Great article on recent adventures

[blazespinnaker]

http://www.theglobeandmail.com/servl...drecovery/home

Anyone who quotes The Onion knows what they're talking about!

;)

Anyways, a fantastic read.

[D-Mack]

Re: Great article on recent adventures

But the good news is only as good as this: the United States, which is Canada's biggest trading partner, is not going to suffer as badly as many other economies around the world

...

There was a time when if you said the United States was going to suffer a lost decade like Japan did in the 1990s, everybody would have said you were a mad pessimist. That begins to look like quite a good scenario. And I think it's a realistic scenario.

One of the facts is if you subtract mortgage equity withdrawal from the Bush years, the real underlying rate of growth of the U.S. economy was 1 per cent. So much of the consumption has been fuelled by mortgage equity withdrawal. So that seems like a reasonable growth rate for 10 years. … We just don't have an improvement of standard of living of the sort we're grown used to. And indeed if you have a more equitable redistribution through the tax system, which Obama is committed to, it might actually be no discernible downside for middle America and lower-class Americans. So many of the benefits of the boom went to the elites. If you have a lost decade plus redistribution, it may not be that dramatic a change for many, many people. People just have to get over the fact that their wealth wasn't worth what they thought it was in 2006. Whether it's their stock market portfolio or their housing. If we simply go back to where we were, in 2005, that's surely not the worst thing that could happen to us.”

Pretty optimistic on the US and it looks like HEATHER SCOFFIELD has been watching too much Fawlty Towers.

Basil I and Basil II have not worked

[c1ue]

Re: Great article on recent adventures

Housing is somewhere between 1999 and 2002 depending on the area, and the Dow just re-achieved 1997 levels today.

So Nial's Ivy League statements are already quite out of date.

[GRG55]

Re: Great article on recent adventures

Housing is somewhere between 1999 and 2002 depending on the area, and the Dow just re-achieved 1997 levels today.

So Nial's Ivy League statements are already quite out of date.

He's promoting a book that was just published. Canada was not his first stop [small market]. As EJ can probably attest, writing and publishing a book about the economy that is current and up to date by the time it hits the shelves is a tall order at the moment.

btw, a few years ago he was one of the early people to put the recent period of globalization in a historical context, and speculate about its potential demise.

[Master Shake]

Re: Great article on recent adventures

One of the facts is if you subtract mortgage equity withdrawal from the Bush years, the real underlying rate of growth of the U.S. economy was 1 per cent. So much of the consumption has been fuelled by mortgage equity withdrawal. So that seems like a reasonable growth rate for 10 years. … We just don't have an improvement of standard of living of the sort we're grown used to. And indeed if you have a more equitable redistribution through the tax system, which Obama is committed to, it might actually be no discernible downside for middle America and lower-class Americans. So many of the benefits of the boom went to the elites. If you have a lost decade plus redistribution, it may not be that dramatic a change for many, many people.

As someone in the "middle" that sounds good, until you look at who is getting the bail-out help. On the poor end, you have all the irresponsible dumb fucks and breeding machines who bought houses they shouldn't have even thought of buying and politicians who view them as "victims." On the other end, you have the rapacious banksters who made out like bandits and want responsible, frugal people me to cover their insane and criminal irresponsibility. You have to excuse me if I don't think the Obamessiah gives a rat's ass about the responsible bourgeoisie. No one does.

[GRG55]

Re: Great article on recent adventures

As someone in the "middle" that sounds good, until you look at who is getting the bail-out help. On the poor end, you have all the irresponsible dumb fucks and breeding machines who bought houses they shouldn't have even thought of buying and politicians who view them as "victims." On the other end, you have the rapacious banksters who made out like bandits and want responsible, frugal people me to cover their insane and criminal irresponsibility. You have to excuse me if I don't think the Obamessiah gives a rat's ass about the responsible bourgeoisie. No one does.

I see some clips of Charlie Rose's interview with Morgan Stanley's John Mack are being featured on Bloomberg this morning. The byline on the screen is "Mack Supports Obama" [I generally keep the audio off].

Sounds fine, but gives little comfort I bet. I would probably take it as a good sign if the people that helped create this problem were all throwing bricks at the new President. That would be an indication he must be doing something right...:p

[cjppjc]

Re: Great article on recent adventures

How about this for rate of growth:


Over a long period, such as the one we are now considering, we actually expect prices to rise more slowly than the increase in the money supply. That’s because price increases due to inflation would be offset by real price declines due to increases in productivity. The fact that the rate of increase in TMS is virtually identical to the rate of increase in the CPI suggests that there has not been any increase in productivity in the US economy since 1959 -- a proposition that I find hard to accept.
On the other hand, the compound annual increase in M3 since 1959 is 8.03%. Compared with the compound annual increase in the CPI it suggests that, on average, there has been an average 1.76% increase in productivity per year in the US economy since 1959. This sounds far more reasonable but actually over-states productivity gains. As the population grows the demand for money will grow correspondingly and the economy will expand, which means we have to adjust the money supply increase for population growth (ignoring changes in demographics for the time being). The average compound increase in the US population since 1959 is approximately 1%. Therefore, we have to deduct 1% from the difference in the annual percentage growth rate of the money supply and the CPI to arrive at a better estimate of the actual increase in productivity. Using M3 and the CPI, and adjusting for the population growth, suggests that the average annual increase in productivity was only about 0.76% per year. When we use TMS (adjusted for population growth) it would suggest an average annual compound decline in productivity in the US since 1959 of approximately 1%, which is even less believable than no productivity growth.
Now let’s see if we can address the divergence between TMS and M3 that we noticed right at the beginning.
From 1980 to 2007 TMS, M3 and the CPI all increased at a similar rate: 7.09%, 7.08% and 7.21% respectively. For all practical purposes these are identical. If we now adjust for population growth we see that both TMS and M3 suggest that the US economy had negative productivity growth of approximately 1% per year since 1980.
While I am certain that every government economist and, perhaps, most main stream economists will vehemently argue that the negative 1% productivity growth in the US since 1980 is impossible, I would suggest that it might just be correct. The United States has been losing manufacturing jobs to developing countries since 1980 and has become entirely dependent on foreign borrowing to sustain internal consumption. I don’t think it’s far-fetched at all that productivity growth in the US since 1980 has been non-existent, or negative.
But TMS and the CPI growth rates between 1959 and 1980 were also essentially identical which means that TMS suggests the American economy also had negative productivity growth of approximately 1% per year during America’s boom years. That is hard to believe. M3, on the other hand, suggests the increase in annual productivity was 3.2% from 1959 to 1980. That seems like an awfully high increase in annual productivity, until you consider that the period we are talking about was the Golden Age of the United States. There is some lag between monetary inflation and an increase in prices and the high rate of monetary inflation during the 1970s may mean that implied productivity growth for the period is over-stated. But let’s accept the data as it is and then consider that during the Second World War both Europe and Japan’s manufacturing complexes were destroyed and the United States was the only major economic power that was not bombarded. After the war the United States became the major producer of just about everything. Labor was abundant, capital creation occurred at a dizzying pace and real economic growth was perhaps the highest in the history of the United States. Could it be that the economy was enjoying 3.2% average annual productivity growth? It seems far more plausible than to suggest the productivity growth during America’s best years was a negative 1% per annum, which is what TMS would suggest.

[hayekvindicated]

Re: Great article on recent adventures

Ferguson never saw it coming and is now waxing about it like an expert.

The academics are worse than useless if you are a trader/investor. The journalists are even worse and are positively injurious to your financial health.

The only people I ever listen to are people who have a track record. I listen to Faber, Rogers and EJ. Schiff I read for getting an overall picture but never for trading decisions.

Of these I would rank Faber and EJ at the top for their moderation and foresight. Schiff gets the fundamentals right but rants too much and becomes immoderate - that makes him dangerous for you if you are going to trade on the basis of what he says.

[Masher]

Re: Great article on recent adventures

Ferguson never saw it coming and is now waxing about it like an expert.

He missed calling the crash so now he's running waaaaaaay over the dooooomer side to try to catch audience appeal.

The academics are worse than useless if you are a trader/investor. The journalists are even worse and are positively injurious to your financial health.

The only people I ever listen to are people who have a track record. I listen to Faber, Rogers and EJ. Schiff I read for getting an overall picture but never for trading decisions.

Of these I would rank Faber and EJ at the top for their moderation and foresight. Schiff gets the fundamentals right but rants too much and becomes immoderate - that makes him dangerous for you if you are going to trade on the basis of what he says.

You will never see Faber or EJ at a conference in Saudi Arabia taking the Saudi side against the USA!

Dear Peter,
Heeeeloooo! Some of those guys are NOT our friends! Whose side are you on, anyhow?



All Peter Schiff cares about is Peter Schiff!

[hayekvindicated]

Re: Great article on recent adventures

As someone in the "middle" that sounds good, until you look at who is getting the bail-out help. On the poor end, you have all the irresponsible dumb fucks and breeding machines who bought houses they shouldn't have even thought of buying and politicians who view them as "victims." On the other end, you have the rapacious banksters who made out like bandits and want responsible, frugal people me to cover their insane and criminal irresponsibility. You have to excuse me if I don't think the Obamessiah gives a rat's ass about the responsible bourgeoisie. No one does.

"Responsible bourgeoisie" - another word for what used to be the traditional middle class (i.e. with an emphasis on savings and production/real wealth creation).

One of the lessons I learnt in my years in London is that people have completely forgotten what it means to get rich by honest hard work - by building and creating things. The people that I met thought you could get rich by one of the following:

(1) trading (zero sum game that adds no value to society)

(2) investment banking (another form of paper shuffling which creates no real wealth)

(3) property speculation (mindless activity that never made any country rich)

(4) sports (amusing but no nation ever maintained wealth and power by every kid wanting to become a soccer player)

(5) lottery (basically legalised gambling so that Brown and his merry men can suck more money out of the economy for their favoured schemes).

The responsible bourgeoisie here aspired to become lawyers and accountants (neither of the two professions are again central to making a nation or society really rich).

In all of this time I've spent in London, I never heard of anyone trying to get rich by building something new with great technology that actually also improves the lives of people. Whatever happened to getting rich like Henry Ford or Thomas Edison?

[hayekvindicated]

Re: Great article on recent adventures

He missed calling the crash so now he's running waaaaaaay over the dooooomer side to try to catch audience appeal.



You will never see Faber or EJ at a conference in Saudi Arabia taking the Saudi side against the USA!

Dear Peter,
Heeeeloooo! Some of those guys are NOT our friends! Whose side are you on, anyhow?



All Peter Schiff cares about is Peter Schiff!

Schiff, I get the feeling dislikes the American state with a passion that borders on hatred. His father was imprisoned for taking a principled position on income tax and refusing to pay it. He seems to have developed a kind of visceral hatred for the US Government.

[Masher]

Re: Great article on recent adventures

Schiff, I get the feeling dislikes the American state with a passion that borders on hatred. His father was imprisoned for taking a principled position on income tax and refusing to pay it. He seems to have developed a kind of visceral hatred for the US Government.

Visceral hatred for the US Government plus a passion for self-promotion took him one step too far, methinks.