'The consumer isn't overleveraged -- the middle class is'- merrill lynch

[ricket]

Re: 'The consumer isn't overleveraged -- the middle class is'- merrill lynch

Now I'm confused. When I clicked on Jim's link last hour, I got an invitation to subscribe to the New York Times, which I chose not to consider.

Now when I click on the same link above, I get right through to the article in question.

Dang computers ...

Ever heard of the website BugMeNot? It gives usernames/passwords to free sites (such as the NYT). You can even download and Add-on if you use firefox that will allow you to right click on a login box at any website and youre given an option to "Log in with BugMeNot". It's quite handy at those free pesky sites that require logging in...

http://www.bugmenot.com

[raja]

Re: 'The consumer isn't overleveraged -- the middle class is'- merrill lynch

If only you knew how hard it is to type with hooves, you'd have more sympathy .

Maybe the delicate electronics in your computer are being eroded by all that methane I've read that you and your bovine brethren produce . . . . ;)

[goadam1]

Re: 'The consumer isn't overleveraged -- the middle class is'- merrill lynch

Where does one go exactly after reaching the Plutocratic-Oligarchy phase of governance?

Fascist dictatorship

or

A new Dark Ages, perhaps?

BTW, how's the bunker coming along, GRG?

It will be stateism. Fascism has too much baggage and implies right wing over left wing.

Ruling style, t.b.d.

[goadam1]

Re: 'The consumer isn't overleveraged -- the middle class is'- merrill lynch

Who could have known?

Where will we get the money? The usual place.

Lower per-capita real GDP translates into lower living standards, especially for the bottom 50% of the net worth group that went into this with little or no liquid net worth.

When we started posting our distribution of income, debt, and net worth charts back when we reopened in 2006 many readers thought we were making some kind of socialistic point about how unfair the distribution is.

In fact, every time we posted these charts we made the point that in the coming economic depression, the majority who have little savings to fall back on and most of the debt will need the government to bail them out at a time when tax receipts from that group evaporate due to rising unemployment and falling incomes.

Our question: Which economic group will government go after for money to pay unemployment benefits and other economic disaster support?

Our forecast: Lousy distribution of wealth in boom times means high taxes on capital and wealth redistribution during busts. It has always been so throughout history.

Our fear: Wealth redistribution becomes structural. Then we’re sunk.

The lesson: In the future boom aim policy at the wealth distribution problem so it would cause the usual backlash later. That means get rid of the rent seeking FIRE Economy and focus on productive enterprise.

The report misses a crucial point that we have made here for 10 years. The top 10% may spend 42% by dollar volume but not by unit volume. There are only a few million of them. We had the same problem during The Great Depression: How can a few million rich create enough demand to employ everyone else?

The outcome of these crashed FIRE Economies is pathetically predictable.

This goes hand in had with the "deflationary boom" post in the select zone. There will be a boom.Those with will have their pick of cheap, "independent contracted" bed pan changers and what not.

[jk]

Re: 'The consumer isn't overleveraged -- the middle class is'- merrill lynch

It will be stateism.

how will we tell the difference from the way things are now?

[raja]

Re: 'The consumer isn't overleveraged -- the middle class is'- merrill lynch

The well-heeled might be able to save the U.S. economy from a long period of dismally weak consumer spending -- if only we don’t jack up their taxes.

That's a good one . . . .

The way to fix the economy is give the rich even MORE money :rolleyes:
Perhaps if we up their share from 60% to to say . . . 90%, then all our problems will be over. Happy Days !

[sunskyfan]

Re: 'The consumer isn't overleveraged -- the middle class is'- merrill lynch

"As the U.S. fiscal and external debt position grows increasingly precarious, the U.S. remains vulnerable to a sudden stop event..."

What does a sudden stop event look like economically? What do stocks do? What does gold do? Et cetera ...

[GRG55]

Re: 'The consumer isn't overleveraged -- the middle class is'- merrill lynch

Where does one go exactly after reaching the Plutocratic-Oligarchy phase of governance?

Fascist dictatorship

or

A new Dark Ages, perhaps?

Or maybe US citizens take back their Republic?

[and collectively bring about real change you can believe in...]

BTW, how's the bunker coming along, GRG?

Slow. Very slow. Time to update the avatar pic however [when I find some time].

[GRG55]

Re: 'The consumer isn't overleveraged -- the middle class is'- merrill lynch

"As the U.S. fiscal and external debt position grows increasingly precarious, the U.S. remains vulnerable to a sudden stop event..."

What does a sudden stop event look like economically? What do stocks do? What does gold do? Et cetera ...

You need to learn to use the search feature...;)

Here's a post by EJ from 09-24-08 on the topic. If you search on "sudden stop" you'll find other posts within which the topic comes up.

Headed for a Sudden Stop

iTulip has since 1999 warned that in a protracted financial crisis the US, a net debtor, is vulnerable to withdrawal of foreign capital and capital flight, producing inflation and a severe economic contraction known in the economics literature as a Sudden Stop.

We called our theory Ka-Poom Theory. It defines two distinct crisis periods. One, a six to 12 month period of disinflation (Ka) that typically proceeds a sharp inflationary (Poom) period of repatriation of capital by foreign investors and capital flight by residents. Repatriation and flight both cause and result from currency depreciation in a rapid, self-reinforcing process.

In light of recent events, a subscriber recently asked how a disinflationary “Ka” crisis period such as we are experiencing during this financial crisis can turn into an inflationary “Poom” as foreign investment dries up and capital flees. In response, I provided the explanation below based on research I am doing for a book. In light of today’s events, I thought I’d share it with readers generally...

[Kadriana]

Re: 'The consumer isn't overleveraged -- the middle class is'- merrill lynch

You need to learn to use the search feature...;)

Here's a post by EJ from 09-24-08 on the topic. If you search on "sudden stop" you'll find other posts within which the topic comes up.

Headed for a Sudden Stop

iTulip has since 1999 warned that in a protracted financial crisis the US, a net debtor, is vulnerable to withdrawal of foreign capital and capital flight, producing inflation and a severe economic contraction known in the economics literature as a Sudden Stop.

We called our theory Ka-Poom Theory. It defines two distinct crisis periods. One, a six to 12 month period of disinflation (Ka) that typically proceeds a sharp inflationary (Poom) period of repatriation of capital by foreign investors and capital flight by residents. Repatriation and flight both cause and result from currency depreciation in a rapid, self-reinforcing process.

In light of recent events, a subscriber recently asked how a disinflationary “Ka” crisis period such as we are experiencing during this financial crisis can turn into an inflationary “Poom” as foreign investment dries up and capital flees. In response, I provided the explanation below based on research I am doing for a book. In light of today’s events, I thought I’d share it with readers generally...

It almost seems like there needs to be Pa added in between the Ka and the Poom part. A period of stagflation where food and energy costs go up but housing and discretionary spending go down.

[sunskyfan]

Re: 'The consumer isn't overleveraged -- the middle class is'- merrill lynch

Well, I meant my question as a rhetorical one but thanks ...

"iTulip has since 1999 warned that in a protracted financial crisis the US, a net debtor, is vulnerable to withdrawal of foreign capital and capital flight, producing inflation and a severe economic contraction known in the economics literature as a Sudden Stop. "

I don't think there has been capital flight. There has been capital destruction. There has been severe economic contraction. No net-inflation yet. The economy does seem to be coming to a stop. Could it be that our scope of analysis needs to change? Could it be that the US economy bifurcates and there is a First Wold shell of Wall Street and Washington masturbating each other while a Third Wold America languishes with an ad-hoc economy based on effectively a "foreign currency" being the Dollar? Ecuador, El Salvador, or East Timor anyone?

[GRG55]

Re: 'The consumer isn't overleveraged -- the middle class is'- merrill lynch

Well, I meant my question as a rhetorical one but thanks ...

Sorry. Didn't appear rhetorical to me

...I don't think there has been capital flight...

Perhaps not capital flight. Yet. But there is something unique going in with net capital flows...:eek:

From another of EJs recent posts:

...But the simple fact that net capital inflows remain negative is, to me, a stronger indication than any other that something is amiss with the self-sustaining recovery story. Since the development of the FIRE Economy in the early 1980s, no U.S. recession has ended until after net capital inflows have turned positive. Usually they fall during the recession. This time they declined well beforehand. I will consider a self-sustaining recovery possible and the FIRE Economy resurrected, at least temporarily, after I see net capital inflows reverse.

[goadam1]

Re: 'The consumer isn't overleveraged -- the middle class is'- merrill lynch

how will we tell the difference from the way things are now?

ha ha ha ha ha.

[goadam1]

Re: 'The consumer isn't overleveraged -- the middle class is'- merrill lynch

Well, I meant my question as a rhetorical one but thanks ...

"iTulip has since 1999 warned that in a protracted financial crisis the US, a net debtor, is vulnerable to withdrawal of foreign capital and capital flight, producing inflation and a severe economic contraction known in the economics literature as a Sudden Stop. "

I don't think there has been capital flight. There has been capital destruction. There has been severe economic contraction. No net-inflation yet. The economy does seem to be coming to a stop. Could it be that our scope of analysis needs to change? Could it be that the US economy bifurcates and there is a First Wold shell of Wall Street and Washington masturbating each other while a Third Wold America languishes with an ad-hoc economy based on effectively a "foreign currency" being the Dollar? Ecuador, El Salvador, or East Timor anyone?

If you don't have a job and gas is $3, then boom, inflation from where you are standing.

[Andreuccio]

Re: 'The consumer isn't overleveraged -- the middle class is'- merrill lynch

Or maybe US citizens take back their Republic?

Fat chance. We're too busy watching "Deal Or No Deal". Maybe we can outsource taking back the Republic to the Chinese.