2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

[vt]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

Where is the bad call? EJ has not announced a time to short. He only has raised the potential for a crash this year, but has also said it could extend as late as 2014.

You might want to reread carefully what was written, plus the followups by EJ on the forum.

EJ has clearly said that forecasting this decline is being made very difficult by the manipulation by the Fed and other central bankers.

[dummass]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

Sorry to be so blunt EJ, but this looks like another bad call. Your not the first to predict the end of this, fake, bull market, but trying to time its end is a fools game.

[vt]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

Economy decelerating?

http://www.telegraph.co.uk/finance/c...-tapering.html

[vinoveri]

Re: But who does the capital deepening ?

Wages are the means of inflation transmission that the Fed cares about, Services wage inflation specifically. After all it is a "Service Economy." Not much happening there yet.

Looks like wages take off 18-24 months after Fed starts to ratchet up funds rate. IHey who woulda thunk it: raising rates causes wages to go up ..... if only it were that simple.

Question is what leading economic data were they looking at in 2004 that provoked the raising of rates? I sure hope it was something real, quantitative and consistent with models, and not just "well we can't have rates at 1% forever so we have to raise them". That is exactly what we have now - 0% money for the last 5.5 years.

[vt]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

http://bambooinnovator.com/2014/02/0...rge-of-crisis/

http://www.phayul.com/news/article.a...ordon+G.+Chang

[Slimprofits]

Re: 2013 Review and 2014 Forecast - Part I: The Last Bubble - Eric Janszen

Tracking the Low-Wage Recovery: Industry Employment & Wages ---- http://www.nelp.org/page/content/lowwagerecovery2014/

[Chomsky]

Re: Who is buying?

Huge jump in non-monetary gold, too. Hmmm.

[EJ]

Re: Who is buying?

Lots of people are buying them, here and abroad.

Been to an airport lately? Very crowded. All those passengers are "buying" boeing 747's.

Been to a gas station? Around here, they are busy. Those people are buying gasoline obtained with Halliburton drill rigs.

US companies are not making lots of consumer stuff, which you see at Wallmart. What they are making is big ticket, premium products, frequently sold to businesses. If you want US companies to make consumer level stuff, then slap a massive tariff on everything coming from China or Mexico. No other way to do it.

Last data I saw, factory workers are keeping up with inflation, or better. But most people are not factory workers. It is the low skill service jobs that are lagging.

Going back to the factory workers, the fact that their wages are relatively expensive here makes US products less competitive both here and abroad. So you have a tradeoff between high wages and high levels of employment--just like it has always been.

This is exactly right and a topic of the upcoming article, except that one has to also include passenger cars.

In 2013 the U.S. exported:

$105,547,180,000 worth of Civilian aircraft, engines, equipment, and parts.
$64,344,343,000 worth of Fuel oil.
$61,014,197,000 worth of Petroleum products, other.
$56,097,345,000 worth of Passenger cars, new and used.
$54,645,906,000 worth of Other parts and accessories of vehicles.

The rise in petroleum product exports is especially notable.

Where exports declined in 2013 versus 2004:

Semiconductors $42,580,142,000 in 2013 vs $48,050,388,000 in 2013.

[Polish_Silver]

Who is buying?

Perhaps, but who is buying our industrial products? Are Americans able to afford their own products?

If we do not have wages here in America that are sufficiently high to encourage people to spend wages on other products and services made in America, how can we restart a wage based economy rather than a credit based economy?

Lots of people are buying them, here and abroad.

Been to an airport lately? Very crowded. All those passengers are "buying" boeing 747's.

Been to a gas station? Around here, they are busy. Those people are buying gasoline obtained with Halliburton drill rigs.

US companies are not making lots of consumer stuff, which you see at Wallmart. What they are making is big ticket, premium products, frequently sold to businesses. If you want US companies to make consumer level stuff, then slap a massive tariff on everything coming from China or Mexico. No other way to do it.

Last data I saw, factory workers are keeping up with inflation, or better. But most people are not factory workers. It is the low skill service jobs that are lagging.

Going back to the factory workers, the fact that their wages are relatively expensive here makes US products less competitive both here and abroad. So you have a tradeoff between high wages and high levels of employment--just like it has always been.

[shiny!]

Re: manufacturing on the top of the heap

Perhaps, but who is buying our industrial products? Are Americans able to afford their own products?

If we do not have wages here in America that are sufficiently high to encourage people to spend wages on other products and services made in America, how can we restart a wage based economy rather than a credit based economy?

This is a very important question. Answers?

[Forrest]

Re: manufacturing on the top of the heap

In Ej's graph, manufacturing wages are growing the fastest. This attests to the very strong industrial productivity growth in the US.

This doesn't necessarily mean lots of jobs, since productivity growth means one man doing the work formerly done by 10. But it certainly improves that nations trade balance, tax base, etc.

Perhaps, but who is buying our industrial products? Are Americans able to afford their own products?

If we do not have wages here in America that are sufficiently high to encourage people to spend wages on other products and services made in America, how can we restart a wage based economy rather than a credit based economy?

[Polish_Silver]

manufacturing on the top of the heap

In Ej's graph, manufacturing wages are growing the fastest. This attests to the very strong industrial productivity growth in the US.

This doesn't necessarily mean lots of jobs, since productivity growth means one man doing the work formerly done by 10. But it certainly improves that nations trade balance, tax base, etc.

[EJ]

Re: But who does the capital deepening ?

What is glaring here is the anemic recovery of wages vs. the slow recovery of the economy.

Wages are the means of inflation transmission that the Fed cares about, Services wage inflation specifically. After all it is a "Service Economy." Not much happening there yet.

[vt]

Re: But who does the capital deepening ?

What is glaring here is the anemic recovery of wages vs. the slow recovery of the economy.

[EJ]

Re: But who does the capital deepening ?

I hope they are correct.
We appear to be well past the point where further reductions in wages will help the economy.
An impoverished population does not buy many goods and services, and businesses suffer from lack of demand.

Perhaps an episode of broad, strong wage inflation will help pick up economic activity.

We do not expect wages to pick up uniformly. In fact we see areas where labor market weakness will intensify and others where labor markets are already tight. In the next article we go into detail on the who, what, where, how, and why of wage inflation in the U.S. Key factors that cause disparities are: age, industry, and geography.