did not seem to have much impact in 2009, and MBS spreads are already quite compressed, limiting the potential for further narrowing. A TALF-like structure could be more powerful, but it would need the Treasury's cooperation and the Fed's authorization under article 13.3 of the Federal Reserve Act, i.e. the Fed would need to invoke "unusual and exigent circumstances." This is a very high hurdle.

6. On the fiscal side, we hope that Congress passes the extension of emergency unemployment insurance, continued aid to state and local governments, and at least a temporary extension of the bulk of the 2001/2003 tax cuts beyond the end of 2010. If some of the tax cuts are left to expire, then this should be offset by temporary fiscal easing elsewhere. The point is that a tightening of the overall fiscal stance at a time when the economy is already struggling to maintain the current, unacceptably low level of resource utilization is a bad idea. In fact, we favor additional deficit-financed stimulus, coupled with a commitment to cut the longer-term deficit more aggressively than currently envisaged in the administration's 10-year plan. The consolidation could include cuts in discretionary expenditures, slower growth in entitlement spending, and gradual hikes in both direct and indirect taxes. The precise mix is a matter of political preferences, and reasonable people can disagree about the pros and cons of different measures. But the need for long-term budget restraint should not stand in the way of a near-term boost when the economy clearly needs it.

7. A failure to enact additional stimulus—at a minimum, extended unemployment benefits, state fiscal assistance, and extension of the bulk of the 2001/2003 tax cuts—would imply a downside risk to our GDP and employment forecasts, specifically for 2011. Right now, we are showing a gradual reacceleration to 3% on a Q4/Q4 basis in 2011, but we worry that this might end up being too optimistic. We will evaluate developments both on the policy front and in the US economic data closely over the next few weeks to see whether any adjustments are warranted.

1. Friday's jobs numbers were shocking. At worst, they show an economy that is falling off a cliff quickly enough to keep the unemployment rate rocketing to 20%. At best, they suggest that the labor market is flat. everything is falling. Given the noise in these series and—the fact that most of them are frankly made up, everything fortunately signals that another labor market downturn has begun. But we will need to get our short position well and truely on before we start telling client to sell or anything crazy like that.

2. This comes at a time when the end of the inventory cycle has triggered the inevitable slowdown in the manufacturing sector. With most of the suckers rally just a product of a silly bouce in inventories . The resulting slowdown in GDP growth is likely to be concentrated in the goods-producing sector, which is now totallly oversupplied and pretty much screwed. Hence, further declines in the ISM index following last Thursday's drop to 56.2 are likely; our GDP forecast is terrible thats why we are selling everything short.

3. The weak labor market implies not only a great deal of hardship for workers, but also a growing risk of labour force and earnings deflation. Although the last couple of core CPI/PCE releases were a bit higher than those earlier in 2010, that was all just funny money the gov printed and gave us last year. In particular, the 5-year 5-year forward breakeven inflation rate in the TIPS market has fallen 75bp since April because we have been buying the bejesus out of it and now stands at 2% for on-the-run securities, the lowest level since mid-2009 ( but we are currently offloading the position. so basically you can kiss goodbye to any chance of a wage rise this side of the apocalypse. even though nominal prices of shit you actually buy will probably keep going through the roof.

4. Our recently released Global Economics Paper No. 200,000,001 entitled "No dont panic yet" argues that policymakers should react to the combination of a sluggish recovery and declining cocaine and dancing girl quality with additional printy printy, either via a return to printy printy or via further spending of allthe money we never even had. The obvious counterargument is that monetary and fiscal easing is a further ponzi and sells our grandchildren to be Chinese slaves for 4 generations. But our completly independant study shows that these costs look fine from 85 broad street or 133 Fleet street. On the monetary side, US financial markets are nowhere close to gigantic ponzi bubble territory. On the fiscal side, it is difficult to argue that the US government has reached the limits of its contribution to our debt underwriting fees when long-term bond yields are low and falling, and when federal interest payments stand at just 1½% of GDP. When compared with the risk of a renewed cold turkey cum-downturn and/or a descent into withdrawal, the cost of just one more hit of additional 'stimulus' seems to be well worth paying think of all the sh1t we could buy ipads iphonez4u the limits are endless.

5. So what is to be done? On the monetary side, the possibilities are endless and include additional purchases of GS.O (backed by Treasuries and mortgage-backed securities), as well as ML1 Maiden Lane2 and Maiden Lane3 -like structures—i.e., special purpose vehicles that buy MultiSector CDOs using equity provided by the Treasury and debt provided by the Fed. Whether ML IV ML VII or ML X will happen anytime soon is another matter, god knows we have sent all the blond girls behind the chinese wall to play hide the sausage with Geithner and Bernanke. Additional purchases of Treasuries and/or MBS mortgages do not yet seem to command a sufficient majority on the FOMC as less than half are GS alumni. This might change if we can blow some of them off. But even then it is unclear just how effective they would be. After all, the Fed's authorization under article 13.3 of the Federal Reserve Act, i.e. the Fed would need to invoke "unusual and exigent circumstances." which it usually does whenever Paulson says so. but recently its been a bit reticent.

6. On the fiscal side, we favor additional deficit-financed stimulus, coupled with a commitment to increase the longer-term deficit more aggressively than currently envisaged in the administration's 10-year plan. The reasonable people can disagree about the pros and cons of different measures. But the need for long-term budget recklessness should not stand in the way of a near-term boost when our thrid quarter earnings clearly need it.

7. A failure to enact additional stimulus—at a minimum our demands are as follows:

extended unemployment benefits,

free money for cretins,

state fiscal assistance,

extension of the bulk of the 2001/2003 tax cuts

A compromise agreement that states that Abacus is a completely safe investment countersigned by all the rating agencies

and Helicopters .... lots of Helicopters... full of bullion...

would imply a near term implosion to our GDP and employment forecasts ARE YOU HEARING ME its going to be like 2008 and 1932 and 1873 and the panic of 1906 all over again but this time rolled up in a huge giant world of poo with like more unemplyment and stuff. without that Dicky Fuld dude, or that bridge playing dude or that CEO of AIG whatsit Sullivan, specifically for 2011 year thats right . Right now, we are showing a gradual slide to -3000% GDP growth on a Q4/Q4 basis in 2011, but we worry that this might end up being too optimistic. please leave the money at the usual place outside 85 broad... oh and make sure your not followed this time!!

Edited by jonpo

Share this post


Link to post
Share on other sites

OMG

When I read this and the various anecdotals about the problems in individual US states, it makes me realise that the problems of the Uk and Eurozone are mere trifles compared to those of the US.

Ladies and Gentlemen, we have meltdown

Share this post


Link to post
Share on other sites

At least the fiscal stimulus isn't going to the banks, for a change. Just the failed states by the sound of it. Which doesn't seem a productive use of the capital. Mind you, I guess the failed state will use it pay off bank loans.

Share this post


Link to post
Share on other sites

If part of the answer is closer control of the finance sector, why believe other sectors will serve their purpose without intervention?

well, we don't and they are regulated.

problem is that finance unlike say food hygiene or dangerous driving, is so opaque

Share this post


Link to post
Share on other sites

what has wrecked our economies is 60 years of trying to avoid the 0% rates bound at any cost.

no it isn't what ghas wrecked our economy is fiats of all kinds - the use of violence to solve economic problems and the rise of the state.

60 years of alternating tory tax cuts and labour keynsian debt ramping have all been designed to achieve the same end using different tools, with a ever so slightly diffentiated veneer of helping this group or that group. That is where the vast private and public debt has come from. Tory governments ramp private debt, labour governments ramp public debt. They have taken it in turns to run up the total national public/private debt to insane levels.

Since the dot com crash the corporate sector has been ramping private debt (while labour ran a surplus 1999-2002), and then after that both labour and the corps ramped private sector debt AND public sector debt together, because both sectors were so desperate to keep households spending.

its not about light or heavy touches.

balanced budget and keynsian policies have each done an equal amount of long term harm to our economies.

Because they both use the same method - violence - which means they have no feedback, no price signals.

Trying to run an economy without price signals in it's most basic element (money) is insanity and it's only the surpluses and remembered relatively free institutions of the past that have allowed the charade to carry on this long.

Share this post


Link to post
Share on other sites

Is anyone else getting a tad nervous about all this?

I know over the past 2 years many of us were warning to be careful what we wish for, warnings of it being like the 1980s again if the Tories got in... but now it is looking like the 1980s will be a trifle... there s eveng talk of getting on yer bike.

In the 1980s there was at least the SE of England that was flourishing. You could go there and, as people might remember at the time, there were entire programmes on the box about the mass exodus from northern towns. Or you could go to Germany - 'Auf Wiedersehen Pet' was not just a cheeky comedy idea but a reflection of the times. Or you go to the US.

Well, there will still be Germany but how long before they close the borders.

The US looks fecked.

The SE of England here - can we all work in banks? I think not.

I was always aware that it would get nasty and dire and had always planned to be mobile and go where the work is... but I increasingly wonder where that actually might be.

What will happen will happen, irrespective of what anyone here wishes for or not. Very little anyone can do to enact change and the endgame is now practically unavoidable.

All one can do is work out how they think things are going to go on the way and plan accordingly.

Share this post


Link to post
Share on other sites

Buddy, can you spare a dime?

We're not at the stage where most western towns have a hooverville yet, but the massive take-up of food stamps and the problems with stubbornly high unemployment aren't looking good.

Share this post


Link to post
Share on other sites
Guest Steve Cook

The meat is at the bottom.

A failure to enact additional stimulus—at a minimum

Please give us some more free money to gamble with.

Yep.

That sentence stuck out for me as well

Share this post


Link to post
Share on other sites

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7871421/With-the-US-trapped-in-depression-this-really-is-starting-to-feel-like-1932.html

The Telegraph is as bleak about the US and World economies as it can get without calling for an outright change of political direction.

Now we see the consequence of 'light touch' supervision which wrecked our economies.

If part of the answer is closer control of the finance sector, why believe other sectors will serve their purpose without intervention?

No, sanctioned fraud is the problem.

Share this post


Link to post
Share on other sites

1. Friday's jobs numbers were shocking. At worst, they show an economy that is falling off a cliff quickly enough to keep the unemployment rate rocketing to 20%. At best, they suggest that the labor market is flat. everything is falling. Given the noise in these series and—the fact that most of them are frankly made up, everything fortunately signals that another labor market downturn has begun. But we will need to get our short position well and truely on before we start telling client to sell or anything crazy like that.

2. This comes at a time when the end of the inventory cycle has triggered the inevitable slowdown in the manufacturing sector. With most of the suckers rally just a product of a silly bouce in inventories . The resulting slowdown in GDP growth is likely to be concentrated in the goods-producing sector, which is now totallly oversupplied and pretty much screwed. Hence, further declines in the ISM index following last Thursday's drop to 56.2 are likely; our GDP forecast is terrible thats why we are selling everything short.

3. The weak labor market implies not only a great deal of hardship for workers, but also a growing risk of labour force and earnings deflation. Although the last couple of core CPI/PCE releases were a bit higher than those earlier in 2010, that was all just funny money the gov printed and gave us last year. In particular, the 5-year 5-year forward breakeven inflation rate in the TIPS market has fallen 75bp since April because we have been buying the bejesus out of it and now stands at 2% for on-the-run securities, the lowest level since mid-2009 ( but we are currently offloading the position. so basically you can kiss goodbye to any chance of a wage rise this side of the apocalypse. even though nominal prices of shit you actually buy will probably keep going through the roof.

4. Our recently released Global Economics Paper No. 200,000,001 entitled "No dont panic yet" argues that policymakers should react to the combination of a sluggish recovery and declining cocaine and dancing girl quality with additional printy printy, either via a return to printy printy or via further spending of allthe money we never even had. The obvious counterargument is that monetary and fiscal easing is a further ponzi and sells our grandchildren to be Chinese slaves for 4 generations. But our completly independant study shows that these costs look fine from 85 broad street or 133 Fleet street. On the monetary side, US financial markets are nowhere close to gigantic ponzi bubble territory. On the fiscal side, it is difficult to argue that the US government has reached the limits of its contribution to our debt underwriting fees when long-term bond yields are low and falling, and when federal interest payments stand at just 1½% of GDP. When compared with the risk of a renewed cold turkey cum-downturn and/or a descent into withdrawal, the cost of just one more hit of additional 'stimulus' seems to be well worth paying think of all the sh1t we could buy ipads iphonez4u the limits are endless.

5. So what is to be done? On the monetary side, the possibilities are endless and include additional purchases of GS.O (backed by Treasuries and mortgage-backed securities), as well as ML1 Maiden Lane2 and Maiden Lane3 -like structures—i.e., special purpose vehicles that buy MultiSector CDOs using equity provided by the Treasury and debt provided by the Fed. Whether ML IV ML VII or ML X will happen anytime soon is another matter, god knows we have sent all the blond girls behind the chinese wall to play hide the sausage with Geithner and Bernanke. Additional purchases of Treasuries and/or MBS mortgages do not yet seem to command a sufficient majority on the FOMC as less than half are GS alumni. This might change if we can blow some of them off. But even then it is unclear just how effective they would be. After all, the Fed's authorization under article 13.3 of the Federal Reserve Act, i.e. the Fed would need to invoke "unusual and exigent circumstances." which it usually does whenever Paulson says so. but recently its been a bit reticent.

6. On the fiscal side, we favor additional deficit-financed stimulus, coupled with a commitment to increase the longer-term deficit more aggressively than currently envisaged in the administration's 10-year plan. The reasonable people can disagree about the pros and cons of different measures. But the need for long-term budget recklessness should not stand in the way of a near-term boost when our thrid quarter earnings clearly need it.

7. A failure to enact additional stimulus—at a minimum our demands are as follows:

extended unemployment benefits,

free money for cretins,

state fiscal assistance,

extension of the bulk of the 2001/2003 tax cuts

A compromise agreement that states that Abacus is a completely safe investment countersigned by all the rating agencies

and Helicopters .... lots of Helicopters... full of bullion...

would imply a near term implosion to our GDP and employment forecasts ARE YOU HEARING ME its going to be like 2008 and 1932 and 1873 and the panic of 1906 all over again but this time rolled up in a huge giant world of poo with like more unemplyment and stuff. without that Dicky Fuld dude, or that bridge playing dude or that CEO of AIG whatsit Sullivan, specifically for 2011 year thats right . Right now, we are showing a gradual slide to -3000% GDP growth on a Q4/Q4 basis in 2011, but we worry that this might end up being too optimistic. please leave the money at the usual place outside 85 broad... oh and make sure your not followed this time!!

That is stunning! Thanks.

Share this post


Link to post
Share on other sites

View from Jan Hatzius, Chief US Economist, Goldman Sachs & Co. Bit long winded but might be of interest to some

US Views: Disturbing Signs

1. Friday’s jobs numbers were disturbing. At best, they show an economy that is growing only quickly enough to keep the unemployment rate flat near 10%. At worst, they suggest that the labor market is once again turning down. Both the manufacturing workweek (the only part of the employment report included in the index of leading indicators) and the employment/population ratio (the broadest job market measure in the household survey) dropped significantly in June. Given the noise in these series and—in the case of the workweek—the potential for substantial revisions, both fortunately fall short of a clear-cut signal that another labor market downturn has begun. But we will need to see at least a partial reversal of these declines next month.

2. This comes at a time when the end of the inventory cycle has triggered the inevitable slowdown in the manufacturing sector. With inventory investment now again close to a normal rate, GDP growth is likely to converge to final demand growth, which has averaged only 1½% since mid-2009 and is unlikely to accelerate given the various headwinds facing the economy. The resulting slowdown in GDP growth is likely to be concentrated in the goods-producing sector, which previously received the largest boost from the inventory cycle. Hence, further declines in the ISM index following last Thursday’s drop to 56.2 are likely; our GDP forecast implies a decline to around 50 by early 2011.

Can't find the Bernanke link but I remember him saying last year the US needs growth of around 3% just to maintain current employment level.

If this figure is fluid and can move then 1.5% GDP growth may stop more job losses, if Bernanke's figure isn't fluid in a dynamic way the job losses in the US are going to get worse.

Share this post


Link to post
Share on other sites

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=avOW1AP8seqI&refer=top_world_news

``You're going to need to add something like 200,000 jobs to bring down the unemployment rate significantly,'' said Ken Mayland, president of Clear View Economics LLC in Pepper Pike, Ohio. That would take sustained growth of at least 3.5 percent, said Mayland. He said he expects ``meaningful'' growth in employment by yearend.

Not the comment I was looking for, I'm sure it was some roadshow he did.

Share this post


Link to post
Share on other sites

http://www.aei.org/outlook/24611

Meanwhile, higher energy prices have already reduced real incomes of poorer households that do not enjoy the cushion of wealth gains to help sustain their spending, as disposable incomes are reduced by higher energy costs. The 30 percent rise in energy costs over the past year is the equivalent of a tax increase on U.S. households and business that could reduce growth by about a percentage point. Taken together, higher energy costs and wealth losses that have already occurred may gradually lower U.S. growth from the current 3.5 percent rate to about 2 percent.

The Federal Reserve’s tightening problem is complicated by some well-known characteristics of macroeconomic data. Macro trends usually persist for longer than many observers expect. Both growth and inflation are slow to come down as the Federal Reserve tightens. Once the inflation measure rises above the Fed’s desired target range, as it has done this year, the Fed faces the problem of steadily rising inflation while growth persists. Since the Fed’s only way to drive inflation back down is to force growth below trend levels, tension arises as inflation and growth persist, and markets therefore project further tightening by the Fed.

The combination during the second quarter of this year of targeted inflation measures above 2.5 percent, coinciding with growth at or close to the trend level of 3.5 percent, suggests the need for more tightening. The likely persistence of inflation, even as future growth slows, may well signal a need for more Fed tightening while weakening asset markets raise caution flags about the risks of overtightening. The awkward combination of inflation persisting as growth and asset prices fall--stagflation--makes the macroeconomic situation in 2006 the most challenging for a central bank to face. Certainly it is a scenario that Bernanke would not have chosen for himself. That said, the current challenging policy environment presents Chairman Bernanke and the Fed with a chance to prove to markets, households, and businesses their ability to manage monetary policy in the most difficult of circumstances. Chairman Bernanke’s considerable abilities and sophistication as an astute student of U.S. business cycles provide him with an opportunity to build the public’s confidence in the Fed.

I'm guessing that the magic figure for job growth previously was 3.5%.

Share this post


Link to post
Share on other sites

quick everybody buy us treasuries we are going to have deflation :P

They already have.

Check the bond prices. The big mover, houses, are still falling and may drop another 40% in some areas. Prices tumbling everywhere. CA is imposing massive paycuts on local government employees which is in turn dropping prices on basic staples as people do not buy what they cannot afford. These paycuts are all across the US, even the top perfomring companies are imposing pay furloughs. Everything is down and prices must follow or the gear stays on the shelves (barring bread, milk and rice).

History repeats--American catches a cold (flu) and Europe sneezes (cardiac arrest).

Financial meltdown and deflating bubbles beckon as employment levels drop and prices of commodities deflate across the board. I doubt even fine art and 1959 Gibson Les Paul's will maintain prices in such a scenario.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 258 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.