Comments

  1. suek says

    FOURTEEN THINGS THAT IT TOOK OVER 50 YEARS TO LEARN:

    By Dave Barry

    1. Never, under any circumstances, take a sleeping pill and a laxative
    on the same night.

    2. If you had to identify, in one word, the reason why the human race
    has not achieved, and never will achieve, its full potential, that word
    would be “meetings.”

    3. There is a very fine line between “hobby” and “mental illness.”

    4. People who want to share their religious views with you almost never
    want you to share yours with them.

    5. You should not confuse your career with your life.

    6. Nobody cares if you can’t dance well. Just get up and dance.

    7. Never lick a steak knife.

    8. The most destructive force in the universe is gossip.

    9. You will never find anybody who can give you a clear and compelling
    reason why we observe daylight savings time.

    10. You should never say anything to a woman that even remotely suggests
    that you think she’s pregnant unless you can see an actual baby emerging
    from her at that moment.

    11. There comes a time when you should stop expecting other people to
    make a big deal about your birthday. That time is age eleven.

    12. The one thing that unites all human beings, regardless of age,
    gender, religion, economic status or ethnic background, is that, deep
    down inside, we ALL believe that we are above-average drivers.

    13. A person who is nice to you, but rude to the waiter, is not a nice
    person. (This is very important. Pay attention. It never fails.)

    14. Your friends love you anyway.

    Thought for the day: Never be afraid to try something new. Remember that
    a lone amateur built the Ark. A large group of professionals built the
    Titanic.

  2. BrianE says

    There is so much potential economic bad stuff looming on the horizon; it’s hard to put it in perspective. Are we headed for a period of hyperflation, after a period of deflation? Is the worst over, as suggested by some, or is this a dead-cat bounce? What does the drop in orders for durable goods and housing last mongth mean?
    From the White House budget office, here’s the numbers they are using for their 10-year budget: the federal budget will grow from $2.98 trillion in 2008 to $5.16 trillion in 2019. From 2010 to 2019 the government will borrow just short of $7 trillion. There is no reason to doubt a democrat administration would spend this kind of money.
    The second part of their estimates is suspect though. To make these spending numbers work, the white house estimates the US economy will grow from $14.73 trillion in 2010 to $22.87 trillion in 2019, an increase of 55%. They are saying the economy is going to grow on average 5.5% a year for the next 10 years! Wow, that’s some recovery.
    The Obama administration is taking a huge risk with these proposed budgets:

    Like the Texas Hold’em player who pushes every last dime into the center of a poker table, the federal government is now “all in” with its commitment to push the national debt to 50% of GDP. The Congressional Budget Office believes that the Treasury will have to borrow nearly $2 trillion this year. None of that is new news, but what is beginning to emerge is a picture of a government which has narrowed its options for improving the economy down to one. Either GDP turns sharply up next year or the deficit will become an unmanageable burden. The Treasury will have to default on interest payments if sharply raising taxes in 2010 and 2011 does not bring IRS receipts to historic highs. That would not appear to be likely with unemployment moving toward 10% and American corporate earnings badly crippled.
    Since the government has left itself no room to maneuver because of its massive commitment to spending, the focus will become what the carrying costs of the debt will be. The Congressional Budget Office predicts that the interest payments on government debt this year will be $172 billion in 2010 and will rise to $806 billion in 2019. Those forecasts are optimistic. If the economy has a sluggish recovery, GDP will not rise at anywhere close to the rate of interest coverage, leaving the burden of government debt at a level which will be both unimaginable and unsustainable. Interest due on the debt could easily be $1 trillion toward the end of the next decade.

    Most of the conversation about American borrowing has focused on whether the Chinese and other large buyers of Treasuries will continue to have an appetite for US paper. Very soon the focus of the debate will move to whether the government will find that it does not have the ability to cover the service on the outstanding debt balance.

    http://247wallst.com/2009/06/01/a-1-trillion-a-year-deficit-interest-rate-payment/

    Normally in a recession the government lowers taxes, which spurs consumption and fuels growth. Since lowering taxes is anathema to the Obama administration, there choice is to embark on massive deficit spending. Basically, the Obama administration, and liberals in general, are embarking on a strategy reminiscent of the Bush Administration, though on a more massive scale.
    These are the same people who were apoplectic over the Bush deficit spending, but find no problem with deficit spending a magnitude greater, since; of course, they will spend their money on good stuff, and not bad stuff like the Bushies.
    As a reminder, Bush also took office during a recession, immediately followed by 9/11, which in addition to the horrible human cost had the potential of bringing our economy to its knees.
    Perversely, Obama’s deficit spending (if spending alone can produce a lasting recovery) may be the only choice. Personal debt is at record levels and even if the banking system chose to increase lending (which by some indications it is not) the average citizen is deleveraging at the same time the financial industry is doing the same.
    Where it gets dicey is the effect this pull back to sanity will have on the economy. Government tax receipts are unlikely to meet projections, which will increase the deficit, which will produce more bad effects.

    $1 trillion annual interest payment may be a conservative estimate and will eclipse all other line items in the budget. Currently interest is the third highest expense behind defense and social spending (The Departments of Health and Human Services, HUD, and Agriculture (food stamps)).

    Information on how the federal government spends your money:
    http://www.federalbudget.com/

  3. Mike Devx says

    suek #4,
    That “ghost fleet” story is eerie. Ships that are as abandoned as modern companies can abandon them… because they have nothing they can *do* with them.

    Shipbuilders’ current contracts run out in two years, and there are almost no orders in the pipeline. That economic sector is a looming collapse. How many other sectors are in the same situation? We know that Obama’s “cash for clunkers” program, funded by the taxpayers only to increase the national debt, resulted in a rush of car-buying. And now car-buying has collapsed, because demand is gone, and our auto-dealerships are facing six months of slowdown. They are the auto equivalent of the ghost fleet. Another looming economic slowdown.

    How many more are out there, hidden by the temporary good news?

  4. says

    With economic chaos and desperation, comes war.

    The only thing keeping the world from going into active wars of conquest was the United States military. Now Obama will lift that stasis. He will change the world.

  5. BrianE says

    Suek,
    that picture of the seeming derelict freighters is pretty compelling.
    Here’s some graphs which are pretty dismal.

    Another area where we are “surpassing” our forbearers is in destroying trade. World trade is falling much faster now than in 1929-30 (Figure 3). This is highly alarming given the prominence attached in the historical literature to trade destruction as a factor compounding the Great Depression.

    Figure 3. The Volume of World Trade, Now vs Then

    Sources: League of Nations Monthly Bulletin of Statistics, http://www.cpb.nl/eng/research/sector2/data/trademonitor.html

    It’s a Depression alright
    To sum up, globally we are tracking or doing even worse than the Great Depression, whether the metric is industrial production, exports or equity valuations. Focusing on the US causes one to minimise this alarming fact. The “Great Recession” label may turn out to be too optimistic. This is a Depression-sized event.

    That said, we are only one year into the current crisis, whereas after 1929 the world economy continued to shrink for three successive years. What matters now is that policy makers arrest the decline. We therefore turn to the policy response.

    From “A Tale of Two Depressions”
    http://www.voxeu.org/index.php?q=node/3421

Leave a Reply