Tuesday, Sep 01, 2015

Forget interset rate rises - the Fed is bluffing

Counterpunch: Return to crisis : Things keep getting worse

With US stock, bond and real estate markets all looking over-valued, at the same time (in 1929 it was only stocks) and investors fleeing stock and bonds, interest rate rises are out. Corporations need to borrow to manipulate stock-markets upwards via buy-backs, banks need to protect the value of securities on their books - kept up by low IRs, and the last thing corporations with declining earnings and revenues need is to divert more cash to debt servicing.

Posted by icarus @ 06:19 PM (5113 views)
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19 Comments

1. killer bunny said...

Except Govt Bonds aren't over priced

Wednesday, September 2, 2015 05:50AM Report Comment
 

2. libertas said...

Lets be clear, things ARE NOT GETTING WORSE in USA. GDP just printed at 3.7%. Things ARE getting better.

HOWEVER, deflationary headwinds mean that this growth will not result in an inflationary cycle. Thus, this time it is different. USA and UK exported much of its heavy industry to China right about the time that new technology begins to make it less relevant, i.e. they were double crossed. "Throw me in that briar patch"

We now get to import all this stuff at pennies on the pound, whilst China and similar become literal slave colonies whilst extraction and heavy industrial process continue to both expand production and contract in terms of profitability, whilst technology progressively reduces the need for labour.

I had always wondered how China could maintain such high economic growth. But now we are taking that mantle and are likely to have high economic growth for a prolonged period of time without it causing over-heating, because next time we need more coal, there will be no domestic miners strike. Yes, we do rely on some industries like trains, but even they are going driver-less over the next 50yrs.

Wednesday, September 2, 2015 06:18AM Report Comment
 

3. reticent said...

@2 So US/UK are the new China? What fantastic news! All this stuff about our productivity fallen behind even Europe has me worried for a bit there.

There is one problem, however...


Where will we find a leader to navigate this new and confusing economic landscape? Someone with the vision to see these trends coming, ideally with a good grasp of how to plan a town but the good sense to know that government needs to get out of the way?

Where, I ask you?

Wednesday, September 2, 2015 06:52AM Report Comment
 

4. mister ed said...

I hear that many visionary entrepreneurial leaders are to be found working in local governement. I think the search should start there.

Wednesday, September 2, 2015 07:09AM Report Comment
 

5. Daveysmith said...

@2 - yeah you can get iPhones for 10p in china!

Wednesday, September 2, 2015 07:22AM Report Comment
 

6. libertas said...

Reticent, the economy does not need a leader. "Leaders" tend to follow in actual fact, and rather, needs somebody to not get in the way.

Wednesday, September 2, 2015 08:39AM Report Comment
 

7. icarus said...

@2 - first line. Government statistical sleight of hand. See

http://www.shadowstats.com/alternate_data/gross-domestic-product-charts

Wednesday, September 2, 2015 08:40AM Report Comment
 

8. mister ed said...

now we are taking that mantle and are likely to have high economic growth for a prolonged period of time without it causing over-heating, because next time we need more coal, there will be no domestic miners strike. Yes, we do rely on some industries like trains, but even they are going driver-less over the next 50yrs.

That must be one of the best Libbyballs youve come up with for a while. I can see the lower-strength meds are allowing your natural creativity to show through.

This was especially good: next time we need more coal, there will be no domestic miners strike

Sure, the next time we need more coal there will be no strikes because we no longer have any coal mines and so it will be really easy to get all the coal we need.

I suppose you could also say that now we are no longer the undisputed leader in civil nuclear power production due to the selling of the government-owned CEGB, it will be really easy to buy our electricity from France and pay the Chinese to build our new nuclear power stations instead of us selling our expertise to the rest of the world and making billions from it.

Just get those UK state-owned industries out the way and then we can buy stuff from er state-owned industries in other countries.

Its Libbynomics in action again.

Wednesday, September 2, 2015 09:13AM Report Comment
 

9. mark said...

so let me get this right GOVERNMENTS DON'T FUDGE FIGURES yes? UK and USA are honest just like china and things can only ever go up yes?

OK then everythings hunky dory :)

just like the three legged dog :)

Wednesday, September 2, 2015 10:15AM Report Comment
 

10. reticent said...

"Where will we find a leader to navigate this new and confusing economic landscape? Someone with the vision to see these trends coming, ideally with a good grasp of how to plan a town but the good sense to know that government needs to get out of the way?"

"Reticent, the economy does not need a leader. "Leaders" tend to follow in actual fact, and rather, needs somebody to not get in the way."

Hang on a second...

Wednesday, September 2, 2015 10:17AM Report Comment
 

11. britishblue said...

L @2. 'things are not getting worse'.
This depends whether you live in the 'real world' or the 'surreal world'
In the surreal world where I live interest rates are at a 300 year low because of the weakness of the world economy, Policies that were laughed at as Zimbabwean are now common practice around the world. The cost of money has blown asset bubbles all over the world with a massive divergence in the wealth of the rich and the poor. Alternative political parties are springing up all over the globe and the war zones around the world are increasing and conflicts that would have been unimaginable 10 years ago, like USA versus China in the south China sea, conflict with Russia, etc are now as mainstream military talk as QE.

We live in times like no other. and we simply don't know what is going to be around the corner. what we do know however is that asset bubble bursts in time of crisis. There are now more candidates for a worldwide crisis than ever before.

Wednesday, September 2, 2015 10:18AM Report Comment
 

12. hpwatcher said...

Lets be clear, things ARE NOT GETTING WORSE in USA. GDP just printed at 3.7%. Things ARE getting better.

That's only your [misguided] opinion.

Numerous indicators are saying you are wrong in that belief. And it is pure belief......

Its Libbynomics in action again.

Just like one of the deluded contestants on the X-Factor, absolutely no sense of doubt.

Wednesday, September 2, 2015 10:42AM Report Comment
 

13. jack c said...

China GDP figures are taken with a pinch of salt by the UK fund management industry. As a general rule of thumb they divide the 'official' figure by 4

Wednesday, September 2, 2015 10:56AM Report Comment
 

14. britishblue said...

Jack @12. 'as a rule of thumb they divide the official figure by 4'
That was when China was booming. I imagine that the figure will be increasing now. Something like 58% of GDP is government spending There are only so many more empty cities that can be built. China used more concrete in 2 years than America did in 100, China maxed out.

Wednesday, September 2, 2015 11:30AM Report Comment
 

15. icarus said...

@bb - "There are only so many more empty cities that can be built. China used more concrete in 2 years than America did in 100". So, on to the C-PEC, the 3,000 km, 21st century "silk road" with added railways and pipelines.

Wednesday, September 2, 2015 01:05PM Report Comment
 

16. mark said...

maybe all the refugees could travel to china, they have empty cities which could house millions - all ready to move in

Wednesday, September 2, 2015 01:28PM Report Comment
 

17. icarus said...

mark - no, the houses in empty Chinese cities are investment vehicles which would lose value if they were filled in this way. Surely we could house them in the big, empty, posh new buildings in London. Oh, wait a minute.......

Wednesday, September 2, 2015 01:35PM Report Comment
 

18. jack c said...

Maybe the refugees could dismantle the empty cities and re-cycle the materials. The Chinese could then say those Syrian so and so's are stealing our jobs !

Wednesday, September 2, 2015 01:37PM Report Comment
 

19. hpwatcher said...

HOT off the press:-

US Recession Looms As Factory Orders Plunge 9th Month In A Row
US Manufacturers saw new orders rise at a modest 0.4% in July (missing expectations of a 0.9%). However, year-over-year Factory Orders crashed 14.7% (thanks in large part to last year's Boeing order dropping out of the cycle). But even ex-Transports, New orders tumbled 0.6% in July and plunged 6.9% YoY. This is the 9th month in a row of YoY drops and is without doubt signalling an imminent US recession.

Wednesday, September 2, 2015 02:15PM Report Comment
 

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