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[P]
World economy headed for catastrophic meltdown?

By MotorMachineMercenary in Culture
Thu Feb 27, 2003 at 07:22:09 AM EST
Tags: Culture (all tags)
Culture

"As strong as our economy may still seem to everyone, it's actually rife with weakness. The only thing keeping it afloat right now is a mass societal consensus that it's going to be O.K. How long can that hold?"
-- Robert Prechter, February 2003

"The world economy is about to turn for the better." "We have reached the bottom." "The downturn is slowing down." The naive and overly optimistic comments on world economy made by economists and politicians have been reported with headlines like "Have We Reached the Bottom?" and "IMF Upbeat On World Economy". But economists and politicians have a vested interest in the Big Lie: they are paid to produce good news, not to provide objective economic information. Almost nobody hires an economist who predicts bad times ahead. Voters don't vote for politicians who promise worse times. They both try to support the idea behind the quote above. But Bob Prechter is one economist who is not afraid to warn about a possible worldwide economic crash.


The world economy is not about to turn for the better. We have not reached the bottom. The downturn is not slowing down. The relative lull we have right now is just gaining momentum for a full-speed downward spiral. At least according to Robert Prechter. He has a book out - Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression - where he conjures a scenario of impending doom, of a recession worse than anything we've seen in two hundred years, including the stock market crash of the 1920s and oil crisis of the 1970s. He uses the Elliott Wave Theory for his predictions and maintains that we are headed to what he calls a new "grand super cycle" of the economy. Although there are examples of his previous successes as well as failures in another interview, there are people who are even more skeptical. Nevertheless, he raises several issues that are very important to address even if they don't lead to a worldwide economic meltdown.

But by no means is he the only one with doom and gloom on his mind. One of the less-publicized news from the World Economic Forum in Davos, Switzerland was the dread leaders of the world expressed with the near future of the world economy and general helplessness as to the remedies. Japan has been in the throes of deflation for years and interest rates have gone below zero. Basically, if you go to a bank and ask for 10,000 loan, they give you 10,100. In practice this happens only in certain special circumstances, but in effect lending money is almost non-existent. Japan also warned G7 economists of an impending worldwide deflation; Germany is already strikingly close. In the US, consumer confidence crashed and woke up economists to a waking nightmare. And the Fed has cut interest rates to 1.25%; soon there will be nothing left to cut.

More problems arise from a growing US credit bubble. Consumer debt-service burden reached 103% in 2002. Yes, you read that right: an average American gathers more debt than he collects paycheck. It shouldn't come as a surprise that over 6% of credit card debts are bad. This is related to a debt bubble on a grand scale, the one of US national debt. Gross federal debt will break 6 trillion dollars (6,000,000 million!) during this year when US GDP is 10.5 trillion dollars. Interest expenses alone are over 300 billion (300,000 million) dollars per year PDF Google html. And the debt is projected to rise. In other words, the US has no intention, nor the ability to pay off its debt. This kind of spending on credit works as long as everything goes well, but not longer. Deflation, extended worldwide economic recession and other shocks to the system are just a few of the possible reasons why things could go wrong. And even if the credit bubble does not burst, the deflation mentioned in the previous paragraph is a real threat. Regardless of whether a war breaks or if there are new terrorist strikes.

"But I thought deflation was a Good Thing?" It is true that prices fall and holding on to your cash its value will rise with time. But it also means that people will cut back on spending to wait for prices to fall even lower, banks can't get business because people and companies don't borrow money due to very low or negative real interest rates, and businesses cut on investments because it will be cheaper in a year and people don't buy their products in any case. So any level of deflation is worse than a healthy level of inflation which stimulates growth.

"So what? Why should I care? How does this affect me?" It depends a lot on how bad the recession will be. Nobody obviously knows how deep the hole we are plunging into is, and therefore doesn't know how long the fall will be. I will present two scenarios; the reality will probably lie somewhere between these extremes.

Scenario 1 - Long PFFFFFFT

World economy goes into a wide-ranging but somewhat manageable deflation. Business investment goes down but major bankruptcy-waves are avoided. Unemployment will go up and governments take measures to hold back deflation. In a few years deflation is history, inflation level is back to the healthy 2-4% and interest rates are back to normal. Unemployment and consumption will take longer to normalize. Although John Doe might not get laid off, the recession might result in losses that amount to the price of a new car. The losses will be even higher if he has debt, or owns stocks or bonds.

Scenario 2 - Four Horsemen

World economy plunges into an apocalyptic deflation cycle headed by Japan and the US. Fed doesn't know how to handle deflation and takes drastic knee-jerk measures with apocalyptic results. Deflation is defeated, but inflation will keep on rising leading to hyper-inflation. The credit bubble bursts sinking banks and pension funds all over the continent. The US dollar crashes. With it go many currencies pegged to the dollar; others will float or are pegged to the euro. Although the euro is relatively well-guarded from changes in USD, the world economy can not handle the massive compounding effects of the biggest currency taking a downward spiral and many of the aforementioned pegged economies along with many independent ones fail. The shockwave travels across the world: the already frail economy of Japan implodes and Europe's diminishing exports take down the whole EU. Company profits turn red and governments try all possible measures which result in even worse circumstances. People's trust in stocks, banks and even money itself weakens and finally just ends. The entire fiat-system of money fails with cataclysmic after-effects. People will use precious metals as currency and/or move to barter trade. It will take the world at least a generation to recover.

So, what can John Doe do to protect himself? Bob Prechter has several suggestions. If at all possible, the most important thing is to get rid of all possible debt, stocks and bonds as well as land and property which are not essential. Cash will be the king, and some of that should be invested in precious metals. Not in companies that mine precious metals, but in gold, silver, platinum. Dont' by luxuries. If you are experienced in short-selling, now is the time to do it. If the situation resembles Scenario 2, there is not much you can do. Cash will be worthless, so John will do better if he has most of his cash in precious metals.

What if Bob Prechter is wrong? What if the economy recovers and sun shines? Good, it would be nice to see  optimists being right every once in a while. Reducing debt and postponing big investments is not very expensive for John Doe. If he does, he will only be marginally worse if the economy doesn't fail. If he doesn't, he should remember the headlines in the 20s when stock brokers hurled themselves off buildings in desperation.

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Poll
World economy
o We have reached the bottom 14%
o Long *PFFFFFFT* 32%
o Four Horsemen 23%
o In between 29%

Votes: 92
Results | Other Polls

Related Links
o Google
o Robert Prechter, February 2003
o Have We Reached the Bottom?
o IMF Upbeat On World Economy
o Robert Prechter
o Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression
o conjures a scenario
o Elliott Wave Theory
o another interview
o skeptical
o World Economic Forum
o interest rates have gone below zero
o impending worldwide deflation
o strikingly close
o consumer confidence crashed
o cut interest rates
o Consumer debt-service burden reached 103%
o over 6% of credit card debts are bad
o Gross federal debt will break 6 trillion dollars
o GDP is 10.5 trillion dollars
o PDF
o Google html
o projected to rise
o Also by MotorMachineMercenary


Display: Sort:
World economy headed for catastrophic meltdown? | 153 comments (136 topical, 17 editorial, 0 hidden)
in other words... (4.78 / 14) (#8)
by dr k on Tue Feb 25, 2003 at 06:57:38 PM EST

The workers will seize the means of production.


Destroy all trusted users!

Resistance is Feudal. n/t (3.66 / 3) (#12)
by jabber on Tue Feb 25, 2003 at 07:54:43 PM EST


[TINK5C] |"Is K5 my kapusta intellectual teddy bear?"| "Yes"
[ Parent ]

IN SOVIET RUSSIA... (1.00 / 6) (#31)
by bjlhct on Wed Feb 26, 2003 at 02:03:01 AM EST

...feudalism resists YOU!

*
[kur0(or)5hin http://www.kuro5hin.org/intelligence] - drowning your sorrows in intellectualism
[ Parent ]
Not necessarily (5.00 / 4) (#24)
by winthrop on Tue Feb 25, 2003 at 11:32:48 PM EST

Catastrophic breakdown of the economy could provide the opportunity for workers' revolutions or simply mass poverty and total breakdown of social relations. In Argentina, as another poster pointed out, the old system has pretty much collapsed, and you've seen both: on the one hand, mass demonstrations overthrowing anti-democratic governments, worker takeovers of abandoned factories, run by workers' councils; on the other hand, you've seen poverty on a massive scale.

This article from Covert Action Quarterly (one of my favorite publications, though it might be properly named Cover Action Occasionally) has a longer description.

This Guardian article by George Monbiot discusses a similar question on the world scale: when old institutions break down (or are torn down), that is a time when massive change is possible, for better or worse.

[ Parent ]

or at least repudiate their debts? (none / 0) (#92)
by ethereal on Thu Feb 27, 2003 at 10:33:00 AM EST

If consumer credit over-extension is the U.S. big problem, then an economic disruption might be the golden opportunity for consumers to reject those debts en masse, just like a developing country that's finally given up on satisfying its IMF economic reform obligations. Mass default might take down some sectors of the banking industry, and would certainly make credit a lot tighter for the short term. Tight credit might make the economic difficulties more severe, since it would prevent the economy from beginning to grow again.

I am not an economist, of course. But it's interesting to consider what might happen.

--

Stand up for your right to not believe: Americans United for Separation of Church and State
[ Parent ]

the measure of economy (none / 0) (#115)
by dr k on Thu Feb 27, 2003 at 04:15:05 PM EST

The way we measure the economy -- the way we know that it is growing or shrinking -- is tied to established institutions like banks and corporations. If some institutions fall apart, then this will certainly appear to cause economic problems. But there are lots of grey areas and black markets that will survive just fine without giant banking conglomerates.

What would be bad for workers would be the failure of government institutions. Without programs for education (what little there is), health care (what little there is) and welfare (what little there is), workers will simply maintain the same poverty they already have. So the trick is to take out the banks without taking out the schools.


Destroy all trusted users!
[ Parent ]

From what you've written (4.50 / 6) (#9)
by hex11a on Tue Feb 25, 2003 at 07:23:38 PM EST

It looks more like US/Japan/Europe's economy headed for a meltdown. Some places in the rest of the world could benefit from this - a shift of power from the service to the industrial nations, making tangible goods worth more. (I shudder to think of what this will do to oil prices, and the power that will move thereafter). So it seems that the "world" economy won't die - it'll just move about a bit.

It's a bit like predicting that nukes will be "the end of the world" - it's an exaggeration - they might be the end of a signifcant portion, if not all, of the human race, but the world will survive.

Hex

We don't live in a vacuum (3.66 / 3) (#11)
by MotorMachineMercenary on Tue Feb 25, 2003 at 07:42:39 PM EST

If any one of the economies you mentioned fails, it will have an effect on all others. Globalization has meant dependence on other nations' well-being as well as your own. Just take a look at what happened in the Asian Flu in the late-90s. A small, insignificant economy (Thailand) failed having adverse effects all over the world, and the region (including Japan) is still trying to fix things up. A similar case was closely avoided with the Mexico bailout in the mid-90s.

So no, it will most definitely not be a good thing for any nation if any of the major economies fail if even small nations' failures can snowball out of hand.

--
"In a time of universal deceit, telling the truth is a revolutionary act."
-- George Orwell


[ Parent ]
So let me get this straight ... (4.71 / 14) (#10)
by DigitalRover on Tue Feb 25, 2003 at 07:24:08 PM EST

A guy trying to sell his book about how to survive a depression is screeching that we're all headed for one?

Riiiiiiiiight ...

Dr. Ravi Batra (none / 0) (#89)
by tzanger on Thu Feb 27, 2003 at 09:31:08 AM EST

And how to survive the great depression of 1990...

[ Parent ]
weird (4.00 / 3) (#13)
by tps12 on Tue Feb 25, 2003 at 07:57:42 PM EST

Cash will be the king...Cash will be worthless
Huh?

The scare tactics at the end are pretty lame. If I do my banking with insured banks, then all I have to worry about is the US government collapsing, in which case I imagine I'd have more things to worry about than my portfolio.

Explanation (5.00 / 1) (#16)
by MotorMachineMercenary on Tue Feb 25, 2003 at 08:46:10 PM EST

Cash will be the king near scenario 1. Cash will be worthless near scenario 2.

If you do your banking with insured banks (which almost all westerners do), that only protects you from bank failures (and even then only to a certain limit, which granted is a rather large amount of money), nothing else. The government and infrastructure don't have to collapse for it to have adverse effects on your money, ie. deflation, interest rates, exchange rates.

--
"In a time of universal deceit, telling the truth is a revolutionary act."
-- George Orwell


[ Parent ]
oh yeah (4.33 / 3) (#19)
by tps12 on Tue Feb 25, 2003 at 10:22:08 PM EST

Sorry, I'm an idiot.

[ Parent ]
And you were wondering... (4.50 / 2) (#14)
by epcraig on Tue Feb 25, 2003 at 08:33:55 PM EST

Why would people come out on the streets to oppose globalization?

Face it, the more tightly coupled the national economies are with each other, the less any one economy can adjust to another country's downturn.


There is no EugeneFreeNet.org, there is an efn.org

Point of contention (4.66 / 3) (#17)
by kphrak on Tue Feb 25, 2003 at 08:50:24 PM EST

Even many anti-capitalist, left-wing figures are divided on whether globalization is a Good Thing or not. Some of them may oppose the World Bank, or the IMF, but still think "globalization", as an increase in international activity, is a pretty good thing. What I see many as opposing is the fact that poorer or less technologically advanced countries may get hurt by an emphasis on paying back loans rather than fixing the problems that required the loans in the first place.

What do you define "globalization" as? Interlinked economies? Increased trade? An increase in relations between countries all over the world? All of the above? Left to itself, trade will increase with increased transportation and communication (which we're slowly but surely getting). National economies are going to be tightly coupled with each other no matter how many people come out on the street, just because the world is growing smaller and people who want to make and spend money are moving around it.

Globalization, as I see it, is simply a fact of life; it has positive possibilities and negative ones, but either way it can't be escaped. What is necessary is to attempt to avoid the possible negative aspects and reinforce the positive ones.


Describe yourself in your sig!
American computer programmer, living in Portland, OR.


[ Parent ]
globalization and globalization (4.25 / 4) (#70)
by svampa on Wed Feb 26, 2003 at 06:40:39 PM EST

Globalization only of capital?

Gobalization of ant-polutions laws? That is, no matter where a industry has the production, it must respect the same anti-polutions laws in all the world.

Gobalization labour laws? That is, no matter where a industry has the production, it must respect the same workers rights and fee all over the world.

Gobalization anti-corruption laws? That is, if someone commits bribery or corruption can be arrested in any country

Globalization of persons movement? Capital can move with no restictions from one country to another. Why people can't?

When 1 world economists talk about globalization they don't mean globalization, they just mean Market Globalization. First world don't like even this globalization. They don't buy its own hype, they protect their farmers, raise arancels, subventions etc. They don't really think free trade is good.

What first world means with globalization is "Open your markets and let me exploit your natural resources, mines, land and workers."

Is that good? Just for the sellers

I think FULL globalization is good, at least not bad. But until this moment they have got a partial gobalization (only markets) and asymetric (They must open, we can remain closed). And I'm afraid they are able to delay the rest of globalization aspects for a long time.

That is not good, that's bad, that terrible.



[ Parent ]
I'll stick my neck out here... (none / 0) (#33)
by bjlhct on Wed Feb 26, 2003 at 02:05:26 AM EST

...and say that no government's 'adjustment' has actually helped its economy (for rational, non-psychological) reasons.

*
[kur0(or)5hin http://www.kuro5hin.org/intelligence] - drowning your sorrows in intellectualism
[ Parent ]
Globalization has already happened. (4.00 / 1) (#35)
by ender81b on Wed Feb 26, 2003 at 02:30:14 AM EST

Globalization happened 2000 years ago. Now the level of globalization - or interdependence - has certainly increased in that intervening time period but economies have been linked for millenia. You cannot go back and change it now nor would you want to I think.

Rome bought huge amounts of goods from the far east via the Silk Road. It is not that much of a coincidence that 5 major empires all collapsed within a period of 150 years or so of each other. Han dynasty in China collapsed around this time (220 AD), Kush dynasty in Sudan (350 AD), Parthian in Mesopotamia(228AD), and Rome began it's long descent into chaos.

Much of the current reasearch in history into this time period suggests a general warming period of about 1-2 degrees that would have gradually diminished crop returns leading to famine, warfare, etc. Indeed the reason the Roman empire survived for so long was precisely because it was so huge and diverse - for many, many decades the East supported the west military and economically.

A counter opinion would be the only way to limit massive collapse would be to link the economies fully to spread the risk around - and to limit the effect one economy has on the others. The US accounts for something insane like 20% of the worlds GDP. Assuming a more linked and equal world economy the failure of the US economy wouldn't matter that much.

[ Parent ]

Its already started (3.85 / 7) (#20)
by truchisoft on Tue Feb 25, 2003 at 10:30:40 PM EST

At least down here, South America is in a big big turmoil

In Argentina bank operations halted for a month or so a year ago, and the goberment simply took out our money from the banks to give it to them, all this under the orders of IMF (they actually wanted to give more but everyone complained so much that they couldnt do it directly, so they just choose the long path, goberment takes all the bank debts instead, just because, ah, and they keep they actives, of course)

And you wonder why are we going down???

--- Saludos de Argentina.

Time Capsule: 1988 (4.83 / 12) (#21)
by Anatta on Tue Feb 25, 2003 at 10:36:30 PM EST

Ladies and Gentlemen, listen up! Your financial lives are at stake, and you ignore this at your peril! The economy is about to keel over, and you can learn all about the Great Depression of 1990, a new NY Times Bestselling book on the coming global meltdown, by Dr. Ravi Batra, an economics professor at Southern Methodist University. In the book, he explains how the global economy will be annihaliated in the coming years, how we don't have a free market, how the entire economy as we know it is a myth, and other exciting stories of gloom and doom.

If you invest only in gold and hold that gold throughout the 1990s, you will have a comfortable wealth level while all of those around you violently crash and burn in an unsustainable economy. You can laugh at them as they panhandle on the streets.

People spew this crap out all the time, and it sells very well. Dr. Batra's book was a big seller for its time, but it turned out to be pretty drastically wrong. I'm not saying Prechter's book is a bunch of hooey like Batra's, but much of it probably is. Deflation in certain goods (technologically focused goods - a sector that is continuously becoming a larger part of the global economy) is resolutely a good thing; I like that I can buy a 2.5ghz tricked out PC for the same price as a 33 mhz machine 15 years ago. Regardless, current US Consumer Prices don't seem to be behaving outlandishly in any case.

Are debt levels a problem? Yeah, probably. Maybe some of the tax changes Bush has proposed will help alleviate some of that problem. Due to tax advantages (at least in the US), people tend to overweight their wealth in housing, and this doesn't help, either.

Government debt is a problem, but not a major one. Governments are not like businesses; they don't try to make a profit off of the roads they build. Rather, they are like consumers, buying things and paying for them over time. A 60% debt level is high, but not bank-breakingly high. The long-term growth in the US economy is pretty tasty, so I'm not sure the federal debt number portents certain destruction.

If we actually see a real deflationary trend (a few straight quarters at least), then it may be time to start worrying, but Prechter's type of alarmism can be dangerous. Had people listened to Batra and purchased precious metals in 1988 (if I recall correctly, that was his suggestion), they would have gotten wiped out. Gold was around $710 in 1988, and around $310 in 1998. Gold, and precious metals in general, are non-performing assets, meaning they're generally valuable for their ability to keep their value and allow people to purchase other items with them later. Generally, non-performing assets are not great assets to hold in large quantities for the long term, because, well, they don't do anything productive.

Be as suspect of Prechter's book as you would be of the hot new IPO of Kuro5hin.org (AMEX: K5).


My Music

Tax advantages for real estate (5.00 / 4) (#49)
by leviramsey on Wed Feb 26, 2003 at 09:51:44 AM EST

Well, the one that's commonly cited is not really a tax advantage (the deductability of mortgage interest). Only the interest portion of the mortgage payment is deductable, and that ends up being a smaller and smaller portion as time goes by.

The only reason real estate seems like such a good investment is the leverage. Say you buy a house for $100,000, putting $10,000 down and paying $5,000 a year for the next 30 years. Ten years later, you sell the house for $200,000. To some minds, you bought the house for $60k and sold it for $200k, a hefty profit by any standard. But it wasn't the house that accounts for the profit; most of the profit was thanks to the leverage, the fact that you bought the house on the margin, paying 10% down and borrowing the remainder. This is the sort of thing you wouldn't do when investing in the stock market. Claiming that a home is a better investment than the stock market is fallacious.

I've come to the conclusion that a radical overhaul of the income tax code is required. My proposal:

  • Abolish (or at least make optional) the withholding tax. More money flowing through the economy is a good thing. Since there's still a need to get cash coming in 12 months a year, have taxes due on any one of 12 days, depending on taxpayer ID modulo 12.
  • Scrap the income tax code, replacing it with a simpler code (ie less deductions). I propose a flat 18% rate on total income (salary, tips, dividends, interest) above $THRESHOLD, with $THRESHOLD being $10,000 for each adult and $8,000 for each dependent child. The hypothetical married couple with two kids (filing jointly) would only be taxed on income above $36,000 a year. This is very progressive income tax; the actual tax rate will grow as income grows. The capital gains tax will be rejiggered to be graduated based on length of time the asset was held: 22% for less than 1 full year, 22%-n% for n full years (n<6), and 16% for gains on assets held longer than that.</li>


[ Parent ]
Downsides / Real Estate leverage (5.00 / 3) (#68)
by maynard on Wed Feb 26, 2003 at 06:08:47 PM EST

Two points on your flat tax proposal:

a) This would create an economic incentive toward having children. You should at least top it off after two or three kids.

b) It demolishes the progressive tax. Many would consider this a good thing, I do not. I like the idea of rich people paying more income and estate taxes than me. I think blocking a permanent plutocratic aristocracy is good for society and democracy as a whole. People should have to work for their wealth, those already wealthy should have to pay the lions share of taxes. That tax income should pay for infrastructure, education, health services for the poor. JMO.

One more point to make about the leverage potential of R/E. What you say is true if you're only buying a single family and live in that house for the duration of ownership. Once you buy an investment property, particularly a multi-family, the game is totally different. In that scenario you're trading risk (finding tenants, tenants refusing to pay, property damage, etc) and management headaches to offset dramatic equity gains over time compared to your initial investment. As long as you remain cash flow positive ahead of expenses, it's a great deal.

Cheers,
--Maynard


Read The Proxies, a short crime thriller.
[ Parent ]

Ultimately... (4.66 / 3) (#73)
by leviramsey on Wed Feb 26, 2003 at 06:56:23 PM EST

This would create an economic incentive toward having children. You should at least top it off after two or three kids.

I disagree. I ultimately think that there should be an economic incentive to having kids. The current economic system is structured around the idea of having those who are under a certain age (65 currently) outnumbering those above that age in a certain ratio (4:1 is probably the lowest that can be sustained). The old folks aren't going to allow that to change (they receive all the benefits from that structure). Unfortunately, that ratio will decrease, causing massive problems. The US has the resources to support a population at several times larger than it currently has.

It demolishes the progressive tax

Uh, it doesn't. Compare these situations: married couple, filing jointly with two kids in both cases. Couple A makes $500,000. They pay .18*(500-36)*$1000 in taxes, which works out to $83,520, or 16.7% of their income. OTOH, Couple B has a total income of $50,000. They pay .18*(50-36)*$1000 in taxes, which works out to $2,520, or 5.0% of their income. Couple C has a total income of $35,000. They pay $0 in taxes or 0%. Between Couples B and A, increasing income by a factor of 10 increases the tax rate by a factor of three, and thus total tax paid by a factor of 30. Unless you are operating from some weird definition of a progressive tax, that's a progressive tax.



[ Parent ]
Where do you get these rates? (4.66 / 3) (#83)
by dachshund on Thu Feb 27, 2003 at 12:40:08 AM EST

married couple, filing jointly with two kids in both cases. Couple A makes $500,000. They pay .18*(500-36)*$1000 in taxes, which works out to $83,520, or 16.7% of their income. OTOH, Couple B has a total income of $50,000. They pay .18*(50-36)*$1000 in taxes, which works out to $2,520, or 5.0% of their income. Couple C has a total income of $35,000. They pay $0 in taxes or 0%.

From the rates you quote it seems like your proposal involves more than just a change in the way the tax would be computed... It includes a complete, across-the-board slashing of tax rates.

Any proposal can be made to sound appealing if it results in everyone paying less in taxes than they currently pay. However, when selling your proposal, it seems honest to implement it so that it could revenue neutral-- or, alternatively, to mention that it would reduce tax revenue by a considerable amount.

Also, you don't mention payroll taxes. What happens to them? Does your proposal involve separating them from general revenue and forcing the gov't to fund its activities without "borrowing" from their funds?

[ Parent ]

The government should be prohibited (4.50 / 2) (#95)
by leviramsey on Thu Feb 27, 2003 at 10:38:47 AM EST

...from borrowing from Social Security. It's illegal for the private sector to count borrowings as revenues; it should be illegal for government to do the same.

A complete, across-the-board slashing of tax rates is a good thing, in my book, especially at the federal level. First to be cut, I would imagine, would be federal aid to the states (let the states raise their income taxes... the money is better spent at the state level, anyway).



[ Parent ]
Not honest salesmanship (4.66 / 3) (#104)
by dachshund on Thu Feb 27, 2003 at 01:02:56 PM EST

A complete, across-the-board slashing of tax rates is a good thing, in my book, especially at the federal level.

You're absolutely welcome to that opinion. I'm just saying that it would be more intellectually honest not to conflate the tax cuts with your flat tax proposal.

Either a) explicitly mention that your proposal would reduce gov't revenues by some large percentage, requiring us to massively re-work government or b) choose an example that's basically revenue-neutral so people can judge the fairness of a flat tax by comparing it directly to the taxes they currently pay.

...from borrowing from Social Security. It's illegal for the private sector to count borrowings as revenues; it should be illegal for government to do the same.

Amen.

[ Parent ]

underpopulated? (none / 0) (#101)
by ethereal on Thu Feb 27, 2003 at 11:42:56 AM EST

he US has the resources to support a population at several times larger than it currently has.

Apu: I've noticed this country is dangerously underpopulated.

--

Stand up for your right to not believe: Americans United for Separation of Church and State
[ Parent ]

kids. (none / 0) (#102)
by joshsisk on Thu Feb 27, 2003 at 11:55:59 AM EST

The US has the resources to support a population at several times larger than it currently has.

So when this limit is reached, you'd suggest changing the tax laws to discourage large families? Unfortunately, by this time it's unlikely that a measure like that could put the breaks on.
--
logjamming.com : web hosting for weblogs, NOT gay lumberjack porn
[ Parent ]

Enough resources? That explains all the imports! (none / 0) (#124)
by rodgerd on Thu Feb 27, 2003 at 11:15:13 PM EST

Perhaps you should tell George he can stop propping up the terroist-backing regime of Saudi Arabia, since the United States is so self-sufficient in oil it can support a much larger population. Just remember to ask him to poave Yellowstone while you've got his ear. Need it for high-rises, don'tcha know.

[ Parent ]
I don't think so ... (none / 0) (#117)
by pyramid termite on Thu Feb 27, 2003 at 04:38:22 PM EST

a) This would create an economic incentive toward having children.

Having kids is too expensive for an economic incentive like that to work - not to mention that they'll drive you crazy, turn your hair gray and destroy your personal possessions at random.

On the Internet, anyone can accuse you of being a dog.
[ Parent ]
"Flat tax" hooey (4.50 / 2) (#81)
by chemista on Wed Feb 26, 2003 at 08:34:48 PM EST

The real problem with all the flat tax stuff is that income tax is the smallest portion of taxes paid by the poor or working class, while FICA and Medicare "investments" (i.e., taxes) are the bulk of it. The overall tax structure of the US is already almost flat above a low threshold, and in fact hits a maximum near $75-85k/year gross income on a marginal basis. If you add in the "investment" taxes as part of the flat tax, the flat tax might actually be slightly more progressive than our current system, but you'll never hear that from du Pont or his ilk.

Stop reminding people about the overvalued stock market! I'm depending on that overvalued stock market to retire some day! - porkchop_d_clown
[ Parent ]
I think it's despicable... (4.00 / 1) (#93)
by leviramsey on Thu Feb 27, 2003 at 10:34:36 AM EST

that Social Security and so forth are capped after a certain point (I think it's now about $75,000... any income above that is not taxable).



[ Parent ]
Fica and folklore (5.00 / 1) (#97)
by bsg on Thu Feb 27, 2003 at 10:49:10 AM EST

Actually, Social Security taxes are capped at about $87k this year. They have been set to automatically increase with inflation.

However, Medicare/caid has no cap, but only accounts for 1.45% of the FICA picture.

[ Parent ]

Slight inaccuracy... (4.00 / 2) (#50)
by leviramsey on Wed Feb 26, 2003 at 10:01:48 AM EST

Gold, and precious metals in general, are non-performing assets, meaning they're generally valuable for their ability to keep their value and allow people to purchase other items with them later. Generally, non-performing assets are not great assets to hold in large quantities for the long term, because, well, they don't do anything productive.

Gold serves a useful purpose in any portfolio, specifically as a counterbalance against declines in the value of bonds.

The reasoning is as follows: bond interest rates are correlated with inflation rates (and economic justifications can be made for either one causing the other). The value of a bond on the open market is inversely correlated with prevailing interest rates (if prevailing interest rates fall, the value of outstanding bonds at the higher rates rises). Gold, however, has historically tended to correlate well with inflation (there's the old saw that an ounce of gold will buy a good suit...). Put those together and you see that as interest rates rise, the value of bonds you hold falls while the value of gold rises. Hence, gold is useful as a hedge position. This elementary fact is known by just about every money manager (especially bond managers).

The manner in which gold is invested does not have to be buying gold (as a matter of fact, that's one of the stupider ways to invest in gold). Gold mining stocks are generally preferable.

It is not inconceivable that the decline in gold prices was due to a general movement of capital out of the bond markets and into the equity markets over that period, thus reducing the demand for the gold hedge.



[ Parent ]
Certainly (5.00 / 1) (#54)
by Anatta on Wed Feb 26, 2003 at 11:01:12 AM EST

Gold is a wonderful hedge against inflation... I didn't go into it because it didn't really fit with the rest of my comment. Still, holding gold isn't really very different than holding cash that won't lose its value due to abuse of the printing press. Ultimately, people (not fund managers) who own gold use it to purchase productive or consumptive goods in the future. Hedge fund managers, and anyone with a sturdy portfolio, uses gold as a hedge, but my point still holds. It is a non-performing asset, and if a portfolio is to really grow over the long term, it's not a great choice to hold as anything other than a counterinflationary hedge. Of course, if you have reason to think the world is going to end, well, that's a different story.

And I also agree that the mining stocks or the indexes are the best ways to work with gold. Buying ignots is extremely illiquid, and dangerous.


My Music
[ Parent ]

WTF!?!?! (none / 0) (#116)
by elq on Thu Feb 27, 2003 at 04:27:43 PM EST

Government debt is a problem, but not a major one. Governments are not like businesses; they don't try to make a profit off of the roads they build. Rather, they are like consumers, buying things and paying for them over time. A 60% debt level is high, but not bank-breakingly high.

You _must_ be kidding here? While I agree that the US Government is not like a business, I think you're stark raving mad in saying that they're anything at all like a (retail) consumer. No no no. :)

And why not, you may ask. Well, here's a great reason - The US Government (via. the Dept of Treasury and the Fed) control's the nation's production of currency. Let me say that again, they control the production of the currency of our country.

Why is that important???

When either you or I have more money going out than coming in we have two options:

  1. reduce the outbound flow of money
  2. get a loan
When the US is in this situation, its options are strikingly similar:
  1. reduce spending
  2. float bonds

What happens when the second option is picked and the time comes for our debt to be settled?

In the consumer case - to repay a loan we must do one or both of the following:

  1. increase our income
  2. reduce or sacrifice non-essential spending
In the Government's case:
  1. raise taxes - nearly universally unpopular
  2. reduce or sacrifice non-essential spending - suicidal for a polition in our political climate
This list is a bit incomplete. It's missing one big item. Print more money.

The mechanics of the "print more money machine" are complex enough to merit an article.

[ Parent ]

Greenspan figured out.... (none / 0) (#149)
by gte910h on Sun Mar 02, 2003 at 01:29:04 AM EST

...that is a HORRIBLE idea. Or rather, his predecessors demonstrated that, and he staunchly avoids it.

[ Parent ]
bahahahahahahhahaha (none / 0) (#153)
by elq on Thu Mar 13, 2003 at 06:01:41 AM EST

No kidding... it _is_ a horrible idea.

I don't think it would be accurate to say that Greenspan "figured" it out, more like it's his job to do run the "money machine".

And since you bring up Paul Volker, I assume that you're speaking of the "Saturday massacre" (a big assumption for me here as you don't even mention Volker by name - it'd be safer for me to assume that you don't really know anything). I find it funny that someone, such as yourself, who agrees that using the "money machine" is a bad idea would believe that Volker or Greenspan or Carter Glass or Senator Aldrich "figured it out" i.e. stopped doing "it". I'd _strongly_ suggest that you learn and understand the meaning of a word that I'm _sure_ you think you know the meaning of - Inflation.

Here's a couple of definitions -

From w-m.com:

1 : an act of inflating : a state of being inflated : as a : DISTENSION b : a hypothetical extremely brief period of very rapid expansion of the universe immediately following the big bang c : empty pretentiousness : POMPOSITY
2 : an increase in the volume of money and credit relative to available goods and services resulting in a continuing rise in the general price level



and from Dictionary.com:
  1. The act of inflating or the state of being inflated.
  2. A persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money, caused by an increase in available currency and credit beyond the proportion of available goods and services.


Now, what is this "Saturday massacre" that I mentioned earlier???

 

Well, the "Saturday Massacre" that Paul Volker is famous for (and I might add, given _way_ too much credit for) was know as the Fed's attempt to (try not to laugh) "smash inflation" by raising interest rates to record levels as was demanded by the "market".

If you understand the meaning of inflation (please see above if you don't), I ask you - do you see the irony??

 

 

[ Parent ]
Hmm (4.33 / 3) (#22)
by Anonymous 242 on Tue Feb 25, 2003 at 11:10:31 PM EST

No mention of the economies of India or China.

If Western economies do begin to collapse, many Eastern economies will begin to prosper. I doubt that the whole world will be going to hell in a handbasket. Maybe the part I live in will, but I'm doubtful that the whole thing will.

Check out the graph (5.00 / 3) (#23)
by rusty on Tue Feb 25, 2003 at 11:12:55 PM EST

You gotta hand it to the guy, he's ballsy. Take a look at the nifty chart that shows how today's market is just like the end of the 1920's. Wow! Amazing! Look how similar they are.

Well... then look at the time scale (8 years for the top line, 26 years for the bottom) and even better look at the numerical scales on the vertical axis. 500, 1000, 2000, 5000, 10000? Ok, whatever. A convincing proof, at least, that if you massage your axes enough, you can make any two graphs resemble each other.

____
Not the real rusty

Hence.. (5.00 / 2) (#29)
by Kwil on Wed Feb 26, 2003 at 01:35:02 AM EST

..why he's labeled the graphs as "Monthly, log scale".

You'll note that the numerical axes on the left also go up in a series of doublings as well, just with a smaller initial jump.  

Does it prove much? Heck no, considering that the full name of the graph is the Elliot Wave Fractal, for all we know we might be looking at the portion just before the supposed "three steps sideways" and have massive growth ahead. But disparaging it because you don't understand how a logarithmic scale works really isn't fair.

That Jesus Christ guy is getting some terrible lag... it took him 3 days to respawn! -NJ CoolBreeze


[ Parent ]
Er (4.50 / 2) (#37)
by rusty on Wed Feb 26, 2003 at 03:23:53 AM EST

Log scale. Right. I'm a nitwit. Sorry. :-)

I stand by the time scale issue, but that doesn't really prove anything. To me it casts some suspicion on the comparability of the two situations, since one is an 8-year span and the other a 26-year span. Actually, what would be an interesting thing to see is if you went looking for similar graph segments, regardless of time scale like this example, and then compared the bit after the matching segment, how often they'd look the same.

I suspect it's just a chaotic system, and you can find any pattern you go looking for. Hell, maybe I should invent a "Wave" and make a mint selling books. :-)

____
Not the real rusty
[ Parent ]

(insert Vespa joke here) n/t (none / 0) (#63)
by Control Group on Wed Feb 26, 2003 at 03:17:20 PM EST



***
"Oh, nothing. It just looks like a simple Kung-Fu Swedish Rastafarian Helldemon."
[ Parent ]
I don't follow... (5.00 / 1) (#32)
by poltroon on Wed Feb 26, 2003 at 02:05:19 AM EST

The vertical scale is supposed to be logarithmic, and it looks that way to me... What's wrong with it?

[ Parent ]
Never too early to plan for doomsday (3.66 / 3) (#25)
by thom2 on Wed Feb 26, 2003 at 12:01:04 AM EST

While Mr. Pretcher's theories are no doubt the ravings of a crackpot, the fact is, the world is slowly becoming overpopulated, and we are running low on natural resources running the gamut from tungsten to, topsoil from crude oil to water. It is only a matter of time before this situation manifests itself in some sort of economic turmoil

Forget than trying to shoehorn the many intricate details of today's economic realities into some foggy abstract theory of long term market cycles. The real historical trends that are once again rearing their ugly heads concern conflicts of culture.

Yes, Old Europe, the Orient, and the dynamic, freedom-based English speaking world are at one another's throats, just as they were in the wild and wooly days of the French-Indian War. The logical reaction to this would thus be a new kind of North Atlantic alliance, one comprising those English-speaking nations who share a common history: Great Britain, Canada, and the United States.

Doubtless this seems silly at the moment, but as NATO becomes more and more irrelevant, and the UN sinks into the doldrums of stagnant whirlpools of infighting, the need for nations to come together along historically resonant lines will be more and more logical. The resources and compassionate populace of Canada, combined with the military might and entrepenurial energy of the US, together with Britain as an indefatigable source of Pop Culture energy and tie to a "Old Europe", will make for an unbeatable team.

Its been suggested before (3.50 / 2) (#30)
by michaelp on Wed Feb 26, 2003 at 01:49:38 AM EST

Orwell called it "Oceania".

God save the figurehead commandantress of Airstrip One.


"Every gun that is made, every warship launched, every rocket fired, signifies in the final sense a theft from those who hunger and are not fed, those who are cold and are not clothed."

[ Parent ]
Reply (2.00 / 1) (#38)
by iba on Wed Feb 26, 2003 at 05:05:39 AM EST

I really don't like it when people latch on to some random background detail from some book like 1984, and play it like it was something important. Frankly, you can't even be sure, given the environment of that book, that Oceania consists of anything besides Britain. The existence of an English-speaking superstate was totally unimportant, a mere background detail, to the important parts of 1984. And an alliance of English-speaking countries is no more likely to adopt an Orwellian system than a single country, like Britain, by itself, would be.

[ Parent ]
"Random" and "Orwell"? (4.00 / 4) (#42)
by michaelp on Wed Feb 26, 2003 at 06:01:22 AM EST

Frankly, you can't even be sure, given the environment of that book, that Oceania consists of anything besides Britain.

"Environment of the book"? How about trying the text?

If they could get control of the whole of Africa, if they had airfields and submarine bases at the Cape, it would cut Oceania in two.
The existence of an English-speaking superstate was totally unimportant, a mere background detail, to the important parts of 1984.

Uh, yeah, well some folks (including ol'George, if one can judge from his letters and essays) seem to think the controlled devolution of English into Newspeak was of passing import. But maybe to you it is just a love story set in a dystopia for extra spice?

I mean come on man, this:
The resources and compassionate populace of Canada, combined with the military might and entrepenurial energy of the US, together with Britain as an indefatigable source of Pop Culture energy and tie to a "Old Europe", will make for an unbeatable team.
Could have come straight from Minitru...


"Every gun that is made, every warship launched, every rocket fired, signifies in the final sense a theft from those who hunger and are not fed, those who are cold and are not clothed."

[ Parent ]
Ok... (5.00 / 1) (#62)
by iba on Wed Feb 26, 2003 at 02:54:56 PM EST

If they could get control of the whole of Africa, if they had airfields and submarine bases at the Cape, it would cut Oceania in two.

So you're assuming that everything the telescreen told Mr. Smith was truthful?

The important parts of that book involved Mr. Smith's rebellion, his subsequent defeat and debasement, and the nature of his immediate environment. The geopolitical situation was background, whether it was the truth, in the world of the book, or just a lie propagated by the telescreen, it is not important.

[ Parent ]

I doubt (none / 0) (#69)
by michaelp on Wed Feb 26, 2003 at 06:30:43 PM EST

that he meant 1984 as yet another tale of rebellion, punishment, and redemption, seems more likely he used that standard formula to as a foil for his geopolitical concerns and predictions.

'Course that is the danger of using the novel form to say anything important: it's so easy for folks to say "its just a story". But then Orwell wrote some non-fiction, too.
In our time, political speech and writing are largely the defense of the indefensible. Things like the continuance of British rule in India, the Russian purges and deportations, the dropping of the atom bombs on Japan, can indeed be defended, but only by arguments which are too brutal for most people to face, and which do not square with the professed aims of political parties.
Politics and the English Language George Orwell 1946


"Every gun that is made, every warship launched, every rocket fired, signifies in the final sense a theft from those who hunger and are not fed, those who are cold and are not clothed."

[ Parent ]
dear sir (none / 0) (#114)
by adequate nathan on Thu Feb 27, 2003 at 04:02:54 PM EST

The devolution of English into Newspeak is not organically connected to the concept of 'Airstrip One.' I hope that this helps you to stop trolling.

Nathan
"For me -- ugghhh, arrgghh."
-Canadian Prime Minister Jean Chrétien, in Frank magazine, Jan. 20th 2003

Join the petition: Rusty! Make dumped stories & discussion public!
[ Parent ]

Airstrip One (none / 0) (#75)
by nicebear on Wed Feb 26, 2003 at 07:50:54 PM EST

During the 1980s, peace protesters in Britain often claimed that the country had become "America's largest aircraft carrier." I don't know if they took this directly from Orwell, but that's the basic idea: Britain is closer to the "enemy" (Libya and the USSR in the real 1980, Europe in Orwell's version) than America, so it's full of U.S. military bases. The protesters argue that this makes it a target.

Britain's location isn't quite so strategic now, but similar arguments are made (much more forcefully) in other countries that are protected/endangered (depending on your POV) by US bases, from South Korea to Saudi Arabia.

[ Parent ]

my suggestion on how to avoid calamity (4.90 / 10) (#26)
by turmeric on Wed Feb 26, 2003 at 12:12:42 AM EST

become a pundit about calamity and sell a bunch of books about it. pundits never go hungry.

Screwy Economics (4.85 / 14) (#27)
by opendna on Wed Feb 26, 2003 at 12:24:26 AM EST

...banks can't get business because people and companies don't borrow money due to very low or negative real interest rates...

Wha? If I can borrow $1000 dollars from you today and give you back $900 tomorrow... Gosh, what a terrible deal. Lower interest rate ENCOURAGE borrowing. They drop BECAUSE people and companies don't borrow money (lower demand), they aren't the CAUSE - excess supply of investment capital is the cause.

Warning of the debt bubble at the same time as you warn about deflation and low interest rates is kinda nonsensical. Government debt consumes investment capital and increases the aggregate demand for financing. The result is that interest rates are pushed higher than the market would set independently. If you want to tie the two together the link should be that the low interest rates are actually too high because of the US national debt.
The corollary, however, is that there are no investment offering a profit significanly above 1.25% (or whatever the rate is). If there were such opportunities then businesses would borrow the money.

If despite high levels of government debt and outrageous consumer debt you STILL have deflation it should be a sign. All the cash has concentrated somewhere in your economy and is being put into investment instead of consumption. The people who are most likely to consume goods and services already owe vast sums to people who are most likely to invest. The investors have a supply of capital so much greater than is demanded that they're driving the interest rate to zero.

In this context the stupidest thing you can do is give the investors MORE money to invest (e.g. by cutting the tax on dividends). When you do that you increase the glut of capital and force interest rates even lower.

What you should be doing is redistributing money from those who have so much they literally don't know what to do with it to those who will spend it as soon as they get their gubby little paws on it (creating demand and a corresponding avenue for investment). In the process you dry up the glut of capital and spur consumer demand, which in turn puts upward pressure on prices.

See? Isn't that easy?

Well, except for that redistributing from the rich to the poor part. That doesn't usually go over very well in the halls of power.

Preaching precious metals is a weird idea. If you can get the investor class to listen it might dry up relatively insignificant amounts of surplus capital (a billion here, a billion there...). Preaching it as a sort of fail-safe for average Joes is odd because you can't eat gold, not even during an international global meltdown (better off investing in bullets). If average Joes sell property and buy gold all they're doing is providing a relatively insignificant avenue for investment to convert investment (in real estate) into consumption (of gold). The consumption isn't even particularily valuable to the economy; the multiplier for precious metals is much lower than for cars or electronics.

I'm done.

trickle up, trickle down (5.00 / 4) (#45)
by speek on Wed Feb 26, 2003 at 08:14:41 AM EST

Yes, in fact, Reagan had it exactly backwards. Money trickles up, not down, and debt trickles down, not up. So, tax the rich, give to poor. The rich will pass on the tax costs to the poor, thus completing the loop, and the money flows. It is indeed easy.

--
al queda is kicking themsleves for not knowing about the levees
[ Parent ]

Not really (4.50 / 4) (#59)
by cr8dle2grave on Wed Feb 26, 2003 at 01:58:41 PM EST

The economic crisis facing the US in the early eighties was nearly the exact inverse of the current problem. In the Reagan era there was spiraling inflation, a deep recession, unprecedented unemployment, and the prime rate was hovering in the neighborhood of ~20% resulting in a lack of capital investment. Today the problem is an overabundance of capital, inflated financial markets, and a mild recessionary cycle. A supply side solution made sense twenty years ago, it's not so clear that it does today.

---
Unity of mankind means: No escape for anyone anywhere. - Milan Kundera


[ Parent ]
and yet (4.00 / 2) (#76)
by speek on Wed Feb 26, 2003 at 07:54:42 PM EST

what actually happened? Money trickled up and got no outlet. So, they had an investment bubble, which popped. Now the money is just stagnant. I don't think Reagan solved anything - just bought us a different problem. And went into massive debt to do it. So much for "conservatism" (which I put in quotes because what Reagan did had nothing to do with real conservatism).

--
al queda is kicking themsleves for not knowing about the levees
[ Parent ]

I don't entirely disagree... (4.66 / 3) (#82)
by cr8dle2grave on Wed Feb 26, 2003 at 10:38:39 PM EST

...but I think you're expecting a little bit much of those at the helm. Economies aren't so much solved (or at least not for long) as they are grown or contracted. There's no magic formula which will ensure, to any degree of certainty, ongoing success into the future without further adjustments. I do believe that the supply side approach of the eighties was essentially the correct course, but today we are suffering from what might called over-steerage, if I may continue with the marine metaphor. Measures should have been taken in the mid nineties -- the time when we could have best afforded to soak up an inflationary spike -- to correct for the accumulation of excess capital; measures such as phasing in a minimum wage increase. Also, you should keep in mind that although Reagan is most strongly associated with the supply side approach, the groundwork was laid in the Carter era when Volker was brought in to head up the Fed and the first wave of cuts in the capital gains rate were made to spur capital investment.

---
Unity of mankind means: No escape for anyone anywhere. - Milan Kundera


[ Parent ]
On borrowing (4.00 / 1) (#60)
by Kwil on Wed Feb 26, 2003 at 02:15:16 PM EST

...banks can't get business because people and companies don't borrow money due to very low or negative real interest rates...

Wha? If I can borrow $1000 dollars from you today and give you back $900 tomorrow... Gosh, what a terrible deal.

You're looking at too small a time frame.

Reality would be, "I can borrow $1000 today and next month pay back $900, but if I wait til tomorrow, I can borrow that same $1000 and only have to pay back $850." So tomorrow comes, and now it's "I can borrow $1000 today and pay back $850, or wait a day and only have to pay back $825.."

So people stop borrowing because they keep waiting for that next interest drop. In which case, the lowering interest rates really are the cause.

Of course, while people are waiting, the economy dies.

That Jesus Christ guy is getting some terrible lag... it took him 3 days to respawn! -NJ CoolBreeze


[ Parent ]
Of course... (none / 0) (#132)
by opendna on Fri Feb 28, 2003 at 07:46:13 AM EST

... nobody is going to loan money at a loss (negative rate) so the rates hit bottom around 1%. Then they act like a price controls and supply sits stangnant.

Going back to the hypothetical negative interest rates, what's to stop me from borrowing today, tomorrow and the day after?

$1000 => $950 (-5%)
$950 => $855 (-10%)
$808 => $727 (-15%)
$727 => $581 (-20%)

If each drop matched 1Q you'd have a healthy 41.9% profit per year compared to only $20 by waiting.

Maybe I botched that. ANYway...



[ Parent ]

Negative Rates can Happen (none / 0) (#139)
by Kwil on Fri Feb 28, 2003 at 09:33:21 PM EST

But it's not very common because it only really occurs in the total collapse of an economy.

Here's how:

Let's say I have a certain amount of money, and with that money I could buy, say, a triple-scoop ice-cream cone.  Unfortunately, I just had a big meal, so I wouldn't be able to eat a triple-scoop ice-cream cone before it melted.

However, I also happen to be living in a place where the money is undergoing a deflationary spiral (or, alternatively, products are undergoing hyper-inflation of prices).  So I know that if I don't buy my triple-scoop ice-cream cone today, by tomorrow my money will only be enough to purchase a single-scoop cone.

Being the smart and savvy guy that I am, I see that you look pretty hungry, and I offer to lend you enough money so you can buy a triple scoop cone today if you promise to buy me a double-scoop cone tomorrow.

Sounds like a good deal for you, until you realize that the actual cost of that double-scoop cone tomorrow is more than the triple-scoop cone today.

That's how negative rates work. If I lend you $1000 knowing full well that tomorrow that $1000 will only be worth $800 in real purchasing power by todays terms, and I only charge you $900 for it, I've made a profit. Even though you've paid back less in currency, you've paid back more in real value.

Of course, you can see where this winds up -- money becomes worth less than toilet-paper, and is actually used as such. When you have to start bringing wheelbarrows of money down to the baker to get a loaf of bread, the system simply collapses. Check out pre-WWI Germany for an example.

That Jesus Christ guy is getting some terrible lag... it took him 3 days to respawn! -NJ CoolBreeze


[ Parent ]
You're talking about INflation (none / 0) (#140)
by opendna on Sat Mar 01, 2003 at 01:07:18 AM EST

Of course, you can see where this winds up -- money becomes worth less than toilet-paper, and is actually used as such. When you have to start bringing wheelbarrows of money down to the baker to get a loaf of bread, the system simply collapses. Check out pre-WWI Germany for an example.

No, no, no! That's INflation, when prices RISE. We're talking about DEflation, when prices FALL.



[ Parent ]

Right on... (3.00 / 1) (#67)
by JahToasted on Wed Feb 26, 2003 at 05:37:34 PM EST

Isn't it a sad thing that to the wealthy money is just some points in a game, while to the poor it means food, shelter and clothing. And still they want more. Sometimes I think Marx was right, just a century too early.

[ Parent ]
not so (none / 0) (#80)
by aphrael on Wed Feb 26, 2003 at 08:27:11 PM EST

Warning of the debt bubble at the same time as you warn about deflation and low interest rates is kinda nonsensical

Not so: deflation is dangerous because of the debt bubble. Absent a serious debt problem, and assuming deflation is evenly distributed across the economy, deflation is harmless. It isn't until you have either (a) uneven distribution such that producers feel the effects of price deflation on the goods they are producing without feeling effects on goods they are consuming, or (b) heavy debt loads whose real value becomes greater that deflation becomes a problem.

[ Parent ]

True dat. (none / 0) (#133)
by opendna on Fri Feb 28, 2003 at 08:07:26 AM EST

Not so: deflation is dangerous because of the debt bubble. Absent a serious debt problem, and assuming deflation is evenly distributed across the economy, deflation is harmless. It isn't until you have either (a) uneven distribution such that producers feel the effects of price deflation on the goods they are producing without feeling effects on goods they are consuming, or (b) heavy debt loads whose real value becomes greater that deflation becomes a problem.

Point conceded. In fact, your scenario is very likely in the private sector.

Price differentials between inputs and outputs could crush some businesses and force others to innovate and/or improve efficiency.

Ultimately, the deflationary presures on outputs is driven by lower consumer demand and/or over-supply of products. In the former case you have to increase incomes, in the later you have to let businesses fail. When UNITED gets in trouble JetBlue and SouthWest come in to poach.

If the focus is on any firm staying in business, deflation is a concern. But firms fail and their assets are bought up by other firms, and the economy keeps going. That's the creative destruction of capitalism.

A bigger concern, IMHO, is that deflation will put downward pressures on wages while increasing consumer debt loads (as you suggest). Lower family incomes mean lower consumption (in this case with a larger percentage of it set aside for interest payments), which means less aggregate demand and more deflation.

Very little of this, however, has to do with the Federal Debt (which was central in the original article), which is so large as to make any discussion of mere percentage increases irrelevant. If nothing else, deflationary pressures will put downward pressure on federal debt payments.



[ Parent ]

so in other words (4.00 / 1) (#96)
by ethereal on Thu Feb 27, 2003 at 10:43:45 AM EST

...to encourage a consumer economy, one has to encourage consumers? It's kind of interesting that the conservative economic theories don't really address this; they seem to view the economy as almost entirely driven by large industry (old-style capitalists), neglecting the consumers that allow industry to work.

It would be interesting if the Fed, the Treasury, or some other entity would publish statistics on the kind of macro-economic indicators that are being discussed in this story. Questions like what percentage of the money supply is in capital investment, etc. would be pretty helpful in seeing what direction the economy is headed in, and justifying government economic manipulation (tax cutting, interest rate manipulation, etc.). It seems like up until now, with the exception of the Federal Reserve rates, government economic policy has been driven by the political assumptions of those in power, rather than a really rational understanding of what makes the economy work. Thus we get a committment to cutting dividend taxation even though most economists agree that it wouldn't immediately spur the economy.

--

Stand up for your right to not believe: Americans United for Separation of Church and State
[ Parent ]

I think they tried that... (none / 0) (#142)
by opendna on Sat Mar 01, 2003 at 03:47:32 AM EST

so in other words ...to encourage a consumer economy, one has to encourage consumers?

I was making chicken soup and frying bagels when it occured to me that they tried that in a limited sense the first time Bush addressed the economy. Remember how he asked the automakers to offer great deals to consumers and we got all these "0% interest and no payments for 2 years" advertisements?

That's exactly the kind of consumption you want to fire up the economy: something with a good multiplier. Auto production draws from all kinds of firms in several different industries.

The purchases were, however, almost entirely consumer debt-financed which is going to come back and bite consumer spending when the 2 years are up and folks have to start paying for the cars they bought.



[ Parent ]

Screwy Logic (none / 0) (#110)
by elq on Thu Feb 27, 2003 at 03:03:14 PM EST

The investors have a supply of capital so much greater than is demanded that they're driving the interest rate to zero.

well, that's not quite accurate. The "investors" controlling the interest rate are the Federal Reserve and the Dept of the Treasury; and they are _not_ adjusting the interest rate based on the supply and demand of capitol.

[ Parent ]

Market rate vs. Base Interest Rate (none / 0) (#131)
by opendna on Fri Feb 28, 2003 at 07:30:49 AM EST

Granted, the Fed sets the base rate but investors still operate a market outside the Federal Reserve System.

I'm aware of some banks in the U.S. offering business loans at 1%, that is below the base rate, because they're reserves are so hard to keep down.

The rate the Fed sets is for overnight loans to members of the System, the rest of us don't have access to that pool.



[ Parent ]

Interest rates and inflation/deflation (5.00 / 1) (#112)
by phliar on Thu Feb 27, 2003 at 03:36:20 PM EST

What little I remember from my undergraduate economics classes is that you always adjust for inflation/deflation when talking about things like income, interest rates etc. So if the real interest rate is 4% and you have deflation of 7% then the interest rate the bank will quote is -3%.

In other words: you borrow some money in 2003, and the amount of dollars you return in 2005 is smaller than the amount you borrowed. However, that smaller dollar amount in 2005 has a greater purchasing power than the larger amount did in 2003. If the rate of deflation is large enough it still makes sense for the bank to quote a negative interest rate.

Faster, faster, until the thrill of...
[ Parent ]

SPAM !!! (4.66 / 3) (#39)
by OldCoder on Wed Feb 26, 2003 at 05:23:54 AM EST

The Elliott Wave Theory has been rolling around the dustbins of con artists and book hustlers for a long time. If this guy's right on anything, it'll be a pure accident.
Go ahead, read this signature

Economics (5.00 / 2) (#40)
by kaibutsu on Wed Feb 26, 2003 at 05:25:44 AM EST

This is an excellent topic, and one that I'd like to see more on, though the article is lacking supporting economic reasoning.  Some such reasoning can be found here.  (The next few long comments by muppetboy are the subject matter.)  He sounds pretty legit, and says he can't find any links to online sources in support of these claims.  I'd very much like to see an extensive article concerning this.

-kaibutsu
Economics (2.66 / 6) (#52)
by Relayer on Wed Feb 26, 2003 at 10:24:55 AM EST

Economics isn't real. Call it what you will, but it is the same as someone telling you that the Earth is the center of the universe, and the other planets have epicycles.

What economics is really about is the stock market. If you don't own stocks, you don't have to worry about it. The problem with that is that when the "corporate" guys lose money, they get all pissy and decide to hoard a bunch of paper bills and crap. Then they lay off in the ranges of 1000-2000 people, to try and keep making money, instead of realizing that it's "hokay," in the words of my oriental physics teacher, to lose money sometimes.

The problem isn't a shifty economy, it's the existance of the stock market altogether. Personally, I don't understand how people can "trade" stocks. It seems a bit idiotic to make a living off of it. Let me tell you a little story.

One time, a few years back, I was the Pokemon card KING. I never played the game, but I had umpteen of those Charizard dudes, and a whole bunch of other ones. One day, I realized that having them wasn't as great as having money, and so I decided to trade them, for cash. So I go to people, and my little brother gave me 60$ for two of them! Then I went to the local card shop. They didn't really need them. In fact, they didn't want them much at all. They offered me 40$ for the rest of them. I was heartbroken (bubble-bursted, whatever) at that, so I left.

Well, I found a way to dump the rest of them, giving myself somewhere around 300$. Let me tell you, trading a little cardboard drawing for money is about the stupidest thing in the world.

Likewise, economics is the ART of trading little cardboard drawings for money, and then trading your money for goods.

Wouldn't you rather do something sensible, like Law or Politics?

It tastes sweet.


[ Parent ]

You are probably a troll (4.00 / 1) (#66)
by JahToasted on Wed Feb 26, 2003 at 05:01:09 PM EST

But I found the pokemon card story kinda amusing.

Let me tell you, trading a little cardboard drawing for money is about the stupidest thing in the world.

Now here's something to think about: What is money but some drawings and a serial number printed on a peice of paper? Yup... you just traded one piece of paper for another. Pokemon cards aren't really any more stupid than any other arbitrary thing we place value on and call "currency".

[ Parent ]

You must be a troll.... (none / 0) (#85)
by carbon on Thu Feb 27, 2003 at 03:00:39 AM EST

Everybody knows that Charizard is effectively worthless. Zapdos, now you're talkin...


Wasn't Dr. Claus the bad guy on Inspector Gadget? - dirvish
[ Parent ]
Economics (none / 0) (#129)
by maren on Fri Feb 28, 2003 at 05:34:41 AM EST

Pka! Trading cardboard drawings is stupid you think? Well, by definition YOU valued money more than you valued the drawings, and the BUYER valued drawings more than his money. Hence you both increased your welfare by carrying through with this transaction. (Otherwise you wouldn't have exchanged goods.) And by the way, law and politics is all about economics anyway. Have you taken any law at the university? From wordnet: economics: the branch of social science that deals with the production and distribution and consumption of goods and services and their management.

[ Parent ]
Yuh. (none / 0) (#144)
by Relayer on Sat Mar 01, 2003 at 08:50:41 AM EST

I only valued the money because, as I recall, I wanted a new video card. Paper is pretty useless unless you're looking for something to write on.

Or to build a paper house.

It tastes sweet.


[ Parent ]

Bullshit (2.83 / 6) (#41)
by twistedfirestarter on Wed Feb 26, 2003 at 05:39:47 AM EST

"Elliot wave theory" is an absolute load of old bollocks.

Wow.. how informative.. (none / 0) (#58)
by Kwil on Wed Feb 26, 2003 at 01:40:52 PM EST

..now, care to tell us why?

That Jesus Christ guy is getting some terrible lag... it took him 3 days to respawn! -NJ CoolBreeze


[ Parent ]
Here's why: (5.00 / 2) (#136)
by twistedfirestarter on Fri Feb 28, 2003 at 11:47:27 AM EST

It's fundamentally flawed because it's assumes that basic shapes on a graph are somehow related to the real world.

And you can always change the scale, offset, so that the predcitions "fit." - it's not falsifiable. It just ain't science.

[ Parent ]

Yes indeed (4.28 / 7) (#44)
by psychologist on Wed Feb 26, 2003 at 08:09:08 AM EST

By "World", you are talking of "Western World". When America gets weak, the non-industrialised countries profit immensly, because cars, engines and other industry goods get much cheaper. This "economic downturn" only affects countries exporting human labour. The importers all gain.

So only about 1/3 of the world lose. The remaining 2/3rds gain.

I think a more appropriate title would be "American economic mismanagment give Africa and Asia cause for hope".

Hm. (3.00 / 2) (#51)
by Relayer on Wed Feb 26, 2003 at 10:09:08 AM EST

I don't know who gave you a 1, but they're dick.

GJ psycho.

It tastes sweet.


[ Parent ]

Can you elaborate (5.00 / 1) (#53)
by Harpalus on Wed Feb 26, 2003 at 10:42:12 AM EST

Your point sounds very interesting but I am having a bit of trouble understanding it. IS the key to which country benefits based on manufacturing non-manufacturing economy distinction. You state that importers stand to gain but the US us net importer. I'm confused... (Not exactly a rare occurence)

[ Parent ]
Let me explain (4.00 / 2) (#56)
by psychologist on Wed Feb 26, 2003 at 11:37:15 AM EST

There are two kinds of countries. Industrialised and non-Industrialised. The non-Industrialised countries like the things that the industrialised countries produce like cars, so they buy them. In exchange, the industrialised countries buy agricultural goods or crude oil from them. But because the non-industrialised countries do not have many goods that the industrialised want, they have got little foreign exchange to buy the goods.

A 3rd world economy typically is not battered on the stock market. It revolves around food and housing, and the revenue for this is exchanged internally. That means that consumer confidence changes little either way. Thus recessions do not occur in very poor countries.

So if there is a global economic slowdown, bothing happens in the poor countries, but things get cheaper in the rich countries. So the rich people living in the poor countries have got more money to buy in the rich countries, and formally expensive things get cheaper in the poor country.

The best-off are the oil dependent poor countries. Because economic slowdown does not affect the price of the oil, the same ammount of foreign exhcnage is coming in, but one can buy a whole lot more (or hire more skill) in the rich countries. So they get richer.

[ Parent ]

economic downturn vs inflation (none / 0) (#90)
by calimehtar on Thu Feb 27, 2003 at 09:35:28 AM EST

I think you're getting economic downturn and inflation confused. It's true that frequently both occur in the same place at the same time, but consider the other possibilities:

Japan has been in a rough economic spot for the last decade or so. Recently, one of the primary causes has been deflation which is making it harder for people in foreign countries to buy the goods it exports and harder for corporations to make profit.

While the US dollar has lost about 20% of its value in the last year against the Euro, the Argentinian Peso lost about 70% against the US Dollar over a similar period. A loss for the 1st world isn't always a gain for the 3rd.



[ Parent ]
I bet that 3 years ago (4.25 / 4) (#46)
by porkchop_d_clown on Wed Feb 26, 2003 at 08:42:34 AM EST

this guy was telling people we were in the middle of a "long boom" and the business cycle was obsolete.


--
You can lead a horse to water, but you can't make him go off the high dive.


Underconsumptionist fearmongering (4.75 / 4) (#47)
by ssyreeni on Wed Feb 26, 2003 at 09:05:02 AM EST

As others have already pointed out, there's hardly any economic reasoning behind the claims, and the two scenarios are a vast oversimplification of how the economics might turn out. Elliot waves seem more like an intuitive leap than real theory -- such waves do not seem to have much predictive power except in that they're hierarchical construction gives rise to multiple timescale statistics with random-walk and scale-invariance like properties, consistent with the efficient market hypothesis.

More on the practical note, I'm also having a hard time with the basically underconsumptist fear of deflation the article represents. China has also been "in the throes of deflation" for a while now, but at the same time has witnessed some of the highest real growth rates around. So, I don't see what's wrong with deflation -- instead I think fully deflationary monetary policy is a perfectly good alternative to money market interventions.

As for the Japanese mystery, one of the more inconventional explanations is that offered by the Austrian school. Unlike Austrian economists, I don't think a wider majority of recessions can be explained by a malinvestment-liquidation cycle, but when monetarist policy fails to stimulate growth and money becomes practically free, it's a good indication that underconsumptionist theory has failed. Capital market imperfections and a rising tide of bad loans are another. What we then have is a lot of consumer debt which needs to be retired before new investment and growth become possible (part of the Austrian regime) or a supply-side problem. I'm thinking both, since they tend to go hand in hand; be what it may, pushing down the interest rates has mostly exacerbated the problem.

What's the fix, then? The Japanese economy is a notoriously price-inflexible one, especially in the distribution and banking sectors. One nasty example of the principle in action is the extremely sluggish response Japan has exhibited after it's past land price bubbles -- investors and banks with their hand in financing such bubbles have been unbelievably slow to acknowledge their losses, and years long underutilization of urban land has followed. As long as such inflexibility is present in significant amounts, deflation might still be something to fear. Neither is it unlikely that current debt will be easily retired. I'm thinking what the Japanese economy needs is a shock treatment to shake loose malinvested assets and to flex the price system a bit. Hiking the rate might well do it (it would seriously cut into the balance sheet of banks with problem loans, which infest the banking sector), but at a cost of a year or so of actual depression. Another good idea would be to radically cut back on public expenditure (e.g. in the building industry) which has helped maintain the current imbalance of the capital market.



Deflation (4.50 / 2) (#79)
by aphrael on Wed Feb 26, 2003 at 08:20:26 PM EST

Deflation is a nightmare for a country, like the US, which is heavily indebted. Given that the average household debt is now more than 100% of the average household income, for most Americans, deflation would be a disaster.

[ Parent ]
Units? (4.00 / 1) (#98)
by nowan on Thu Feb 27, 2003 at 11:10:33 AM EST

Debt is in dollars, income is dollars per unit time, so I'm not sure how you're comparing them.  Do you mean yearly income?

Can you explain why debt is a problem in a deflationary economy?  Intuitively it'd seem the opposite -- the money I borrow is worth more than the money I use to pay off the debt.

[ Parent ]

Example (none / 0) (#105)
by pdrap on Thu Feb 27, 2003 at 01:27:37 PM EST

If I owe $300,000, and I make $100,000 a year, that's not too bad. Probably the majority of that would be a mortgage. But, suppose the effect of deflation is to turn my salary into $40,000 a year. That would be trouble. On top of that, my house decreased in value, and I lost the investment that I spent my life struggling to pay off.

Inflation on the other hand helps with this debt. I buy a house for $100,000 with a salary of $40,000. Twenty years later, inflation has driven my salary up to $100,000, but the debt didn't rise with inflation. That debt becomes much easier to pay over time, freeing up my money for big screen TV's.


[ Parent ]

Not money, purchasing power (4.00 / 1) (#106)
by Control Group on Thu Feb 27, 2003 at 01:48:52 PM EST

Look at it this way:

Let's say you borrow $100. Gasoline costs $1/gallon. Ignoring interest, you owe the bank $100, or 100 gallons of gas. Deflation hits, and gas now only costs $0.50/gal. Now, you still owe the bank a nominal $100, but that translates into 200 gallons of gas - you owe them twice as much of your real purchasing power.

The opposite, of course, occurs with inflation. The general rule is that inflation is good for debtors, deflation is good for creditors. In today's economy, the fundamental unit of money movement, the consumer, is almost universally a debtor. Hence the danger of deflation.

(Note that there are other dangers, mostly related to wage inflexibility, but the example above should answer your question)

***
"Oh, nothing. It just looks like a simple Kung-Fu Swedish Rastafarian Helldemon."
[ Parent ]

problems (5.00 / 1) (#107)
by aphrael on Thu Feb 27, 2003 at 02:33:42 PM EST

Yeah, I mean annual income.

As for why it's a problem, assume an even distribution of deflation (eg., the price of all goods falls by the same amount) because it makes the math simpler. That means that the price of your labor falls, so your income falls. But your debt remains constant. Which means it gets harder and harder over time to repay the debt.

I think the basic problem with your intuition is the statement 'the money I borrow is worth more than the mone I use ot pay off the debt'. Deflation is a decrease in prices, which becomes an increase in the purchasing power of money or, more generally an increase in the value of money. So the money you borrow is worth less than the money you use to pay off the debt.

The situation where the money you borrow is worth more than the money you use to pay things back is a situation where prices are increasing (eg., inflation) and is associated with entirely different problems.

[ Parent ]

Globalisation has some way to go yet (4.00 / 4) (#48)
by idiot boy on Wed Feb 26, 2003 at 09:24:52 AM EST

Before we reach a situation where any such "permanent" global meltdown is a practical possibility.

The reason for this is that the world economy is still not integrated to the point where when the US or any other "driving" nation can cause a global economic contagen.

It's like the story of a bunch of girls living together sychronising their periods. In some areas of the world (the EU springs to mind), nations have been living together long enough to ensure that they all start craving chocolate at roughly the same time (with the exception of obstinate exceptions to the rule like the UK :)).

In the majority of the world however, and even between countries such as the US and Canada which are tightly linked by trade (75% of Canadian exports go to the States), there is little or no synchronisation.

In fact, much of the talk of a world economy is overblown. Although globalisation has come a long way in the last few years, the cyclical differences between nations are still stark and sufficient to shield what we call the world economy from systemic collapse.

Another factor that is overblown is the reliance on US imports. Certainly, for the majority of trade performed by EU member states, trade is largly inter-EU. While the US is an extremely important trading partner, it is not the be all and end all.

Where there is a problem is in the confluence of similar issues in several (though by no means all) of the larger economies in the world. Such problems include the personal debt burden, severe trade imbalances and large amounts of bad debt that are causing suffering for the banks. These can, should and almost certainly will be worked through. The only country that remains doubtful is Japan where a total refusal to reform the bandking system has led to a decade long recession and the worst deflation the world has seen for decades. Even there though, there are no problems that a liberal dose of reform would not sort out.

--
Science is a way of trying not to fool yourself

What? No global economic contagen? (none / 0) (#143)
by opendna on Sat Mar 01, 2003 at 04:29:50 AM EST

The reason for this is that the world economy is still not integrated to the point where when the US or any other "driving" nation can cause a global economic contagen.

We are WELL past the point when ANY nation can cause a global economic contagen. In case you hadn't noticed hedge funds have already tied global economies so tightly that a default in Russia blows the legs off Mexico. Likewise, a devaluation in Thailand levels asia, tips Latin America and rattles the US and EU.

How quickly we forget the Clinton years...



[ Parent ]

Economy absorbed a pretty big event (4.66 / 3) (#61)
by 8ctavIan on Wed Feb 26, 2003 at 02:28:58 PM EST

After Sept 11 2001, Wall St. closed down for a week, and there was an interruption in air traffic, general panic, gloom and doom etc. and the world economy absorbed it fairly well. The fact that we can take a pretty big hit like that and not have a severe economic downturn would justify a fair amount of optimism.

Then again, you never can tell what's going to happen. Like the old saying that a butterfly flapping its wings in one part of the world might cause a tornado in some other part of the world, events, even small ones, have unforeseen consequences. We might get hit by an asteroid that we didn't even know about, and then the economy sure be in tough shape. But honestly, the theory that we're heading toward a deep and prolonged depression - I just don't see anything to back that theory up


Injustice is relatively easy to bear; what stings is justice. -- H.L. Mencken

Pfft. 9/11 had nothing to do with the economy. (4.00 / 1) (#64)
by porkchop_d_clown on Wed Feb 26, 2003 at 03:24:59 PM EST

Except that it became a great excuse for problems that had already been brewing for the six months prior.


--
You can lead a horse to water, but you can't make him go off the high dive.


[ Parent ]
Yes and no. (none / 0) (#78)
by aphrael on Wed Feb 26, 2003 at 08:18:22 PM EST

There was a huge danger of a collapse of the financial lending system in the US after 9/11, due to the fact that the headquarters of many of the major financial institutions, including their computerized record keeping, had just been shut down. The Fed basically dealt with the problem by issuing emergency loans to anyone who needed them, without worrying about the paperwork until later.

I agree that today's economic problems are totally unrelated to those events. But the poster's point that the system is resilient enough to have been able to handle it remains a good one.

[ Parent ]

Wow! (none / 0) (#87)
by olethros on Thu Feb 27, 2003 at 07:35:06 AM EST

"Then again, you never can tell what's going to happen. Like the old saying that a butterfly flapping its wings in one part of the world might cause a tornado in some other part of the world,

This is already an old saying! Unbelievable! I think this 'saying' was not written down before I was born. Where does it actually come from? I don't think it comes from Mandelbrot, or from Liebnitz. Maybe from Takens? I definitely came across it in a book when in the late 80s, but I am not sure if it was a quote, or if it was the original source.
-- Homepage| Music
I miss my rubber keyboard.
[ Parent ]

1972 (4.50 / 2) (#88)
by wiredog on Thu Feb 27, 2003 at 09:08:35 AM EST

From Cal Tech (with a cool java app/animation of the attractor):
The "Butterfly Effect" is often ascribed to Lorenz. In a paper in 1963 given to the New York Academy of Sciences he remarks:
One meteorologist remarked that if the theory were correct, one flap of a seagull's wings would be enough to alter the course of the weather forever.

By the time of his talk at the December 1972 meeting of the American Association for the Advancement of Science in Washington, D.C. the sea gull had evolved into the more poetic butterfly - the title of his talk was :

Predictability: Does the Flap of a Butterfly's Wings in Brazil set off a Tornado in Texas?


Wilford Brimley scares my chickens.
Phil the Canuck

[ Parent ]
The solution (2.00 / 4) (#65)
by PullNoPunches on Wed Feb 26, 2003 at 03:42:14 PM EST

to the collapsing world economy is obviously to stop letting governments run it. Haven't you noticed that lately lines at the bank are starting to resemble lines at the DMV?

------------------------

Although generally safe, turmeric in large doses may cause gastrointestinal problems or even ulcers. -- Reader's Digest (UK)

A deliberate strategy by banks (5.00 / 1) (#71)
by nicebear on Wed Feb 26, 2003 at 06:46:46 PM EST

They want you to use the ATM (or Internet), not go into the bank. That's a lot cheaper for them, and if they can make you wait, you're less likely to go in.
Once you do actually get to seak to a teller, they'll waste even more time (thus holding up everyone else in line) trying to sell you something: a mutual fund if you have money, a high-interest loan if you don't. Most banks give their tellers sales quotas, which they have to meet or else get reprimanded (and ultimately fired).

[ Parent ]
What bank does that? (none / 0) (#94)
by KnightStalker on Thu Feb 27, 2003 at 10:36:05 AM EST

US Bank and B of A around Portland don't try to sell you anything. I've never heard of such a thing.

[ Parent ]
yeah (none / 0) (#99)
by melia on Thu Feb 27, 2003 at 11:35:36 AM EST

thing is, i'm too much of a luddite to use the deposit envelopes, so I always have to go to the counter. In some HSBCs the counters shut at 1pm. Cheap bastards.
Disclaimer: All of the above is probably wrong
[ Parent ]
I heart my credit union [nt] (none / 0) (#111)
by Josh A on Thu Feb 27, 2003 at 03:05:16 PM EST


---
Thank God for Canada, if only because they annoy the Republicans so much. – Blarney


[ Parent ]
Interesting bit of historical blindness (5.00 / 1) (#77)
by aphrael on Wed Feb 26, 2003 at 08:15:46 PM EST

That's an interesting theory which completely ignores the history behind government intervention in the economy; in the US, at least, it happened first and foremost because the economy had collapsed and had stayed collapsed for several years; government intervention was viewed as the only way to prop it back up on its feet.

[ Parent ]
Interesting theory (2.00 / 1) (#119)
by PullNoPunches on Thu Feb 27, 2003 at 07:57:09 PM EST

which completely ignores logic. Are you saying the economy that collapsed sometime after the '29 crash was a completely free market? Was there no government running of the economy then?

Look up the Smoot-Hawley tariff sometime, just for starters. Then maybe examine the implications of trying to micromanage foreign trade in an era of punishing war reparations being demandeded from those same foreigners. That's just one cause. I won't even get into how the "Raw Deal" extended the subsequent depression by years.

------------------------

Although generally safe, turmeric in large doses may cause gastrointestinal problems or even ulcers. -- Reader's Digest (UK)
[ Parent ]

extending the depression (5.00 / 2) (#135)
by aphrael on Fri Feb 28, 2003 at 11:37:21 AM EST

Yeah, the Smoot-Hawley tariff was stupid. But it didn't cause the crash, nor did it cause the depression; the crash was caused by herd panicking, and the depression was caused by (a) the inability of foreign markets to continue to buy US products after the US banks were unable to continue subsidizing their consumption; and (b) a massive decrease in US demand for products after people's savings evaporated overnight as thousands of banks failed.

I believe that some of the New Deal made things worse. I also believe that things like preventing banks from speculating on stocks were essential to the long-term stability of capitalism; and I believe that providing jobs to millions of people who were literally going days without eating, and had been in that situation for months was the *only* reasonable thing to do in the crisis.

I know it has become fashionable in modern times to take Hoover's position that things would just get better on their own and people had better just tough it out. But that was an irresponsible position in 1932, and it's still an irresponsible position today. An economic system which leaves 20-25% of the country with no employment, and no source of food, for years, is horribly broken.

[ Parent ]

Nice troll nt (none / 0) (#147)
by Big Sexxy Joe on Sat Mar 01, 2003 at 06:47:55 PM EST



I'm like Jesus, only better.
Democracy Now! - your daily, uncensored, corporate-free grassroots news hour
[ Parent ]
Get a gun, too (3.66 / 3) (#72)
by anon868 on Wed Feb 26, 2003 at 06:53:26 PM EST

Seriously, in scenario two, if John Doe has $80,000 in gold and silver buried in his back yard (can't keep it in a bank, they're collapsing remember), he's going to need some serious protection, and local law enforcment is going to be too busy dealing with riots and looting, plague, famine etc... If you go the route of converting your money to gold, you pretty much have to go the whole route of crazy hermit holed up in his shack in the mountains with AK-47's and grenade launchers- a collapse of money pretty much assumes a near total collapse of society.

The real problem is those record levels of consumer debt. We may be ok now, for a while at least, but what's going to happen when intrest rates start rising again?
Open a window. No, not that one! One made from actual glass, set in an acual wall, you dork.

economic security (3.50 / 4) (#74)
by circletimessquare on Wed Feb 26, 2003 at 07:31:47 PM EST

is highly overrated, personal or national.

get used to insecurity, or die with an ulcer.

life is one big fractal mistake. why should the economy be any different?

The tigers of wrath are wiser than the horses of instruction.

Tax Concentration of Assets (4.42 / 7) (#84)
by Baldrson on Thu Feb 27, 2003 at 02:35:00 AM EST

The fundamental problem is "capital welfare" extracting purchasing power from the markets and giving it to the capitalists free of charge combined with government corruption sucking ever more money from producers.

Capital welfare is the service of protecting holders of assets, free of charge to them, by retaining the option of calling up men on conscription while taxing things other than net assets to pay for additional costs of protecting the assets of the capitalists. Communism is worse in some ways but better in the sense of not even making a pretense of rational economics and is therefore more transparent.

Conscription is a form of taxation, but more importantly, retaining the right to call up men on conscription is a form of "retainer" which is the real dominant ongoing form of taxation of human capital.

It is that hidden form of taxation that forms the need for a personal exemption from asset taxation, and that exemption should amount to the value of a home and personal business assets (tools, inventor-owned patents, subsistence farm land, etc.) -- the things typically covered by bankruptcy protection.

Taxing only net assets, with a basic exemption for subsistance assets (small acreage farm, house, etc.), is the kind of relationship that is natural when men are allowed to possess and protect their own homes and farms/personal businesses, but can be called up for protection of larger domains when required.

The problem we face is hypercivilization. Hypercivilization creates parasites that can, and therefore do, spend their time subverting this natural relationship confounding fundamentals of statecraft and economics with Byzantine volumes of legal gibberish, theory and political rhetoric, in the guise of being specialists. Freud had it wrong. The problem isn't civilization and its discontents, but rather hypercivilization and its victims.

These are the fault-lines that are created in capitalist countries -- that forms, then, the potential for revolution.

For a bit of pedagogy here do a google search for "net asset tax" and read the first article at the top of the list.

A bit more advanced is the "clanarchy" article a few links down.

-------- Empty the Cities --------


So what? (none / 0) (#127)
by cameldrv on Thu Feb 27, 2003 at 11:41:57 PM EST

I've noticed you have a tendency to always bring up your unusual theories regardless of whether they apply to the current situation. How does what you perceive as an unfair tax situation bear on economic growth?

[ Parent ]
Taxing Producers Affects Growth (none / 0) (#128)
by Baldrson on Fri Feb 28, 2003 at 05:33:54 AM EST

Taxing economic activity affects economic growth for all the obvious reasons. Protecting those who have assets for no reason other than they have assets makes the rich richer for no better reason than they are richer. How could you be more destructive of economic growth? The decision makers of the economy are corrupted by welfare just as are others; more so since they already have all they need.

-------- Empty the Cities --------


[ Parent ]

just another great depression (5.00 / 1) (#91)
by svSHiFT on Thu Feb 27, 2003 at 09:57:26 AM EST

I would not consider it anything like the "final meltdown of world economics". Consider it just as another one "great depression", just like it was already in our history. many economists now start to remember so called "Kondratyev cycles" -- 30-40years global economical raise and fall periods, going on constantly during the past two centuries stated by the great Russian ecomonist Kondratyev in the beginning of 1900s, thus, predicting both the great depression of 30s in america, and the global economical crisis in 70s. The next one was predicted to happen in 2010th, but, with the current rates, it may start even a little bit earlier.

Very poor generalization (none / 0) (#118)
by olethros on Thu Feb 27, 2003 at 05:48:03 PM EST

From 2 prior events, two predict a third.. bah, this is *not* numerology? What is it then? What are those 'cycles' anyway? There are no cycles, it is a bloody illusion. Economists don't even have any means to measure the 'economy' - Reflected sounds of underground creatures.

Economists use single or two-varible linear approximations as 'laws' for statistically defined quantities, which are influenced by a virtually unknown system state. Each newly defined law introduces at least a couple of new different 'quantities' which are, in general, not measured in any sensible way.
-- Homepage| Music
I miss my rubber keyboard.
[ Parent ]

Bovine Faeces? (3.33 / 3) (#103)
by hughk on Thu Feb 27, 2003 at 11:58:40 AM EST

The main reason that we have an extended depression at the moment is that we have a War to go to and the Shrub wants to spend his way out of a depression. Forget gold, forget Elliot waves. Maybe though look to the Big Mac Index as there will probably be a shift according to Purchasing-Power Parity. Buying precious metals is generally a waste of time unless you plan to use them. The exception to this is if you are writing newsletters predicting doom and gloom.

The thing to look for is intrinsic worth. The bottom isn't going to drop out of the dollar, although it may settle a bit lower against the Euro. We aren't in 1920, banks are much better regulated (some would say over-regulated) and there is less of an information gap to cause sudden panics. People sell and then they buy. Market professionals can not afford to keep cash, they must keep capital invested, relatively few go towards precious metals and most will just move money around.

Oh and forget about Kabbalistic Numerology, The only value of the Fibonaccis and Elliot Waves is using the fact that some sheep are following it. Just look at the balance sheets. If a company is grossly overvalued, then this is a good time for corrections.

blah (none / 0) (#108)
by mattw on Thu Feb 27, 2003 at 02:38:01 PM EST

The economy here is being held back only by the looming threat of war. War causes uncertainty. Uncertainty slows or stops investment. Slowing and stopping investment depresses the economy. Unemployment remains traditionally low. GDP contraction for a 'recession' has been very limited, and did rebound back to the positive column before the long situation with Iraq slowed things down. Interest rates are amazingly low. As soon as the uncertainty is removed, investment will begin, because the low rates create an incredibly opportunity to acquire investment capital at what can only be viewed as a nominal interest rate. It's a great time to be selling debt. Consumers are getting interest rates scarcely above the historical rate of inflation. When the war situation ends, businesses will plunge into the capital markets, invest in their growth (with no uncertainty to stop them), and we will see a boom driven by job growth, rising consumer confidence, foreign re-investment, etc. Meanwhile, January had a 3.3% jump in orders for durable goods, which is a hallmark of economic growth. Meanwhile, growth is held back by the high price of oil. The markets are now pricing in some oblivion-like scenario with respect to oil, as futures touched $40/barrel. That's apocalyptic prices, especially given that if the US puts a friendly regime in Iraq, there's a decent chance OPEC will be crushed and oil will fall to like $12/barrel. The economy will subsequently be red hot. Lastly, let's not forget that Greenspan criticized Bush's tax cuts because he said it was uncertain that the economy even required stimulus.


[Scrapbooking Supplies]
Wrong! (3.00 / 1) (#121)
by ult on Thu Feb 27, 2003 at 08:07:12 PM EST

US economy was in a downslide before S11, before Afghanistan and before the impending war on Iraq.

As you should know Iraq was and is being used both as a diversion and as an economic booster. Blanket the media with talk of war and they'll forget that companies are going bust and people aren't eating. Of course as history shows every war causes economic booms for the victors.

[ Parent ]
uh, nice try (3.00 / 1) (#134)
by mattw on Fri Feb 28, 2003 at 10:12:16 AM EST

Did I ever imply that the economy wasn't on its way to recession before 9/11? Of course it was. But no one has forgotten about the accounting scandals. I don't care about companies going bust: that's part of natural economic evolution. What I care about is violation of SEC accounting requirements, and people need to go to jail now for that, which is going fairly well. More importantly, the SEC need to press for more additional disclosure, and formalize rules regarding companies and so-called 'analysts'.

As for being an economic booster, not hardly. It might appear that victory 'boosts' the economy, but that's historical coincidence. If you have an economy ready to boom, war will suppress that. War ending will allow it to progress again. It isn't causing a boom; its hiding a boom in progress.


[Scrapbooking Supplies]
[ Parent ]
The Null Doomsday Device (1.00 / 1) (#141)
by opticfiber on Sat Mar 01, 2003 at 01:53:53 AM EST

I agree that economic the down turn that this story demonstrates is not only implausible but illogical. War breads not only economic growth but consumer confidence (provided you're viewing from the victor's perspective). I'm not a fan of "W" by any means, but his administration had the right idea; the major focus, oil. The impending conflict in Iraq can only do good things for the world economy. The war machine of the United States and its massive troop build up in Middle East is spurring economic growth. More things are being built, new technologies being invented; all the while interest rates are dropping.

[ Parent ]
Tobin tax (none / 0) (#109)
by dollyknot on Thu Feb 27, 2003 at 02:54:05 PM EST

I've said it before and I will say it again, institute the Tobin tax. Use the revenue raised to fund the internet based on hit rate, do it via dns --> ISP, there is not that many dns servers. I'm sure Rusty would like the idea.

The internet is global and lovely, but it is also a poor place to make a living and raise kids, unless you want to get gynaecological, which gets boring after the novelty wears off.

Peter.
They call it an elephant's trunk, whereas it is in fact an elephant's nose - a nose by any other name would smell as sweetly.

Tobin Tax (none / 0) (#146)
by Anatta on Sat Mar 01, 2003 at 12:57:39 PM EST

What about hedging? By instituting the Tobin Tax, you'll essentially destroy the ability for companies and governments to use modern financial instruments like options and futures to hedge their positions. How can you avoid throwing the financial markets into complete chaos and increasing currency fluctuations with a Tobin Tax?


My Music
[ Parent ]

crap! the economy is about to melt down (3.00 / 2) (#113)
by ibbie on Thu Feb 27, 2003 at 03:38:47 PM EST

and i'm fresh out of marshmellows. ):

--
george washington not only chopped down his father's cherry tree, but he also admitted doing it. now, do you know why his father didn't punish him? because george still had the axe in his hand.
2 Problems with this "scenario" (none / 0) (#120)
by ult on Thu Feb 27, 2003 at 08:03:31 PM EST

The flaws are quite simple and in order to see them you mustn't have a narrow view of the world as your typical yank does.

1) Dominant currency. I'm sorry but ever since the euro came into being it has been destined to be the dominant world currency. Maybe some might not see it as such right now but I can guarantee you that Europe's economies combined dwarf the US.

2) Dominance of the US and Japanese economies. I'm sorry once again but whoever wrote this article is stuck in the 1970s and 1980s. The Japan's economy is shrinking rapidly, the US as we all know over estimates self worth. It's in their nature to bluff and bullshit, not very modest people.

I now bring forward the example of a supposedly dependant economy. Mine. Australia. Since WWII we began to realise we can no longer look to Europe and we must look to the Asia Pacific region. Specifically the US and Japan. Much has changed since the 1970s and 1980s and the crash of the Japanese economy did not affect us and the depression that the US is currently seeing also has done little to affect us.

The world is constantly changing and I think our little amateur economist here needs to stop reading textbooks written 30 years ago.

US GDP= $10.8B, EU GDP = $7.6B (2.00 / 1) (#125)
by StrifeZ on Thu Feb 27, 2003 at 11:16:19 PM EST

Actually I saw a few days ago, that Europes combined economy has a GDP of $7.6 billion and sinking. Most European nations have 1.0% annual growth (like Japan), and Germany has 10.8% unemployment. The US, even in its recessed state, grows 3-4% year over year.

The US GDP is currently $10.8 billion.

You forget something else: the US dollar is a self-fulfilling currency. There isnt nearly enough gold in the world to back up its total value of $10.8 billion, but its reliablity and historical strength have made it the world benchmark. Every currency in the world is measured against the dollar and entire countries have based their economy around the dollar. China, for example, its economy is primarily motived by American dollar investment, not internal investment like the US is. Essentially, the Dollar is a substitute gold standard, but it is unique, because one control controls the standard, unlike gold.

Simply put, although there is a certain level of national pride with a currency being the center of the world economy, and national pride in the strength of a currency, a stable dolar about 1:1.1 with the Euro and 1:whatever with the yen is actually better than the dollar being 1:5 with the Euro. this is because it means the US exports are affordable for foreigners and the US can get good deals on imports.

In short, the Dollar isnt going anywhere. The Euro isnt strong, it is the dollar is weaker than it was upon the Euro's debut because of the recession (it its still stronger than the Euro at that).

A Bi-Polar global economy would be so dangerous, but i might talk about that later.


KITTENS@(_%&@%@_($&@(_$&^@$()&@%@+(&%
[ Parent ]
Whoops (none / 0) (#126)
by StrifeZ on Thu Feb 27, 2003 at 11:19:25 PM EST

"Essentially, the Dollar is a substitute gold standard, but it is unique, because one control controls the standard, unlike gold. "

That should be" Essentially, the Dollar is a substitute gold standard, but it is unique, because one country controls the standard, unlike gold. "


KITTENS@(_%&@%@_($&@(_$&^@$()&@%@+(&%
[ Parent ]
funny figures (5.00 / 1) (#130)
by linca on Fri Feb 28, 2003 at 05:35:20 AM EST

10.8 billion bucks as the GDP of the US? how is it going to pay for the 30 billion it has promised t Turkey?

For what those figures actually mean, EU GDP was 8400 billions in '99, and US GDP was  9250 billions. With the Euro rising, the EU could get a larger GDP than the US pretty quickly, before it definitely becomes larger as the former Eastern blocks join.

By definition, in its recessed state, the US economy doesn't grow at all. Although it is not right now in a recession, its economic growth isn't flashy.

[ Parent ]

WHOOPS again. Trillions (none / 0) (#137)
by StrifeZ on Fri Feb 28, 2003 at 12:31:23 PM EST

i meant trillion I was tired, give me a break ;)


KITTENS@(_%&@%@_($&@(_$&^@$()&@%@+(&%
[ Parent ]
Euro is gaining clout vs dollar (none / 0) (#138)
by DaChesserCat on Fri Feb 28, 2003 at 01:20:54 PM EST

I read an article in EV World a little while ago where they were discussing the fact that, for oil trade, most transactions are still taking place in USD, even if that's not the currency in use by either of the countries involved in the trade. It's simply the currency of choice for dealing in oil. This is something which has been propping up the dollar for some time. Now, progressively more countries are looking at using the Euro for such trade, instead. This will definitely hurt the dollar, as there will be significantly less demand for it, overall.

Interesting that I should read about this a couple weeks ago, then run across this on Kuro5hin. I, personally, feel that we (residents of the US, including myself) have been playing on borrowed time for quite a while, and the piper is just about due for payment. I mentioned that in a previous comment on Kuro5hin. In retrospect, my math was a little off, but the basic tenet of what I stated remains valid.

Trains stop at train stations Busses stop at bus stations A windows workstation . . .
[ Parent ]
For the geographically challenged... (4.50 / 2) (#122)
by awethu on Thu Feb 27, 2003 at 09:30:21 PM EST

From the economist (subscription site) - Annual GDP growth (%) for major economies in continents other than Europe and North America:
China 11.2
India 5.8
Egypt 3.2
South Africa 3.0
Turkey 7.9
Russia 4.3
Brazil 2.4
*Argentina -10.1
Australia 3.7

It seems that more than half the world's population are oblivious to coming meltdown.
*Note: Argentina and Venezuela have problems unrelated to the economic conditions in OECD countries.

Half o' the world (none / 0) (#151)
by mmsmatt on Sun Mar 02, 2003 at 09:24:36 PM EST

Yeah, half the people might be oblivious, or apathetic, but what about half of the planet's wealth? Knocking Europe and America out discussion on global economics can't last long.

[ Parent ]
America is the global crutch (1.00 / 1) (#123)
by StrifeZ on Thu Feb 27, 2003 at 11:01:34 PM EST

I could go on for pages about this (and I might later), but i'll keep it brief for now I guess.

Basically, the world economy has been in the bowels of hell for the past few years. It is only the US economy, even in its recessed state, that keeps it afloat. Germany for example, the powerhouse of Europe, has 10.8% unemployment. Yes, people in the US whine about 5.7%.

South America is in hilarious shape right now. Argentina is gone, probably for a decade. Venezuela is gone for a few years. Chile is a model globalization student. 20 years ago, they were making TVs and had a sinking economy. Today they are exporting fish and copper and are doing well for themselves. The problem is that its a small country and a lot of the potential markets are already accounted for. Brazil is a bright spot in south america, but it has its problems too. International buisness men are keeping their eye on it.

Africa and the Middle east have no economies to speak of besides importing world interest and exporting hate.

Asia is sort of interesting. South Korea is slowly recovering from the Asian melt down. Japan is flat. Tiawan has had a tough few years. China, however, has 11% annual growth. The problem is, this growth is completely unsustainable in the mid-long term. In china, keeping year over year economic growth above 8% is a national priority. The problem is, the only way they government is sustaining it is by building dams, building highways, and building skyscrapers. This kind of stimulus, which the US went through in the 1950s, cannot be sustained for 2 reasons : first, you can only build so many highways, and secondly, the economy is fluid and will adapt to urban revitalization projects over the years until it becomes a non-stimulus. This is what happened in the US: the US has a ton of urban revitalization work done every year, but unless the project is really major, it has no effect on the economy anymore.

So in short, China is on a momentary high, but it wont keep it up.

Also China's economy is very heavily dependent on American Investment. They arent economically self sufficient. Far from it actually.

So in short, the world is already a disaster, but the US is keeping it afloat (as usual).

The real question is, will low, post war Oil prices provide global stimulus, or further cause crash and burn?


KITTENS@(_%&@%@_($&@(_$&^@$()&@%@+(&%
Credit bubble about to burst (none / 0) (#145)
by drquick on Sat Mar 01, 2003 at 10:50:04 AM EST

I found this on the credit bubble. Some experts think it's about to burst. There's some quite impressive graphs to underline the point.

So he thinks the economy will collapse (none / 0) (#148)
by Big Sexxy Joe on Sat Mar 01, 2003 at 08:14:27 PM EST

because people think it will? In that case, maybe he should just shut his mouth.

I'm like Jesus, only better.
Democracy Now! - your daily, uncensored, corporate-free grassroots news hour
College (none / 0) (#150)
by mmsmatt on Sun Mar 02, 2003 at 09:21:05 PM EST

I'll be looking at (how to pay for) college tution shortly. What happens in that regard if the sky falls on the world economy?

Meanwhile in Silicon Valley... (none / 0) (#152)
by MichaelCrawford on Sun Mar 09, 2003 at 06:07:28 AM EST

I've just spent a happy evening chatting with the guys at Slashdot over in LA Times Examines Silicon Valley.

I've been away from the valley for a couple years, but apparently things have improved in my absence. For example, the highways aren't as crowded and it's easier to find rentals now.

Read especially the LA Times piece Valley of the Stunned Raccoons. Compare it to my own essay The Valley is a Harsh Mistress, written just as I was blissfully unaware that I was about to experience the full force of the dot-com meltdown (I based it on past experiences in the software industry, mostly from pre-dot-com days).

I didn't leave Silicon Valley (actually nearby Santa Cruz) because of the dot-com collapse, I left to get married, but it turns out I was very fortunate to do so. I left at the peak with no plans to return. Read about moving to Owl's Head, Maine just a couple hours away from Rusty's home.

In my Slashdot comment I point out that my moving expenses have been paid for by what I saved in the rent I used to have to pay. What I forgot to say is that rent in Santa Cruz went up significantly after I left, and haven't come back down very much. I was paying $1275 a month in rent when I left in April 2000; when I visited a year and a half ago, rents on 2 bedroom houses in Santa Cruz had gone up to $1900.

Getting my move paid for is based on the old $1275 price. There is just no way I would have survived had I stayed and had to pay two grand a month.

Now I'm wondering if I'm going to survive even here in Maine, where my mortgage is $799.


--

Live your fucking life. Sue someone on the Internet. Write a fucking music player. Like the great man Michael David Crawford has shown us all: Hard work, a strong will to stalk, and a few fries short of a happy meal goes a long way. -- bride of spidy


World economy headed for catastrophic meltdown? | 153 comments (136 topical, 17 editorial, 0 hidden)
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