Roubini: No Poom

[phirang]

Re: Roubini: No Poom

pirang, with whom do you agree, Starving Steve or Roubin?

Roubini w/o a doubt.

Commodities are fked.
Inflation hedges are fked.

Gold may get a run, but whatever: the smart money was in Yen as of last year.

[phirang]

Re: Roubini: No Poom

Who would finance this "mushrooming of public debt"? After what just happened would you be interested in lending the U.S. more money? Is there anyone out there capable of financing the exploding debt?

With interest on the debt becoming a larger and larger % of government expenditures, what programs would be slashed? Defense? Social security?

I suggest reading up on the theories of Grover Norquist to get an answer to that.

[phirang]

Re: Roubini: No Poom

What I never understand about these deflation scenarios is that they talk of China and India, commodity prices, etc. but don't mention the trillions upon trillions of unfunded liabilities of the US government.

OK, so there is a slowdown and demand destruction, loss of pricing power, etc. take their toll. Perfectly logical, makes sense.

However, will there be demand destruction in Social Security? Will there be demand destruction in Medicare, Medicaid? When Obama gets in the White House with a complaint Congress who will destroy the demand for trillions in spending in "green" initiatives and building stadiums, tunnels, train lines, etc? Won't we need a fuckton of dollars created regardless of the price of copper?

The only hope for the infrastructure circle-jerk is that the chinese intend to buy bonds on the crap.

Otherwise, this could all be a lot of hot air.

As for the liabilities: liabilities are at record highs, yet gold is where again? Clearly not correlated.

[Judas]

Re: Roubini: No Poom

So?

There's a BIG difference between POOM and EUR/USD, YEN/USD, and Gold/USD.

The USD can depreciate on top of a credit meltdown... that's what Roubini is talking about. The aggregate, though, is not poom.

Ah, so with the US dollar depreciating the US would experience inflation, but not so other currencies? Or the dollar would depreciate at a lower rate then prices would fall due to deflation?

[Judas]

Re: Roubini: No Poom

The only hope for the infrastructure circle-jerk is that the chinese intend to buy bonds on the crap.

Otherwise, this could all be a lot of hot air.

Couldn't the "otherwise" be printing money to cover the liabilities and campaign promises?

As for the liabilities: liabilities are at record highs, yet gold is where again? Clearly not correlated.

I'm not worried about gold correlations. I'm worried about food, taxes, energy, etc. if the dollar goes down faster than I can increase nominal personal revenues.

[phirang]

Re: Roubini: No Poom

Ah, so with the US dollar depreciating the US would experience inflation, but not so other currencies? Or the dollar would depreciate at a lower rate then prices would fall due to deflation?

The key thing is VELOCITY: who cares about aggregates when there is no VELOCITY!

This is what morons like Rogers and Schiff completely forget about! THERE IS NO CREDIT TO BUY GOLD WITH.

GOLD IS MONEY, but you have to get CREDIT to get MONEY!

As for inlfation, if the US reduces her imports meaningfully as a result of declining AD, then other nations will have to import MORE inflation to have a hope in hell of exporting to the US.

[FRED]

Re: Roubini: No Poom

Roubini addresses all of the key issues–and we agree with all of all them–but neglects the two that drive the "Poom" phase of Ka-Poom Theory: dollar depreciation and negative US capital flows.

Today everyone, including Roubini, is focused on this:

Everyone, including Roubini, has forgotten the context:

From an upcoming analysis, a few charts that Roubini needs to see. Quite surprising he does not mention these very big developments in currencies and capital flows.

And the implications for this:

Why is physical gold so hard to come by even as spot prices fall? Because people who have money who have not forgotten their Econ 101 know what the charts above mean: Net capital outflows presage a weakening currency. The dollar spike is due to panic.

We'll explain it tomorrow.

[phirang]

Re: Roubini: No Poom

Roubini addresses all of the key issues–and we agree with all of all them–but neglects the two that drive the "Poom" phase of Ka-Poom Theory: dollar depreciation and negative US capital flows.

Today everyone, including Roubini, is focused on this:

Everyone, including Roubini, has forgotten the context:

From an upcoming analysis, a few charts that Roubini needs to see. Quite surprising he does not mention these very big developments in currencies and capital flows.

And the implications for this:

Why is physical gold so hard to come by even as spot prices fall? Because people who have money who have not forgotten their Econ 101 know what the charts above mean: Net capital outflows presage a weakening currency. The dollar spike is due to panic.

We'll explain it tomorrow.

I see massive outflows in GSE paper and ALL risky assets, but t-bills have almost negative yield. I don't see how the most massive t-bill rally in recent history presages a dollar decline.

[Judas]

Re: Roubini: No Poom

Sorry if I'm being stupid, but I've been having a hard time understanding the deflation scenarios.

The key thing is VELOCITY: who cares about aggregates when there is no VELOCITY!

This is what morons like Rogers and Schiff completely forget about! THERE IS NO CREDIT TO BUY GOLD WITH.

GOLD IS MONEY, but you have to get CREDIT to get MONEY

Whoa, I haven't thought of it that way. I've been thinking in terms of rotation, not credit. I see your point, even if the idea of using credit to buy money is counterintuitive.

As for inlfation, if the US reduces her imports meaningfully as a result of declining AD, then other nations will have to import MORE inflation to have a hope in hell of exporting to the US.

Huh, so shift it to externals and look for some equilibrium down the line?

[phirang]

Re: Roubini: No Poom

Sorry if I'm being stupid, but I've been having a hard time understanding the deflation scenarios.



Whoa, I haven't thought of it that way. I've been thinking in terms of rotation, not credit. I see your point, even if the idea of using credit to buy money is counterintuitive.



Huh, so shift it to externals and look for some equilibrium down the line?

Import deflation - export inflation: keeping US citizens tractable since 1980.

EJ DID address tradable goods deflation a while back, to his credit.

[Guest]

Re: Roubini: No Poom

No Master Shake - he was not right. He has cobbled together two separate events to form a false conclusion. The demographic and geological trends describe a train wreck aseversal factors larger even than this financial one, and it arrives right on schedule in the global recovery from this financial collapse. 2015-2017 you will have it.

I have zero interest in convincing you of this point, as you'll have it squarely front and center in your life shortly enough anyway. I see that Jtabeb got tangled on this same distinction. "$#* wuz right, wasn't he??". The event you see unfolding puts global GDP growth on hold, but anyone who presumes that global GDP energy consumption will be stagnating 3 - 4 years from now is being notably ingenuous.

I have read $#* refer with vague expansiveness to this event occurring in "15 years" and I have heard him vaguely referencing "coal and nuclear fusion" solutions. His references to these things evidence he has not been very curious to delve into it's mountain of substantiated data - but he has surely done a copious amount of exposition on the "oil bubble". These are two very distinct and separate events which $#* has ably "comandeered" for his thesis.

He's talking through his hat actually, on the larger event. No bubble.
An intermission. Don't forget also it's horrific twin sister, fiat money inflation which is waiting and building up a nice cloud of "flammable fumes" to rocket propel the oil price up to $200 in the next three years. Four years at the outside, and then on north from there towards $500.

If I read another mention to $#* having been "right" on this broader point I think I will start to feel nauseous. It is pure mis-information, all gussdied up in a duly dramatic commodity cycle bust. People will get whipsawed by the underlying story by 2012 like nothing imaginable.

Well, he was right, wasn't he?

[Guest]

Re: Roubini: No Poom

[/b] Import deflation - export inflation: keeping US citizens tractable since 1980. EJ DID address tradable goods deflation a while back, to his credit.

OK I think I've got it now. Rest of World inflation ramps up (with money velocity increasing as a typical corollary of inflation) as they are forced to gobble up more exported US inflation, while the US deflates with collapsing money velocity - and meanwhile the international price of gold collapses in value because the only nation capable of putting a bid under gold will be the US which will be deflating! Right? No sovereign wealth funds will be interested in backing their obscenely bulging stashes of US dollars with any gold. There you have it, the US has got the world in an arm-lock and gold's significvance in an international credit collapse was revealed to be the biggest canard of them all. Those foolish Saudis, and Europeans, and Indians will give gold the big yawn in this scenario while they gobble up ever more exported US inflation and stupidly resist putting two and two together.

And as to the hapless Americans, they won't have any credit so how can they buy any gold. I mean, no-one's gonna have any savings left worth safeguarding, so any gold would have to be bought on credit! But America's ponzi scheme to export our terminal phase inflation will rule because we are saved by the rest of the world's stupidity. If EJ had only had a clue what he was talking about.

:confused: :confused: :confused: :rolleyes:

[quote=phirang;56754]As for inlfation, if the US reduces her imports meaningfully as a result of declining AD, then other nations will have to import MORE inflation to have a hope in hell of exporting to the US.[/quote]

[xtronics]

Re: Roubini: No Poom

There is something missing here - I don't know of any one in Washington, other than Ron Paul, that says we should stop out of control spending. Both major candidates are promising to further expand government. No one has said anything about paying down our foreign debt.

Politically there is no way to renege on SS and Medicare so the real debt is now around $50T - figure long term interest at 5% and that is $2.50T of more debt each year. Much of the debt we no longer "owe to ourselves" and the US will continue to try and borrow to meet the cost of social programs. There can only be two outcomes - the interest on the foreign debt spirals or they print money and inflation spirals. I see no other future than wild printing of money. At some point, exporters will want ever increasing amounts of dollars to send us any goods, but no one wants to open factories here (regulation, litigation, taxation) so manufacturing coming back will be only after the singularity caused disaster.

If I squint into the future - I see the rest of the funny bank money unwinding - and there will be a lot more of it than is now assumed - and once it finishes unwinding(next year - 2012?), they will raise interest rates Volcker style, but this is not the 1970's - politically it will explode. Todays citizens will not tolerate any pain and the printing press goes into high gear.

The point is that the good-will of the USA is being spent - and is already running out - one more bankruptcy. The solutions that will sell to the public will be socialistic and compound all the problems.

We can't avoid poom.. Roubini has that part wrong.

[phirang]

Re: Roubini: No Poom

There is something missing here - I don't know of any one in Washington, other than Ron Paul, that says we should stop out of control spending. Both major candidates are promising to further expand government. No one has said anything about paying down our foreign debt.

Politically there is no way to renege on SS and Medicare so the real debt is now around $50T - figure long term interest at 5% and that is $2.50T of more debt each year. Much of the debt we no longer "owe to ourselves" and the US will continue to try and borrow to meet the cost of social programs. There can only be two outcomes - the interest on the foreign debt spirals or they print money and inflation spirals. I see no other future than wild printing of money. At some point, exporters will want ever increasing amounts of dollars to send us any goods, but no one wants to open factories here (regulation, litigation, taxation) so manufacturing coming back will be only after the singularity caused disaster.

If I squint into the future - I see the rest of the funny bank money unwinding - and there will be a lot more of it than is now assumed - and once it finishes unwinding(next year - 2012?), they will raise interest rates Volcker style, but this is not the 1970's - politically it will explode. Todays citizens will not tolerate any pain and the printing press goes into high gear.

The point is that the good-will of the USA is being spent - and is already running out - one more bankruptcy. The solutions that will sell to the public will be socialistic and compound all the problems.

We can't avoid poom.. Roubini has that part wrong.

Actually, he doesn't.

[FRED]

Re: Roubini: No Poom

I see massive outflows in GSE paper and ALL risky assets, but t-bills have almost negative yield. I don't see how the most massive t-bill rally in recent history presages a dollar decline.

They are opposing forces: disinflation driven by dollar demand from de-leveraging and inflation driven by reversing capital flows.

The former is short term but latter long term. Long term, you can't stop this:

Econ 101: depreciate a currency and you get inflation in the local economy. No way around it.

In the real world, versus the textbooks:

In the undertow of the disinflationary "Ka" rush to liquidity, before the surge of inflation that arises from currency depreciation, that arises from negative net capital flows, the men and the boys are separated.