The issue that really get me with some of these analysts is their focus on some segmentds of the economy and not others - and the inability of many to recognize the evolution of the market economy and a change in the monetary structure. How long did it take for them to recognize and add an M3 to the M equation?
I remember a big stink and prophesies of doom about savings shrinking and being neglected, when the savings had just moved from the banks to the money markets in the form of 401ks and IRAs. Many savings institutions went belly up, but the investment firms took off.
As for debt - consider the demographics - is this debt being incurred by everyone in the population, or just certain segments? Maybe the young - who haven't developed the necessary disciplines to keep debt down,
Who else is in this slice of the pie? What about the baby boomers - what's the natonal total of their retirment funds? And what about the assetts they've built up over the years as they've paid down mortgages and other capital debt. What about the assets and retirment savings! they're built up?
As far as international debt and the trade defecit is concerned - I want to see the $ go down a little bit on the world market - I t would prompt more investment and developmant in the US infrastructure.
I remember a big stink and prophesies of doom about savings shrinking and being neglected, when the savings had just moved from the banks to the money markets in the form of 401ks and IRAs. Many savings institutions went belly up, but the investment firms took off.
As for debt - consider the demographics - is this debt being incurred by everyone in the population, or just certain segments? Maybe the young - who haven't developed the necessary disciplines to keep debt down,
Who else is in this slice of the pie? What about the baby boomers - what's the natonal total of their retirment funds? And what about the assetts they've built up over the years as they've paid down mortgages and other capital debt. What about the assets and retirment savings! they're built up?
As far as international debt and the trade defecit is concerned - I want to see the $ go down a little bit on the world market - I t would prompt more investment and developmant in the US infrastructure.
Savings rates are calculating the investments. To get the figure you just take net wages and reduce by the consumption figures. They do miss capital gains, but there is no good way for an economist to calculate that effect. The bottom line is that our economy can handle a somewhat reduced savings rate compared to say Asian countries because our assets are in generally more productive classes compared to many Asians putting money in the bank or other low return stores of value, but still we can't get away with an under 1% rate for long and not pay a price. Then again I see zip out there that would suggest an increase in that rate anytime soon.
Almost every other country in the world targets a percentage for its deficit. Why is it so hard for our Congress to do that?
Almost every other country in the world targets a percentage for its deficit. Why is it so hard for our Congress to do that?
WildBill - the question that has to be answered is where the debt is? Is it in the housing market and mortgages which is "productive debt", or is it in credit cards and other short term expensed debt?
I don't know about catastrophe? We'd start seeing interest rate hikes if debt was growing in a dangerous direction. Interest hikes would slow the economy while debt came back into allignment.
We're at the apex of the pyramid - the world would feel the pain before we felt the quake.
I don't know about catastrophe? We'd start seeing interest rate hikes if debt was growing in a dangerous direction. Interest hikes would slow the economy while debt came back into allignment.
We're at the apex of the pyramid - the world would feel the pain before we felt the quake.
It won't take much in the way or inflation or interest rate increases to send us into a recession right now. I have been harping on Al to get the Fed Funds up in the 4's for quite some time, so needless to say I think we are quite vulnerable. If we had prime rates in the low 7's the housing bubble would cool very fast. That is all we need. We don't need a bubble burst, but we definitely need to get people out of the mindset that real estate is this great investment with no risk. Not only would it do that, but it would also make the dollar more attractive to those not just trying to control the exchange rate.
BBL, I consider productive investments those that fund growth and future earnings. Banks are horribly inefficient at this. Much of the time they just slop their money into government issues which I am sure you would agree aren't very efficient. Other poor investments are chronic through Asia, the "connected" loan. When your banking system absorbs much of your savings and then the money is loaned out to favored industries or connected people, innovation and growth are stunted.
This is the reason why so many Asian dollars come to the US and fund this deficit. It starts with the acceptance by Japanese and Chinese that their banking systems fundamentally are broken. Funny thing is Snow-job is telling these people the first thing they need to do is clean up their banks to grow their economies. Sounds great on paper, but if the economies grow thanks to cleaned up banks, but don't lower trade barriers, this fall of the dollar will turn into an absolute massacre. This is probably the crisis for about a decade from now.
You never know anymore with the vast amount of speculative capital out there. They have run over oil prices and real estate last year or two, could the currency markets and specifically the dollar be the next target?
BBL, I consider productive investments those that fund growth and future earnings. Banks are horribly inefficient at this. Much of the time they just slop their money into government issues which I am sure you would agree aren't very efficient. Other poor investments are chronic through Asia, the "connected" loan. When your banking system absorbs much of your savings and then the money is loaned out to favored industries or connected people, innovation and growth are stunted.
This is the reason why so many Asian dollars come to the US and fund this deficit. It starts with the acceptance by Japanese and Chinese that their banking systems fundamentally are broken. Funny thing is Snow-job is telling these people the first thing they need to do is clean up their banks to grow their economies. Sounds great on paper, but if the economies grow thanks to cleaned up banks, but don't lower trade barriers, this fall of the dollar will turn into an absolute massacre. This is probably the crisis for about a decade from now.
You never know anymore with the vast amount of speculative capital out there. They have run over oil prices and real estate last year or two, could the currency markets and specifically the dollar be the next target?
Xpanda is obsessed with Armageddon.:nopityA:
He should change his name to Chicken Little.
The sky is falling...the sky is falling.. what a bunch of bullshit.
Funny how you never heard these jackass liberals talking about debt,deficits or trade imbalance while Clinton was in office.
Democrats invented government by debt. Buy now, let your children pay later.
Thanks FDR...
Sure is funny how the only time jackass liberals think about how bad the debt is... is when a Republican is in office.
He should change his name to Chicken Little.
The sky is falling...the sky is falling.. what a bunch of bullshit.
Funny how you never heard these jackass liberals talking about debt,deficits or trade imbalance while Clinton was in office.
Democrats invented government by debt. Buy now, let your children pay later.
Thanks FDR...
Sure is funny how the only time jackass liberals think about how bad the debt is... is when a Republican is in office.
Debt isn't a problem if you use it wisely. That doesn't mean piling it on endlessly. The reason why people think about it now is because it has never been this bad. Lets see it spiraled during Reagan and Bush, began being paid down by Clinton, and now is spiraling again under W. This isn't necessarily a partisan issue, just that is what happens when the last two decades of history show this striking pattern.
The problem with the macro economy is that it's complex in the extreme, and it's all new territory. In 1973 we went off of the gold standard and into international fiat. Since then we added M3 and some people think thewre should be an M4 and M5.
My point is that the structure of the economy is fluid, changing ands evolving as the impact of tax laws and other legislation affecting business and economy are enacted, as national and international demographics change, and as the economic power structure adjusts to new realities.
The entrance of China and India into the world market are impacting the cost of raw materials and finished goods.
The demographics of aging European and American populations are impacting national economies and tax structures.
The recent changes in accounting standards brought on by Enron and others has had a major impact in the US business practices - CEOs and CFOs aren't willing to sign off on fraudulent profit and loss statements.
And it goes on and on - right down into the micro structure.
911 and the following military actions had an impact on the economy - but the economy wasn't prepared to absorb such cvatastrophe's. It is now!
From a supply chain perspective, I'll tell you that the failure of any economic bloc will have a devastating impact on the world economy - and none of us want that - the old 60's chant should be changed to "make business, not war"
My point is that the structure of the economy is fluid, changing ands evolving as the impact of tax laws and other legislation affecting business and economy are enacted, as national and international demographics change, and as the economic power structure adjusts to new realities.
The entrance of China and India into the world market are impacting the cost of raw materials and finished goods.
The demographics of aging European and American populations are impacting national economies and tax structures.
The recent changes in accounting standards brought on by Enron and others has had a major impact in the US business practices - CEOs and CFOs aren't willing to sign off on fraudulent profit and loss statements.
And it goes on and on - right down into the micro structure.
911 and the following military actions had an impact on the economy - but the economy wasn't prepared to absorb such cvatastrophe's. It is now!
From a supply chain perspective, I'll tell you that the failure of any economic bloc will have a devastating impact on the world economy - and none of us want that - the old 60's chant should be changed to "make business, not war"
