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Economy: gloom or doom?


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I felt like opening a new thread as most of the others have run their course and we will soon be entering a new area of economy.

 

For me the trigger point came this week as the Bank of Canada which praised itself in the past as the most logical and clear headed central banks world wide decided to follow the Federal Reserve bank.

 

The path of unlimited money supply.

 

Interest rates are at almost zero, what else can we do?

 

Push it over the edge and enjoy the free fall until we reach the bottom "hard".

 

What this really means will come to a surprise to many people in the world.

 

BOOM

 

Yes, you guys read correct.

 

We will soon enter one of the biggest economic recovery in time, the only problem will be:

 

We will hit the ground soon "hard".

 

People will buy like crazy, cars, appliances, consumer goods, houses everything because they will realize that money is evaporating.

 

Buy as long as you can. Crazy.

 

This will last about 2 to 4 months until everybody runs out of money and inflation will hit us hard.

 

From 0 to 100 to 0 in 6 months.

 

Enjoy the ride baby.

 

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Effervescent

We've been enjoying this ride for decades. No one is going to get off willingly. Everyone who cares already knows, the rest couldn't do anything about it even if they wanted to.

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There is not much to say right now. Over the next few months we will observe that the people in power will try to make the public very dull and do their well known little tactics, swine flu being one of them. I also observe that the ion ratio blown at us must be very high at times, so the Alaska machine seems to be working just fine.

 

Motto: "Don't believe what the media is telling you" - it is just the opossite.

 

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....

Motto: "Don't believe what the media is telling you" - it is just the opposite.

That my be true in North America. In the Philippines I believe in everything the media tells me.

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I think he's full of it, but that's ok. I see the economy clawing its way back, meaning we are going to bounce around on the bottom for awhile. Doom and glooms sells, but people are frankly tired of it. A deep recession is what the economy needed, I just hope that it is deep enough to do some lasting good and balance some inbalances.

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Alan S

I dont believe the UK economy will recover before 2012-2013, and even then for many sectors it will be slim pickings.

The amount of debts incurred by lenders, banks, governments etc, will hold down any economic growth for years in the future.

 

Before any of that happens, I expect to see more job losses, more firms closing, and although some will do well, many will just jog along whilst waiting, and hoping, for better times.

Yes, there may well be some "ripples" as stock markets show small gains, but "boom", no, I dont think so.

 

As for the global economy, although many countries are less affected than the UK, few a re in a truly strong position due to the global nature of the markets, banking etc.

So, some may, and I repeat may, show an upturn before we, in the UK, do, I think that few countries will (in the near future) be showing anything like the growth that they have become accustomed to in the past decade.

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Markham
I dont believe the UK economy will recover before 2012-2013, and even then for many sectors it will be slim pickings.

The amount of debts incurred by lenders, banks, governments etc, will hold down any economic growth for years in the future.

 

Before any of that happens, I expect to see more job losses, more firms closing, and although some will do well, many will just jog along whilst waiting, and hoping, for better times.

Yes, there may well be some "ripples" as stock markets show small gains, but "boom", no, I dont think so.

 

As for the global economy, although many countries are less affected than the UK, few a re in a truly strong position due to the global nature of the markets, banking etc.

So, some may, and I repeat may, show an upturn before we, in the UK, do, I think that few countries will (in the near future) be showing anything like the growth that they have become accustomed to in the past decade.

I think that's a realistic viewpoint, Alan. But do expect the Number 10 and Treasury spin-doctors to go into overdrive well before then and talking-up the economy - but then, if you notice, they've already started to do this. And we haven't reached bottom quite yet! A landslide is inevitable, it's only its magnitude that's in doubt.

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Rogersea

I think it is easy to predict doom and gloom, I am pretty bullish short term, bearish mid term and bullish long term. The US the government is trying to not allow the people to feel any economic pain and that is not possible in a Free Market Capitalist Society...

 

Anyway I have read lots of books on the "next great depression" brought on by what the SCIANNA describes and the recent credit bubbles(credit cards/housing)... like I said in my first sentence mid term 2-6 years I think we are in for a difficult time.....

 

I used to joke that my financial future was bright unless the US GOVT went bankrupt/became insolvent/collapsed (thinking that there was no possibility whatsoever). Now I am ever so slightly concerned about that possibility... All of my currently planned retirement income(sans 401K) comes from the Govt... NAVY, Civil Service, SS...

 

Ohh well just thought I would share my thoughts..

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Effervescent

Part of the trouble is the title of this post. "Doom or Gloom". There is no doom. Predicting doom is silly. The world has been through countless depressions and total failures of fiat currencies countless times and we are still here. Doom does sell news, but people should not let weariness of the title mask what is a very real problem. There is someone that will predict doom in every scenario, but it does not mean that there are not real problems that could be very serious.

 

The real question is how much gloom is there going to be? What is the "bottom" or lowest point in the crisis, how soon will it arrive, and how will people know when it has been reached. Any post made without factual basis is just opinion. To be blunt, I don't personally care about personal opinion based on nothing. I could surf the net and find a million other mindless opinions with no basis also.

 

What ever the bottom is I think it is obvious that it has not been reached yet. The real influence on the markets is unemployment and jobs are still being shed. As long as jobs are being lost the Dow must continue a slide, more mortgages must be defaulted on and the governments social programs must come under increased stress. Many US cities are reaching 15 year highs for unemployment and layoffs continue to be announced. Many of the countries in Europe show the same. Ireland has 13.2% unemployment and predicts 16.8% in 2010. Spain, Portugal, Iceland and many others are all past the 13% and climbing. Trade between the US and all other countries is in decline as people don't want to buy luxury goods when the are worried about losing their jobs and homes.

 

A bad depression is a spiral that is difficult to break. Jobs are lost, so people stop spending. When people stop spending there is no need to produce goods as no one is buying them. If goods are not needed then more jobs are lost as there is no reason to keep people employed in industry creating products that don't sell. This continues until an event stops the cycle. There has been no such event yet. The cycle is continuing so the bottom has not yet been reached. I do not see the economy clawing its way back. Every factual piece of information shows a continued slide.

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mattwilkie

I think we have reached the worst of it already.. we will still see companies disappear weekly but not at the rate we first got hit with. Big question is when will it recover.. or even more so will it ever recover.. The current world situation the West leads the countries blind.. The world is changing that is for sure but I doubt any of it is for the better.

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My company has been established for a bit over 30 years. We service the commercial shipping industry, mainly coastal and inter-island cargo and passengers in the SE Asian/Australasian area. All I have experienced is a 20% increase in work/profit over the past 6 months when compared with the same period the previous year.

 

I am opening a new office in Cebu and am having difficulty in sourcing good staff in Australia. Other firms related to our industry, mostly report the same as us. Go figure?

 

We have always been frugal and probably even more so now.

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mattwilkie
My company has been established for a bit over 30 years. We service the commercial shipping industry, mainly coastal and inter-island cargo and passengers in the SE Asian/Australasian area. All I have experienced is a 20% increase in work/profit over the past 6 months when compared with the same period the previous year.

 

I am opening a new office in Cebu and am having difficulty in sourcing good staff in Australia. Other firms related to our industry, mostly report the same as us. Go figure?

 

We have always been frugal and probably even more so now.

 

I think there is different affects on Asia to the West because most of Asia is in development where the UK for example are in decline. Asia will keep growing stronger but will stall at stages but doubt for long..

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Yes, maybe I am full of it, so be it.

 

What people need to understand that as in this thread there are many opinions out there about anything, like a.. holes, everybody has one.

 

But you cannot ignore that for years now our wealth was based on pure calculations (technology improvements), destroying of resources (oil, gas, water, trees, environmental issues etc.) and the creation of money (stock market bubble, housing bubble, living on credit cards etc.) which eventually will come to an end. There are 2 big accelerators, money and population growth, both are exponential and therefore all named factors are exponential. Wanna eat money?

 

We are also living in a world were money dominated and is dominating everything. Economic growth is essential to our happiness, the more people, the more growth we need. The more jobs we need, the more cars we have to build, the more resources will be destroyed. It goes on and on.

 

But because everybody is only looking out for themselves, not everybody is pulling on the same string. Greed is a big factor, the people in power are trying to gain control over the poor people and middle class. Banks and insurance companies (and their bosses) which are not creating anything helpful other than regulating money have destroying billions of dollars due to mismanagement, greed and corruption and no end is in sight.

 

My best guess right now is that real economic growth has stalled and will decline over many years to come but of course our governments will always find ways to crunch the numbers. This also means that combined with population growth there won't be enough money in real terms to buy food for everybody.

 

Hence the governments created, 'again', money as the solution. Print more money, give more money, this time at a rate which has never seen before, telling me, that the problems are far worse than we think.

 

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Effervescent

@Scianna

 

There are many ways to argue wealth and population. The Earths population is increasing it is true, but in modern societies it is not. Most of Europe is not increasing. China has stabilized its population growth. Many countries are having what they call dangerous declines in population such as Korea, Japan and Russia. If there is a uncontrolled growth of population it is true that just as with any species in nature we must reach a limit based on resources. Many have said that we are already past a long term sustainable population, and in some ways this is true. If every person on earth was to live as a "normal" city dwelling inhabitant, and no new technology was to be invented for the creation and transport of energy, water etc than it is already unsustainable. There is not enough recoverable copper for the power lines and pipes.

 

The other argument is that the rich developed countries have already halted their population growth. Only the non-developed are increasing population and they use the least resources and will never be able to build cities or infrastructure to house their inhabitants. They live in basic sustenance environments and have no where near the resource demands of developed nations. Indeed, they are the ones selling their raw resources to support the immense production of China, US, EU etc. These are the places where life and human labour is cheap as there is so much of it. These people however can not just pack up and leave, only a small number ever will.

 

Technology will not stop. It will continue as it always has. It is possible and probably likely that it will progress too slowly to continue the supply of food to many developing countries. However if countries like China can be a net food exporter then perhaps the only real limitation to growth is energy. China is energy starved, but not food starved. Technology could allow wireless transmission of energy, solar/geothermal/wind production of energy and other breakthroughs that could extend the population cap many fold. We are also not short on land in many developed areas. If you look at North America and Russia we see how empty it is, especially compared to Asia. It was well argued in a article that if the US and Canada were rebuilt to produce nothing but food, and became the agricultural centre of the world, we could easily feed the entire worlds population. Perhaps in the future that will be our priority as most of the arable land and water are here.

 

Not being able to buy enough food because of a lack of money is not going to happen. The destruction of billions of dollars of wealth is a complete fallacy. Money has no innate value and it is as easily destroyed as created. We can create and destroy it so easily because it is in fact not wealth at all. Only resources and labour are wealth. You can create any amount of money to represent these two forms of wealth, but it doesn't change the amount that is available. You can not create and destroy millions of tons of iron, gold, cars etc, because these are real forms of wealth. Average citizens have for so long been taught that fiat money is wealth that they think of it as such.

 

Greed is a big motivator, but the richest and most powerful understand that it has nothing to do with money. Money is the means by which wealth and debt are controlled. By controlling money you control access to land and labour. The most powerful people and nations are the ones that have control of the most land and labour. There has always been greed, but it is essential to our survival. It is an evolutionary trait that we and every other living creature on Earth possesses, but not by accident, and is what drives us to build cities and nations.

 

Fiat money will collapse. It is not an "if" it is a "when". All fiat currencies have collapsed and none has ever endured the test of time and corruption. The money game will end as all other money games have ended before. The real winners of the game are those that gain real wealth when it ends. When it ends the winners have more labour and land under their control than before, as these things can not be destroyed. Then, quite simply, we start the game again.

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