Global Monetary Breakdown: Part I

[Verrocchio]

Re: Global Monetary Breakdown: Part I

EJ,

FWIW I applaud the video as a skillful integration of graphics and text that allowed me to take away a more accurate view of the points made. For example, the text stated that the USA had dropped out of the top 20 nations on the corruption index. However, the color-keyed graphic showed the corruption level of the USA (yellow hue) still stood in contrast to almost all other nations of the world (red hue), which had a much deeper level of corruption. If I had only the text to read, I would have formed a wrong impression. (Yes, falling out of the top 20 still causes concern, although I doubt any iTulip readers were surprised.)

I take in most of my information by reading text, but I found it refreshing to view the video for a change.

In summary, the video celebrated insights that are already manifest to your subscribers. If it were my site, I'd look at it as a promotional piece to put out in front so potential subscribers could understand the value behind the subscriber wall.

[zoog]

Re: Global Monetary Breakdown: Part I

If you're trying to sell a home over $750,000, forget it. The market is virtually dead.

...

While the high end of the housing market has seen the greatest decline, unit sales at the mid and low end housing market are off 50% to 85% from the peak.

...

Interestingly, the very low end of the market is almost as bad off as the very high end. It peaked at 40,000 units per quarter in the spring of 2004, only to collapse to 5,000 in Q3 2011.

My simplistic explanations for the high and low end are:

• High-end homes heavily depended on jumbo mortgages, which are not backed by Fannie / Freddie. Since the crash, primary lenders are reluctant to take on the risk of such large loans.
• Low-end homes heavily depended on subprime and NINJA mortgages. Most of that came to a screeching halt in 2007.

The sales count data is interesting to see. As for prices, in the cities that Case-Shiller tracks, the low-end indicies have dropped the most.

[raja]

Re: Global Monetary Breakdown: Part I

We promised readers inflation by Q4 2011 and everywhere we looked, we found it.

Prices are going up now as producers try to maintain the profits to which they've become accustomed. But that's going to stop soon, because there will be fewer consumers with money to spend once the global slowdown hits in a big way. Ka? You ain't seen nothin' yet

Prices can't go up if there are no customers. Once the crunch hits in a big way, either sellers go out of business, or they lower prices and share the pain. I expect both price drops and massive closings.

I'm not going to say the D word, because on iTulip that causes widespread wailing and nashing of teeth. But what would you call it when there is 25% unemployment and stores close right and left from lack of customers?

The government wants to save the bankers by saving their ass-sets, but unless consumers get the money in their hot little spending hands, we're headed for a downward spiral. So, how do you think that's going to happen? The Financial Elite, who are controlling the show, are looking forward to swooping in and grabbing up all the real assets at bargain basement prices . . . .
. . . . unless there is a revolution, and the People stop them.

But no need to quibble. Give it a year or two, and we'll see who's right.

[pescamaaan]

Re: Global Monetary Breakdown: Part I

We need to make the iPhone of the world auto manufacturing world.

Perhaps Apple should build a car, given their long history of excellent hardware design and quality...looks like GM is up to their old tricks: Volts catching fire..

http://bloomberg.com/news/2011-11-25...atch-fire.html

[bart]

Re: Global Monetary Breakdown: Part I

...

I'm not going to say the D word, because on iTulip that causes widespread wailing and nashing of teeth. But what would you call it when there is 25% unemployment and stores close right and left from lack of customers?

...

Depends on if it's Depression or Deflation. ;-)



Pretty much no question in my book on depression.








But inflation (or stagflation if preferred) is quite alive and well, albeit slowing.

Water & sewer is up about 6% year on year, and if it weren't for long term contracts I believe that electricity would be up at least 5% too

To follow with the car analogy, here's used car prices. They're up over 25% since the bottom.

[swgprop]

Re: Global Monetary Breakdown: Part I

Perhaps Apple should build a car, given their long history of excellent hardware design and quality...

Yes, as long as

• You are willing to send your car back to Apple when the battery needs to be replaced.
• You are willing to buy proprietary "Apple Gas" from the "Apple Stations" when you need fuel.
• You are happy to allow Apple to decide what after market accessories are allowed on your vehicle.
• After market manufacturers are willing to pay licensing fees to Apple for the privilege of producing and selling replacement parts and accessories for the car.
• You are OK with Apple deciding when and where you can use your vehicles features.

I'm sure the car will be pretty though.

[raja]

Re: Global Monetary Breakdown: Part I

Depends on if it's Depression or Deflation. ;-)

Pretty much no question in my book on depression.

But inflation (or stagflation if preferred) is quite alive and well, albeit slowing.

Water & sewer is up about 6% year on year, and if it weren't for long term contracts I believe that electricity would be up at least 5% too

To follow with the car analogy, here's used car prices. They're up over 25% since the bottom.

One of my points is that inflation can't hold if people don't have money to spend and therefore don't spend. With a global slowdown in progress, that's what's going to happen.

Instead of the profits flowing into the coffers of the 1%, businessmen will have to decide whether to accept lower profits or go out of business. I think they will choose to stay in business, so I think prices will go down.

Now, if the government somehow can get money into the hands of the people, that situation will reverse and we would see inflation, but so far that's not happening.

The current rise in prices is only temporary . . . KA is coming. Whether POOM ever comes depends on politics . . . .

[bart]

Re: Global Monetary Breakdown: Part I

One of my points is that inflation can't hold if people don't have money to spend and therefore don't spend. With a global slowdown in progress, that's what's going to happen.

Instead of the profits flowing into the coffers of the 1%, businessmen will have to decide whether to accept lower profits or go out of business. I think they will choose to stay in business, so I think prices will go down.

Now, if the government somehow can get money into the hands of the people, that situation will reverse and we would see inflation, but so far that's not happening.

The current rise in prices is only temporary . . . KA is coming. Whether POOM ever comes depends on politics . . . .

While I'm in the disinflation camp (as in lower rates of inflation ahead), I just don't see any significant period in the near or intermediate term future where prices of basics & necessities will drop substantially when measured with something like my CPI w/o lies.

Lower prices on necessities, and businesses preferring very low or no profits - yes. True deflation of over a percent or two on necessities, with apples-to-apples comparisons - very unlikely. And who knows...

[c1ue]

Re: Global Monetary Breakdown: Part I

One of my points is that inflation can't hold if people don't have money to spend and therefore don't spend. With a global slowdown in progress, that's what's going to happen.

Instead of the profits flowing into the coffers of the 1%, businessmen will have to decide whether to accept lower profits or go out of business. I think they will choose to stay in business, so I think prices will go down.

You are assuming that businesses have the capability to drop prices without going out of business - i.e. that profits are still quite high.

You are also assuming that businesses need to sell to everyone. As we're seeing right now, the businesses selling to the 1% are doing fine; everyone else is just surviving. And they're surviving by passing increasing costs due to commodity prices, health care, energy, and so forth onwards.

The 'D'-baggers are wrong and continue to be wrong.

Deflationary spirals can only occur under a gold standard with government complicity - and we have neither.

[*T*]

Re: Global Monetary Breakdown: Part I

Instead of the profits flowing into the coffers of the 1%, businessmen will have to decide whether to accept lower profits or go out of business. I think they will choose to stay in business, so I think prices will go down.

The total amount of money/credit (govt + private) can go down and prices can still go up.

[bart]

Re: Global Monetary Breakdown: Part I

You are assuming that businesses have the capability to drop prices without going out of business - i.e. that profits are still quite high.
...

For what its worth, from the BEA via the Fed:

[c1ue]

Re: Global Monetary Breakdown: Part I

For what its worth, from the BEA via the Fed:

And in counterpoint, I note:

http://illusionofprosperity.blogspot...s-vs-debt.html



Thus while the BEA data is correct, it doesn't take into account the amount of debt corporations have piled up.

I cannot recall the link now, but this was noted elsewhere: only at one time in the past have corporate debts been at such high levels vs. revenue.

Given this extra perspective, several conclusions can tentatively be drawn:

1) Corporate profits aren't at record levels; corporate leverage is

2) Access to leverage is more important for business than anything else right now

3) Employees don't figure into either of the above except negatively; unsurprisingly employment is thus going down

Or in other words, corporations are squeezing labor because they are in turn fully dependent on credit. FIRE uber alles.

[bart]

Re: Global Monetary Breakdown: Part I

...
Thus while the BEA data is correct, it doesn't take into account the amount of debt corporations have piled up.

I cannot recall the link now, but this was noted elsewhere: only at one time in the past have corporate debts been at such high levels vs. revenue.

Given this extra perspective, several conclusions can tentatively be drawn:

1) Corporate profits aren't at record levels; corporate leverage is

2) Access to leverage is more important for business than anything else right now

3) Employees don't figure into either of the above except negatively; unsurprisingly employment is thus going down

Or in other words, corporations are squeezing labor because they are in turn fully dependent on credit. FIRE uber alles.

Sort of...

Interest rates are very low too, which makes that leverage look much higher than it is - my basic point being that there is room to cut prices without substantially jeopardizing the operation.



Little doubt about employees not exactly participating or FIRE issues, and its not just the last few years (excluding the bump in the late 1990s and early 2000s). The peak appears to be around 1973, as shows so many times in fully inflation adjusted charts too.

[jtabeb]

Re: Global Monetary Breakdown: Part I

High unemployment AND high inflation is the NORM! (not the exception). I can give as many examples as you wish to prove this point, but the following should do for a start.

Inflation in the French republic, Weimar Germany, collapse of former soviet union, Argentina, Zimbabwe, civil war south, etc, etc.

As EJ has REPEATEDLY, the only exception is the original American great depression, and that only lasted while we retained the gold standard.

Your assertion is blatantly contradicted REPEATEDLY throughout history.

Raja, I'm not trying to be a you know what, but I've had this discussion over and over again with people in person and just can't help them get it. I hope that is not the case here.


P.S. You and I Both agree that another Ka (maybe a bigger Ka than 2008) is comming. What is essential is to recognize that that too will be a transient crisis event that will be immediately followed by intense inflation. This process (Ka-po-KAA-POOO-KAAAAA-POOOOOOOOM!!!) of destabilizing fiat currency depreciation has NEVER in history resulted in an increase in the purchasing power of the currency in question. This time will be no different. (deflationary interludes excepted, of course).

I hate to say it, but I will (with one caveat).

Somebody here once said "it's a PROCESS not an EVENT". HT EJ, of course.

I would modify that to "It's a process not an event, until it isn't".

Meaning?

Ka-poo-KAAA-POOO-KAAAAAAA-POOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOM!

[jiimbergin]

Re: Global Monetary Breakdown: Part I

High unemployment AND high inflation is the NORM! (not the exception). I can give as many examples as you wish to prove this point, but the following should do for a start.

Inflation in the French republic, Weimar Germany, collapse of former soviet union, Argentina, Zimbabwe, civil war south, etc, etc.

As EJ has REPEATEDLY, the only exception is the original American great depression, and that only lasted while we retained the gold standard.

Your assertion is blatantly contradicted REPEATEDLY throughout history.

Raja, I'm not trying to be a you know what, but I've had this discussion over and over again with people in person and just can't help them get it. I hope that is not the case here.


P.S. You and I Both agree that another Ka (maybe a bigger Ka than 2008) is comming. What is essential is to recognize that that too will be a transient crisis event that will be immediately followed by intense inflation. This process (Ka-po-KAA-POOO-KAAAAA-POOOOOOOOM!!!) of destabilizing fiat currency depreciation has NEVER in history resulted in an increase in the purchasing power of the currency in question. This time will be no different. (deflationary interludes excepted, of course).

I hate to say it, but I will (with one caveat).

Somebody here once said "it's a PROCESS not an EVENT". HT EJ, of course.

I would modify that to "It's a process not an event, until it isn't".

Meaning?

Ka-poo-KAAA-POOO-KAAAAAAA-POOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOM!

+1; I don't think EJ could have said it better! (well maybe)