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Clueless_Academic

Does History Repeat Itself ?

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How do other members think the Global economy will play out over next 2 years? Are we heading for Inflation, deflation, or stagflation in US / EU / Japan ? Could we be caught in a continuing 'Supercycle' where we witness a rapid transfer of 'Wealth' from mature economies to BRIC's ?

Looks as if mature economies are about to cede their dominant position in the Global Economy due to 'drag' effect of inefficient post war state expenditures and resource allocation on building a pure 'Services' based economies to the detriment of private sector industrial production, innovation, R&D, etc.

Hence are mature economies now fated to become passive consumers of finite resources in direct competition with BRIC & other developing Nations ? Can you appreciate the potential 'Resource Wars' which could follow as the mature economies try to maintain their dominant positions in a post oil era ?

Couple peak oil & peak food with 'Global Warming' scenarios and you conclude the only future game in town will be wholesale conversion of the Global Economy from oil derived energy to substitute forms like nuclear & renewables -

Considering that the majority of rare earth minerals needed for 'Green' & non-oil technologies are located in BRIC regions like China, we can conclude that mature economies may not benefit directly from the next upwave expansion based on clean energy systems, as they will be passive consumers and not active producers and innovators due to lack of strategic materials.

Question is, have we forevermore been denied the cabability of constructing a society capable of surviving this new Global Environment of the 21st Century due to lack of long term planning, foresight and investment ?

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Top economists: The second Great Depression has arrived - (http://www.helium.com/items/1933168-us-in-economic-great-depression)

David Rosenberg, market guru, has officially declared that the US economy is in a state of depression, and he sees the economic superpowers woes worsening.

On the heels of that bleak forecast, the statistics for existing home sales for July were released and the numbers were ugly. The weak housing market collapsed. Reflecting the worst slump in American history, existing housing sales had plummeted a stunning 27 percent and there's no sign on the horizon that sales will stabilize any time soon.

The bottom line, argues Rosenberg and others: the US economy has collapsed into another Great Depression.

Citing the period from 1929 to 1932 and the eerie similarities, Rosenberg said, "We may well be reliving history here. If you're keeping score, we have recorded four quarterly advances in real GDP, and the average is only 3 percent." The same happened during the early 1930s stock market rebound of 50 percent after the 1929 crash.

The Great Depression followed the brief economic upswing.

As long as two years ago, one of Britain's top economists predicted a decade-long depression, $45 trillion in debt defaults and unemployment in the US and UK approaching 25% or higher.

During October 2008, economist Fred Harrison told the Foreign Press Association in London,""The massive contraction in demand caused by this 'wealth effect' will condemn the western economy to a decade-long depression."

Like some economists who alerted the Clinton and Bush administrations about the approaching economic crisis, Harrison warned future Prime Minister Gordon Brown of the looming financial danger when Brown was appointed Chancellor of the Exchequer in 1997. Brown, like Presidents Clinton and Bush, ignored the warning.

"Brown blames America for the global crisis. But every country in the world permitted property speculation, which is at the heart of boom/busts. Brown now defends himself by claiming that he tried to get global agreement on a stabilization plan. But he failed to tell the other governments about the tax reforms that could have prevented the crisis," Harrison explained in his speech in London.

Two years later, more economists agree with Harrison. Such luminaries as Arthur Laffer and Paul Krugman are two. Although at the opposite ends of the political spectrum, both see dire times ahead for the United States: higher unemployment, a worsening of the credit crisis and housing slump, more loan defaults, more business failures and more foreclosures. Add to this economic witch's brew the possibility of simultaneous currency deflation and inflation and you have every ingredient necessary for another extended Great Depression.

In fact some economists have begun using the term, Great Depression II.

Harrison concurs and believes that the situation has become so serious that whole nations could fail and something unseen in the West for hundreds of years could appear again: wholesale starvation of peoples in some Western countries.

Back in 2008, Spectator Business reported that "Harrison's predictions earned him the epithet 'Prophet of Doom' until his forecasts proved correct. He is now described as 'the canary in the housing mine…(his) prediction is chilling: Nostradamus...could scarcely have been more accurate."

On the other side of the pond, in the US, sits Arthur Laffer. The author of several important books on economic theory including his latest, "Return to Prosperity: How America Can Regain Its Economic Superpower Status," Laffer was also an adviser to the Reagan Administration during the 1980s and a member of the Economic Policy Advisory Board.

His economic models have been proven to work and withstood the test of time. Now Laffer has declared that the US economy is heading for a very big fall early in 2011.

The economist, best known for his economic model called the 'Laffer Curve," came to national prominence when his model was adopted by Ronald Reagan in an effort to turn the economy around after the disastrous economic policies of Jimmy Carter.

Back in the late 1970s the media kept track of 'the misery index' an informal gauge of inflation, stagnation and taxation that put a damper on the economy for years. Laffer's recommendation—to cut federal taxes significantly and roll back the rate of government spending—was employed in 1981 after Carter's bid for a second term was roundly routed by an angry American electorate.

Laffer's 'prescription' created an economic boom that carried into the Clinton presidency. It also surprised many critics of the model when it achieved what Laffer had predicted: higher revenues to the treasury despite the deep tax rate cuts.

Now Arther Laffer has analyzed the direction of the federal government over the past two years and hears alarm bells going off. The savvy economist has studied the potential impact of the historic debt, an economy hovering just above a depression, and the building pressure to raise interest rates when inflation rises in the future, and compares the ship of state to the Titanic.

"Today's corporate profits reflect an income shift into 2010. These profits will tumble next year, preceded most likely by the stock market," writes Laffer in the Wall Street Journal article, Tax Hikes and the 2011 Economic Collapse.

Laffer calls attention to the one thing that has kept the economy partially afloat, as poor as the economy has been: the Bush tax cuts. When they expire (on January 1, 2011), "federal, state and local tax rates are scheduled to rise quite sharply." Dividend tax will skyrocket from 15 percent to a whopping 39.6 percent, the capital gains tax will increase 25% and the estate tax will jump from zero to 55 percent.

These taxes—a triple whammy to the economy—will serve to further depress business growth and hiring, depress real estate further and add an even greater burden on the ability of the consumer to spend discretionary income, which will sink like a rock. To all that must be added the re-introduction of the infamous "marriage penalty" that could lead to more home foreclosures.

If all that is not bad enough, tax rates will be raised further on income earned outside the US, payroll taxes will rise in 2013 squeezing the middle-class wage earner more, the alternative minimum tax will affect people at lower income levels and taxes are scheduled to be imposed on so-called "Cadillac health care plans."

Nobel Prize winning Paul Krugman, a liberal economist, concurs, but for different reasons. He believes the federal government has not spent enough fast enough. Much of the so-called "stimulus money" authorized by Congress is languishing, unspent. Some hundred billion went to dubious projects and grants designed to stimulate nothing.

Krugman is furious. Writing in a New York Times OpEd piece recently, he condemned the current administration's economic policies and predicted a Second Great Depression. He also raised a rather bellicose alarm against Treasury and other responsible for US monetary policy—including the Fed. Krugman is convinced that tens of millions will never find work again and the economy will worsen in 2011 and 2012.

All economic indicators echo 1929 - 1933

Finally, Robin Griffiths [http://www.financial-gurus.co m/gurus/9511/Robin-Griffiths/] devines the future economy from a technical market approach. Griffiths is a strategist at Cazenove Capital who recently shared with viewers of CNBC that "the world has entered significant financial depression."

According to Griffiths “Equities are for losers and bond markets for winners. Equities are simply for people who like losing money,” Griffiths said.

“A double-dip is inevitable and imminent, as Keynesian stimulus measures have never worked anywhere. We are in the equivalent of a Great Depression following 3 years of credit crisis,” he added.

Griffith has taken a seat at the economic banquet of scarcity, austerity and gloom. The entrees at that table offer very slim pickings indeed: charts depicting a 20-year economic downturn; zero growth; possible additional contraction; massive unemployment, and the imminent collapse of governments globally.

If all that's not enough, Griffiths points out that the United States' shrinking M3 money supply now matches the average decline seen from 1929 to 1933.

Despite the gloom and doom, it's best to remember that things could always be worse.

How? Well, an asteroid could hit Earth tomorrow...

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Nah we'll just pick up the toys where we left off in 1945 and go back to war again.

Except there are some iffy issues, all of the hightech toys of the western economies may not have fuel to run them. Which means a massive massive infantry war which turns into a massive meat grinder. Where China/India do well because most of their populations are expendable.

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The rate of productivity increases in the west is slowing. Without productivity growth there's no increases in general living standards. Add in growing inequality and for most people flat productivity actually means declining living standards.

The innovation engine that fired up with the industrial revolution has been losing momentum since the late 1970's. In other words the spread of computers and mobile phones didn't drive economies quite as vigorously as the earlier spread of motor cars and radio-telephony.

None of us knows what the future holds, maybe nano-technology or bio-engineering or some as yet undiscovered energy source will catapult productivity growth back up again. But right now the trend line is going in the other direction.

To put this in context, productivity growth of about 2.0-3.0% a year (the twentieth century "normal") meant western living standards roughly doubling every generation. But for all of recorded history prior to the industrial revolution productivity was no-where near as rapid, averaging only 0.02% per year. In other words living standards were virtually static across centuries, it's the last 250 years that's been the "blip"!

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The rate of productivity increases in the west is slowing. Without productivity growth there's no increases in general living standards. Add in growing inequality and for most people flat productivity actually means declining living standards.

The innovation engine that fired up with the industrial revolution has been losing momentum since the late 1970's. In other words the spread of computers and mobile phones didn't drive economies quite as vigorously as the earlier spread of motor cars and radio-telephony.

None of us knows what the future holds, maybe nano-technology or bio-engineering or some as yet undiscovered energy source will catapult productivity growth back up again. But right now the trend line is going in the other direction.

To put this in context, productivity growth of about 2.0-3.0% a year (the twentieth century "normal") meant western living standards roughly doubling every generation. But for all of recorded history prior to the industrial revolution productivity was no-where near as rapid, averaging only 0.02% per year. In other words living standards were virtually static across centuries, it's the last 250 years that's been the "blip"!

I would say it's even worse productivity growth has covered the money printing growth. Once that disconnects everyone is handling worthless paper.

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Nah we'll just pick up the toys where we left off in 1945 and go back to war again.

Except there are some iffy issues, all of the hightech toys of the western economies may not have fuel to run them. Which means a massive massive infantry war which turns into a massive meat grinder. Where China/India do well because most of their populations are expendable.

Britain is toast if it ever comes to infantry war, we have plenty of expendable cannon fodder (the Jeremy Kyle types) but not enough to have any impact against anyone else.

I do though predict escalations in conflicts all over the world whether it is Israel, Kashmir, Soviet States or one of the many sets of idiots who insist in killing each other in Africa seemingly the whole time.

There will be a big session various countries throwing their toys out of the pram in Europe but I think (and hope) we are well and truely beyond the killing people stage - though I can see conditions changing that would encourage some ethnic groups to move to places where their lifestyles are more accomodated Europe is shifting back to the 'Right' and immigration will become an even bigger issue as rsources dwindle.

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Britain is toast if it ever comes to infantry war, we have plenty of expendable cannon fodder (the Jeremy Kyle types) but not enough to have any impact against anyone else.

snip

says who?...Germany took on the whole of Europe.

and they nearly won.

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Britain is toast if it ever comes to infantry war, we have plenty of expendable cannon fodder (the Jeremy Kyle types) but not enough to have any impact against anyone else.

We could hurl some lardies at enemy troops.

Obviously we would need some kind of clever lardie hurling device to be produced but I am sure that the successors of R. J. Mitchell, Barnes Wallace and Alun Turing can come up with something :blink:

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If my old economic history tutor was still alive (sadly killed by an ice avalanche in the Himalayas in 1995) he'd say history does repeat itself. It's all cyclical, Kondratiev cycles/waves/whatever and all that. Guaranteed within 20 years there will be a sizeable academic industry focused on trying to explain this whole ******-up in terms of cycles and waves.

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  • 140 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%



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