The U.S. Economy: Stand by for more worse news

Discussion in 'Business & Economics' started by Brian Foley, Nov 28, 2010.

  1. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    Posting following quote in this thread now (4July) is sort of a less than week a head prediction that for this Treasury "party" the guest will want to be paid well* to come:

    " The Treasury Department will auction $32 billion of three-year notes on Tuesday**, $21 billion of 10-year notes on Wednesday and $13 billion of 30-year notes on Thursday. "

    * "Well" being defined as a 10 year bond rate of at least 2.6%
    ** 9 July 13.

    Lenders are starting to realize that when the bonds they buy mature, the purchasing power of the "face value" they collect is much less than that they bought the bonds with. Thus, to reduce their real losses they need (and will demand) higher interest rates. I may be a few weeks early in my expectations that will happen at next week's Treasury auction, but following makes me think not:

    "Americans owe more money, collectively, than ever before in our history – far, far, far more. We owe at every level: $17 trillion at the federal level, $13 trillion in mortgages, another trillion in student loans, and nearly $3 trillion in state and local government debt. Put all of these numbers together and you end up with a $60* trillion pile of obligations. That's nearly four years' worth of our entire country's total production."

    BTW, the interest rate on student loans, has recently doubled, I think. Please correct if not true.

    * 17+13+1+3 = 44 not 60, but article included other debts.
     
    Last edited by a moderator: Jul 5, 2013
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  3. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    Why dollar will crash:

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    hard to read so: Red section is federal deficit in Trillions. Spending has grown 75.7% while revenues has grown only 38.5% in nine years (2003 to 2012) but that has gotten dramatically worse in last 5 years (2007 to 2012) in the long lasting recession and gap is widening.
     
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  5. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    * On "not have (3)" above: We do have shale oil - that helped boost the economy up for the 2008 crash, as it lowers import cost, but rising interest on the rising debt will still prevail.

    For about a year in several posts I (Billy T) have quickly stated Richard Young's POV by: "The Fed has a tiger by the tail, and can't let go without great loses."
    Ben will let the next chairman (or woman) take the blame for market and dollar collapse "On or before Halloween 2014," as I predicted ~6 years ago!

    Corporations and the rich are doing well selling to Asia etc. but here is the no strong US economy. Here is more evidence of how badly the real economy is doing:

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    From same source: "We’ve lost 1/4 of the jobs since the Bush/Obama spending spree began.
    Worse, as the blue arrow above illustrates, we haven’t had production levels this low since 1961. ... What all 3 charts actually show, are several sharp downturns, punctuated by short rallies, as the economy eventually finds its real bottom. We’re about to die the death of a thousand cuts.

    So the true story of 2013 — and beyond — is the continual decline of the American economy and its financial markets. "
     
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  7. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    Unwinding the Fed's balance sheet - How?
    * That is the only realistic way - Fed is now the buyer of >80% of new treasury paper. Who could it sell to? Answer: No one, except in a "fire sale" at prices greatly lower than the Face Value of the bonds and mortgages it holds. I.e. Fed would need to admit its assets are not worth what it claims and take a loss. When Fed takes a loss so does the dollar - the pain is transferred to the tax payers and the holder of dollar based assets.

    Note: With the "let holdings mature, to void selling at deep discount" method for clearing of Fed's "stimulus buying" to help the recovery means 52% of the QEs will be dumped back on the economy in only four years! Don't you think about 1.5 trillion of "negative stimulus" will sink the ship of state (if bond vigilantes and or China have not already sent it to the bottom of the ocean?) Thus I continue to think the Fed has a tiger by the tail and dare not let go. I.e. the production of thin-air money will continue until the dollar collapses. (To be replaced by the Gold backed RMB.)

    One likely possibility IMHO is the Fed will join the rest of the government in "kicking the can down the road." I.e. to help the Treasury pay off the bonds maturing in 2016, the Fed will run the thin-air dollar printing presses even faster to make new dollars it can use buying new treasury bonds, maturing in 2024, when few are now scheduled to mature (See graph above.) Although not actually mechanical, these presses can break if run ever faster. I.e. the Fed may be able to delay the disaster by making it even worse when Fed can not run the thin-air dollar presses even faster. In other words: The printing of ever more thin-air money is the road to an ever worse economic hell.
     
    Last edited by a moderator: Aug 10, 2013
  8. Michael 歌舞伎 Valued Senior Member

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    Forgive me Michael. I'm adding add some numbers to your post:

    In 2013's first half 77% of ALL new jobs created were part-time jobs and most were low hourly pay with no health care, etc. benefits also. An unknown, but probably large reason is that the employer does not need to contribute to cost of their "Obama care" as with a full time employee. I.e. this is very likely NOT a "one time" glitch but the new norm. I made same point of your graphic here: http://www.sciforums.com/showthread...ent-in-March&p=3096764&viewfull=1#post3096764 and in next post, 51, gave data on the fact that those who have a good full time job are not retiring from it at age 60 or 65, but holding on to it even into their 70s, much more than they did only a decade ago. I.e. times are tough and getting tougher for the young trying to move out of the Dad's basement, get married, etc.
     
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  9. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    Downward trend is mainly due, I think, to the upward trend in part-time jobs being created. (77% of new jobs in first half of 2013 were part-time jobs, and most at low pay with no health care, etc. benefits.) - Not the way to build a healthy economy.

    In China, out of pocket cost of health care has been reduced by 50% and purchasing power of salaries is growing annually by double digits - The CCP is doing all it can to switch to a domestically driven economy, instead of an export led one as US & EU are broke and can only buy, if China lends then the funds.

    Despite my comments added to post 605, Obama care, probably is not the main reason, as now the start of the requirement for employers to contribute has been delayed a year (now 1 January 2015) The very sick economy is probably why employers are letting go full time employees and hiring lower cost part-timers. The new hires can't buy as much so even sales at cheap outs are dropping now - this is a self accelerating process - Manufactures selling in the US (Not Asia) don't produce as much as they did so need fewer full time employee, and then there is even less purchasing power in the market place.
     
  10. kmguru Staff Member

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    IMHO...Until we hit -0.6 that could be in 2016 - we are not there yet. Then the location to -1.0 that could be in 2017-18. This time not coming back unless China, Japan and Korea support us....
     
  11. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    Yes, but interesting to me is the fact that the red lower boundary line hits -0.6 on Halloween 2014.

    Why did you focus on -0.6? When one enters the next recession, I think, crashing thru -1% is very likely. Main reason "were not there yet" is the 85Billion per month of thin-air money being "printed." That is not sustainable - will end by choice or necessity before Halloween 2014.

    Start painting your "Brother can you spare a dime?" sign soon.
     
  12. arauca Banned Banned

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    My feeling many of this prediction are not wort the paper. I am playing the stock market for over 35 years . I see changes like playing yo yo , and thank God I am in a better position now then in the so called good years.
     
  13. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    Good for you. Every one can hold their own view about the future. I have been trading stocks, mainly buy an hold, for more than 50 years with considerable success too. (I never owned a business - only had a salary for 30 years before retiring 20 years ago, yet because I often correctly foresaw, before others, what was coming, I am more than doubly a millionaire with 53 stocks now in my portfolio now. - Too many and for that and other reasons I'm a net seller now using losses to offset profits.) We will just need to wait to see what the future brings.
     
  14. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    This does not sound so good and BTW, Congress is on vacation until 9 September.

    Two definitions of insanity seem to apply to Congress:
    (1) Einstein's "Doing the same thing again and expecting different results."`
    (2) The psychiatric one: "A persistent refusal to deal with reality."

    * I.e. the bond market is not worried, yet. Thinks they will work something out - probably using their experience-honed skills at kicking the can down the road, again.
     
  15. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    There is ALWAYS good news for lawyers. The corollary is their is (on average) bad new for those dealing with them.
    This is an accidental partial repeat of post here: http://www.sciforums.com/showthread...e-bad-news-is&p=3103064&viewfull=1#post310306
    I had left note here telling text of quote would soon appear, but had to leave and when came back, next day I posted it at link above with comments telling why the above it just the tip of the bank sinking iceberg. (Most do not need to pay their sliced and diced mortgage - the courts have said!)
     
    Last edited by a moderator: Sep 3, 2013
  16. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    Figure's original Caption is: Calved icebergs from the nearby Twin Glaciers are seen floating on the water in Qaqortoq, Greenland

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    More and accelerating evidence world is headed for 60 Trillion loss damage via melting ice as recent article in Nature* predicts:
    Acceleration is in M/sec^2 and Jerk is in M/sec^3.

    * Nature reference is here: http://www.nature.com/nature/journal/v499/n7459/full/499401a.html but not fully available for free so see discussion of it here: http://www.theguardian.com/environment/2013/jul/24/arctic-thawing-permafrost-climate-change

    ** If you live where heavy snow falls occur, you know from personal experience that they never come when the air is very cold, only in the spring as it is warming.
     
    Last edited by a moderator: Sep 6, 2013
  17. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    I'm reminded of investment service's warning: "Past performance is no guarantee for future performance."
     
  18. joepistole Deacon Blues Valued Senior Member

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    Well therein lies your only hope for an economic Armageddon. The only way we are going to see an economic Armageddon is if Republicans send the nation into a debt default through their fiscal and political incompetence and profligacy.
     
  19. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    I don't have any such hope - just the expectation that will happen, as it always does to people or nations than think they can forever live beyond their means by borrowing. A day of reckoning always comes. Now that both interest rate and the debt is increasing US's day of reckoning is coming more rapidly. - May arrive "on or before" Halloween 2014, as I predicted in a post near end of 2007 with less definite dates specified (between 2015 to 2017) in in predictions back when GWB still had more than two years as POTUS.

    Likewise, I don't have any hope CH4, ~20 times worse per molecule GHG than CO2, release rate will accelerate and cause serious climate change problems - just the expectation that will happen. etc.

    $ 16,862,434,571,600 US debt as of a few minutes go. See it grow at: http://www.worldometers.info/us-debt-clock/ A $16.8 trillion debt, is more than$53,000 for each US citizen, Or $212,000 per family of four Or 4 or 5 times their equity in their home.

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    Last edited by a moderator: Sep 13, 2013
  20. joepistole Deacon Blues Valued Senior Member

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    And what proof do you have that the country is living beyond its means? The US deficit has fallen by 50% and is now more in line with historical norms, which by the way was fully expected. As the US emerged from the recession government spending eased and government revenues increased as more and more people became employed.

    Your premise is false. The US is not living beyond its means. The US is a very wealthy country with extraordinarily low tax rates. The US has the ability, the means, to pay its debts. The real question is do we have the political will to do so?

    Back some 35 years ago President Reagan signed onto law unprecedented increases in payroll taxes which racked up huge Social Security and Medicare surpluses over the course of subsequent decades. But the government spent those surpluses on tax cuts for the wealthiest among us...the Reagan & Bush II tax cuts. Just restoring US tax rates to what they were a half century ago, it would add more than 300 billion dollars each and every year to the nation’s income.

    The US has a lot of untapped taxing ability. US taxes are among the lowest in the world and certainly the industrial world.


    http://www.huffingtonpost.com/robert-reich/why-we-must-raise-taxes-o_b_844606.html

    http://www.moneynews.com/Kleinfeld/tax-haven-US-investor/2013/07/08/id/513734

    http://www.truth-out.org/archive/item/83147:reagan-the-great-american-socialist


    Trinidad and Bolivia have higher effective tax rates than the US. According to that conservative bastion, The Heritage Foundation, the US effective tax rate is 26.9 percent. Compare that to the socialistic commie Swedes who have a tax 45.8% income tax rate.

    http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_as_percentage_of_GDP

    Below is a chart showing Swedish economic growth.


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    And those socialistic, commie, fascist Swedes have an economy that has and continues to grow in multiples of the real US growth rate.

    The US has the means to pay its bills. The question is, does it have the political ability to do so? The US has the ability to double its income and still grow the economy. The question is, does it have the political ability to do so.
     
    Last edited: Sep 14, 2013
  21. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    How is this PER CAPITA DEBT for "proof" that Americans are living beyond our means (or the graph below your post)? Lets ask Greece, France, Spain and Portugal for some help.

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    US per capita debt is now growing 7 times faster than that of Italy!
    I don't think more than $53,000 debt per US citizen (man, woman and Child) is the "historic norm" and Yes the debt is INCREASING now more slowly but still becoming a greater percent of GDP. And unlike Japan where ratio is much worse, we owe large fraction to foreigners, like China (#1), Japan (#2), and Brazil is Number three (be nice to me)!
    Per capita debt up 53.0 / 44.2 is a 20% increase in less than two years! Unfortunately, the S*it may hit the fan by Halloween 2014 at that rate.

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    Ahhhm yes the good old tax the rich "solution" Have you noticed the surge in the rich Americans turning in their passport? It is accelerating now that IRS has Switzerland's agreement to turn in Americans with hidden funds, lines will be forming to do that as giving up US citizenship surges to a new level. Some might say: "Good - the rats are leaving the sinking ship."

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    The Swiss banks agreed less than a month ago - This trend is just starting.
     
    Last edited by a moderator: Sep 13, 2013
  22. joepistole Deacon Blues Valued Senior Member

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    For starters there is a difference between debt and deficit. And deficits are now close to historic norms.

    The national debt is per the US Treasury $11,973,170,292,026.36. The current estimated US population as of this writing is 316,670,650. So if you do the math, the US per capita debt is $37,809.54. That is a far cry from the $53,000 number you have claimed. What you have done is include interagency debt, which isn’t debt. It is money the government owes to itself. It is an internal transfer. It is an artifact of fund accounting which is the kind of accounting used by charities and governments. If government used corporate accounting methodology, those interagency debts would be netted out and they would not show up in the financial statements. So basically you are significantly overstating government debt by including interagency debt in the national debt.

    http://www.treasurydirect.gov/NP/debt/current

    http://www.census.gov/popclock/

    And yes the national debt is growing. It has been growing for most of our existence. Our national income grows, our population grows and our national debt also grows.
     
  23. joepistole Deacon Blues Valued Senior Member

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    You really need to start sourcing credible sources for your information. Using credible sources isn’t so good for demagoguery, but is much better for argument, discussion and developing reasoned conclusions.

    Yeah, we have heard the “can’t tax” the rich excuse or they will leave excuse many times before. But they have not left. For starters, where are they going to go? If you looked at the references in my last post, there wasn’t a developed country around with lower tax rates. I suppose they are all going to jump in their private aircraft and go to Syria? I don’t think so.

    Do you really think the wealthy are going to abandon one quarter of the world’s income? Do you really think the wealthy are going to flea wealthy countries in preference for underdeveloped or more totalitarian states or more socially restricted countries simply because of tax rates? If that were the case, Europe should have been abandoned by the wealthy long ago. It is a myth Billy T. The wealthy are not going to abandon anything as long as there is a buck to make or power to be attained. Wal-Mart and the owners of Wal-Mart are not going to pick up and leave just because the US government raises their taxes. If your excuse had merit those socialist, commie, fascist Swedes would not be growing their economy several multiples faster than we have in the US with our extremely low income taxes on the wealthiest among us.
     

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