Is this finally the economic collapse?

[hvactec]

FORTUNE -- The Great Depression. Wall Street in 1987. Japan in 1997. Point of economic collapse are generally crystal clear in the rear-view mirror. Professional politicians in Japan have been telling stories for 20 years as to why they can prevent economic stagnation. In the US, the storytelling started in 2007. All the while, stock market and real-estate prices have repeatedly rallied to lower-highs, then collapsed again, to lower-lows.

Despite the many dissimilarities between Japan and the US, there is one similarity that continues to matter most in the risk management model my colleagues and I use at Hedgeye, our research firm -- debt as a percentage of GDP. Now that the US can't cut interest rates any lower, the only option left on the table is what the Fed just announced it would start doing -- buying Treasury debt. And that could lead the country to the brink of collapse: According to economists Carmen Reinhart & Ken Rogoff, whose views we share, crossing the 90% debt/GDP threshold is the equivalent of crossing the proverbial Rubicon of economic growth. It's a point from which it's almost impossible to return.

On July 2nd, we cut both our Quarter 3 2010 and full year 2011 GDP estimates for the US to 1.7%. At the time, the consensus around US economic growth estimates was about 3%. Now we're starting to see both big brokerage analysts and the Federal Reserve gradually cut their GDP estimates, but not by enough. Even our estimate for 2011 is still too high.

Growth slowing, both domestically and in China, is core to our bearish views on both the strength of the US Dollar and US equities. There will be a downward bias to our US growth estimates as long as debt-financed-deficit-spending continues to be the solution politicians and central bankers turn to as a fix to our financial crisis.

Read more Is QE2 finally the economic collapse? - Aug. 11, 2010

 

[topspin]

No

 

[editec]

It won't collapse.

It will die by inches same as its been doing for the last 40 years.

 

[B. Kidd]

It won't collapse.

It will die by inches same as its been doing for the last 40 years.

At this pace, won't take 40 more years. It's dying by yards. I give it 5-7 more years, tops.

 

[william the wie]

It won't collapse.

It will die by inches same as its been doing for the last 40 years.

At this pace, won't take 40 more years. It's dying by yards. I give it 5-7 more years, tops.

I lean more to 10 years for disintegration of the current republic but economic collapse as in 1786 when tax farmers literally could not find people economically employed usually precedes political collapse. 7 years for economic collapse and 10 years for political reorganization is perhaps the same prediction.

 

[Neubarth]

We have been in a continuing economic collapse for two years now. A little "bought" GDP does not mean that we were coming out of Depression. Buying a slightly positive GDP number and lying like hell about Unemployment does not a recovery make.

 

[topspin]

The economy is growing. We have way more than 10 years ago and will have waymore in 10. Even the dumb people.

 

[Douger]

Gerald Celente On the Alex Jones Show: Double Dip Depression Will Lead Us Into War

 

[Pepe]

I lean more to 10 years for disintegration of the current republic but economic collapse as in 1786 when tax farmers literally could not find people economically employed usually precedes political collapse. 7 years for economic collapse and 10 years for political reorganization is perhaps the same prediction.

My best look forward suggest that the Empire has 36-60 months before even the densest of Sheeple comprehends that the Empire's Financial Ponzi scheme is in the throes of Collapse.

That will be followed "Balkanization" or as WTW writes political reorganization.

The only question remains is will it be peaceful or will it be violent?

Weekly Initial Unemployment Claims increase, Highest since February

** Snippet **

The DOL reports on weekly unemployment insurance claims:

In the week ending Aug. 7, the advance figure for seasonally adjusted initial claims was 484,000, an increase of 2,000 from the previous week's revised figure of 482,000. The 4-week moving average was 473,500, an increase of 14,250 from the previous week's revised average of 459,250.

 

[Wry Catcher]

The Henny Penny Polka crowd is all about doom and gloom, too bad they have no solutions to offer but to cut, cut, cut spending.
It is the same refrain, the sky is falling, the sky is falling screamed by all the chicken hawks in the Republican/RW barnyard.
But, what to cut? Never a word is spoken; but the same tune is played with a new refrain, cut taxes, cut taxes, cut taxes.
Of course some want entitlements cut, social security and medicare; social programs are bad, war is good. Sounds somewhat like a novel I read long ago.

 

[B. Kidd]

News like the following moves us closer to economic collapse by yards:

Trade deficit hits $50 billion for June, the biggest in almost 2 years. Indicates the economy is worse off than had been thought.
Nigel Gault (yes, real last name, hee-hee-hee), Chief U.S. economist at IHS Global Insight states: "The problem is that to the extent we have a recovery in the United States, it is pulling in a lot of imported goods. That means it is not translating into production and jobs at home."
Additionally, economists fear that 2nd quarter GDP put at 2.4 percent estimate, may turn out to be ONLY HALF THAT!

 

[uscitizen]

The economy is a massive thing. It keeps moving for quite a while on inertia alone after the driving force has been removed.
Because of it's mass it is also equally slow to strat back up or change directions.

 

[Carol]

Where is the Smilies dressed up like a foot ball player and ready for a rough game? I want to say something that I am sure will result in you all throwing stones at me, or at least tomatoes. In the book "The Mayan Factor" by Jose Arguelles, he speaks of economic collapse. Our Military, Industrial Complex and all industrial economies tied to ours will collapse. At the same time we are suppose to maintain our international communication system, which is effective in transforming the world for life "Beyond Technolocy".

I remember when I was in high school, when dinosuars walked the earth , a teacher told us the purpose of education had been changed, and we were now being prepared for a technological society with unknown values. He told us we had to think about becoming a low labor intense society, because machines would would replace human labor. I have witnessed a significant change in humans being replaced by machines. Our whole economy is set up for a labor intense economy, and we really do not know how to create a low labor intense economy. When people don't work, they don't pay taxes, and neither do the machines that replace them. This may be something we need to adjust.

I don't like predictions without scientific evidence, so let us look at science. Our great booming economy depended on gold, until we went off the gold standard, then it depended on oil. We have enjoyed a growing oil based economy for about 200 years, and are now experiencing the limit of that growth. It is limited, because like gold, oil is finite.

Oil exports gave the US more revenue than all other exports combined, not that long ago. Just as today many countries are depending on oil exports for their revenue. With this revenue, they can build an roads, dams, train systems, schools, industry and buy weapons, just as the US did. When this revenue is lost, what will replaces the revenue?

The problem with our Gross National Product, is it no longer is about products. Our gross national product today is about abstracts, ideas that can become as valueless as a peeled ballon. The US has exploited its natural resources and spent its wealth, and now reality is catching up with it. It can not maintain the standard of living it had, and doesn't know how to adjust to change. It role model has been Rome and hello, Rome fell.

The good news is, human beings survived many centuries without the abundance we believe we think we have to have. They did so by caring about each other, helping each other, and doing things together that gave them joy. If we can figure out how to blend what was, with the technology we have today, we will have the New Age, a time of high tech, and the end of tyranny, and peace. Some say this prediction has been by carried by several different cultures for centuries.

 

[ConservativeDad]

 

[william the wie]

The economy is a massive thing. It keeps moving for quite a while on inertia alone after the driving force has been removed.
Because of it's mass it is also equally slow to strat back up or change directions.

True but the real problem is that the politicians are totally confused by the whole idea of the product life cycle and are therefore into counterproductive policy. Take two things:

Computers the cost of hardware and software keeps going down. In order to keep track of my DSP (Direct Stock Purchase Plans) portfolio over the last 18 years I have bought three computers to keep up. I've gone from diskettes/megabytes to CD/gigabytes to DVD/terabytes but the price remains more or less the same in nominal dollars. And the only reason I have bought is that the memory devices keep going out of style. I don't know what is beyond DVDs and terabytes but I suspect I could store a large percentage of all public domain software on it without crashing my hard drive. But the only reason I will be buying is that information on DVDs will no longer be available and I expect to pay less than $1,000.

High speed rail. Attainable speed by rail keeps going up. At some point sound buffers for supersonic or even hypersonic speed will be needed. So at what point will the WTF point be reached and congress will geek for high speed rail? I have no idea but commuter zones increase as the square of the speed of travel which means real estate is going to really crash.

Policies, Keynes/Fisher policies in particular, that ignore the product life cycle are going to get us in ever bigger trouble.

 

[uscitizen]

I was thinking more about the product life cycle on "economic experts" and politicians.

 

[william the wie]

I was thinking more about the product life cycle on "economic experts" and politicians.

One of the things I do agree with Keynes about is that politicians set economic policy according to whoever their college instructor turned them on to 30 years previously. As to economists the big question is "It works great in practice but does it work in theory?"

 

[eagleseven]

One of the things I do agree with Keynes about is that politicians set economic policy according to whoever their college instructor turned them on to 30 years previously.

Our problem is that Obama never took economics...but spent his college days musing Marx with his hipster friends.

 

[Samson]

The economy is a massive thing. It keeps moving for quite a while on inertia alone after the driving force has been removed.
Because of it's mass it is also equally slow to strat back up or change directions.

If we accelerate it toward the sun, maybe we can achieve a Sling Shot Effect, and we'll go back in time to 1967.

 

[uscitizen]

One of the things I do agree with Keynes about is that politicians set economic policy according to whoever their college instructor turned them on to 30 years previously.

Our problem is that Obama never took economics...but spent his college days musing Marx with his hipster friends.

Obama has done his economics pretty much the same way as the previous administration did.
Much to my dissapointment. I had hoped he would at least have a small pair of balls to do what was needed.