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Kuros
Joined: 27 Apr 2004
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Posted: Sun Nov 07, 2010 8:12 am Post subject: The Recovery Thread |
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It has to happen at some point. The question is when.
The case for economic optimism in 2011
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Today, the jobs picture is a tug-of-war between the private and public sector. Private companies are tugging toward growth, adding an average of 111,000 jobs each month this year, nearly enough to keep up with population growth. But federal, state and local governments are contracting by 24,000 jobs a month.
While productivity inched up in yesterday's report, workers' output-per-hour has stalled in the last year. That sounds bad. Higher productivity points to higher living standards. But in a recession, we want productivity numbers to hit a ceiling. That means employers have run their current employees ragged and the only way to make more stuff is to hire more workers. More workers means lower unemployment and higher demand. |
I admit I'm a sucker for the productivity arguments. |
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mises
Joined: 05 Nov 2007 Location: retired
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Posted: Sun Nov 07, 2010 8:44 am Post subject: |
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Regarding jobs, remember the private equity bomb.
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I admit I'm a sucker for the productivity arguments. |
Why? US productivity has increased since the 70's and wages have declined and unemployment risen.
2011 is too early. It will be a year of hell in the real estate market. There will be more bank bailouts in 2011 too.
You are right in that there will be a recovery. 2012 at the earliest. This all depends on so many variables. What if the Fed blows emerging market/commodity bubbles? They will burst and then what.. |
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austrian123
Joined: 15 Oct 2010
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Posted: Mon Nov 08, 2010 12:18 pm Post subject: Re: The Recovery Thread |
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Kuros wrote: |
It has to happen at some point. The question is when.
The case for economic optimism in 2011
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Today, the jobs picture is a tug-of-war between the private and public sector. Private companies are tugging toward growth, adding an average of 111,000 jobs each month this year, nearly enough to keep up with population growth. But federal, state and local governments are contracting by 24,000 jobs a month.
While productivity inched up in yesterday's report, workers' output-per-hour has stalled in the last year. That sounds bad. Higher productivity points to higher living standards. But in a recession, we want productivity numbers to hit a ceiling. That means employers have run their current employees ragged and the only way to make more stuff is to hire more workers. More workers means lower unemployment and higher demand. |
I admit I'm a sucker for the productivity arguments. |
The only way for a recovery to happen is for the US to go into a deep painful recession where National debt and spending would have to be drastically and the US needs to reduce the size of the government. Also, the US needs to save and invest more and change it's service based economy to a goods producing economy. However, no president wants a painful recession during his term....so unfortunately this won't happen, and the FED will continue printing all this money and additional bail out packages will be paid to banks, states, and others in the criminal banking cartel.
The US and the world economy is F*ucked unless, it undergoes a fundamental change to the practices of sound money and true free market economics. Buy gold and silver.
Gold hit $1410 today...... |
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recessiontime

Joined: 21 Jun 2010 Location: Got avatar privileges nyahahaha
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Posted: Mon Nov 08, 2010 4:45 pm Post subject: Re: The Recovery Thread |
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austrian123 wrote: |
Gold hit $1410 today...... |
i noticed haha. I bought 5 ounces of gold at $1310 thinking might as well seeing how it was inevitable that it would skyrocket to 3000 or higher anyway. Now that I think of it though, I should of invested silver instead. Only bought 1kg of silver at $700.
You know where I hide my gold? At the bottom of my kitchens sugar packages.  |
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Nowhere Man

Joined: 08 Feb 2004
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Posted: Mon Nov 08, 2010 6:59 pm Post subject: ... |
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The only way for a recovery to happen is for the US to go into a deep painful recession where National debt and spending would have to be drastically and the US needs to reduce the size of the government. |
If economics were physics, I'd agree with you. It's not. It's a confidence game. |
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mises
Joined: 05 Nov 2007 Location: retired
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Posted: Mon Nov 08, 2010 7:08 pm Post subject: |
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It's a confidence game. |
Not it isn't. The US has been talking up the recovery and playing down the problems for 2-3 years now. The Atlanta Fed reported today that even their juked index is showing the US as having reentered contraction in October. Confidence is not the problem. Behavior economics is really overrated. Japan is not stagnant because Japanese people feel bad.
Though the society that gave us The Secret and the prosperity gospel deserves behavioral economics.
...
Here's an example of what I mean:
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How bad do you think it will get?
The opinions on this shift, but the Boston Consulting Group in late 2008 predicted that about 50% of the companies bought in leveraged buyouts would default on their debt. If half default, and they fire about half of their workers � not the most aggressive estimate � then you're talking about 1.9 million unemployed. |
http://www.time.com/time/business/article/0,8599,1942574,00.html
All the confidence in the world won't stop debt-bombs from exploding and ruining hundreds of thousands of jobs.
...
OKAY. That's all. Back to recovery talk.
http://www.marketnewsvideo.com/story/201011/mcdonald-s-same-store-sales-up-6-5-in-october-mcd-wen-yum-MCD110810/
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McDonald�s Same-Store Sales Up 6.5% in October
Monday, November 8, 1:56 PM ET
Fast food giant McDonald�s said today its global same-store sales rose 6.5% in October.
U.S. sales rose 5.6%, while European sale grew by 5.8%, and Asia/Pacific, Middle East and Africa sales were up 5.3%.
The company said the U.S. sales growth was due to its Monopoly game promotion as well as core products like Chicken McNuggets, McGriddles, the Big Mac and McCafe beverages. |
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Nowhere Man

Joined: 08 Feb 2004
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Posted: Mon Nov 08, 2010 8:07 pm Post subject: ... |
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Not it isn't. The US has been talking up the recovery and playing down the problems for 2-3 years now. |
Yes, there are limits to the confidence game; that doesn't mean they approach the predictability of a hard science.
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All the confidence in the world won't stop debt-bombs from exploding and ruining hundreds of thousands of jobs.
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OKAY. That's all. Back to recovery talk. |
No, but predicting when they will explode is more of a confidence game than any hard science.
It's very akin to the hot-potato passing of social security. That bomb is probably not due to go off for 20 years. It IS a confidence game.
The bailout was a confidence game. That brings us to the crux: was the bailout a successful confidence game or not?
Again, with all the Goldman-Sachs bruhaha, I'm curious about what you would've bailed out, if anything. And, again, absent of a bailout, we'd have had a free-fall. I think that would've been worse, but I also see the potential in a climbing-out of this mess with problems still in place than any sort of crashing everything and rebuilding.
And that's what you want, no? But that's not going to happen. Confidence will return before that point. You can argue that it won't, but what we're still talking about is confidence. Confidence will or won't end the recession. It's a confidence game.
It's not physics. |
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mises
Joined: 05 Nov 2007 Location: retired
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Posted: Mon Nov 08, 2010 8:30 pm Post subject: |
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I'm curious about what you would've bailed out |
None of the banks. Not a cent. Banks fail and their assets are sold off. New banks are born and other banks become larger.
http://www.youtube.com/watch?v=UfR_gPzTMnk
Keeping dead banks alive will prolong this situation.
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And that's what you want, no? |
Dead firms should die, yes. The economy should not exist to repair balance sheets of banks. Recessions clean out bad debts and investments. In a very real way, we are suffering still from the .com recession. Instead of allowing failure the Fed lowered rates and deliberately caused a housing bubble. Many economists point to the LTCM crisis as the real starting point because it was there that firms realized that they can bet hoards of money on smoke and mirrors and the government will bail them out.
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Confidence will return before that point. You can argue that it won't, but what we're still talking about is confidence. Confidence will or won't end the recession. It's a confidence game. |
From where will this confidence come? Magic? The Secret? We'll all send vibrations of confidence to the universe and it will send back economic health?
More likely, we've reached the end of the current model of growth. Debt-based growth.
You're repeating platitudes from the beginning of the crisis. We're a dozen platitude cycles past them. |
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riverboy
Joined: 03 Jun 2003 Location: Incheon
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Posted: Mon Nov 08, 2010 9:18 pm Post subject: |
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[/quote]I'm curious about what you would've bailed out
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Main Street rather than Wall Street would have been a good start. Investing in publics works would be another place to spend trillions of dollars. |
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mises
Joined: 05 Nov 2007 Location: retired
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Posted: Thu Nov 11, 2010 9:06 am Post subject: Re: ... |
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Nowhere Man wrote: |
And, again, absent of a bailout, we'd have had a free-fall. I think that would've been worse, |
http://georgewashington2.blogspot.com/2010/11/its-not-great-recssion-its-great-bank.html
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In case its not crystal clear, this isn't the "Great Recession".
Its really the Great Bank Robbery.
First, there was the threat of martial law if the $700 Billion Tarp bailout wasn't passed. Specifically, Treasury Secretary Hank Paulson warned Congress that there would be martial law unless the Tarp bailouts were approved.
As I pointed out last October:
The New York Times wrote on July 16th:
In retrospect, Congress felt bullied by Mr. Paulson last year. Many of them fervently believed they should not prop up the banks that had led us to this crisis � yet they were pushed by Mr. Paulson and Mr. Bernanke into passing the $700 billion TARP, which was then used to bail out those very banks.
***
Congressmen Brad Sherman and Paul Kanjorski and Senator James Inhofe all say that the government warned of martial law if Tarp wasn't passed:
Bait And Switch
Indeed, the Tarp Inspector General has said that Paulson misrepresented some fundamental aspects of Tarp.
And Paulson himself has said:
During the two weeks that Congress considered the [Tarp] legislation, market conditions worsened considerably. It was clear to me by the time the bill was signed on October 3rd that we needed to act quickly and forcefully, and that purchasing troubled assets�our initial focus�would take time to implement and would not be sufficient given the severity of the problem. In consultation with the Federal Reserve, I determined that the most timely, effective step to improve credit market conditions was to strengthen bank balance sheets quickly through direct purchases of equity in banks.
So Paulson knew "by the time the bill was signed" that it wouldn't be used for its advertised purpose - disposing of toxic assets - and would instead be used to give money directly to the big banks?
And see this and this.Treasury Secretary Hank Paulson warned Congress that there would be martial law unless the Tarp bailouts were approved. As I pointed out last October:
The New York Times wrote on July 16th:
In retrospect, Congress felt bullied by Mr. Paulson last year. Many of them fervently believed they should not prop up the banks that had led us to this crisis � yet they were pushed by Mr. Paulson and Mr. Bernanke into passing the $700 billion TARP, which was then used to bail out those very banks.
***
Congressmen Brad Sherman and Paul Kanjorski and Senator James Inhofe all say that the government warned of martial law if Tarp wasn't passed:
Bait And Switch
Indeed, the Tarp Inspector General has said that Paulson misrepresented some fundamental aspects of Tarp.
The bailout money was used simply to make the rich richer. As I wrote in March 2009:
The bailout money is just going to line the pockets of the wealthy, instead of helping to stabilize the economy or even the companies receiving the bailouts:
* Bailout money is being used to subsidize companies run by horrible business men, allowing the bankers to receive fat bonuses, to redecorate their offices, and to buy gold toilets and prostitutes
* A lot of the bailout money is going to the failing companies' shareholders
* Indeed, a leading progressive economist says that the true purpose of the bank rescue plans is "a massive redistribution of wealth to the bank shareholders and their top executives"
* The Treasury Department encouraged banks to use the bailout money to buy their competitors, and pushed through an amendment to the tax laws which rewards mergers in the banking industry (this has caused a lot of companies to bite off more than they can chew, destabilizing the acquiring companies)
And as the New York Times notes, "Tens of billions of [bailout] dollars have merely passed through A.I.G. to its derivatives trading partners".
***
In other words, through a little game-playing by the Fed, taxpayer money is going straight into the pockets of investors in AIG's credit default swaps and is not even really stabilizing AIG.
But at least the government is trying to help the struggling homeowner, right?
Well, PhD economists John Hussman and Dean Baker (and fund manager and financial writer Barry Ritholtz) say that the only reason the government keeps giving billions to Fannie and Freddie is that it is really a huge, ongoing, back-door bailout of the big banks.
Many also accuse Obama's foreclosure relief programs as being backdoor bailouts for the banks. (See this, this and this).
But certainly quantitative easing is helping the little guy?
Unfortunately, QE only helps the big banks and giant corporations, and the small number of investors who hold most of the stock. See this, this, this, this and this.
And now, the government has announced that it will maintain tax breaks for the wealthiest while slashing social security and medicare.
Warren Buffet famously said a couple of years ago:
There's class warfare, all right, but it's my class, the rich class, that's making war, and we're winning.
The proof is in the pudding: a small handful of people have ended up with a lot more loot in their safes, while everyone else has gotten poorer. |
Inside the link above are links to sources for the above claims.
There was no need for a bailout. It was a heist. |
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blade
Joined: 30 Jun 2007
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Posted: Thu Nov 11, 2010 9:08 pm Post subject: |
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Europe maybe finally coming to it is finally coming to its senses:
Chancellor Merkel had insisted on Thursday that private investors should share the burden of adjustments in bailouts, piling pressure on Ireland as investors sold Irish bonds on fears of default.
Merkel told a lunchtime meeting in in Seoul that taxpayers could not keep being told they "have to be on the hook for certain risks, rather than those who make a lot of money taking those risks."
�Let me put it simply: in this regard there may be a contradiction between the interests of the financial world and the interests of the political world,� she added.
French Finance Minister Christine Lagarde supported Merkel's position, saying investors must share the cost of sovereign debt restructurings.
�All stakeholders must participate in the gains and losses of any particular situation,� Lagarde said during an interview yesterday in Paris for Bloomberg Television�s �On the Move� with Francine Lacqua. �There are many, many ways to address this point of principle.�
http://www.finfacts.ie/irishfinancenews/article_1021004.shtml |
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Nowhere Man

Joined: 08 Feb 2004
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Posted: Thu Nov 18, 2010 5:32 pm Post subject: ... |
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Some look to tie recovery to employment rates, but it's interesting how we have, in a vacuum to air arguments about the free market, companies not doing what would be best for society.
The upturn from the 1930s was not tied to employment rates.
I'd say investor confidence came first, and indeed, if Harley-Davidson is turning a profit, then why not invest?
Predicting a massive downturn/upheaval is one thing. Dreaming of people eating dog food is another.
Let's be careful. |
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Madigan
Joined: 15 Oct 2010
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yesman

Joined: 15 Sep 2006
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Posted: Mon Nov 29, 2010 9:32 am Post subject: |
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mises, I agree with almost everything you've said.
mises wrote: |
More likely, we've reached the end of the current model of growth. Debt-based growth. |
Completely agree.
Concerning recovery:
mises wrote: |
2011 is too early. It will be a year of hell in the real estate market. There will be more bank bailouts in 2011 too.
You are right in that there will be a recovery. 2012 at the earliest. This all depends on so many variables. What if the Fed blows emerging market/commodity bubbles? They will burst and then what.. |
What do you see happening in the US now that will lead to a new model of growth (especially as early as 2012)? |
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mises
Joined: 05 Nov 2007 Location: retired
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Posted: Mon Nov 29, 2010 11:08 am Post subject: |
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I'm merely trying to be positive. 2012 will probably be better than 2011, unless something black swan'ish happens. That's my idea of a recovery. |
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