[AgentR]

So, tell me, AgentR. What did he promise since your keeping tally.

Tax cuts and health care apparently, stimulus packages..

No idea how it is even possible to THINK of paying for those, but hey, Mr. Magic Money is going to the White House.

[flapjax]

So, tell me, AgentR. What did he promise since your keeping tally.

Tax cuts and health care apparently, stimulus packages..

No idea how it is even possible to THINK of paying for those, but hey, Mr. Magic Money is going to the White House.

So far he has kept his promises (just to throw a jab in there).
We've kept our troops in Iraq have we not? Thats not cheap. We can shave some moolah there. That was an Obama promise just to help you out a bit.

I agree with you that there may not be much he can do, but we shall see. You have pointed out that he would unjustly get credit for a 21st century depression. Why do you support the unjust? What benifit is it to you that he takes blame for a pre-existing problem?

[phaster]

No doubt we as a civilization are in an "emotional depression" because of the state of the global economy.

IMHO what is eventually going to happen within a few years is hyper-stagflation!

Right now we are experiencing price contraction in the stock and commodities markets at the moment because hedge funds are
de-leveraging, and individuals who bought stocks on margin are being forced to selling everything because they don't have cash reserves. This feedback loop on wall street is having effects in the real economy (aka main street), because no one knows the size of the problem in the credit markets.

Even with all the injection of money into the banking system, there is no wide spread lending in the commercial paper markets because financial institutions are sitting on cash because they fear the side bets (the credit default swaps), are going bankrupt one of the big financial institutions basically one of the counter parties.

With financial uncertainty there is now some demand destruction in commodities such as oil (the USA for example now uses 1 million barrels of oil less, compared to the same time last year). This is setting off a chain reaction, less "credit" and less oil demand means less oil production by OPEC and less investment in infrastructure for oil production. With the peaking of conventional oil production, there will come a point when manic consumer are suddenly going to be faced with a sudden reversal in commodities because oil production infrastructure is going to break down because of chronic under-investment. Combine the fact that the fed is printing money as fast as possible, with falling oil production this IMHO means sometime in the future we're info some form of hyper-inflation.

On the other hand with ever increasing populations and decreasing job opportunities this means wages IMHO are going to stagnate. IMHO this is a trend that is going to happen all over the world. Sadly what I see in the future is akin to what I've seen in Cuba or the Philippines, in both these societies I've seen first hand underemployment by an educated workforce that exists in an economy devoid of credit and opportunity. Both these nations, like mexico, china, etc., will have increasing populations trying to chase down ever fewer economic opportunities.

Global climate change within the next few decades I'm pretty sure will be a contributing factor to limiting global populations to a max of just about 9 billion people. I've been following drought trends and if the past is any indication then just like the maya and three Chinese dynasties: the Tang, Yuan and Ming the confluence of a contracting economy, peaking of oil and climate change means we're in for some interesting times ahead...

BTW ya all might find this blurb interesting: Stalagmite's monsoon guide basically the results from Wanxiang Cave in northern China provide the most detailed evidence so far of a link between solar activity, climate and culture.

[topcat]

+1 phaster

My crystal ball also calls for stagflation.

Once the de-leveraging slows considerably, all the money that has been thrown at the current crisis, will show back up. IMO, this will bring on inflation, the likes of which we have not seen in decades.

A silly question, we all know the text-book definition of a recession, what is the text-book definition of a depression?

[AgentR]

I agree with you that there may not be much he can do, but we shall see. You have pointed out that he would unjustly get credit for a 21st century depression. Why do you support the unjust? What benifit is it to you that he takes blame for a pre-existing problem?

"Support" ? I make a plain observation and prediction; my preference would be bubble-con forever with endless streams of milk, honey, and booze.

It'd be unjust because presidents honestly don't have much power to shape the economy; they can nibble here and there; but people like to insist on giving the credit for great things, and blame for bad; when they really deserve neither.

The depression cycle we are going into is not the fault of politicians; as much as we'd like it to be; it wasn't politicians leading the charge to make huge SUV's and huge houses; it wasn't politicians who spent millions (or billions?) on TV advertisements for fantastic home mortgages so that you too can be a working class slob living in a posh neighborhood. It wasn't politicians who decided that A/C and speedboats are the way to enjoy the American South.... They did react of course to our compulsive wants, but we sent them so many mixed signals and contradictory wants that they've been crippled even to regulate and moderate our behavior.

We want it to be THEIR fault.

It is OURS.

That a lefty is going to take the fall for it... that'll provide me with more than a few laughs as we all get handed our hats in a few years. That I'm gonna party with Money from the Chosen One while Rome burns, seems just so epic!

[shady28]

AgentR - I agree, 100%

Politicians are elected, and the people have elected those who gave them what they want rather than those who would do what was needed.

Obama is telling people what they want, so he got elected.

It really doesn't matter much what Obama and the congress do at this point. The bottom line is, they will spend a lot of money, incur a great deal of debt, and that will extend how long it takes for this debt contraction to work itself out. A republican would do the same.

Few people will vote for someone who tells us what needs to happen - that debt needs to go bad, a lot of banks need to go under, a lot of corporations need to go under, your 401K needs to lose about 90% of its value, your house needs to be foreclosed upon, the FDIC needs to go bankrupt.

That's what level setting for the next up phase in the business cycle looks like, but no one wants to admit it.

All these things will still happen, it's just going to take 10 years instead of 2 and the federal debt racked up will continue to be a drag on the economy for another 20 years after that.

And folks, again, this is not going to be stagflation or hyperinflation. It's deflation right now, pure and simple. From the OP article :

"The greatest area of danger here is that The Fed is in fact trying to catch not a falling knife but rather a falling piano. The idea that The Fed can prevent a debt deflation of this magnitude is pure folly; even with expanding its balance sheet from $800 billion to over $2 trillion in less than a year and increasing its leverage to 50:1 (as of the most recent Fed report) it pales beside a housing market that has roughly $3 trillion of bad debt to be expunged - and that's just one sector of damage.

Taken in total the debt that must be defaulted in order to restore balance is likely in the $8-10 trillion range in the United States, and The Fed is not limiting its influence-peddling to the US. The swap lines it has opened to places like South Korea are an attempt to prevent debt deflation there from reflecting back into trade and global currencies; when one looks at the global deflationary forces at play one is staggered - they may in fact exceed global GDP (~$50 trillion)"