FIRE Economy Explosion Fallout -- Part I: Recession ends, depression begins - Eric Janszen

[flintlock]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins

No. But it would take a miracle for U-3 to go from 10 to 20 in just nine months. For whatever it's worth, I believe that the FED is going to continue to extend benefits which will close the gap between U-3 and U-6. They have no other choice or we will encounter civil unrest episodes(Rodney King). To a certain extent, I agree with Gerald Celente("When people have nothing to lose, they lose it"). You cannot give ordinary average citizens 150k+ instant equity in a house in just two short years and then take it away from them leaving behind only debt that they can never pay back, especially in a severe and prolonged recession. The housing bubble is the worse thing that the FED could have blown. It would not surprise me right now if over 30 percent of the adult population is technically bankrupt.

Thanks for the link Snacky and the clarification of 20 percent as opposed to 25. I was just too lazy to look it up myself.

Oh I agree, continuing high unemployment is a real potential powder keg. Hard to say how things will go down, but I suspect it won't be pretty as limited savings people have been living on run out. Politicians will have their hands full figuring out just how fast they can lower the US standard of living before something explodes. There's a certain segment used to poverty. Then there's others who aren't so well prepared for it. 2010 should be an interesting year.

Crime is already up a lot in my area. I get calls daily now to install security lighting, CCTV systems, and timers.

Not my area, but recently an Atlanta City councilman was carjacked in his neighborhood. This after weeks earlier another was robbed in a home invasion.

http://www.ajc.com/news/atlanta/atla...pe=rss_atlanta

[we_are_toast]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins

More accurately, it is a "more capable" vs "less capable" issue. And by "capable" I mean it can take many forms, most obvious of which are intelligence, discipline, street-smarts, drive/ambition, opportunity and the like. If viewed from this perspective, the wealth will obviously flow to the "more capable" much like NBA championships flowed to Michael Jordan.

In reality, the "rich", those of us that are causing and creating this uneven distribution of wealth, are you and me and our fellow iTulipers that are smarter than the average individual, or have better than average opportunity than some (I was born into a family business), or are more disciplined than most (conservative investing, not highly leveraged/in debt over our heads), more driven (investing hours and hours on iTulip and elsewhere). It is only natural that more wealth (which also includes less self-inflicted wealth destruction) flows our way. We don't do it to spite our less fortunate brethren, we don't do it out of shear greed, we don't try to hurt anyone else along the way (most of us do more direct good the more successful we become personally). No, the uneven wealth distribution just happens as a natural result of our capabilities and chosen actions versus those that are less capable and make bad decisions and possibly don't try as hard.

All that being said, I don't totally disagree that a severe uneven distribution of wealth may not be optimal for society, but I'm not sure.

I do strongly beleive that a rising tide does raise all boats. So from that perspective, what's good for us "rich" is also good for the "other half". With that in mind, I would have a great fear that any form of forced/excessive wealth redistrubution would directly harm the motivations of the more capable, more productive of us that are the wealth producers in this great Nation, which in turn, would be bad for all members of our society. You know, "Road to Serfdom" thinking. As an anology, we'd all have a more equal portion of the pie, but of a much smaller pie. I further feel that any forced wealth redistribution would only be a temporary unnatural state. As such, and with all due respect to EJ, I can't agree with his call for doing a better job of wealth equalization during boom times simply because that wealth will (eventually) find its way right back into the hands of the same wealthier (more capable) people from whence it came.

In summation, it is my opinion that uneven wealth distribution is a natural state that results from a free-market society, and that a free-market society is still the best structure/philosophy for maximizing the size of the pie (strength of an economy), even if it means some inequalities OF RESULT (of wealth) are a natural side affect. The greater pie size will offset the smaller portion of said pie for most citizens in my opinion.

All of this is easy for me to say because I am confident in my abilities and successful in my life thus far. On the other hand, I can understand why an individual who is less capable, less successful, and therefore has less wealth than average would scream for government assistance or any type of "break" or freebie or hand-out or "stick-it-to-the-rich" redistribution. Just because I can understand the thinking, however, doesn't make it right. Let's not try to fix what can't be fixed. Let's also not create class warfare where none should exist. We should idolize and emulate the typical entreprenuers, titans of industry, and all around capable, productive members of society that drive our economy, not chastize, belittle, and take from them.

Please tell me this is a letter to the Onion.

[Chris Coles]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins

Truthfully, Raz, I'm not sure how to resolve the uneven distribution of wealth "problem", but I don't think it's fair to characterize it as a liberal vs conservative issue, although it is a popular characterization.

More accurately, it is a "more capable" vs "less capable" issue. And by "capable" I mean it can take many forms, most obvious of which are intelligence, discipline, street-smarts, drive/ambition, opportunity and the like. If viewed from this perspective, the wealth will obviously flow to the "more capable" much like NBA championships flowed to Michael Jordan.

Additionally, your argument may be (hypocritically) fueling the flames of a class warfare debate when such debate is unfounded. The "rich" are not the stereotypical crooks of banking and Wall Street that are the poster boys of the "rich-bashing". In reality, the "rich", those of us that are causing and creating this uneven distribution of wealth, are you and me and our fellow iTulipers that are smarter than the average individual, or have better than average opportunity than some (I was born into a family business), or are more disciplined than most (conservative investing, not highly leveraged/in debt over our heads), more driven (investing hours and hours on iTulip and elsewhere). It is only natural that more wealth (which also includes less self-inflicted wealth destruction) flows our way. We don't do it to spite our less fortunate brethren, we don't do it out of shear greed, we don't try to hurt anyone else along the way (most of us do more direct good the more successful we become personally). No, the uneven wealth distribution just happens as a natural result of our capabilities and chosen actions versus those that are less capable and make bad decisions and possibly don't try as hard.

All that being said, I don't totally disagree that a severe uneven distribution of wealth may not be optimal for society, but I'm not sure.

I do strongly beleive that a rising tide does raise all boats. So from that perspective, what's good for us "rich" is also good for the "other half". With that in mind, I would have a great fear that any form of forced/excessive wealth redistrubution would directly harm the motivations of the more capable, more productive of us that are the wealth producers in this great Nation, which in turn, would be bad for all members of our society. You know, "Road to Serfdom" thinking. As an anology, we'd all have a more equal portion of the pie, but of a much smaller pie. I further feel that any forced wealth redistribution would only be a temporary unnatural state. As such, and with all due respect to EJ, I can't agree with his call for doing a better job of wealth equalization during boom times simply because that wealth will (eventually) find its way right back into the hands of the same wealthier (more capable) people from whence it came.

In summation, it is my opinion that uneven wealth distribution is a natural state that results from a free-market society, and that a free-market society is still the best structure/philosophy for maximizing the size of the pie (strength of an economy), even if it means some inequalities OF RESULT (of wealth) are a natural side affect. The greater pie size will offset the smaller portion of said pie for most citizens in my opinion.

All of this is easy for me to say because I am confident in my abilities and successful in my life thus far. On the other hand, I can understand why an individual who is less capable, less successful, and therefore has less wealth than average would scream for government assistance or any type of "break" or freebie or hand-out or "stick-it-to-the-rich" redistribution. Just because I can understand the thinking, however, doesn't make it right. Let's not try to fix what can't be fixed. Let's also not create class warfare where none should exist. We should idolize and emulate the typical entreprenuers, titans of industry, and all around capable, productive members of society that drive our economy, not chastize, belittle, and take from them.

I absolutely concur with this statement and, in my own way am trying to seek out an acceptable solution to the problem of how we create more prosperity at all levels of society.

And to add to the above, may I suggest anyone interested read the history of the Russian farmers and the collectivisation of their agriculture.
http://www.piiblog.com/2008/08/russi...ent-kinds.html that in turn set back the Russian economy to this day.

The only way forward is to use capitalism, but with some redefinition of the way we use it to improve prosperity at the grass roots of society.

[jk]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins

there has always been a wide distribution of abilities within society, but the inequality of the distribution of wealth has varied. thus, varying abilities is not an adequate explanation of wealth distribution.

there are both policies and social norms which feed into the wealth distribution. the recent skew is as large as that in 1929, iirc- what a coincidence! it is a product of the financialization of the american economy, on the one hand, and the global labor arbitrage, on the other.

[Chris Coles]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins

You cannot give ordinary average citizens 150k+ instant equity in a house in just two short years and then take it away from them leaving behind only debt that they can never pay back, especially in a severe and prolonged recession. The housing bubble is the worse thing that the FED could have blown. It would not surprise me right now if over 30 percent of the adult population is technically bankrupt.

The best thing they can do is indeed, go bankrupt. The faster the better for all of them. How long it takes for that lesson to sink in is another matter entirely. But that in turn bring on the worst times for all the systematic risks entailed by such actions. So the next couple of years will be made even harder caused by the steady collapse.

[rjwjr]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins

Yep. I saw it coming [politically] thirty-five years ago.

Human nature doesn't change. The rich only get greedier and the "kept" class (tax eaters) always grows larger. The Left set it in motion with FDR and supercharged it under LBJ. Then along came the friggin' NeoCons to apply hubris and stupidity so as to detonate the delayed charge.

The explosion comes next.

Truthfully, Raz, I'm not sure how to resolve the uneven distribution of wealth "problem", but I don't think it's fair to characterize it as a liberal vs conservative issue, although it is a popular characterization.

More accurately, it is a "more capable" vs "less capable" issue. And by "capable" I mean it can take many forms, most obvious of which are intelligence, discipline, street-smarts, drive/ambition, opportunity and the like. If viewed from this perspective, the wealth will obviously flow to the "more capable" much like NBA championships flowed to Michael Jordan.

Additionally, your argument may be (hypocritically) fueling the flames of a class warfare debate when such debate is unfounded. The "rich" are not the stereotypical crooks of banking and Wall Street that are the poster boys of the "rich-bashing". In reality, the "rich", those of us that are causing and creating this uneven distribution of wealth, are you and me and our fellow iTulipers that are smarter than the average individual, or have better than average opportunity than some (I was born into a family business), or are more disciplined than most (conservative investing, not highly leveraged/in debt over our heads), more driven (investing hours and hours on iTulip and elsewhere). It is only natural that more wealth (which also includes less self-inflicted wealth destruction) flows our way. We don't do it to spite our less fortunate brethren, we don't do it out of shear greed, we don't try to hurt anyone else along the way (most of us do more direct good the more successful we become personally). No, the uneven wealth distribution just happens as a natural result of our capabilities and chosen actions versus those that are less capable and make bad decisions and possibly don't try as hard.

All that being said, I don't totally disagree that a severe uneven distribution of wealth may not be optimal for society, but I'm not sure.

I do strongly beleive that a rising tide does raise all boats. So from that perspective, what's good for us "rich" is also good for the "other half". With that in mind, I would have a great fear that any form of forced/excessive wealth redistrubution would directly harm the motivations of the more capable, more productive of us that are the wealth producers in this great Nation, which in turn, would be bad for all members of our society. You know, "Road to Serfdom" thinking. As an anology, we'd all have a more equal portion of the pie, but of a much smaller pie. I further feel that any forced wealth redistribution would only be a temporary unnatural state. As such, and with all due respect to EJ, I can't agree with his call for doing a better job of wealth equalization during boom times simply because that wealth will (eventually) find its way right back into the hands of the same wealthier (more capable) people from whence it came.

In summation, it is my opinion that uneven wealth distribution is a natural state that results from a free-market society, and that a free-market society is still the best structure/philosophy for maximizing the size of the pie (strength of an economy), even if it means some inequalities OF RESULT (of wealth) are a natural side affect. The greater pie size will offset the smaller portion of said pie for most citizens in my opinion.

All of this is easy for me to say because I am confident in my abilities and successful in my life thus far. On the other hand, I can understand why an individual who is less capable, less successful, and therefore has less wealth than average would scream for government assistance or any type of "break" or freebie or hand-out or "stick-it-to-the-rich" redistribution. Just because I can understand the thinking, however, doesn't make it right. Let's not try to fix what can't be fixed. Let's also not create class warfare where none should exist. We should idolize and emulate the typical entreprenuers, titans of industry, and all around capable, productive members of society that drive our economy, not chastize, belittle, and take from them.

[Quincy K]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins

He didn't say at what rate it leveled off did he?

No. But it would take a miracle for U-3 to go from 10 to 20 in just nine months. For whatever it's worth, I believe that the FED is going to continue to extend benefits which will close the gap between U-3 and U-6. They have no other choice or we will encounter civil unrest episodes(Rodney King). To a certain extent, I agree with Gerald Celente("When people have nothing to lose, they lose it"). You cannot give ordinary average citizens 150k+ instant equity in a house in just two short years and then take it away from them leaving behind only debt that they can never pay back, especially in a severe and prolonged recession. The housing bubble is the worse thing that the FED could have blown. It would not surprise me right now if over 30 percent of the adult population is technically bankrupt.

Thanks for the link Snacky and the clarification of 20 percent as opposed to 25. I was just too lazy to look it up myself.

[Raz]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins

I like the bomb analogy.


In my opinion, this is a foregone conclusion. We have a government bubble. It's too large and makes up too big a percentage of our economy now to turn back. We will see the downside of democracy that some of our forefathers warned us about, as politicians are forced to play to the mob.

Tough times ahead.

Yep. I saw it coming [politically] thirty-five years ago.

Human nature doesn't change. The rich only get greedier and the "kept" class (tax eaters) always grows larger. The Left set it in motion with FDR and supercharged it under LBJ. Then along came the friggin' NeoCons to apply hubris and stupidity so as to detonate the delayed charge.

The explosion comes next.

[flintlock]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins

Hello Fred

Unemployment leveling off in Q42009? I believe that you once predicted U-3 at 25 percent. I always thought that we would max-out at 25 percent U-6, which looks very plausible.

I would assume that you guys have now changed this number. What do you believe will be the ultimate U-3 and U-6 forecast?

He didn't say at what rate it leveled off did he?

[we_are_toast]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins

And right below that last graphic, the closing statement, " We are sticking to our forecast of 20% U3 unemployment in the U.S. by the end of 2010."

My immediate reaction when that was posted was to comb through some old posts to see if I could find a precedent forecast on the site - no luck. I also don't think that particular forecast has been revisited since.

I had the same question. 9.5% is a far cry from 20%. I'm not sure why the major change in unemployment, but I disagree. I don't see the fall off in weekly claims that will level out unemployment. I'm still betting on low teens by the end of 2010.

[cindykimlisa]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins

Part I: Recession ends, depression begins

Part I : Manipulation continues, Depression begins, Manipulation continues, Recession ends, Depression continues, Manipulation continues

Forget the fundamentals and logical comparisons. Stay tuned to the manipulations and sieze on opportunities. Be careful not to get burned by the logical and illogical.

[art]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins

I would love to see iTulip have a dedicate Forecasts page that lists each forecast, the date, the link to the post justifying the forecast (or change in forecast if it is an update).

[metalman]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins

And right below that last graphic, the closing statement, " We are sticking to our forecast of 20% U3 unemployment in the U.S. by the end of 2010."

My immediate reaction when that was posted was to comb through some old posts to see if I could find a precedent forecast on the site - no luck. I also don't think that particular forecast has been revisited since.

have been on this site for 10 yrs... seen 100s of forecasts.. but i can find 1 or 2 that are not within 10%.

compare to ???

[snacky]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins

And right below that last graphic, the closing statement, " We are sticking to our forecast of 20% U3 unemployment in the U.S. by the end of 2010."

My immediate reaction when that was posted was to comb through some old posts to see if I could find a precedent forecast on the site - no luck. I also don't think that particular forecast has been revisited since.

[metalman]

Re: FIRE Economy Fallout -- Part I: Recession ends, depression begins

See http://itulip.com/forums/showthread.php?t=9528 - last sentence

If we compare that animation of unemployment data to this older one of recessions since the late 1970s we see that even at the worst part of the 1980 t0 1983 recessions unemployment fell in some states even if it was rising in most states.