For A Double-Dip, You'll Have to Go for Ice Cream
"The concern about a double dip is largely a function of what I'd call residual bearishness. Stung by excessive optimism in 2007, the econo-pundit community remains in a reflexive, dour crouch. Since this recovery began in the spring of 2009, it has been widely disbelieved and dismissed. Fretting about the double dip is as much about where we've been as where we are.
If you want a double dip this summer, you'll have to go to Carvel or Baskin-Robbins."
~Daniel Gross in Slate.com
50 Comments:
Oh Mark, did you really have to quote Daniel Gross? The guy's faith in economic recovery isn't because he is a believer in the free market, it's because he's an Obamaphile fully convinced about the value of the stimulus package and green tech initiatives.
Colin: I don't always have 100% support or endorsement for everything I post, I often post something if it's provactive or interesting, hoping to stimulate some discussion. In this case, it generated discussion within five minutes, so I think it's a successful post!
There are many people who actually believe this is a strong recovery.
The most likely outcome is a slow U-shaped recovery that'll be completed in 2016 or 2017. However, I wouldn't rule out a double dip before then.
The European debt crisis, which caused lower U.S. interest rates and lower U.S. exports, is likely a net benefit for the U.S.
Daniel Gross? I am sorry Mark but you seem to have this thing about optimism that is not exactly supported by reality. Some of the numbers that I have seen have shown a major reduction in the private sector that has been offset by the growth in the public sector. As someone who believes in unhampered markets and understands economic history I cannot see how there can be an optimistic case to be made at this time.
Let me be clear about one thing. I am a long term optimist and believe that things will get better when the structural problems are resolved. But there is no way to accept the optimist case that you are making at a time when the structural problems are getting worse.
The European debt crisis, which caused lower U.S. interest rates and lower U.S. exports, is likely a net benefit for the U.S.
I am sorry but you can't confuse the short term effects with a net benefit over the medium to long run. All the Euro is doing is diverting attention from the terrible case for the USD. Spain and Greece are not all that significant when compared to California, Illinois, New Jersey, Pennsylvania, and the other states verging on bankruptcies. And try as we might, we cannot really say that the US SS system is much better than the extravagant European system.
VangelV, I doubt anyone knows how long it'll take for the E.U. to get it's house in order. However, even today, the U.S. economy is much stronger than the E.U. economy.
Also, another benefit of the E.U. crisis is a strengthening of the dollar as the world's reserve currency.
Housing Double Dip a Done Deal
Seth Klarman is worth listening to, especially when markets go mad.
Mr. Klarman is president of the Baupost Group, an investment firm in Boston that manages $22 billion. His three private partnerships have returned an annual average of around 19% since inception in 1983—and nearly 17% annually over the past decade, as stocks went nowhere.
To measure Mr. Klarman's importance as an investor, you need only see the value his rivals place upon his words. You could have earned at least a 20% average annual return since 1991—better than twice the performance of the market—merely by buying and holding Mr. Klarman's book, "Margin of Safety": Published that year at a cover price of $25, hard copies now fetch up to $2,400.
But the professorial Mr. Klarman speaks in public about as often as the Himalayan yeti. He made an exception last Tuesday, when I interviewed him in front of a standing-room-only crowd of 1,600 financial analysts at the CFA Institute annual meeting in Boston ...
"There is nothing natural in the markets. Everything is being manipulated by the government. I'm skeptical that the European bailout will work." ... Mr. Klarman proclaimed, "I am more worried about the world, more broadly, than I ever have been in my career."
WSJ
For a second I thought it was from Bill Gross of Pimco. Instead it's a journalist from Newsweek.
Why should I believe this guy has any clue? How many journalists and in particular Newsweek writers really have a clue about economics?
There may not be a double dip in the GDP sense, but that's only because massive increase in government spending has added about 5% to GDP. Since that's a permanent $800 billion increase that will grow, it would take a lot of decrease elsewhere to have 2 quarters of decline any time soon. Definitely not this summer so he's not making a tough call.
Next year, there's higher taxes and regulations, and whatever gets crammed through until the next Congress is seated.
Carmen Reinhart, a University of Maryland economist with Harvard professor Kenneth Rogoff:
"When government debt-to-GDP rise above 90%, it lowers the future potential GDP of that country by more than 1%. It also locks in a slow-growth, high-unemployment economy."
"The U.S. government-debt-to-GDP ratio is 84%. Assuming GDP expands at a 3% per annum rate and the annual deficit remains at $1.4 trillion, both optimistic assumptions, the U.S debt-to-GDP ratio will pass the 90% threshold in 2011."
"Some countries might try to reduce their debt load through lower spending and higher taxes. This action will push them into a new recession. As one country tips to recession it will curtail spending that drags other countries down with it."
EU woes to weigh on global growth: Stiglitz
Jun 01, 2010
"Global economic growth will be "markedly lower" by the end of the year as European governments push through painful austerity measures, strangling the region's recovery, Nobel Prize winning economist Joseph Stiglitz said.
Stiglitz, winner of the 2001 Nobel Prize for Economics, said on Tuesday it was not yet clear whether the world was headed for a double-dip recession, but that one thing was certain: Europe is going to face a roller coaster ride for the "foreseeable future"."
VangelV, I doubt anyone knows how long it'll take for the E.U. to get it's house in order. However, even today, the U.S. economy is much stronger than the E.U. economy.
I disagree. The US economy is not much better that what we see in the EU. Go around Asia some time and see where most of the Western imports are coming from. (It isn't the US.) The US economy is mainly smoke and mirror stuff that is based on the accumulation of debt. It may look a bit stronger because the Chinese choose to help fund your deficits.
Also, another benefit of the E.U. crisis is a strengthening of the dollar as the world's reserve currency.
Nonsense. The USD has been losing purchasing power for many decades and the trend is still down. Most states are at the edge of bankruptcy and there is little in the way of hope that the US can meet its obligations without resorting to the printing press. What we see is the degenerate gamblers playing their momentum games. The USD was heavily shorted so it makes sense that we will see a rally driven by short covering. If the crisis in Europe continues (think Spain) we can see the USD move even higher but if one of the states runs into trouble we could see some serious weakness.
Vangel1V:
The EU has already got its house in order. Its where Angela Merkel lives and its called "GERMANY"[house].
btw. Its the worlds big exporter!
What a coincidence.Who was the Eu's winner.Who paid?
America needs to buy DMW's [Detroit Motor Works]cars and not the close namesake.
Sith Carlemans: Sucks.
VangelV, U.S. per capita income is over $10,000 a year more than E.U. per capita income, and that doesn't include the consumption side. For example, "the average American household has 92% more space (1,875 square feet) than the average European household (976.5 square feet)."
The U.S. leads the rest of the world combined in the Information and Biotech Revolutions (in both revenues and profits). Also, older U.S. industries offshored less profitable goods, e.g. to Asia, and shifted limited resources into higher quality "core" goods.
China is basically a U.S. factory that produces goods with declining prices, while the U.S. produces goods with rising prices. The U.S. is the only economy that can expand with huge negative net exports, while China needs the U.S. to maintain acceptable levels of employment.
The U.S. dollar is the most demanded currency in the world. Inflation causes all currencies to lose purchasing power. However, the U.S. imports deflation and exports inflation. The U.S. produces goods no other country can produce, and has huge market power.
Yes PT.Mostly true but you haven't explained why America is a bankrupt state living on other peoples borrowed money and in hock up to the hilt.
Why the future looks bleak because savings are being run down
even after a world breaking crash of unknown proportions.
Really they are a very talented naieve stupid people that are now making and calling for a return to the easy life and asset inflation that they in the past worshiped but in reality can no longer afford.
This in the near future looks everyday more remote for all and absolute drudgery for some.
The EU has already got its house in order. Its where Angela Merkel lives and its called "GERMANY"[house].
btw. Its the worlds big exporter!
Germany is doing fine. But the EU is not and has no way to get its house in order at this time without letting many of the banks go under or have several countries leave the union.
What a coincidence.Who was the Eu's winner.Who paid?
Germany has clearly been a loser from the EU experiment. It has abandoned its own strong currency and has had to subsidize weak countries.
America needs to buy DMW's [Detroit Motor Works]cars and not the close namesake.
Americans are free to choose the cars they want.
this doesn't look good:
US employers added 431,000 jobs to nonfarm payrolls in May, but 411,000 of those were temporary census workers. The private sector added just 41,000 jobs: Manufacturing, temporary help and mining added jobs, while construction declined. That number was also well short of the more than 500,000 economists had expected.
The May unemployment report was BAD. The total number of people employed in May based on the survey FELL by 35,000. This is terrible given that the government hired over 400,000 people for the census. The total employed had bottomed in December and started to rise which was a good sign. I hope this drop is a one month blip. If not, it is a very bad sign.
VangelV:
It is you that has it wrong Germany has been the winner all along!
They were the instigators of the EU it was part of Nazi policy and was carried through after the war in order to create a stronger Europe less vunerable to division, wars and recessions.
The Deutschmark [is]gave way to the Euro in order to encourage greater more inter-dependent union.
Germany is the [strong] big exporter to all the EU countries and backbone of the union but strangely does not have the highest GDP per capita[ clue here]
They have worked hard to build brand names and a reputation for high quality products.
PT?
I am not mocking you or being dis-respectful to you but pointing out that any recovery is going to be hobbled with the debt load and the interest payments on it. This will definitely slow recovery and should be included and costed into your proposal.
This of course will slow the everything down but hopefully to slow motion.
It is you that has it wrong Germany has been the winner all along!
Germany has done well because German industry is very productive, not because of the formation of the EU.
They were the instigators of the EU it was part of Nazi policy and was carried through after the war in order to create a stronger Europe less vunerable to division, wars and recessions.
Nazi policy? I do not think that the Nazis would have liked opening up EU immigration to Greeks, Hungarian or Slovaks. You need to start looking at the real world rather than the imagined world of conspiracy.
The Deutschmark [is]gave way to the Euro in order to encourage greater more inter-dependent union.
Germany lost control of the currency by joining the EU monetary union. While its impact was large, its taxpayers still had to subsidize less efficient workers in Europe.
Germany is the [strong] big exporter to all the EU countries and backbone of the union but strangely does not have the highest GDP per capita[ clue here]
No clue is required. Germany is a huge country that was formed when the poor East Germany joined with West Germany. I would expect that the inclusion of East Germany would give Germany a lower per capita GDP than the smaller West European nations. I am actually surprised that it is doing better than France, which did not have a similar problem with integration.
They have worked hard to build brand names and a reputation for high quality products.
Yes they have. It is that hard work, not the EU, that is responsible for German success.
Hmmm, 'double dip for ice cream', eh?...
Well those pessimists over at Business Insider are somewhat less than optimistic if the following has any substance: CHART OF THE DAY: The Scariest Job Chart Ever Just Got Even Scarier
Still the news isn't all bad out there as many on this site can attest to I think...
Consider the following from the folks at Big Picture: Cumulative Total Return of U.S. Equities (Monthly) from 1802 to 2010
A very interesting graph, a graph that seems to idicate Professor Mark's optimism isn't misplaced...
Grant, I've explained in detail many times why the U.S. has so much debt.
In summary, the U.S. government squandered your money. So, Americans have even more debt to pay. The future is about maxed-out.
Over the past 40 years, the federal government has spent your money roughly seven times faster than you earned it.
A very interesting graph, a graph that seems to idicate Professor Mark's optimism isn't misplaced...
The chart does not account for all of the capital destroyed by competition, war, confiscation, etc. It suffers from survivor bias. That said, while reductions would probably be lower, investing in equities as the nation began to grow strongly was bound to produce a decent return. If we want similar gains we probably need to look to Asia where there are several countries that are growing strongly and are liberalizing their economies. Western Europe and the US, both of which are becoming even more socialist, are no longer as free of risk as they used to be.
PT?
The US has so much debt because the American people elected fruit loops to run their country, They didn't elect Congreesmen because they were well qualified for the job[ eg their resuam'e fitted them into it]But because of what they said at the time the election was in progress.
Embalmers favorite ploy was to start every one of his speeches with"I am going to change America" but he didn't say that he intended to really get down to business in 2050.Hardly a man of action. He was going to leave Iraq but did say next century.
America should be out of Iraq and left the natives to it. Instead they fall victim to truck bombers who let another one off every time Pretrauis says their going.
Iraquis don't want the Americans to leave because they know the type of crazy they are going to get to replace them.
I have been investigating the Iraq economy and I can assure you that the country has a good future. I hate to admit this but Benjamin is right there is no need for America to be there.
The oil industry is relatively un- explored and is open to further development and so is almost everything else in the country the country.
US banking:
A large number of banks have become insolvent because the Banking industry is a managed risky business in normal times but becomes extremely volatile and extremely risky in times of low liquidity.Such as in the period just passed.
The FDIC according to their charter has stepped up to the plate and rescued the failed banks and their innocent depositors.So they have proved that they can be relied on.
The banking collapse has been contained[probably at great cost to the taxpayer]and is now no longer in free fall so its time to move focus away from there to the general economy.
US real estate:
Plenty of bargains here for the cashed up conservative long term investor[Warren Buffet types]willing to wait for an excellent return on capital over the longer period now that the desperate &2 paid up short term profit seekers are out of the market.
Heavens gates have opened to the garden of eden and smorgasbord of bargains just take your pick and just screw the realty enemies for all you can to get that bargain priced investment that anyone with a good job credit rating or cash can now easily afford. So go for it.
US banking:
A large number of banks have become insolvent because the Banking industry is a managed risky business in normal times but becomes extremely volatile and extremely risky in times of low liquidity.Such as in the period just passed.
Actually, not enough banks have failed. The government has stepped up and bailed out the worst of the lot.
The FDIC according to their charter has stepped up to the plate and rescued the failed banks and their innocent depositors.
You mean reckless depositors. When you give poorly run banks your savings you are not innocent but either greedy or stupid. Most people lose money because they take on huge amounts of risk for just a little bit extra in yield. A free market would punish both the bankers and the idiot depositors and would not need an institution like the FDIC, which makes things worse.
So they have proved that they can be relied on.
No. The FDIC steals from the prudent to protect the reckless. It only serves to increase risk taking activity.
The banking collapse has been contained[probably at great cost to the taxpayer]and is now no longer in free fall so its time to move focus away from there to the general economy.
The banks are still in big trouble and technically insolvent. Most of their loans are in trouble and enough will go bad to wipe out the thin sliver of capital that keeps the banks solvent. What has saved them is the lax accounting rules and the regulations that permit losses to be hidden.
Vangel1V:
Germany is an ancient country that has a much longer history than post war.The real growth for the country was instigated by Bismark which has led to modern Germany.
German re amalgamation has little to do with current prosprerity.
Come on Vangel1V get with it. You are saying you want banks to go broke so that every man in the street looses the savings money he puts in the local bank for safe keeping.
The only reason he ever went there is he saw their add while he was watching the game. He associated the bank with the game not the nuts and bolts holding it together which by the way wern't mentioned at the time he made the deposit.
So you are saying that every person who makes a deposit of funds should be told what the financial position of the bank is at that time. That is totally unworkable.
Maybe customers could be given a disclaimer form advising them that this bank could become insolvent at any time. I'm sure average people would take no notice of it and deposit anyway. YES or most likely NO!!!!!!!!!
Cut the crap!
Now to the REAL ECONOMY:
Steve Jobs is what the future is about the innovator and inventor who gets the new technology onto the market to gain high value export income.
The warren buffets who secure the base infrastructure assets so that goods get to export markets.
The rest of the people that rake the muck and pack the goods so that that happens.
Here we agree PT?
PT?
Just another point:
You are right GDP per capita USA is around $46,500usd
But for China GDP per capita is around $3,600usd
Yet China is the country with the savings. What is wrong here?
Grant, China exchanges its goods for worth less U.S. paper assets, to maintain employment, rather than for U.S. goods.
Also, commodities are mostly priced in dollars on the world market.
Moreover, the Chinese communists and American capitalists benefit at the expense of the Chinese masses. So, most of China's consumers can't afford to buy goods at world prices.
PT?
I Agree with you and this has to change.either China revalues and buys more US goods or in the circular trade flow the countries China purchases raw materials from spend more on US export consumer goods so the US dollar does the full trade circle and extinguishes in a zero sum game. All winners and no losers.No deficits!
I suggested to a financial person shifting large sums around that US pension funds $USD should be shifted into direct ownership or when not possible shareholder ownership of large raw material resource projects in safe foreign countries so as to remove dollars from the system and gain long term income not affected by USD depreciation and create an income stream not so exposed to future USD deprecation. That happened.
I don;t know what Geithner has been up to lately, but his backpack has been turning up almost everywhere.
There are a lot of countries now that have a higher GDP per capita than the USA. 20 years ago this was rare so I think this is where America has lost a lot of ground and prestige.
You are right that America came out of WW2 with virtually no competition.The situation is different now of course with highly technical goods being exported from Japan, Europe, And other strange places like Singapore which is becoming high tech. Competition is everywhere. It's a hard road ahead.
PT?
I dislike the current Democrat Federal Government not because they are Democrat but because they are too slow conceited and too lazy.
When it was obvious that a major financial crash had taken place the Democrats and Republicans should have cut a deal to just do anything to make the economy work. Politics should have gone out the window.
They have lost a lot of precious time that they could have been looking at areas they could remove money from the economy and re-direct those funds into other areas for a greater return. Had that been done on a continuous basis across the board I think it would have made all the difference. I will blame obama if this stimulus fails.
Germany is an ancient country that has a much longer history than post war.The real growth for the country was instigated by Bismark which has led to modern Germany.
German re amalgamation has little to do with current prosprerity.
You might want to read up on your history and economics a bit.
As for amalgamation, it was a net cost to East Germany and has set it back quite a bit. Without having to bail out East Germany, the West German taxpayers would have had a higher standard of living.
Come on Vangel1V get with it. You are saying you want banks to go broke so that every man in the street looses the savings money he puts in the local bank for safe keeping.
What are you talking about? Many of the local banks are fine. The bailouts went to save the brokers and banks who behaved as hedge funds. Their depositors and creditors should go broke because they made the wrong bets and should take their lumps.
The only reason he ever went there is he saw their add while he was watching the game. He associated the bank with the game not the nuts and bolts holding it together which by the way wern't mentioned at the time he made the deposit.
Muddled writing means muddled thinking. Most of us have had our share of typos or hit the wrong button on our spell checker and wound up using the wrong word here or there. But if we want to be seen as credible our thoughts have to make sense. Yours don't seem to.
So you are saying that every person who makes a deposit of funds should be told what the financial position of the bank is at that time. That is totally unworkable.
Not at all. People don't care because they know that the FDIC will step in and protect them. So they go for the extra bit of yield knowing that if the bank fails they will still get their money and the higher yield that was only there because of the risky nature of the deposits. They call that moral hazard.
Maybe customers could be given a disclaimer form advising them that this bank could become insolvent at any time. I'm sure average people would take no notice of it and deposit anyway. YES or most likely NO!!!!!!!!!
Cut the crap!
As I wrote before, your ignorance of economics is astounding. When people are bailed out every time they make a wrong bet but get to keep the winnings when their long shots come in they will turn into degenerate gamblers. That is the way that human nature works.
Now to the REAL ECONOMY:
Steve Jobs is what the future is about the innovator and inventor who gets the new technology onto the market to gain high value export income.
The warren buffets who secure the base infrastructure assets so that goods get to export markets.
The rest of the people that rake the muck and pack the goods so that that happens.
If you look at valuations and income you will find that the 'REAL ECONOMY' has been pushed aside by government and the financial sector.
Grant, China exchanges its goods for worth less U.S. paper assets, to maintain employment, rather than for U.S. goods.
I take it that you have never walked down Nánjīng Lù in Shanghai or driven on a new Chinese highway in Beijing or Xi'an. If you did you would see extremely well dressed men and women, restaurants that are full, and stores that sell merchandise that many Americans would find out of their price range. The Coach purses that you see are mainly real; the copies, many of them of very nice quality, go to the West. The highways do not have the cracks and potholes common in the US. And when you get on the plane to go home you find airports that are far superior to those in the US. When the USd finally achieves its intrinsic value the Chinese will still have all those new bridges, roads, electrical generation plants, etc., to use in the future. What will the US have?
Peak Trader says: "Over the past 40 years, the federal government has spent your money roughly seven times faster than you earned it"...
Ever so true!
How's this for irony?
Courtesy of the TaxProf blog: Deficit Reduction Commission Seeks Increase in its Budget
I dislike the current Democrat Federal Government not because they are Democrat but because they are too slow conceited and too lazy.
You forgot to mention stupid and corrupt. But if you think that there is a major difference between the Democrats and Republicans you are naive.
When it was obvious that a major financial crash had taken place the Democrats and Republicans should have cut a deal to just do anything to make the economy work.
government can't, "make the economy work." It can only distort the economy by diverting resources into ineffective and inefficient schemes.
Politics should have gone out the window.
How naive of you to think that politicians are not governed by self interest.
They have lost a lot of precious time that they could have been looking at areas they could remove money from the economy and re-direct those funds into other areas for a greater return.
You seem to have faith in central planning. I suggest that the faith comes from a lack of knowledge of economics and history. Perhaps you should try doing some reading.
Had that been done on a continuous basis across the board I think it would have made all the difference. I will blame obama if this stimulus fails.
The stimulus will fail. At best all it could have done is postpone the necessary adjustments in the economy.
VangelV:
Quite obviously you are a German citizen or German descent person who is anti American working as a car cleaner in the auto industry. You don't like the idea of competition from electric cars or Detroit made vehicles that will emerge as better value and quality than German or Japanese imports.
You don't like the idea of American owned and controlled industry re emerging as a threat to industries in your home country.
The economics you are pushing is at the moment completely discredited yet you continually push this crap as gospel.
Your idea of how a bank should be run totally lacks any vision or knowledge in reality of the banking industry.
You seem to be on a mission to discredit posters who post here and I seriously doubt that you are a genuine poster.
I even wonder if you are not are attached to the "GERMAN democrat CIA"
What does VangelV stand for it seems to be foreign origin.No other poster here has a name anything like it
Quite obviously you are a German citizen or German descent person who is anti American working as a car cleaner in the auto industry.
Quite obviously you like to jump to conclusions and are incapable of rational thought that is free of bias. I am a Canadian who worked as an engineer in the aircraft industry. But I have a good education and am very familiar with economics and history.
You don't like the idea of competition from electric cars or Detroit made vehicles that will emerge as better value and quality than German or Japanese imports.
I support competition. That is why I believe that all vehicle production should be free of subsidies and that all fuels should be free of taxes.
You don't like the idea of American owned and controlled industry re emerging as a threat to industries in your home country.
My province is one of the biggest producers of American vehicles and automobile parts.
The economics you are pushing is at the moment completely discredited yet you continually push this crap as gospel.
You have it wrong. It is your call for central planning and interventionism that has been discredited.
Your idea of how a bank should be run totally lacks any vision or knowledge in reality of the banking industry.
It is because I know how the banking industry works that I call for real competition. Here is a decent read that might enlighten you on the subject of banking:
http://mises.org/mysteryofbanking/mysteryofbanking.pdf
I recommend that you read the entire book but if you are pressed for time you might want to go over Chapter XII and look at the history of banking in the US.
You seem to be on a mission to discredit posters who post here and I seriously doubt that you are a genuine poster.
No. I just have little time for pretenders who have no idea what they are talking about.
I even wonder if you are not are attached to the "GERMAN democrat CIA"
As I said, I am Canadian.
What does VangelV stand for it seems to be foreign origin.No other poster here has a name anything like it
Vangel is my first name. V is an initial. There is nothing wrong with foreign born people posting here. They add a different perspective and at times a knowledge that you seem not to possess. Many of us have seen central planning first hand and know that it wasn't the class of people chosen that were the problem. We saw first hand what Mises and Hayek showed that had to happen. In my case I have seen it in places that I have lived; behind the Iron Curtain and in China.
http://mises.org/books/socialism/contents.aspx
VangelV:
Thanks for the explanation I will take all that into account and try to understand your side that underneath it all, you are OK!
Why don't you tell us about some of that stuff you went through in Europe and what it was like to live under a repressive government and how it affected peoples lives.
Why not start a new thread further up the posts.
Why don't you tell us about some of that stuff you went through in Europe and what it was like to live under a repressive government and how it affected peoples lives.
All governments are repressive. They all steal savings by having access to the printing presses and use their monopoly power on the initiation of force to meddle in markets and in the daily transactional activities between individuals.
Where I grew up the government had a great deal of control of the official economy but if one looked at the big picture, it probably did not consume as much of the national income as most governments do today. People are not stupid and when governments meddle too much they take steps to allow themselves to mitigate the damage caused by that meddling. Where I grew up there was a great deal of black market activity and workers clearly did not work as hard as they could have because there was no incentive to do so.
My experience helped me to see the way things were rather than to rely on the official story from groups that tried to interpret the facts for me. This is why I have trouble with Mark at times. He tends to be too trusting of data from the official sector, questions far too little for a guy who knows that free markets work best, and for there to be real free markets they have to actually be free.
Sadly, too many people in the US and the West have forgotten about liberty and are having a hard time imagining being free. Ironically, my first true exposure to authentic free market economists came in China where one of my debating partners, an economist who worked for AVIC, got me to read Mises, Hayek, and Rothbard. Because of what I learned I was able to see many of the problems coming long before the idiots one hears on the news channels or reads in the press and took advantage by retiring just after I turned 40 even though I never earned a great deal in salary.
When I make my arguments they are backed up by theory, history, and my own money. I am betting that after a nice run for the USD, most of which may have already occurred, we will see problems in the municipal bond market, state and federal budgets begin to dominate and take the currency much lower. I agree with Faber, who pointed out that given the position that it is in the Fed will not make any significant moves towards meaningful tightening. That means that the economy will not do well in real terms and that hard assets like gold should do quite well for several more years. I have lived through several major devaluations and do not have much faith in real money.
If I am right this is an opportunity of a lifetime for those that refuse to sleepwalk through life and choose to think for themselves. It is time to take advantage of those opportunities. The best way to do that is to acquire knowledge and to shed dependence on the lies that most of us were taught in public school and the university system. If you think that Keynes or Milton Friedman were right and act according you are going to have your brains beat in by reality. Better to read Rothbard or Friedman the son for a better idea of where things are heading.
VangelV:
OK I will follow tour advice. Thanks for putting in such a large answer.
OK I will follow tour advice....
Do your homework first. The internet has a great deal of information and provides us cheap or free access to a great deal of information and data. If one can stay free from bias it is easy to put together a coherent picture of what is going on and have a good idea of what to expect some time in the future. As long as one does not make a bet where timing is critical it is simple to be right. The only thing to remember is that while success at determining what is going on is simple, it isn't easy because of the great variation that makes it difficult to stay the course even when you are right.
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