Are We Idiots?

[Sharky]

Re: Are We Idiots?

Carl Steidtmann seems to write most of the editorial for Deloitte's Economic & Market Review. Some entertaining stuff in the Apr 2007 issue:

http://www.deloitte.com/dtt/cda/doc/...MR1Q042007.pdf
http://www.deloitte.com/dtt/article/...D41537,00.html

Much of the economic pessimism comes from a strong belief that in the face of a dismal housing market, the consumer can not continue to spend. Nothing could be further from the truth. While consumer cash flow has been hurt by a reduction in home mortgage refinancing, job and wage growth continue to be healthy. Employers added nearly 450K net new jobs in Q1 2007, a slowdown from a year ago but still enough to lift real consumer spending by more than 3%.

[FRED]

Re: Are We Idiots?

time for an interview with Carl Steidtmann, chief economist and director, Consumer Business - Deloitte Research? maybe he can cheer us up.

Great idea! Even if he doesn't accept, it'll be fun sending him letters.

[jk]

Re: Are We Idiots?

time for an interview with Carl Steidtmann, chief economist and director, Consumer Business - Deloitte Research? maybe he can cheer us up.

[bart]

Re: Are We Idiots?

Thought for the thread for today:

[rabot10]

Re: Are We Idiots?

The Idiot thing cought my attention, OK yes I"m an Idiot - but don't tell my kids OK

[FRED]

Re: Are We Idiots?

Here comes the pitchfork crowd. The first wave is peaceful.

Group plans to physically block evictions

Local activists vow to begin this week physically blocking eviction of Bostonians who lose homes to foreclosures - even if protesters wind up in jail.

“We feel stopping evictions is important enough that if arrests are necessary, some people will be arrested,” said Steve Meacham of City Life, a Jamaica Plain group that plans to launch a civil-disobedience campaign tomorrow.

[DemonD]

Re: Are We Idiots?

I just hope that hyperinflation doesn't cause pitchforks to become too expensive. I'll be prepared either way.

[Chris Coles]

Re: Are We Idiots?

Personally, I do not believe there is anything that can be done to stop this change. I have ideas about some new forms of energy, but like every other outside the box thinker we cannot get access to funding for our thinking. So the ideas lie fallow. Financial institutions do not invest in thinkers; their world centres upon totally ephemeral concepts such as hedge funds, not real research or innovation. Governments only fund large research projects in large companies. That is the way of things in today's world. You get a minimal grant to make yourself attractive to a large company to fund you on-wards. Forget about freedom, free enterprise and the like. Just like the unstoppable train in a movie; nothing will change until it is too late to stop.

Certainly the record shows that within a century or so, there may be sufficient CO2 to match the time when the largest animal in North America was the size of a small dog. But my money is on Greenland losing most of its ice within the next decade. Yes, the experts say it cannot happen for a thousand years. Well, the second Larson went inside a year when the experts said it might go in another 35 years.

Go down to the nearest port and look at the sea level, it will come to within six feet of the top of the wharf. Now add another 20 feet.

[SSmith]

Re: Are We Idiots?

I've been wondering about this with respect to food. Global warming projections suggest that some food-growing areas will become unsuitable for farming, while other land--often further north--will become arable. A lot depends on the timing of factors like these:

1. Whether the new farmlands become suitable for farming before the old ones cannot sustain agriculture.

2. Whether an infrastructure, such as roads and railroads, will be in place to transport the food out of the new farming areas when needed. Brazil has trouble transporting food for export out of its interior because building this infrastructure is expensive.

3. When will governments admit that the old farmland will no longer support agriculture? Trade negotiations and agricultural subsidies show how tenaciously governments support existing farmers, so one would think they would not give up on these farmers easily after only a few bad years that could be explained away as part of the normal weather cycles. And if rich-country governments are not willing to abandon their existing farmers, they probably will not finance or otherwise support infrastructure construction elsewhere.

It also depends on the effects of global warming on agriculture in many countries at once. It's impossible to know how it will play out, or how quickly the climate changes will occur, but one can see developments ranging from a relatively easy and painless transition to extended periods of catastrophic famine. Even a few years of food shortages during a period of transition would be difficult, and it's hard to see anyone implementing the necessary (and expensive) changes before they become absolutely necessary.

[Chris Coles]

Re: Are We Idiots?

I am not talking about weather in the sense of this years or next; what I am saying is that we are witnessing the swing change to a completely new paradigm. The changes to come will not swing back the following year, they will stay for thousands or even millions of years. When the sea rises, it will stay risen and the consequences will return the human race to a new dark age that will make the price of a house the very least of our worries.

[grapejelly]

Re: Are We Idiots?

If you read the superb book by David Hackett Fischer, The Great Wave: Price Revolutions and the Rhythm of History, you learn that over the past thousand years there have been several well-defined long upward cycles in prices, punctuated by periods of relative equilibrium. The upward price cycles often, at their terminus, involve great social unrest.

But what is most interesting is that they also often involve unusual weather patterns!

How it all syncs is beyond me, but it seems to. In earlier periods unusual weather was so dire because human existence depended so much on the weather. One year there would be no summer, and mass starvation would result. One year there would be extremely unusual massive rains, and mass starvation would result.

I don't think things are like that anymore. Over the course of the millenium covered in the book, each price cycle often ends with a combination of political upheavals and bad weather, but the results of the weather are less and less dire as technology has advanced and made existence less borderline.

In any event, as you read a book like this you realize how bad things really were in the past compared to today. Some perspective anyway.

[Chris Coles]

Re: Are We Idiots?

If you take a look at the science behind disaster theory you will find that a collapse in the housing market is going to be as instantaneous as any other bubble burst. Basically, you get a long run up to a point where deep resistance is felt and then a fairly long period where no matter how hard everyone tries, the increases level out. But at some point, a complete collapse occurs taking the market right back to the beginning. A good book to read is The Downwave by Robert Beckman.

My money for the trigger is on another problem altogether; global warming. When New Scientist reported that the ice shelf Larson A had broken off Antarctica, it added that we should all worry if Larson B followed within the next 35 years. The following March, it too disintegrated, but not by breaking off. No, instead it went blue on the surface and melted before our eyes in three months. http://news.bbc.co.uk/1/hi/sci/tech/1880566.stm

Recently, we have had reports about the top of Greenland's Ice shelf, 10,000 feet above sea level, becoming covered in pools of blue water that run into Moulins, http://www.cei.org/pdf/ait/chXIV.pdf which are rivers, yes, rivers that flow into the top surface of the ice sheet.

http://www.msnbc.msn.com/id/9827949/...framenumber/1/

If Greenland should suddenly go the way of Larson A sea level will rise by about 23 feet putting most of the worlds sea ports and coastal cities such as Los Angeles under water. http://news.nationalgeographic.com/n...ndicemelt.html

http://www.msnbc.msn.com/id/11385475/

http://www.commondreams.org/headlines06/0811-06.htm

In addition, that single event might also trigger the plugging of the flow of the great conveyor of warm water to Western Europe triggering a collapse of the European economy.

You might think this is as fairyland an idea as Eric's about a collapse of house prices. But if you had been in my shoes over the last year, you would have seen that everywhere I visited, NM last autumn, TX This early spring, and here back in the UK; the weather has gone nuts. Las Cruces normal rainfall is 8 inches per annum but had had 20 inches before I arrived last October with another 2 or 3 inches during my stay. Houston was freezing in January but I watched as storms with tornadoes started a month early and temperatures beat all spring records right across the mid west. Back here in the UK, friends tell me that they had a very warm February with Strong winds that blew trees down all over the place and now we have summer temperatures in April.

Arctic ice is melting at an alarming rate http://news.nationalgeographic.com/n...rctic-ice.html and as it does so, the amount of heat it took to melt it is now available to heat the atmosphere rather than the ice. http://www.ens-newswire.com/ens/apr2...6-04-04-04.asp

The Arctic Tundra has been melted all summer since 2001, for the first time in history. http://www.sciencedaily.com/releases...0410140922.htm

In my opinion, we are already seeing a greatly increased rise in temperatures that will accelerate and cause a sudden increase in sea levels that will trigger a collapse in trade world wide within the next few years. Forget about economics, worry about the weather. That is what is going to trip the world economy into a sudden collapse.

[stumann]

Sounds like Peak Oil

The points made in the R WE IDIOTS article are oh so similar to those raised in countless Peak Oil books like The End of Suburbia & The Long Emergency. The housing/finance bubble might rightly be viewed as the last hurrah of US suburbanization. Yet then again, Itulip doesn't believe in Peak Oil...

- BUT the huge financial bubble behind housing/stocks was needed to finance more costly oil - the low hanging fruit was all gone, and the more costly oil could not be cost-effectively extracted under the then existing US suburban dream paradigm.

- the suburban dream paradigm we continue to be trapped in should've ended in the early 80s, yet Reagan's "morning in America" & a Michael J Fox "me generation" mentality gave it new, anti-depressent filled life -a bogus one, but a new life nonetheless

- the high % rates of the early 80s reflected the fact that cheap oil was gone. oil was getting too costly to extract & defend. % rates should've continued HIGHER - CHANGING AMERICAN BEHAVIOR - changing the suburban model to something else, but that didn't happen. Instead we got the Reagan/Bush/Greenspan voodoo econ cabal giving America what it really wanted - by hiding the true costs of the suburban dream under an ever more financialized carpet. globalization & global empire resulted in % rates not mattering - and they still don't...debtor falls behind on his or payments? push it farther into the future, extract a bit of equity, and everything continues swimmingly.

- the Ponzi debt creation now occurring inside the globalized financial apparatus has allowed the American consumer (the world's petty aristocracy) to continue down the path of suburbanization - Ford Explorers & Urban regeneration in the 90s - Hummers & MacMansions in the 00s. the true costs need never be addressed. subprime housing is only just a bump in the road, because "these people don't vote" (qoute from a New Orleans rescue person explaining why some neighborhoods remained flooded)

- as the US middle class grows ever smaller, the benefits of the current system will actually increase for those who remain within the priviliged class - meaning, the suburbanization model can well continue on in it's twisted logic because the lucky ones will have more at stake. meanwhile, America could well go the way of New Orleans, keeping in mind that what occured in New Orleans is the G rated version of what's going on in Bahgdad or any major city in Africa or South America. It's only shocking to some, the formerly priviliged American's now caught in the downdraft of suburbanization/globalization. To those outside the US, that's how it goes. life is hard.

- since it's a safe bet to say most of most of those involved in "investing" (internet gambling, more like) were probably included in the Reagan faithful, to now be waiting for the other shoe to drop, for the Big Decline to occur, is probably as foolhearty as believing it was "Morning in America" back in 80s. it wasn't. we were richer then as a nation than now, we just weren't being told we were on an hour by hour basis.

- the present paradigm has been uneconomical for nearly 30 years - but just because the evidence is now overwhelming doesn't mean it stops. we could very well continue down the path of global Ponzification for another 30, until Africa is pretty much depopulated, until South America becomes one big meat-4-export hacienda, until China becomes openly pro-slavery, and the US populace gives up on a university degree is preference for the Russian Dream - organized crime for the boys, prosititution for the girls.

- Elliotwave patterns suggest the financial system has been so skewed in order to pursue the Suburban American Dream worldwide, the pattern is dead! sounds foolish? it means the market mechinism is dead. the true cost of oil might never be realized and the big decline will continue to be pushed farther & farther into the future.

[Charles Mackay]

Re: Are We Idiots?

That'd be the torch and pitchfork crowd, assuming they can't be kept distracted by reality TV and shipped off to war.

Good One!

Here is a video from Kenneth Heebner, Co-Founder, Capital Growth Management

http://www.bloomberg.com/avp/avp.asx...efEajX3Khs.asf

Apr 13 (Econotech FHPN)--"The one thing they [investors] shouldn't go anywhere near is a CDO or residential mortgage-backed securities rated triple-A by Moody's and S&P because these securities are going to get downgraded by the hundreds of billions because they are secured by sub-prime and Alt-A mortgages where there's going to be massive defaults ... most of them appear to have been sold to hedge funds and foreigners and pension funds. Interviewer: Who owns them? Heebner: No one wants to talk about it ... They [hedge funds] buy a pool of mortgages that yield 8%, and they borrow against the yen and pay 3% [a yen carry trade], and they lever it ten to one, and so you have a lucrative profit. The hedge fund that you're running, the manager gets 20% of the gain. So even if you go a year before you go broke in the hedge fund, you get rich until the thing gets shut down. So there's a huge incentive to gamble recklessly here in the hedge fund business ... They [largest investment banks] created, they invented this machine. They're the ones that came up with the idea of securitization. They know the products are toxic. I don't think they're going to suffer losses. They simply passed them on to everybody else ... The only impact [on the i-banks] this will have when it shuts down is that the profits flow from it will get less ... So, they know the product is toxic; they're not going to get caught. Interviewer: And basically you think they've disposed of all the risk. They created it, they made their fees, and they got rid of the risk. Heebner: That's right." Kenneth Heebner, manager, CGM Realty Fund, Bloomberg video, Apr 12, my transcription

[grapejelly]

Re: Are We Idiots?

Just followed through on Bill's link to forum posting on building on toll roads.
Who will build them? Not expensive union labor but millions of Latino "guest workers"--better not let them be put on the path to citizenship however or Latinos will control elections. (Actually probably soon to do that anyway )

that will be done. The US needs millions of new immigrants to honor promises made to Boomers in terms of health care and retirement. So both problems are addressed