Meltdown

[bwv 1080]

I agree.  Indeed, in many respects, the USA's consumer-driven house-of-cards economy is among the most FRAGILE economies right now, and even after pumping trillions into the credit markets, and bailing out countless companies, it's still plunging into the abyss.  Even if the US somehow manages to squeeze out a shallow, short-lived recovery, it will remain consumer-oriented (rather than manufacturing based), and will remain saddled with a gigantic anchor of debt, causing it to fall back into the abyss. 

...

I do not see the US pulling anyone out of a recession.  If anything, the US will drag down other economies, with its trillions in toxic assets bundled into derivatives (and fraudulently sold to foreigners with phony AAA ratings), and its trillions in treasury bonds ballooning into a bubble on the brink of bursting.

The only problem with that levels of consumer & government debt and housing bubbles are if anything worse in most of Europe

easier to get insurance against McDonald's defaulting than UK government bonds.

He said 2009 would be "a really bad year" and society was going to suffer.

Public debt has risen to £650bn - 44.2% of UK gross domestic product. Consumer debt is more than £1.4 trillion.

In last month's pre-Budget report, the chancellor announced plans for a £20bn economic stimulus package, which would bring public debt close to 50% of GDP.

http://news.bbc.co.uk/1/hi/uk/7794294.stm

The United Kingdom is an interesting economy in particular because its aggregate consumer debt alone ($2660 US Billion) is roughly equal to the nation's total GDP. In this sense, the UK is just like your friend that spends exactly what they make, or even beyond their means to try and impress his/her friends. This is worse than living month to month – it's like living a month to two months behind! And now, the UK is accumulating new debt at a faster rate than the economy. If the UK were a private citizen, it might be time for him/her to sell off what they can and move to Panama, or declare some type of bankruptcy.

http://www.creditloan.com/blog/americans-debt-to-income-ratio-as-compared-with-other-countries/

And European bank capital ratios are as bad or worse than Lehman or Bear Stearns was:

[karlhenning]

". . . a qualified success."

"Maybe I'm missing something, but I don't see how it's possible to rescue the banking system without rescuing banks."

[BachQ]

US Census Bureau: Retail sales collapsed in 2009




Retail sales in real terms declined by 11.3% from 2009 vs 2008, representing the largest yearly decline since the Census Bureau began recording sales data.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aNIls_gWQjqk&refer=home

[ezodisy]

oh dear the UK is going to get stuffed. But I am not too worried about it. This country always finds a way out and always wins in the end, it'll just take some time (probably we'll be the second to last to get out of recession, just before the Eurozone, or what's left of it  ).

Oil < $36/bbl   
Gold < $810

Oil will fall to $15/bbl this spring, and close 2009 at $66/bbl.

Gold will fall to $450, baby!

You've really got a way with pictures. That post below with the balls was bloody hilarious (unless you live in the US)  0:)

Oil's gonna have a tough time getting back above $50 -- and below $35 maybe.
Gold today turned $815 from support into resistance. Any day now I'm looking for it to sell off into the $760s and lower.

Some of those graphs are pretty scary when somehow translated into human terms

[BachQ]

Oil's gonna have a tough time getting back above $50 -- and below $35 maybe.

MarketWatch (12 Jan 2009): Oil in SuperContango !

[BachQ]

The only problem with that levels of consumer & government debt and housing bubbles are if anything worse in most of Europe

http://news.bbc.co.uk/1/hi/uk/7794294.stm




http://www.creditloan.com/blog/americans-debt-to-income-ratio-as-compared-with-other-countries/

And European bank capital ratios are as bad or worse than Lehman or Bear Stearns was:

Even if the US solves all of its credit/banking woes, and even if all of its asset bubbles are properly purged and set aright, what worries me most is that the US will be hard-pressed to dig itself out of a depression amid a collapsed manufacturing infrastructure which has eroded to a 27-year low, and is getting worse.  It's difficult to fathom how the US can lead others out of a depression if the US cannot itself accomplish that feat.



America Has No Means to Recover from a Depression

Dustin Ensinger
OpEdNews
December 8, 2008

Speaking in front of members of Congress on Tuesday, economist Peter Morici, a professor at the University of Maryland, said the job loss experienced in November "was much worse than was expected ... The threat of a widespread depression is now real and present." *** Unfortunately, during the Great Depression we had the capacity to innovate, manufacture and otherwise create wealth that could drag us out of the hole we were in. Today, we no longer have that capability. We have forfeited that ability through disastrous trade policies that have shipped the majority of America's manufacturing prowess across the border and overseas. Without the capability to manufacture and create wealth, the U.S. will never truly recover.  Today we are maintaining our living standards only with imports & through the good graces of our creditors who loan us money. How can our creditors have faith in our credit worthiness when we can only pay them if we can borrow money from someone else to pay them.

[bwv 1080]

US Census Bureau: Retail sales collapsed in 2009




Retail sales in real terms declined by 11.3% from 2009 vs 2008, representing the largest yearly decline since the Census Bureau began recording sales data.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aNIls_gWQjqk&refer=home

That decline brings us all the way back to the level of 2005, hardly a return to the dark ages

[bwv 1080]

Dustin Ensinger
OpEdNews
December 8, 2008

Frankly, that is simply bullshit.  The US still has the best research University and Venture Capital system in the world.  Creative destuction is how you create wealth, not building automobiles which no one needs. 

[ezodisy]

The US still has the best research University and Venture Capital system in the world.  Creative destuction is how you create wealth, not building automobiles which no one needs. 

could you briefly explain to me what you mean by this and what might happen? I don't see where you're coming from here

[bwv 1080]

could you briefly explain to me what you mean by this and what might happen? I don't see where you're coming from here

Technology and Entrepeneurship creates wealth, not factories and the US is still a leader in this area.  There are a set of technological tools coming into maturity - nanotech, synthetic biology, biotech, materials science that have a wide range of potential applications in energy, healthcare & agriculture (and manufacturing for that matter).  For example, what happens when something equivalent to Moore's law occurs with photovoltaic cells, driving the installed, fully amortized cost of solar power to 2 cents / kwh over a period of 20 years?  I am not talking about big government, Manhatten-project type science, rather the darwinian process of  thousands of research projects resulting in hundreds of VC companies resulting in a few viable and distruptive technologies.  Would you rather live somewhere that could make cheaper TV sets than anyone else or a country where this sort of research was being done?

[ezodisy]

Technology and Entrepeneurship creates wealth, not factories and the US is still a leader in this area.  There are a set of technological tools coming into maturity - nanotech, synthetic biology, biotech, materials science that have a wide range of potential applications in energy, healthcare & agriculture (and manufacturing for that matter).  For example, what happens when something equivalent to Moore's law occurs with photovoltaic cells, driving the installed, fully amortized cost of solar power to 2 cents / kwh over a period of 20 years?  I am not talking about big government, Manhatten-project type science, rather the darwinian process of  thousands of research projects resulting in hundreds of VC companies resulting in a few viable and distruptive technologies.  Would you rather live somewhere that could make cheaper TV sets than anyone else or a country where this sort of research was being done?

Thanks. Not sure about the answer to your first question but the rhetorical second would be easy enough. It would be interesting to see a historical study of the effect of downturns on this sort of technology -- for example how the '70s recession slowed and delayed science & tech. I don't know, perhaps it'll turn out to be the US's chief wealth-creating export -- to China, naturally.

[BachQ]

Technology and Entrepeneurship creates wealth, not factories and the US is still a leader in this area.  There are a set of technological tools coming into maturity - nanotech, synthetic biology, biotech, materials science that have a wide range of potential applications in energy, healthcare & agriculture (and manufacturing for that matter). 

True.  The US and Japan lead the world in the procurement of patents, and, presumably, in the development of high-tech intellectual property.  However, the US's share of issued patents has declined from 26% in 2000 to 21% in 2006.   While it's not clear how much of this R & D is classified as "manufacturing," strictly speaking, your point is extremely important.

What is potentially troubling is the US's declining share of global manufacturing.



According to a study by Global Insight, China's share of global manufacturing is expected to increase from 3% in 1990, to 35% in 2025; while the US share is expected to tumble to roughly 10% by 2025. Of course, most countries are losing ground to China: 



As of 31 Dec 2008, US manufacturing hasn't been this dismal in 28 years (since 1980), and the manufacturing sector continues to contract at a statistically significant rate, specifically, the manufacturing index was down 3.8% from Nov to Dec 2008, and plunged 18.3% for 2008 (in contrast, U.S. real GDP fell at a 0.3% annual rate in the third quarter of 2008).  New manufacturing orders are at the lowest level in 60 years (since 1948), when recordkeeping began.  And there's no bottom in sight. 

Creative destuction is how you create wealth, not building automobiles which no one needs. 

It's not just manufacturing worthless automobiles.  The vast majority of US industries have reported contraction; specifically (in order):

     --     Nonmetallic Mineral Products;
     --     Wood Products;
     --     Fabricated Metal Products;
     --     Printing & Related Support Activities;
     --     Textile Mills;
     --     Plastics & Rubber Products;
     --     Paper Products;
     --     Transportation Equipment;
     --     Machinery;
     --     Primary Metals;
     --     Electrical Equipment, Appliances & Components;
     --     Chemical Products;
     --     Computer & Electronic Products;
     --     Miscellaneous Manufacturing;
     --     Food, Beverage & Tobacco Products; and
     --     Furniture & Related Products.

http://www.ism.ws/ISMReport/MfgROB.cfm?navItemNumber=12942

http://www.industryweek.com/ReadArticle.aspx?ArticleID=18125

[ezodisy]

you are the master of Gloom & Doom Dm. In fact I just figured out what Dm stands for: Doom-monger

[BachQ]

you are the master of Gloom & Doom Dm. In fact I just figured out what Dm stands for: Doom-monger

Well, according to the birth certificate, it's "Doom Meister" ... 

[BachQ]

Jim Rogers : "Oil Reserves are dropping 7% a year and these drop in reserves will cause serious supply problems in the near future.  We're going to see US$200 oil at some point, it may be by 2013. It's a sad fact but the world is running out of known oil. Oil will make a big comeback."

[ezodisy]

lol!

Jim Rogers is the best. He may be shamelessly self-promoting his interest in China right now but he doesn't have a short-term interest and will most likely be right in most respects over time.

For the gold bugs, I've spotted an inverted head and shoulders pattern on the weekly chart with the right (left) shoulder in formation. Price should play down to the 740-760 area soon to complete it and I expect the pattern to fail overall--just as all daily inverted H&S patterns on the major indices have over the past year--and new lows in the $600s to follow.

[BachQ]

RealtyTrac: US foreclosures soar 81% in 2008

lol!

Jim Rogers is the best. He may be shamelessly self-promoting his interest in China right now but he doesn't have a short-term interest and will most likely be right in most respects over time.

For the gold bugs, I've spotted an inverted head and shoulders pattern on the weekly chart with the right (left) shoulder in formation. Price should play down to the 740-760 area soon to complete it and I expect the pattern to fail overall--just as all daily inverted H&S patterns on the major indices have over the past year--and new lows in the $600s to follow.

Oil is again below $36/bbl (WTIC NYMEX).  Gold @ $810

Meanwhile, several brokers are taking advantage of contango by acquiring supertankers for storing cheap oil, including Morgan Stanley, Citigroup, and Royal Dutch Shell Plc.  Some 80 million barrels are being stored in supertankers, setting a 20 yr record.  Bloomberg

[BachQ]

Guardian (15 Jan 09 Reuters) - Societe Generale said on Thursday that the United States' economy looks likely to enter a depression and China's could implode.  "It is becoming clear that the Chinese economy is imploding and this raises the possibility of regime change. To prevent this, the authorities would likely devalue the yuan. A subsequent trade war could see a re-run of the Great Depression."

[Lethevich]

Good to see.

The west may have caused this screw-up, but by god we'll bring everybody else down with us

[ezodisy]

http://www.allthingsjimrogers.com/2009/01/15/wtfu-is-going-on/

"no, sorry, we won't tell you where your money is going"