Massive Layoffs Today- Your thoughts on the economy?

Beware the Low Tides of March Are Upon Us!

 

I just listened to it on his site. Pretty depressing.

 

He has the full video of the interview on his site. Definitely worth watching. Nothing like a little historical perspective to make our new economic reality sink in.

http://www.charlierose.com/

 

what has fundamentally changed since then to make it seem as if we are on the path to real recovery? nothing.

it's like this. in fall 2008, we had a ton of debt we couldn't pay off and the loan shark was coming to kneecap us. just in time, we secured an even bigger loan, with even more usurious rates, from an even meaner loan shark who will give us a few years to pay it off. we paid off our original loan, but then spent the rest on shiny new cars. we're not about to be kneecapped and we have some new cars so it seems our situation has certainly improved and is recovering, but in a few years, when the second loan shark gets through with us, we'll be wishing the first one had just kneecapped us and knocked some sense into us.

we haven't negated the doomsday predictions, we've simply delayed them. if printing money and running absolutely enormous and unprecedented peacetime deficits were the way to prosperity, we would never stop printing and the deficit would be infinity every year. we've managed to make the market rise by devaluing the dollar (since it is denominated in the dollar), and we managed to make GDP rise by having the government spend as much as it possibly could. banks still aren't lending, consumers aren't spending, railroad loadings aren't going up, trade sucks, unemployment may manage to top out but will not decrease for a good long time.

the credit bubble is enormous. enormous. and it will either continue popping now, or every last drop of fiat money energy will be spent inflating it one last time and then it will pop even harder. when something deviates from the long term trend and starts growing exponentially like credit has for the past 25 years, it always stops (as Herb Stein said, "If something cannot go on forever, it will stop"). and when it does, it comes back down to the long-term trend, and most likely overshoots it by a bit. and we are a long way from the long-term trend. this is the second great depression. we may hide the symptoms a little better this time (we grew instead of shrunk the money supply and thus the market didn't collapse), but there is no getting around the law of having to eventually pay for stuff. our solutions seem limited.

default on our debt and hope we aren't utterly crushed.

monetize the debt and hope that we aren't utterly crushed by hyperinflation.

start world war III. in the good old roman empire or genghis khan days we would just go invade and takeover the middle east (none of this pansy "win the hearts and minds" stuff) and take all the oil for ourselves but with MAD and technological advances in long-range missiles that might be a little harder.


i personally don't wanna die in a middle eastern desert or a russian ice field (presumably us and China would team up in WW3 and ensure we each get 1/2 the world instead of destroying each other) and solution #1 can't go too well and will be avoided at all costs, even if it becomes inevitable at some point. and since we're already doing #2 i guess i'll just hope it works poorly instead of catastrophically and my dollars are worth something when i'm getting ready to retire.

maybe you just worded that poorly but you make it sound like "too big to fail" is akin to "too successful to fail" and that they really were too successful because they didn't fail. it simply means under no circumstances would the government not step in and prevent failure. the government spent a ton of our tax money propping them up and turning them from failures into financial black holes. while it was probably necessary to keep a surprisingly interconnected and fragile financial system from utter and instantaneous chain reaction collapse, we are simply spreading the pain out over time. it didn't go away, it just got put on the taxpayers tab.

run a bid enough deficit and you can get pretty much anything you want from the numbers.

things work until they don't and trying to win yesterday's trade rarely goes well. the government may help them out and throw them some more of our money and thus extending and pretending may be the smart move for them, but socializing the losses and privatizing the profits is again not a sign of recovery. it's just shifting the losses onto an increasingly indebted public that can't pay it back, at least not without substantial changes in spending and taxation, which will bring its own pain.

 

This chart is pretty telling about where we are headed. We have printed more fiat money then in any other time in history and we expect it to turn out ok. No fiat currency has ever survived. What makes the dollar different from all the rest especially after the printing presses are still running?

 

what about a forth option? revert to 1950's taxing for the uber rich and big cooperation for the sake of just paying up the debt. not saying it's a good idea... just an option out of desperation.

http://mjperry.blogspot.com/2009/03/90-tax-rate-back-to-1950s.html

 

i guess i actually did mention that at the end of my post

so i should have put it as an option. i've thought this through so many times that i think i kind of zoned out about halfway through the post and just started writing stuff. so yeah, i guess that would be option #4, but that would require short term pain and fiscal responsibility, so i can't see that happening. plus, severe taxation can't be good for the revenue being taxed and would be self-defeating at some point. but all of the options are self-defeating, so whatever.

 

Except that I have read many articles on CNBC, etc that mention the concern that the recovery this time may be without significant growth in the job market.

The reliance that we have on the stock market and earnings reports to determine the state of the economy that it is possible that the recovery will be extremely slow to impact most Americans.

 

This is just at your house, isn't it?

 

Well, if anybody needs some minor car repairs, particularly BMW, I'm ok with doing side jobs, since work is slowing down for us. I'm in Alvin.

..sniff..

 

Yeah, no one will ever have a job again.

I also read that the the Mayans say we're out of here in 2012.

 

Yeah, by listening I meant playing the vid at work.

If you haven't already, check out Lee Kuan Yew's interview. It seems appropriate on how to deal with America's new challenges.

All this means is that another "Greatest Generation" needs to rise and take responsibility.

 

how we did it in the past was with some new invention. what will our new invention be this time? the government is pressing green jobs, but none of the green technology is cost effective without subsidies.

 

I bet the U6 rate is closer to 20%. With all things considered, that's a scary number