[Pops]

9 scenarios and all lead to stock plunge
$this->bbcode_second_pass_quote('', '�')��Is the U.S. Condemned by History to Slow Growth?” asks Bloomberg BusinessWeek. Yes. But for traders and investors, it’s far worse than just bearish slow growth. Plan for no growth or zero growth.

Why? Wall Street, America and the world economy are in the early stages of a long era of “de-growth,” a reversal of economic growth and reduction in market growth as population growth adds new stresses on commodities resources, creates unrest, disasters and wars. Big problems ahead.

[dinopello]

Broad-based, long term growth in the economy and stock market is at an end, yes. For the last many decades you could invest in anything (including index mutual funds) and hold and the growth would beat most other things. Specific markets & stocks will still grow, but you need to pick them. Markets may be product based or location based. Localized in time, there will be ups and downs. As I said elsewhere, I think there is going to be a boom in investments (not necessarily in stocks though) in the near term (next 3 years). There is just too much cash sitting around.

[PrestonSturges]

Also, the baby boom is just starting to retire (1947 + 65 = 2012) In ten years this will peak, and none of these people will be adding stocks to their portfolios anymore. Instead they will be cashing out, possibly in a broad panic.

[Lore]

$this->bbcode_second_pass_quote('dinopello', 'B')road-based, long term growth in the economy and stock market is at an end, yes. For the last many decades you could invest in anything (including index mutual funds) and hold and the growth would beat most other things. Specific markets & stocks will still grow, but you need to pick them. Markets may be product based or location based. Localized in time, there will be ups and downs. As I said elsewhere, I think there is going to be a boom in investments (not necessarily in stocks though) in the near term (next 3 years). There is just too much cash sitting around.

[PrestonSturges]

$this->bbcode_second_pass_quote('Lore', '')$this->bbcode_second_pass_quote('dinopello', 'B')road-based, long term growth in the economy and stock market is at an end, yes. For the last many decades you could invest in anything (including index mutual funds) and hold and the growth would beat most other things. Specific markets & stocks will still grow, but you need to pick them. Markets may be product based or location based. Localized in time, there will be ups and downs. As I said elsewhere, I think there is going to be a boom in investments (not necessarily in stocks though) in the near term (next 3 years). There is just too much cash sitting around.

[evilgenius]

I don't think it is the case that, given a war free scenario, there will be zero growth in every sector. Certainly, in areas such as alternative energy, there will be growth. My question would be, how much of the old game will still enter into play? That is the game of musical chairs, of chest thumping pride and consequent evacuating panic. If nobody can hold strong to a position there can't be any real winners. Even now there has been that opportunity, it has supported many people's returns in the form of privately held corporations making steady returns - to the point where they can really cash in by going public. Will anybody be there to make sure that going public means offering the public a legitimate going concern?

[Lore]

$this->bbcode_second_pass_quote('PrestonSturges', '')$this->bbcode_second_pass_quote('Lore', '')$this->bbcode_second_pass_quote('dinopello', 'B')road-based, long term growth in the economy and stock market is at an end, yes. For the last many decades you could invest in anything (including index mutual funds) and hold and the growth would beat most other things. Specific markets & stocks will still grow, but you need to pick them. Markets may be product based or location based. Localized in time, there will be ups and downs. As I said elsewhere, I think there is going to be a boom in investments (not necessarily in stocks though) in the near term (next 3 years). There is just too much cash sitting around.

[AgentR11]

$this->bbcode_second_pass_quote('Pops', 'I')s de-growth the future?

[Plantagenet]

$this->bbcode_second_pass_quote('evilgenius', 'I') don't think it is the case that, given a war free scenario, there will be zero growth in every sector. Certainly, in areas such as alternative energy, there will be growth.

[Ibon]

On a more existential note, "de-growth" also shrinks the obsession with the future.

[Loki]

I suppose “de-growth” is what we doomers call economic collapse, the Great Emergency, contraction, etc.? The article in the OP was pretty darn doomy, though. He offers a prediction of “a long decade of 'less than zero growth,' high-stress chronic unemployment, accelerating global unrest, regional conflicts, higher Pentagon budgets,' because 'much of the excesses and financial leverage built up in past decades, especially in the financial sector globally and among U.S consumers, remain to be worked off.' Whether bull or bear, optimist or pessimist, you better prepare of the coming Age of Austerity.” Yikes.

It's clear that the Great Recession was a deflationary depression caused primarily by excessive private debt and associated financial industry Ponzi schemes. The Federal Reserve and US federal government have pulled every rabbit out of their hats to slow private sector deleveraging, somewhat effectively. Unfortunately this probably sets us up for the second shoe of the deflationary depression to drop, public sector deleveraging (i.e., austerity). This will likely accelerate private sector deleveraging, creating a death spiral. The Greatest Depression. Binge and purge at a decadal scale.

I've found Edward Harrison's views on the origins of the next crisis useful. And I've been obsessed recently with reading/watching everything I can by Australian economist Steve Keen, who offers the best explanation I've found of the Great Recession and the long economic slog we have ahead of us. From Keen's “The Crisis in 1000 words or less”:
$this->bbcode_second_pass_quote('', 'T')he last Depression saw [private] debt levels fall from 240% to 45% of GDP over a 13 year period, and the ensuing period of low debt led to the longest boom in America’s history. [In 2008] we commenced deleveraging from 303% of GDP. After 3 years it is still 10% higher than the peak reached during the Great Depression. On current trends it will take till 2027 to bring the level back to that which applied in the early 1970s, when America had already exited what Minsky described as the “robust financial society” that underpinned the Golden Age that ended in 1966.

[SeaGypsy]

Who first? How about we have the blasted RE & Stock crash we would have had in 2008 if not for QE1, 2 & 3? Aren't these instruments basically just nominal asset value protection for the ownership classes (Baby boomers mostly) anyway? How can we get on with implementing new-urbanism while most folks are either paying down a totally unrealistic mortgage or renting someone else's? Whatever way you want to look at it, we are in for a world of hurt. Much of this pain will be felt by the establishment classes. There is no way of stopping this process, merely stalling the inevitable. 3rd worldisation come on down!

[Newfie]

$this->bbcode_second_pass_quote('Pops', '
')Is de-growth the future?

[Timo]

$this->bbcode_second_pass_quote('SeaGypsy', 'W')ho first? How about we have the blasted RE & Stock crash we would have had in 2008 if not for QE1, 2 & 3? Aren't these instruments basically just nominal asset value protection for the ownership classes (Baby boomers mostly) anyway? How can we get on with implementing new-urbanism while most folks are either paying down a totally unrealistic mortgage or renting someone else's? Whatever way you want to look at it, we are in for a world of hurt. Much of this pain will be felt by the establishment classes. There is no way of stopping this process, merely stalling the inevitable. 3rd worldisation come on down!

[AgentR11]

$this->bbcode_second_pass_quote('Loki', 'U')nfortunately this probably sets us up for the second shoe of the deflationary depression to drop, public sector deleveraging (i.e., austerity). This will likely accelerate private sector deleveraging, creating a death spiral. The Greatest Depression. Binge and purge at a decadal scale.

[Ibon]

De growth is exactly what one should expect in a global economy heading toward a steady state due to energy costs rising in the face of resource constraints.

I find it funny that when this is framed as a theoretical idea where we should be heading it is embraced as some novel and enlightened sustainable economic goal but when the evidence is out there that it is actually happening then we perceive it as some economic disaster.

De Growth means the resilience of the consumption engine is stuttering.

The metaphorical bulldozer plundering the planet is slowing down.

Good.

[Newfie]

Yup, good insight.

[Loki]

$this->bbcode_second_pass_quote('AgentR11', '
')I'm just not seeing how we get a classic deflationary situation where $1 buys more tomorrow than it does today, when it is very clear that the Feds will continue to print money like crazy. If one honestly believed in a deflation cycle incoming, you should just sit on dollars like they were the most valuable thing ever.

I personally do not believe $1 will buy more food/stuff in ten years (or ever) than it does today.

[AgentR11]

$this->bbcode_second_pass_quote('Loki', 'B')ut these strategies can't defeat the exponential function, the levels of public debt are clearly unsustainable.

[AgentR11]

$this->bbcode_second_pass_quote('Loki', 'S')omething needs to happen to all this private debt. It's going to be resolved either by printing money that actually enters circulation (inflation, possibly slipping into hyperinflation) or, far more likely, through defaulting, devaluing, and otherwise deflating. Welcome back to the 1930s.