Still...there isn't much human behaviour can do about the laws of physics and depletion.
evilgenius wrote:I think the place to watch for trouble is the bond market. The yield on the ten year is very low, at under two percent. It's lower than that actually, but to state a figure like 1.53 percent isn't really the point. Something is wrong with rates this low. It means that demand for Treasuries is high enough that investors will take such a low rate. That's all fine, as long as the rate structure doesn't reverse course. If things are so great, unemployment is historically low, then we should expect a reversal at some point, in order to slow the economy down. It would be bad if the Fed found itself constrained, as far as rate increases go, at the time when they are necessary.
This economy is interesting because it has been slow to increase wages. Unemployment this low should result in increased wages. I think that the government's deficit spending plays a large role in this. The money available within the economy, the money supply, includes that as a component. Everybody knew this would happen, as it pretty much had to when whomever took over from Obama. Congress said no to spending under him, with the hopes that they could get the ruling party's candidate into power after Obama left office. Regardless of the person who was elected, we should have expected this level of spending.
The thing you have to ask yourself is, can this economy take over for that level of spending when the time comes? Can economic activity replace that amount of government spending? It's definitely possible, given the current low rate structure. Borrowing is how money is made, so things are positioned well for a switch. There will, however, be a philosophical problem at the Fed, as wages going up will trigger inflation worries. This will take place against a backdrop where huge companies, like Amazon, rule the economy in such a manner as may be dangerous for smaller competitors. That doesn't bode well for increased wages, and may keep the Fed in check, but may not engender the necessary amount of economic activity to sideline deficit spending. And, also, there will be worries about foreign investment. The level of uncertainty over what direction that will take is huge right now.
Armageddon wrote:3 rounds of bad economic news today and the DOW goes from -335 to +100?
- Unemployment filings up
- ISM service sector report declines
- factory orders decline
Haha, you can’t make this up.
Exxon Mobil has warned that its 3Q revenue will be hurt by the low oil price. But oil prices have been around this level for 5 years. So, what has changed? Exxon moved into the shale oil business...the high hanging fruit... scraping up what's left at the bottom of the barrel.
September Class 8 Heavy Duty Truck Orders Collapse 71%
shortonoil wrote:Exxon Mobil has warned that its 3Q revenue will be hurt by the low oil price. But oil prices have been around this level for 5 years. So, what has changed? Exxon moved into the shale oil business...the high hanging fruit... scraping up what's left at the bottom of the barrel.
The cost to produce oil is ever increasing as the total energy to produce it is ever increasing, and energy is not free even for the oil industry.
The Fed said that U.S exports are down becaus of a global slowdown. Sure, even I understand that. But is the U.S an island, isolated from the global downturn?
Armageddon wrote:-record govt debt
-record govt deficits
-record corporate debt
-record consumer debt
-record credit card debt
-record student load debt
- GDP slowing to under 2% and headed to 0
- Manufacturing in contraction
- most of Europe in recession
- Trucking collapsing
Can they stop this one? Time will tell
some man's debt is another man's credit.
The bigger the economy, the bigger the debt.
Can they stop this one? Time will tell
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