James Kunstler responds to Next Bubble Article in Harpers

[merry]

He basically says that there won't be a next bubble because the U.S. has no money left to invest in anything else. Any comments?

http://www.lifeaftertheoilcrash.net/...erBubbles.html

If this has been posted before, please let me know and I will delete the thread. Thank you.

[icm63]

Re: James Kunstler responds to Next Bubble Article in Harpers

I agree.

The Monies in the housing bubble was much much larger than the dot.com bubble.

The FED will not be able to borrow ( or the consumers) the same level of funds ( as housing bubble funds) to get another bubble going.

Here is a major head wind for you.

The Arab ( Saudi is the main one) countries that are pegged to the dollar and USA yield curve, are going thru a massive inflation problem of 7% YOY, also they have over 2 trillion dollars of $USD in reserves from Oil receipts.

They may/will have to unpegged from the $USD raise interest rates to halt inflation , otherwise social unrest will be the result. Some countries have 10% YOY inflation. They would also sell there dollars, and BUY GOLD.

This will see $USD sink, then the USA Fed will have to raise interest rates to protect the $USD and to halt massive inflation imports into the USA. Guess where this sends the USA economy.

We are in the END GAME.

REF: I have found three models based on the demograhics of the spending population. See this thread.

http://www.itulip.com/forums/showthread.php?t=3056

[FRED]

Re: James Kunstler responds to Next Bubble Article in Harpers

I agree.

The Monies in the housing bubble was much much larger than the dot.com bubble.

The FED will not be able to borrow ( or the consumers) the same level of funds ( as housing bubble funds) to get another bubble going.

Here is a major head wind for you.

The Arab ( Saudi is the main one) countries that are pegged to the dollar and USA yield curve, are going thru a massive inflation problem of 7% YOY, also they have over 2 trillion dollars of $USD in reserves from Oil receipts.

They may/will have to unpegged from the $USD raise interest rates to halt inflation , otherwise social unrest will be the result. Some countries have 10% YOY inflation. They would also sell there dollars, and BUY GOLD.

This will see $USD sink, then the USA Fed will have to raise interest rates to protect the $USD and to halt massive inflation imports into the USA. Guess where this sends the USA economy.

We are in the END GAME.

REF: I have found three models based on the demograhics of the spending population. See this thread.

http://www.itulip.com/forums/showthread.php?t=3056

Where will they get the money? Think: SWFs funding P3s. China, Japan, et al want to invest those Treasury bonds in something more profitable, and the current generation all went to Harvard and Stanford together anyway.

[icm63]

Re: James Kunstler responds to Next Bubble Article in Harpers

.."Where will they get the money? Think: SWFs funding P3s. China, Japan, et al want to invest those Treasury bonds in something more profitable, and the current generation all went to Harvard and Stanford together anyway."...

So the money from SWF, so why invest in USA fall stop.

Why not invest in structures in CHINA and ASIA. Much better long term returns.

The Yaun will rally, so invest the funds for 20 years returns in there own back yard.

[idianov]

Re: James Kunstler responds to Next Bubble Article in Harpers

Ironically, there is an ad for Solar Gear at the end of the article that dismisses Alt Energy Bubble thesis on the Peak Oil website.

[GRG55]

Re: James Kunstler responds to Next Bubble Article in Harpers

.."Where will they get the money? Think: SWFs funding P3s. China, Japan, et al want to invest those Treasury bonds in something more profitable, and the current generation all went to Harvard and Stanford together anyway."...

So the money from SWF, so why invest in USA fall stop.

Why not invest in structures in CHINA and ASIA. Much better long term returns.

The Yaun will rally, so invest the funds for 20 years returns in there own back yard.

You largely answered your own question (highlighted part above). No currency trend lasts forever, but the depreciated (and depreciating) US $ is making the USA THE low cost provider of more and more of what makes the global economy go round. The rising yaun will hurt China's relative competitiveness and will force it to improve labour productivity - a process that will take a long time, in part because of the societal and political implications there.

I note that the people on this site that appear to be the most sceptical of the economic power of this currency shift seem to be looking at things only from an "internal to the USA" perspective.

[icm63]

Re: James Kunstler responds to Next Bubble Article in Harpers

..."The rising yaun will hurt China's relative competitiveness and will force it to improve labour productivity - a process that will take a long time, in part because of the societal and political implications there. "..

Careful about what takes a long time.

Tawian, South Korea did wonders in a DECADE.

Investment in CHINA will see there middle income earners grow, this body of consumers will be the NEW WORLD CONSUMER. There political structure just may be better for this growth than the beauracy that comes with democracy. Also remember they dont have the annoying political correct bodies to slow them down. Environment, human rights, free speech, etc, they can POWER forward as fast as they wish.

Its pure arrogrance to under estimate the determination of the people of CHINA. ( I am not from China, nor the USA). So I am picking the Jm Rogers story, that ASIA is the growth for the next 20 to 50 years.

SO why should the SWF bother to play bubble games within the USA, why not make more substantial investments in ASIA. How stupid are they ??%$@%@?$


UPDATE , check out the inflation expectations latest for USA .

http://www.portfolio.com/views/blogs...n-expectations

Now just think what the inflation expectations would be in those ARAB states pegged to the $USD. Like I said we are in the END GAME. I see 10yr and 30yr bonds yield moving UP, and STOCKS DOWN...big time.

[GRG55]

Re: James Kunstler responds to Next Bubble Article in Harpers

..."The rising yaun will hurt China's relative competitiveness and will force it to improve labour productivity - a process that will take a long time, in part because of the societal and political implications there. "..

Careful about what takes a long time.

Tawian, South Korea did wonders in a DECADE.

Investment in CHINA will see there middle income earners grow, this body of consumers will be the NEW WORLD CONSUMER. There political structure just may be better for this growth than the beauracy that comes with democracy. Also remember they dont have the annoying political correct bodies to slow them down. Environment, human rights, free speech, etc, they can POWER forward as fast as they wish.

Its pure arrogrance to under estimate the determination of the people of CHINA. ( I am not from China, nor the USA). So I am picking the Jm Rogers story, that ASIA is the growth for the next 20 to 50 years.

SO why should the SWF bother to play bubble games within the USA, why not make more substantial investments in ASIA. How stupid are they ??%$@%@?$


UPDATE , check out the inflation expectations latest for USA .

http://www.portfolio.com/views/blogs...n-expectations

Now just think what the inflation expectations would be in those ARAB states pegged to the $USD. Like I said we are in the END GAME. I see 10yr and 30yr bonds yield moving UP, and STOCKS DOWN...big time.

You are perfectly entitled to think END GAME, or whatever you wish.

However, what does any of what you have written above, that I have highlighted, have to do with labour productivity dynamics in an industrial economy?

The growing Chinese (actually Asian) middle class may well become the "NEW WORLD CONSUMER" as you say. Be assured they will be consuming more of the USA's output in future than they do now...

[icm63]

Re: James Kunstler responds to Next Bubble Article in Harpers

Back to main point: Not likely another USA sourced bubble.

The last two bubbles dot.com and housing started in the USA, mainly funded by the USA ( Yes, yen carry trade helped), with help from the USA FED.

The next batch of funding ( you say SWF) is not soley USA based, so they dont have to fund another USA bubble. They can be more prudent with there funds and find other places to invest. I say ASIA/China.

Sure China will consume more from the USA in the future as there wealth grows, by then USA will have gone from a total service economy to a more manufacturing economy as there $USD will be $0.10 to the YAUN, and exports will bring USA back to wealth just like Tawain, Sth KOrea and now Vietnam.

[GRG55]

Re: James Kunstler responds to Next Bubble Article in Harpers

He basically says that there won't be a next bubble because the U.S. has no money left to invest in anything else. Any comments?

http://www.lifeaftertheoilcrash.net/...erBubbles.html

If this has been posted before, please let me know and I will delete the thread. Thank you.

I'm not sure if James Kunstler qualifies as a Doomer, but his writings are extraordinarily pessimistic not only about the future, but also about mankind's ability to deal with it. Unfortunately history doesn't support that latter position.


In the linked article he says:

"...This leads to a further consideration of where the capital for "the next bubble" supposedly comes from. Janszen doesn't account for the essentially bankrupt condition of the USA. The capital that was deployed and squandered in the previous two bubbles is not there anymore to be washed, rinsed, and recycled. It's gone..."

Kunstler fails to point out that most of the monetary fuel for the tech and housing bubbles didn't exist in the formative years of those bubbles either.


Kunstler also states:

"...He [EJ] seems to understand that the previous two bubbles in dot-coms and houses were essentially frauds that generated imaginary wealth, which sooner later evaporated off the balance sheets and out of the financial system. A boom, it seems to me, is not the same as a "bubble." While perhaps wasteful and messy, booms at least produce something of value beyond the fees paid to bankers for arranging the deployment of capital. A boom that resulted in citizens being able to take a train from Boston to Albany would produce a substantial public good..."

...and so did the tech bubble (or "boom" if you wish) in the form of massive amounts of global telecom and internet infrastructure, which has certainly benefited Kunstler's ability to get his message out to lots of people - but we don't see him acknowleging that. In his "trains are good, cars are bad" thinking, moving lots of people between the same two points over rails is apparently more important than moving lots of information to wherever people happen to be, at a price most of them can afford to pay.

The USA will also eventually benefit from the increase in modern housing stock that the real estate bubble created, much of it financed by foreigners who can't physically repossess it. Anyone who has spent time in a place like England, with its crumbling housing, will understand what I mean.



I take back what I wrote earlier...Kunstler IS a Doomer:

"...By the same token, I wonder if our investments in alternative energy will prove to be chimerical -- things wished and hoped for but impossible to achieve..."

"...Rather, I believe we'll discover that wind power is only really practical on the household or extremely local basis. Ditto solar. I also doubt that we will continue to get all the necessary exotic metals needed to fabricate the hardware for these things..."

"...Along similar lines, I believe our expectations for ethanol and bio-diesel fuel production will prove to be not only disappointing but destructive to the food production sector..."

"...We're facing such an array of potential instabilities that even assuming we continue to live in an orderly society may be too much..."

I wonder how Kunstler rationalizes to himself how mankind managed to make it this far? Somebody should keep him away from the Kool-aid...:rolleyes:

[BiscayneSunrise]

Re: James Kunstler responds to Next Bubble Article in Harpers

Kunstler is without a doubt a doomer of the highest degree. If you read his latest diatribe against modern life, "The Long Emergency" he describes, almost with glee, about how life 50 years from now will look more mad max than modern.

He makes some good points but you must take his analysis with a grain of salt since he seems misanthropic in his disdain for how business and science have teamed up to make modern life a wonder for mankind.

[FRED]

Re: James Kunstler responds to Next Bubble Article in Harpers

..."The rising yaun will hurt China's relative competitiveness and will force it to improve labour productivity - a process that will take a long time, in part because of the societal and political implications there. "..

Careful about what takes a long time.

Tawian, South Korea did wonders in a DECADE.

Investment in CHINA will see there middle income earners grow, this body of consumers will be the NEW WORLD CONSUMER. There political structure just may be better for this growth than the beauracy that comes with democracy. Also remember they dont have the annoying political correct bodies to slow them down. Environment, human rights, free speech, etc, they can POWER forward as fast as they wish.

Its pure arrogrance to under estimate the determination of the people of CHINA. ( I am not from China, nor the USA). So I am picking the Jm Rogers story, that ASIA is the growth for the next 20 to 50 years.

SO why should the SWF bother to play bubble games within the USA, why not make more substantial investments in ASIA. How stupid are they ??%$@%@?$


UPDATE , check out the inflation expectations latest for USA .

http://www.portfolio.com/views/blogs...n-expectations

Now just think what the inflation expectations would be in those ARAB states pegged to the $USD. Like I said we are in the END GAME. I see 10yr and 30yr bonds yield moving UP, and STOCKS DOWN...big time.

Because the Chinese can't spend their US treasury bonds in China.

[jk]

Re: James Kunstler responds to Next Bubble Article in Harpers

Because the Chinese can't spend their US treasury bonds in China.

this is a key point, and the only reason i'm writing this post is to quote it in a bigger and bolder font, in the hope that people will pause and ponder its message. for example, if you want to think that china will provide domestically all its inputs for development, then you must ask how they do that when their reserves are in u.s. dollars.

[Verrocchio]

Re: James Kunstler responds to Next Bubble Article in Harpers

$USD will be $0.10 to the YAUN

The exchange value of the US$ and the yuan will change, and the consensus is that the yuan will gain, but, um, it's unlikely that it will go from the current 7.2 Yuan: 1 dollar to 1 Yuan: .1 dollar anytime in the foreseeable future.

[touchring]

Re: James Kunstler responds to Next Bubble Article in Harpers

Agree, the gain will be relative. but wages in china will rise more than in the US as they move up the value chain.

The exchange value of the US$ and the yuan will change, and the consensus is that the yuan will gain, but, um, it's unlikely that it will go from the current 7.2 Yuan: 1 dollar to 1 Yuan: .1 dollar anytime in the foreseeable future.