Dreams of Shiny New Economies Didn't Dance in Their Heads
I share Rob's admiration for Seth Godin, but his recession forever post may have helped signal one of those weird days on the market that keep you wondering. Good economic data made the market go up for, oh, about 8 minutes. Then it turned around and headed south. Bank of America couldn't keep its website online. Morgan Stanley couldn't shake the market's fear that they've exposed themselves too much to Europe. American Airlines got hit with a bankruptcy rumor and lost a third of its value. And Europe? Well, when Larry Kudlow tweets this...
If Europe/Troika doesn't ring fence/guarantee all bank debt and deposits and debt, then holy hell will break out.
...you'd better listen. He doesn't panic much.
I mean, a burning chemical plant in Dallas gets barely any notice, even after it causes an elementary school to evacuate. How bad are things when "kids fleeing toxic chemicals" stories can't even make it on Memeorandum?
This bad: Greece said over the weekend they couldn't hit their deficit targets (to the surprise of absolutely no one.) The EU is not currently following Larry's advice, instead delaying a decision on the Greek bailout until November. You can't blame them -- they can't even go inspect the books of the Greek government because government workers are holding sit-ins around the country to prevent them. A Belgian bank, Dexia, is about to croak under the weight of the impending Greek default. That might, might make them move faster, but it appears not. All the countries that had to vote on the bailout last week did so, but Slovakia isn't until the 17th, so it appears the Europeans will tarry a while longer trying to get private investors to eat a bigger chunk of the loss rather than pass them on to taxpayers. Good luck with that.
Elsewhere, Asian stocks opened much lower and the Chinese are currently angered over the Senate's moving on the currency bill. I wonder how Seth (or Rob) fit a trade war into their view?
It's getting harder and harder to hold the view that a second recession isn't an even-money proposition. Too many things happening outside the US for us to just slide by. And if all the above won't sober you, perhaps this number will:
$14,790,340,328,557.15
That was the closing U.S. federal debt on Sept. 30. Have a nice night.
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Aug '11
Re: Dreams of Shiny New Economies Didn't Dance in Their Heads
Thanks King, that plus the "Waiting for Princip" post oughta take care of that "falling to sleep too easily" problem I've been having lately!
Jul '10
Re: Dreams of Shiny New Economies Didn't Dance in Their Heads
The world is in a sorry state.
May '10
Re: Dreams of Shiny New Economies Didn't Dance in Their Heads
And let us not forget the somewhere between or around $85,000,000,000,000 to $100,000,000,000,000 of unfunded liabilities to be supported by our $14,500,000,000,000ish economy. The fact we can not put an accurate number to the liabilities is a pretty good indication of where we stand.
There appears to be a reckoning coming for the irresponsible fiscal behavior of much of the world for the last 40ish years.
Sep '10
Re: Dreams of Shiny New Economies Didn't Dance in Their Heads
While Greece fails to meet it deficit targets, the US has no deficit targets to meet and no one bothers to mention that this is probably not a good way to run a country. I would say your projections of another down turn are low and your description mild. Total world debt remains dangerously high. Aggressive fiscal and monetary policy has failed to inflate any of it away. Guessing what the market will do is a fool’s game and so I’ll play. Judging from put action and volume I would say we are near a temporary low and might well enjoy a few months of relatively positive but volatile price action before a steep sell off that may well make 08-09 look like child’s play. Most of the debt is denominated in dollars which means steep appreciation of our currency well accompany the selloff. That is what is beng seen now. Being simple minded I have never understood how anyone could take seriously the idea that more debt could be a solution to problems caused by too much debt.
Jun '11
Re: Dreams of Shiny New Economies Didn't Dance in Their Heads
Indexes are breaking down out of well defined bear flags. Economic strength stocks (try APD and CAT) are looking to plunge. Will we have to revisit the '08-'09 lows to finish off this phase? Short term it is going to get brutal.
The silver lining is that the markets, not political rhetoric, are the primary driver of the new hope and change which has everything to do with deficit reduction and the restriction of run-away government.
What the politicians have no will to accomplish, the markets will gladly force upon them.
Apr '11
Re: Dreams of Shiny New Economies Didn't Dance in Their Heads
We round out the evening with this simple SAT-type exercise:
Oct 3, 2008: SPX=1099.23; VIX=45.14 is to Oct 3, 2011: SPX=1099.23; VIX=45.45
as
Oct. 10, 2008: SPX=899.22; VIX = 69.95 is to ....
Courtesy of Zerohedge
Dec '10
Re: Dreams of Shiny New Economies Didn't Dance in Their Heads
Tying the Battleship Iowa's anchor around somebody's neck and them telling them to jump in and swim is a little rough don't you think. You lay out the facts well but what positive suggestion do you have as a remedy other then mass suicide. Have a tough morning.
Dec '10
Re: Dreams of Shiny New Economies Didn't Dance in Their Heads
Viator: We round out the evening with this simple SAT-type exercise:
Oct 3, 2008: SPX=1099.23; VIX=45.14 is to Oct 3, 2011: SPX=1099.23; VIX=45.45
as
Oct. 10, 2008: SPX=899.22; VIX = 69.95 is to ....
Courtesy of Zerohedge · Oct 4 at 5:50am
Since it's not yet Halloween, should you be scaring the kids with this stuff. If we were only in a Ground Hogs Day loop, then the future for our economy wouldn't be so horrifying. A Ground Hogs Day replay is probably our very best case scenario.
Re: Dreams of Shiny New Economies Didn't Dance in Their Heads
Well, a trade war would be the end. It would be a murder-suicide pact.
The non-stated policy of most economic blocs, like the Eurozone, is to shuffle things around, delay, kick the can down the road, and hope that something good happens in whatever time they can buy themselves. What we have now is a market that accepts bad times in the short term but believes growth will return in the long term. So it's a matter of getting long term capital reinvested.
The trouble is, the longer this thing drags out, the less confident the market becomes in growth at any time. The central bankers in Europe (and here) keep trying to mitigate the short term pain of the recession. But maybe what we needed was a good sharp collapse, clear the decks, unwind the bad debts, and live in winter for a bit. All of this intervention -- bailouts, restructurings, etc. -- has only prolonged the recession. And the longer the recession lasts, the less confident we are about long term prospects.
Dec '10
Re: Dreams of Shiny New Economies Didn't Dance in Their Heads
Rob Long: Well, a trade war would be the end. It would be a murder-suicide pact.
The non-stated policy of most economic blocs, like the Eurozone, is to shuffle things around, delay, kick the can down the road, and hope that something good happens in whatever time they can buy themselves. What we have now is a market that accepts bad times in the short term but believes growth will return in the long term. So it's a matter of getting long term capital reinvested.
The trouble is, the longer this thing drags out, the less confident the market becomes in growth at any time. The central bankers in Europe (and here) keep trying to mitigate the short term pain of the recession. But maybe what we needed was a good sharp collapse, clear the decks, unwind the bad debts, and live in winter for a bit. All of this intervention -- bailouts, restructurings, etc. -- has only prolonged the recession. And the longer the recession lasts, the less confident we are about long term prospects. · Oct 4 at 11:14am
+1 on all of that ... and rollback the avalanche of toxic and lethal government regulation.
Dec '10
Re: Dreams of Shiny New Economies Didn't Dance in Their Heads
I remember the winter of 1978. Debt pulling us down. 21% interest rates. 11% inflation. Savings & Loan Scandal. Foriegn competition killing us. The childish unions screaming for pay raises (they were already at $35/hr which would be $150/hr now plus time and half plus medical plus paid vacation). The Major Idiot #1 (Jimmy Carter) was babbling away about the environment and "malaise". Three Mile Island. Heaviest snow in 50 years on the interstate. Independent truckers abandoned their wrecked brand new rigs. It looked like a herd of dead buffalo carcasses.
When Ronald Reagan took over it was like some old cowboy movie. The stage coach horses were spooked and with the bit in their teeth were galloping toward the precipice. The hero climbs out of the coach up the side and leaps onto the first horse of the team. Standing on the first horse he leaps to the lead horse. Now he can grab the reigns of the lead horse and bring the runaway team to a halt just in the nick of time.
Boy, I wouldn't mind watching a sequel to that movie.
Nov '10
Re: Dreams of Shiny New Economies Didn't Dance in Their Heads
Rob Long: Well, a trade war would be the end. It would be a murder-suicide pact.
But maybe what we needed was a good sharp collapse, clear the decks, unwind the bad debts, and live in winter for a bit. All of this intervention -- bailouts, restructurings, etc. -- has only prolonged the recession. Oct 4 at 11:14am
Isn't that essentially what Ms. Gelinas advocates in her book, earlier discussed in this venue?
May '10
Re: Dreams of Shiny New Economies Didn't Dance in Their Heads
James, Its difficult to craft a solution without first an honest analysis of the problems faced. To date, the vast majority of the media and "political leadership" have steadfastly refused to do this, or even permit it to be done. If people do not understand the scope and depth of the problems, one can not expect them to support remedies of the magnitude required to resolve them.
We are way past the time for easy or palatable solutions. As Rob has said above, we need to do the right things, suffer the pain and get it behind us & then grow forward. This is exactly the opposite of our current course.
At least (and surprisingly) in Europe, the debate is becoming more honest than our own.
Dec '10
Re: Dreams of Shiny New Economies Didn't Dance in Their Heads
Europe is the problem. America is the solution.
1.) The super external lie of global warming/environmental obsessionism must stop. For 35 years I have watched it eat away at global productivity & global wealth. It is most cruel to the poor as they spend the majority of their income on the basic commodity goods and services that are most inflated by these useless regulations.
2) The super internal lie of quota based affirmative action must stop. For 40 years I have listened to this legally enforced PC doctrine destroying the American intellect. It corrodes all of the best institutions, the media, and the arts. The leadership of fools is the result and now in the midst of a great crisis we must pry the greatest fool of them all out of 1600 Pennsylvania Ave.
3) Public Enemy Number 1 is the Public Employee Unions. Public Enemy Number 2 is the Entitlement Society including the entitlement of illegals! So far 83% of Doctors oppose ObamaCare, thank Gd. We must torpedo ObamaCare before it drowns us in a tsunami of cost.
Time to cross the Delaware and attack the Hessians. We need somebody standing up in the boat!!!
Edited on Oct 5, 2011 at 9:40pm