Normal Ebb and Flow or The Sky is Falling?

[mslman71]

So, I know squat about economics; as close to zero as one can know and still have passed economics in high school. Of course we've got/had the 'great recession,' a tremendous amount of market volatility, recent economic crises in the European Union, credit down-gradings, production decline in the major manufacturing sectors all over the world including China, and all the other stuff that has been making news. Is this part of the rather normal cyclic nature of global economics or signs of an impending collapse of the whole house of cards? I don't know how to interpret the media stories, but if I consider how badly the butcher science and technology (something I know a little about), then I'm inclined to take economic news with a grain of salt. In summary, I don't know how to put it all the pieces together and in context.

What say you, in the know? A we standing on the edge of a cliff? Buy more ammo? Help an ignorant guy out.

[m9a1mike]

Well, I always have ammo simply because I enjoy shooting. Not into the whole world is coming to end survival thing though. Will depend on what happens in November, and Europe. The future does not look bright though.

[djflex]

Honestly, i think were all fuked.....srs.

[mslman71]

Well, I always have ammo simply because I enjoy shooting..

I was being facetious with the ammo thing... I mean, don't get me wrong, I've got no shortage, but I was just kidding in the apocalyptic sense.

[BillReilly]

We are on the edge of the cliff. Not the end of the world type of cliff. More of an end of the world as we know it cliff. The basic issue is the world has a deeply flawed currency system. That creates all sorts of deformities in capital markets, economics and politics. The *really* bad result is the complexity. The interdependence in the financial system has reached a point where a pint sized country like Greece can crash the world financial system. That means reform may be impossible. Collapse is not unrealistic.

When smart, sober minded people are talking about The International Emergency Economic Powers Act, things are damned serious. There are ongoing discussions amongst G20 nations about how to fix the structural problems that are at the root of the current troubles. These things, however, take forever. History says major change comes after major calamities. So, I'm not optimistic about the near term.

[pharmamarketer]

My brother has made a fukin fortune watching this collapse. So there are people out there betting on it and winning. When someone loses, someone wins. Me, I am just like most. Saving what i can. Fortunately, my brother, a hedge fund manager, invests some of my money. he is the only one making me a dime right now

[geer_matt]

I just had economics last semester. My teacher said we shouldn't be too worried. She seemed to know her stuff I don't know. Take that for what its worth I guess

[Brackneyc]

I just had economics last semester. My teacher said we shouldn't be too worried. She seemed to know her stuff I don't know. Take that for what its worth I guess

How much does she make? She has nothing to lose. Case closed.

[crupiea]

both sides will profit by complaining about the economy so there really is no reason for them to say everything is fine.

you know the old saying,"people dont report on planes landing safely".

[JRT6]

Nows the time to invest.

[litljay]

Honestly, i think were all fuked.....srs.

This is the short version

both sides will profit by complaining about the economy so there really is no reason for them to say everything is fine.

you know the old saying,"people dont report on planes landing safely".

I wish it was this simple.

Nows the time to invest.

In what?

The bottom line is that governments around the world have been spending money they don't have, creating a fake demand, and creating too much production.
We've been successfully making this happen for a generation or more. The mindset of the general population is skewed.

[JRT6]

Don't invest in the gov't invest in private enterprise. You know the whole "buy low sell high" thing.

[x-trainer ben]

So, I know squat about economics; as close to zero as one can know and still have passed economics in high school. Of course we've got/had the 'great recession,' a tremendous amount of market volatility, recent economic crises in the European Union, credit down-gradings, production decline in the major manufacturing sectors all over the world including China, and all the other stuff that has been making news. Is this part of the rather normal cyclic nature of global economics or signs of an impending collapse of the whole house of cards? I don't know how to interpret the media stories, but if I consider how badly the butcher science and technology (something I know a little about), then I'm inclined to take economic news with a grain of salt. In summary, I don't know how to put it all the pieces together and in context.

What say you, in the know? A we standing on the edge of a cliff? Buy more ammo? Help an ignorant guy out.

This is the *1 guy* that predicted the last cycle correctly, i watch him whenever i want to know the future.
http://www.roubini.com/

[jamacdon]

We are on the edge of the cliff. Not the end of the world type of cliff. More of an end of the world as we know it cliff. The basic issue is the world has a deeply flawed currency system. That creates all sorts of deformities in capital markets, economics and politics. The *really* bad result is the complexity. The interdependence in the financial system has reached a point where a pint sized country like Greece can crash the world financial system. That means reform may be impossible. Collapse is not unrealistic.

I agree -- when a country like Greece pulls a lot of the financial resources out of Europe's main power -- Germany -- something is flawed. Maybe the Euro wasn't a great idea (as the UK said iirc) when discussions were started on creating the new currency.

I have friends from Greece who've said farmers were literally getting tens of thousands of euros to subsidize their farms but spending it on new cars. A small example, but are there *no* checks and balances? Spain and Italy are getting close to the edge as well.

[BillReilly]

I agree -- when a country like Greece pulls a lot of the financial resources out of Europe's main power -- Germany -- something is flawed. Maybe the Euro wasn't a great idea (as the UK said iirc) when discussions were started on creating the new currency.

I have friends from Greece who've said farmers were literally getting tens of thousands of euros to subsidize their farms but spending it on new cars. A small example, but are there *no* checks and balances? Spain and Italy are getting close to the edge as well.

The Euro is more of a symptom than a cause. The point of the exercise was to hedge against the dollar. When Nixon took us off gold and debased the currency, everyone suffered, nit just Americans. The reason Nixon did it was in response to European countries debasing their currency. Plus, the French were trying to hoard gold in the process. Currency markets did not settle down again until the Louvre Accord in 1987. The lesson, however, was clear. The dollar as the reserve currency gave America control of the world economy. The Euro was an attempt to counter it.

The troubles in Europe have little to do with the Euro. Their problem is they have enormous welfare states and social democracy. That's why their elections result in more of the same, regardless of party. We have the same problem, but we're not as far down the road. That's the core problem. The people want generous benefits from government, but have no desire to pay for it. Catastrophe can only be avoided if the fever breaks and people come to their senses. Looking around, it is hard to be optimistic on that score.

[mslman71]

The Euro is more of a symptom than a cause. The point of the exercise was to hedge against the dollar. When Nixon took us off gold and debased the currency, everyone suffered, nit just Americans. The reason Nixon did it was in response to European countries debasing their currency. Plus, the French were trying to hoard gold in the process. Currency markets did not settle down again until the Louvre Accord in 1987. The lesson, however, was clear. The dollar as the reserve currency gave America control of the world economy. The Euro was an attempt to counter it.

The value of currency is basically whatever people think it is, no? Since it is not tied back to anything tangible.

The removal of the gold standard is often touted (if I recall correctly) as one of the major leaps forward in the evolution (i.e. progression) of the system. Is this because they see it as a way to directly manipulate currency through policy alone?

[BillReilly]

The value of currency is basically whatever people think it is, no? Since it is not tied back to anything tangible.

Pretty much. Our money is not tied to anything tangible. The value of a dollar is relative. Not so long ago, a dollar bought one unit of gas. Now it takes 3.5 dollars to buy a unit of gas. Dollars have become less valuable than gas.

Money has always been a reflection of the culture that issues the money. In the days when money was pieces of gold, silver and other precious metals, corrupt governments would try to cheat by mixing other metals with the precious metal. Others would take great pains to make counterfeiting difficult. In many countries, altering currency was a capital offense. Today, the trust put in the paper and digital equivalents reflects the trust in the issuing society as much as anything.

The removal of the gold standard is often touted (if I recall correctly) as one of the major leaps forward in the evolution (i.e. progression) of the system. Is this because they see it as a way to directly manipulate currency through policy alone?

People, especially smart people, can convince themselves of anything. The "lesson" of the Great Depression is that you have to have the ability to expand the supply of money in times of crisis. The argument from modern economists, particularly Ben Bernake, is the only way this can be done is with fiat money. Otherwise, the constraints of hard money (there's only so much gold) put a limit on what a government can do to stem a panic.

I'm not a member of that church and I'm not alone. The pews are starting to empty as people learn the pitfalls of fiat money. Economics is not science. In fact, it was only considered a science after WW2. The reason is economics does not happen in a vacuum. People, through their politicians, make policy decisions that shape the economics of society and the world. Give people the ability to print and spend as much as they like, they tend to do it. The result is what we see now. Massive dislocations, improper allocations of capital and the growth of a parasite class on both ends of the social pyramid. The later is what characterizes banana republics, that and fiat money.

[mslman71]

...
People, especially smart people, can convince themselves of anything. The "lesson" of the Great Depression is that you have to have the ability to expand the supply of money in times of crisis. The argument from modern economists, particularly Ben Bernake, is the only way this can be done is with fiat money. Otherwise, the constraints of hard money (there's only so much gold) put a limit on what a government can do to stem a panic.
....

Or to cause one, eventually. It seems the cry for change involves giving more {centralized} power to these entities to do good, while at the same time, providing a vehicle for them to do harm, whether intended or not.

[BillReilly]

Or to cause one, eventually. It seems the cry for change involves giving more {centralized} power to these entities to do good, while at the same time, providing a vehicle for them to do harm, whether intended or not.

Funny how that works. Large scale societies are relatively new to the human animal. My guess is these defects are somehow rooted in that fact. That and humans willingness to believe any bravo sierra that comes down the pike. Somewhere in this thread someone says they asked their econ teacher who told them everything will be OK. How is that different than consulting the local witch doctor to see if tomorrow is a good day for battle?

[m9a1mike]

The troubles in Europe have little to do with the Euro. Their problem is they have enormous welfare states and social democracy. That's why their elections result in more of the same, regardless of party. We have the same problem, but we're not as far down the road. That's the core problem. The people want generous benefits from government, but have no desire to pay for it. Catastrophe can only be avoided if the fever breaks and people come to their senses. Looking around, it is hard to be optimistic on that score.

Too many takers and not enough makers.
Repped.