Here Comes The Double Dip Pt. 2

[Daniel_Plainview]

But it was never a depression.

My larger point is that traditional/historical definitions of "depression" etc. worked fine in the pre-2008 era, but such definitions must now be revisited / redefined, or discarded.

As long as a sovereign can continue to rack-up trillions of dollars in annual deficits and/or print money (e.g., monetize the debt, QE, etc.), then the "true" economic situation will be cloaked and disguised.

A majority of the US economy is govt-controlled (directly or indirectly) ... and to compare this to the dust bowl is comparing apples to oranges.

Absent unbridled money-printing, the true state of the sovereigns will soon be revealed in Greece, Italy, Spain, Portugal, etc.

Then you'll see how truly ugly the reality is.

We've only begun to scratch the surface of unvarnished "reality," and the politicians are currently working overtime to continue the facade and charade.

Ask yourself why politicians never discuss "peak oil," ... and you'll understand why subterfuge and deception are the hallmark of the current political regime.



The Cornies would love for sovereigns to continue to propagate the illusion of prosperity ... but we will soon learn the folly of their delusions.

[Armageddon]

Daniel is spot on.

[newman1979]

According to USdebtclock.org,46.6% of GDP spending is from government on all levels. It is not a free market. It is a mixed market. Republican Administrations contributed 3/4's of our Natioal debt of $15.22 trillion according to Zfacts.com. Crony capitalism,special interests spending, the revolving door of Wall Street, government, defense, oil, health care and banks leave little for the 99%. The FED is tied to Wall Street and caused the housing crash by not stopping the bubble. But we have have nobody to blame because we are not smart enough to vote or rich enough to fight. Don't let them take Social Security or Medicare from you or old age will be a nightmare.

[Cog]

I would lower my expectations about saving social security or medicare in its present form.

[newman1979]

Why not put your head in the sand. We are Americans. We are pragmatic and we can fix things when we have a will to do so. SS can be fixed easily. In 1960, 90% of payroll income was taxed. Today, that number is 84%. Getting back to 90% grdually and indexing 90% for the future would protect SS for 100 years. Or is the answer that we were a fairer Country in 1960 and have become a fat unthinking and lesser Country today.

[Cog]

You can not fix a Ponzi scheme.

[newman1979]

cog, you really are a case. Fraud is the essence of a ponzi scheme. SS is a law, it is run according to laws passed by Congress and approved by the Supreme Court. SS has worked for over 80 years. SS in some form exists in over 60 Countries. You and your other right wing kooks are dumb as mud.

[Hawkcreek]

Since Hostess is going under, does this mean that Little Debbie is on her back, too?

[ralfy]

Well done, Daniel.

"Home Seizures May Jump 25% This Year as U.S. Foreclosures Resume"

http://www.businessweek.com/news/2012-0 ... esume.html

[KingM]

Since Hostess is going under, does this mean that Little Debbie is on her back, too?

Little Debbie may be on her back and Suzy Q is going down, but Ding Dongs are still standing tall and every day millions of people are still eating out their Ho-Hos.

[TheAntiDoomer]

NobodyDaniel Plainview Doesn't Understand Debt

http://www.nytimes.com/2012/01/02/opini ... .html?_r=1

Deficit-worriers portray a future in which we’re impoverished by the need to pay back money we’ve been borrowing. They see America as being like a family that took out too large a mortgage, and will have a hard time making the monthly payments.

This is, however, a really bad analogy in at least two ways.

First, families have to pay back their debt. Governments don’t — all they need to do is ensure that debt grows more slowly than their tax base. The debt from World War II was never repaid; it just became increasingly irrelevant as the U.S. economy grew, and with it the income subject to taxation.

Second — and this is the point almost nobody seems to get — an over-borrowed family owes money to someone else; U.S. debt is, to a large extent, money we owe to ourselves.

This was clearly true of the debt incurred to win World War II. Taxpayers were on the hook for a debt that was significantly bigger, as a percentage of G.D.P., than debt today; but that debt was also owned by taxpayers, such as all the people who bought savings bonds. So the debt didn’t make postwar America poorer. In particular, the debt didn’t prevent the postwar generation from experiencing the biggest rise in incomes and living standards in our nation’s history.

But isn’t this time different? Not as much as you think.

[Daniel_Plainview]

Well, well, well. It looks like Japan is finally leaving La La Land, and beginning to face reality: Japan now pays a mere 1% interest on its bonds, but given the massive size of its debt, if that increases to 3%, the country would implode. Thus, Japan now sees an urgent need to address its debt problem ... and its primary tool appears to be raising taxes, which a majority of the public opposes.

Japan Must Heed Lessons of European Credit-Rating Downgrades, Noda Says

Prime Minister Yoshihiko Noda said containing Japan’s public debt load, the world’s largest, is critical after Standard & Poor’s downgraded credit ratings on France, Austria and seven other European nations.

Europe’s fiscal situation “isn’t a house burning on the other side of the river,” Noda said on TV Tokyo Holdings Corp.’s program on Jan. 14. “We must have a great sense of crisis.”

Noda reshuffled his cabinet last week, aiming to win support for doubling Japan’s 5 percent national sales tax by 2015 to trim the soaring debt. S&P said in November Noda’s administration hadn’t made progress in tackling the public debt burden, an indication the credit-rating company may be preparing to lower the nation’s sovereign grade.

Japan’s government, which has enjoyed borrowing costs that are around 1 percent, wouldn’t be able to manage its finances if bond yields surged to 3 percent, Noda said last week.The country risks seeing a spike in government bond yields unless it controls a debt load set to approach 230 percent of gross domestic product in 2013, the Organization for Economic Cooperation and Development said on Nov. 28.

“The proposed increase in the consumption tax to 10% would not be enough to put the public finances on a sustainable track,” David Rea, a Japan economist at Capital Economics Ltd. in London, wrote in a report last week. “A larger increase is needed, and soon, but is highly unlikely without a specific mandate from the electorate as support from the opposition and even some elements of the ruling party is non-existent.”

... About 57 percent of the public opposes raising the sales tax, and the approval rating for Noda’s cabinet fell to 29 percent from 31 percent last month, the Asahi newspaper said yesterday, citing its own survey. The Nikkei newspaper said Noda’s public approval rose 1 percentage point to 37 percent after a cabinet reshuffle last week, while the Yomiuri newspaper reported a decline in public approval to 37 percent from 42 percent.

‘Worse and Worse’

Japan’s finances are “getting worse and worse every day, every second,” Takahira Ogawa, Singapore-based director of sovereign ratings at S&P, said in an interview on Nov. 24. Asked if this means he’s closer to lowering Japan’s credit rating, he said it “may be right in saying that we’re closer to a downgrade.”

S&P rates Japan AA- and has had a negative outlook on the rating since April. Ogawa said Japan needs a “comprehensive approach” to containing its debt burden, which the government has projected will exceed 1 quadrillion yen ($13 trillion) in the year through March as the nation pays for reconstruction costs from March’s record earthquake.

Remember when our La La Land corny crowd was proclaiming that "debt doesn't matter" ??? Well, tell that to Japan ... and France ... and Italy .. and Greece ...

This precarious house-of-cards is moving closer and closer to implosion.

[Plantagenet]

families have to pay back their debt. Governments don’t — all they need to do is ensure that debt grows more slowly than their tax base....

Yes, but you apparently are too much of a thickie to realize that the US government isn't ensuring that debt is growing more slowly than the tax base. The opposite is happening.

Since Obama took over in 2009 the federal deficit in the US has tripled. Debt is now growing much more rapidly than tax receipts.

[newman1979]

According to Zfacts.com, 3/4's of the $15.23 trillion National debt was created under Republican Administrations. Two unfunded wars,Bush tax cuts, and a unfunded Medicare D program account for over $6 trillion in debt under Bush II. Obama came into the worst recession since the depression in the 1930's. Supply side theory has only increased debt, helped the rich and cost jobs. Keynesian economics have also increased debt but added some jobs. The problem is not enough jobs and the cost of more stimulus is not a good enough return to the future. Economists need to retool their theories to keep debt from hurting the future. Higher taxes are needed in a high oil economy as profits are inpacted adversly.

[Daniel_Plainview]

Keynesian economics have also increased debt but added some jobs. The problem is not enough jobs and the cost of more stimulus is not a good enough return to the future.

The marginal utility of using deficit spending to enhance GDP is now NEGATIVE ... Stated otherwise, govt deficit spending has now become SO INEFFICIENT and PERVERSE that the multiplier is now less than zero.

Keynesian economics is now dead ... and every dollar spent using deficit dollars has a NEGATIVE impact on the economy.

The govt needs to stop intruding on private free markets ... because every time it intrudes it makes matters WORSE.

Economists need to retool their theories to keep debt from hurting the future. Higher taxes are needed in a high oil economy as profits are inpacted adversly.

Keep debt from hurting the future? This is an oxymoron. Why? Because exponential debt, per se, destroys the future. We will soon be confronted with a hyperinflationary collapse ... even without peak oil



Obama has already destroyed every shred of "future" for the youth ... with annual trillion dollar deficits while eviscerating the moral work ethic by bailing-out every loser company that falls victim to Obama's backwards economic policies.

And Obama's partner-in-crime, Helicopter Ben Bernanke, takes delight in further expanding the Fed's role in providing life-support to a dysfunctional, moribund economy.

[AgentR11]

IF you seek after powerdown.
And
IF your economic system requires nominal growth.

THIS is how you do it.

The "hyperinflation" is restricted to food and energy.
Food and Energy inflation is removed from the inflation index.

Unemployment is restricted, by non-participating people as their benefits expire.

And if you want to achieve powerdown in a way that your opponents can not undo.
You do it with debt.

[Daniel_Plainview]

Since Obama took over in 2009 the federal deficit in the US has tripled. Debt is now growing much more rapidly than tax receipts.

Debt is now growing exponentially.

But even if debt were only growing linearly, it would still destroy the future economy ... but not quite as quickly.

Real, sustained growth is impossible amid peak oil, and with an aging population (and dwindling tax base), govt deficit spending will only increase.

And if taxes are increased to counteract the massive deficit spending, then GDP will fall proportionately ... and matters will be made worse.

This is it, folks. We're past the event horizon.

[Serial_Worrier]

This is it, folks. We're past the event horizon.

Unlike a real event horizon, we actually can pull back from this black hole of economic doom.

[Daniel_Plainview]

NobodyDaniel Plainview Doesn't Understand Debt

http://www.nytimes.com/2012/01/02/opini ... .html?_r=1

Deficit-worriers portray a future in which we’re impoverished by the need to pay back money we’ve been borrowing. They see America as being like a family that took out too large a mortgage, and will have a hard time making the monthly payments.

This is, however, a really bad analogy in at least two ways.

First, families have to pay back their debt. Governments don’t — all they need to do is ensure that debt grows more slowly than their tax base. The debt from World War II was never repaid; it just became increasingly irrelevant as the U.S. economy grew, and with it the income subject to taxation.

Second — and this is the point almost nobody seems to get — an over-borrowed family owes money to someone else; U.S. debt is, to a large extent, money we owe to ourselves.

This was clearly true of the debt incurred to win World War II. Taxpayers were on the hook for a debt that was significantly bigger, as a percentage of G.D.P., than debt today; but that debt was also owned by taxpayers, such as all the people who bought savings bonds. So the debt didn’t make postwar America poorer. In particular, the debt didn’t prevent the postwar generation from experiencing the biggest rise in incomes and living standards in our nation’s history.

But isn’t this time different? Not as much as you think.

To borrow from Carlhole's lexicon: What a dumbass, moronic, shit-for-brains!

[Daniel_Plainview]

This is it, folks. We're past the event horizon.

Unlike a real event horizon, we actually can pull back from this black hole of economic doom.

It's all mathematics. When you have an exponentially growing national debt, combined with declining real GDP, dwindling tax base, and increasing energy costs, then it becomes mathematically impossible to extricate yourself from the blackhole.

We need a miracle ... an E-cat type magical energy source. Without that, it's game over.