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View Full Version : EJ's Rio Van Winkle awakening in 2012.



Jim Nickerson
02-06-07, 12:43 AM
You take a five year Rip Van Winkle nap. You wake up in 2012 to find that the debt pyramid has indeed collapsed. Perhaps one of these scenarios will prevail.


Median Home Price: $450,000 ($225,000 today)
Median Household Income: $80,000 ($40,000 today)
30-Year FR Mortgage: 19.5% (6.14%)
Discount Rate: 18% (5.5%)
CPI: 20% (3% today)
Oil: $200/bl
Imported Car: $80,000 (One year's median income)
Domestic Car: $40,000 (One half year's median income)
Cup of Starbucks Coffee: $6 ($3.00 today)



Median Home Price: $100,000 ($225,000 today)
Median Household Income: $30,000 ($40,000 today)
30-Year FR Mortgage: 0.5% (6.14%)
Discount Rate: 0% (5.5%)
CPI: -4% (3% today)
Oil: $100/bl
Imported Chinese Car: $80,000 - due to 50% tarriff (One year's median income)
Domestic Car: $40,000 (One year's median income)
Cup of Starbucks Coffee: N/A - out of business ($3.00 today)

EJ did not say either of these would happen in his post # 15 in the thread Saving, Asset-Price Inflation, and Debt-Induced Deflation http://www.itulip.com/forums/showthread.php?t=891 He offered them as possible extremes. In voting, the results would be more meaningful to vote in terms of the likelihood of things economic going more one way than the other, that is to say don't think either extreme will necessarily be reached in the entirety of EJ's imaginings.

jtabeb
05-28-11, 11:58 AM
Take the prices from the former and the income from the latter and THAT seems about right. (yes seriously) My vote is neither (or both, depending on how you look at it).

Stagnant or falling wages that do not keep up with even REPORTED inflation, let alone a more accurate of inflation, combined with all goods price inflation and (select, aka commodity) asset inflation. Sounds ******* lovely.

People have it wrong when it comes to commodities. James Dines has it exactly correct when he says, and I am paraphrasing "once awakened, dis-trust of a currency eventually becomes a deafening roar". It may be about supply and demand now, but it sure won't be later. (I think it is not, it is all about not properly accounting for the environmental, military, and the replacement costs of critical commodities, like energy).

jk
05-28-11, 12:18 PM
Take the prices from the former and the income from the latter and THAT seems about right. (yes seriously) My vote is neither (or both, depending on how you look at it).

Stagnant or falling wages that do not keep up with even REPORTED inflation, let alone a more accurate of inflation, combined with all goods price inflation and asset inflation. Sounds ******* lovely.

i voted inflationary as i think that will be closer to the picture, though i don't think it will all unfold by the end of next year. otoh, i agree with you, jtabeb, that incomes will look worse than in the pure inflationary scenario.

Slimprofits
05-29-11, 09:00 AM
You guys do realize that Nickerson posted this poll in 2007?

jk
05-29-11, 02:21 PM
You guys do realize that Nickerson posted this poll in 2007?
no, i'm embarrassed to say that i all i saw was that jtabeb had just posted to the thread. so now it is almost 5 years later. did we have inflation or deflation? yes, we did.

jtabeb
05-29-11, 10:47 PM
it just popped to the top of the board and thought that it would be worthwhile to comment.

raja
05-30-11, 08:57 AM
EU solvency issues explode. Sets off global financial crisis. Business failures, high unemployment. Collapse in velocity. Bernanke prints, but banks don't lend, because who can pay back? Prices drop as everybody is willing to make less profit and live on less. Big Deflation.

Or maybe everything will just work out, and hope triumphs.

Finster
08-08-11, 10:30 PM
Well now it's 2011 0808 and we know that by the time 2012 gets here there will have been another round of some kind of indeflationary $#!+...

Finster
08-03-12, 11:45 AM
Well chalk up another one for EJ ... the collpase of the debt pyramid is under way ...

charliebrown
08-03-12, 02:38 PM
what do you mean finster? I don't see any new signs of collapse. Both international and domestic bond markets are down today, but I assume that is normal
risk on / risk off sector rotation. corp/treas ratios seem to be holding up too.

When you spin the unemployment numbers into employment numbers, they seem to always contradict the unemployment numbers.
June report I thought was good.
July report I think is bad. There are actually less people working this month than last. 100,000 new full time jobs, but 200,000 less part time jobs.
Weekly wages about the same.
And the rate of new jobs increase y-o-y is slowing too.

globaleconomicollaps
08-03-12, 04:27 PM
what do you mean finster? I don't see any new signs of collapse. Both international and domestic bond markets are down today, but I assume that is normal
risk on / risk off sector rotation. corp/treas ratios seem to be holding up too.

When you spin the unemployment numbers into employment numbers, they seem to always contradict the unemployment numbers.
June report I thought was good.
July report I think is bad. There are actually less people working this month than last. 100,000 new full time jobs, but 200,000 less part time jobs.
Weekly wages about the same.
And the rate of new jobs increase y-o-y is slowing too.

Bottom line. None of the gloom and doom forecasts from Rubini, Shiff, etc. happened. Certainly nothing that I thought would go down happened. EJ on the whole has hit it exactly down the middle. Bravo EJ!

Finster
08-08-12, 12:40 PM
what do you mean finster? I don't see any new signs of collapse ...

Yeah, I wasn't referring to very recent events ... the context was my last post in August 2011, and plenty has gone under the bridge since, China slowing, the ongoing euro fiasco, just to cite some of the headlines. Globaleconomicollaps probably puts it better ...