[tokyo_to_motueka]

I'm really surprised that these guys do not seem to have come up at all on PO.com yet (i did a google search of the PO.com domain). This paper looks particularly interesting:

N. Roubini and B. Setser, Will the Bretton Woods 2 Regime Unravel Soon   The Risk of a Hard Landing in 2005-06, February 2005.

I would also highly recommend reading Brad Sester's weblog. Has anyone already looked at this stuff?

[trespam]

$this->bbcode_second_pass_quote('tokyo_to_motueka', 'H')as anyone already looked at this stuff?

[linlithgowoil]

i read some of the report but it is deathly dull and boring. i dont really care about deficits and dollar investments and all that, and neither does the average person.

all people want to know is this :- will i have a job, house, car, food on the table and will i be able to at least have a few nice things now and again to make the drudgery of work less overbearing.

i think that, with planning and government intervention NOW we could save ourselves. us in the UK are in a far better position though - my local council gives out free energy saving lightbulbs every year and you can get free insulation in your house etc. The US sounds pretty backward.

[BabyPeanut]

$this->bbcode_second_pass_quote('linlithgowoil', 'u')s in the UK are in a far better position though - my local council gives out free energy saving lightbulbs every year and you can get free insulation in your house etc. The US sounds pretty backward.

[tokyo_to_motueka]

$this->bbcode_second_pass_quote('linlithgowoil', 'i') read some of the report but it is deathly dull and boring. i dont really care about deficits and dollar investments and all that, and neither does the average person.

all people want to know is this :- will i have a job, house, car, food on the table and will i be able to at least have a few nice things now and again to make the drudgery of work less overbearing.

[DantesPeak]

$this->bbcode_second_pass_quote('trespam', '')$this->bbcode_second_pass_quote('tokyo_to_motueka', '
')
Has anyone already looked at this stuff?

[savethehumans]

Not gonna tackle a 55-page economics paper...but it seems to line up well with what PO-aware economists have been saying. We're up against it, folks. (What a surprise! )

Food on the table? Bills paid? A few (less-expensive) luxuries this and next year? Well, sure. Things may seem (or made to appear) like always on the surface. But what's REALLY going on is gonna be more obvious, and CLOSER to the surface than before--kind of like a bulge in a volcano just before it blows.

Such an illusion can't be maintained, you say? Try THIS on for size:

The Boom That Feels Like a Bust
By Stirling Newberry
Tuesday 15 March 2005

You'd have to have sharp eyes to notice it, but it's true - last year, Bush's popularity began to slide, even as hiring picked up for the first time since employment reached its bottom in 2003. And it is happening again: last month, seasonally adjusted private payrolls grew by 229,000, according to the Bureau of Labor Statistics, and according to the irreplaceable and irrepressible Dr. Pollkatz's "Bush Index," the popularity of the executive dropped to 47.5%.

That's because this is the boom that feels like a bust.

If you listen to the right-wing commentators on cable, things should be coming up roses for the President who saved us from Saddam's terrorism and Clinton's recession. They crow over the Dow reaching three-year highs, an unemployment rate that is just over 5%, along with good GDP numbers and low inflation. And yet, people don't feel good about this economy, or have much faith in Bush's judgment: a CBS/New York Times poll said that a stunning 58% of Americans feel that "the White House doesn't share their priorities on foreign policy."

So what is going on? Are the numbers lying? Or perhaps fibbing a bit?

Let's start with what is supposedly a Republican strong point: the stock market. Republicans are constantly talking about how important business is, and they collect a great deal of their political money from the big investors. The most trusted measure of the stock market is the Standard and Poor's 500, composed of the 500 largest American corporations. Right now, that index stands a bit over 1200, well below its Clinton-era high of almost 1600, but far above the bottom, in 2002, of just under 800. It seems to be doing well.

Or is it really? During that time, the dollar has dropped like a stone against currencies that aren't pegged to the dollar itself. What good is having something worth more dollars, if each dollar is worth less and less? If one takes the price of the same stocks in Euros or Great British Pounds, two major currencies not tied to the dollar, one gets a different picture: instead of a strong rebound from a bottom, the stock market has been virtually flat the last two years, crawling up only slowly. Priced in Euros or Pounds, the S&P 500 has gone nowhere slowly since September of 2003. If making money is what you like to do, you could have dumped American stocks and bought Eurobonds a long while ago.

The same thing can be said about the Gross Domestic Product, or GDP. Is the GDP up? Or is it just that the dollar is down? With oil having nearly doubled since its low just after the invasion of Iraq, it seems likely that it is more of the latter than the former.

But realistically, most of us don't make our money on the stock market, we make it by working and selling our labor, so what about employment? Isn't 5.4% as an unemployment number respectable?

The answer is that the headline number that the Bureau of Labor Statistics puts out, the "Unemployment Rate," isn't a very good measure of the job picture right now. Not because the numbers are wrong, but because most people don't know what the Unemployment Rate actually measures: it is the one of the numbers that tells the central bank, in our case the Federal Reserve, the amount of wiggle room it has in setting interest rates. It is important if you work for a bank, but for the rest of us, there are more important measures: real wages, labor under-utilization, and labor slack.

Not surprisingly, the Bureau of labor statistics doesn't trumpet the numbers of underutilization it does compile, which show that 9.3% of the people who want to work either can't work, or are working part time when they want to work more.

But even better is to ask why the headline number is so low. It isn't because people are finding work in large numbers, it is because people are leaving the workforce in large numbers. Bush has presided over one of the two times in post-war history during which people have left or stayed out of the workforce without a recession to push them out. The other time was under the end of Eisenhower's two terms. If people were looking for work in the same numbers as in 2000, we would have an unemployment rate of not 5.4%, but close to 7.5%. And that is a number that would worry most people.

With so much slack in the job market, it is no surprise that real wages have been flat, and show no signs of going up any time soon.

And this isn't even the end - going down the supposedly good economic numbers, each and every one of them conceals the bad news beneath a number which seems good. So what is the story they do tell? Who is doing well in this economy? It's a good time to be among the very, very rich. Tax rates are low, inflation is almost dead in the water: which means there is no reason to take risks and invest, no competition from up and coming rich people. It is true that gasoline is up in price, but the things that rich people care about - buying companies and paying taxes - haven't been cheaper, relative everything else, in a very long time. That's why merger-mania is gripping Wall
Street: there has never been a better time to sell out and cash out than right now. It is no wonder that the percentage of wealth held by the top one percent of America is now higher than it has been since the Crash of 1929.

So if you are wondering why Bush's popularity is sinking, even as his supporters are trumpeting how well he is doing, now you know: the numbers may not be lying, but they aren't telling the whole truth either. That means if someone tells you "stocks are up, unemployment is down, taxes are low," just tell them that "the dollar is down, the job market is out, and Bush's poll numbers are lower."

Because if the numbers are telling the truth, very soon, discontent is going to be busting out all over. Why is this? Because right now the United States isn't creating real economic growth, but using federal borrowing - now leaving the billion dollars a day of deficit in the rear view mirror - and easy monetary policy of the fed to get more to happen now, rather than later. This inefficient approach is generating inflation, inflation in basic commodities, particularly oil, which has reached the $50 a barrel mark, a level that OPEC says it is happy with. This credit boom, and not economic progress, is what is driving the US economy.

Because much of what has happened in the world economy over the last few years has been a credit boom, when there is a bit more activity, there is a bit more inflation. The people who have jobs are not getting wage increases, and so they feel the inflation pinch. Every new job in the Bushconomy is paid for by other people working, people who have to pay higher prices, higher prices for gasoline and other necessities that they cannot easily cut back on. This is why, when the economy hires, it often hurts, rather than helps, George Bush. As Dr. Stuart Eugene Thiel noticed, "Bush popularity is, in fact, a gas."

And what is more ominous is that the credit boom is increasingly looking like a credit bubble that is ready to burst. In the language of the Financial Times: "Although corporate default rates remain low, some fear the legacy of recent private equity buy-outs and hedge fund investments in distressed debt will be a swath of over-leveraged companies ill-equipped to survive in less benign conditions." Shrill words indeed from the normally staid business press. And a warning to Americans that we are dancing on a volcano.
-----------------------------------------------------------------------------------------------------------
All bold print above is, of course, mine.

OK, so we can sense that all is not well here. But on the surface, it pretty much appears the same, doesn't it? This makes the Powers That Be happy--they know We The People would rather deny stuff like this than face the truth. So they put out statistics that are "true," but not telling the true story, they make speeches about how great things are and the media and the people are happy to lap that news up. And, of course, we're so caught up in the day-to-day hassles of living in this society that we've little time to peruse that bump we see under the carpet....

Think that's gonna change when TSHTF? No way! The "surface illusion" machine will just go into overdrive: we're having a bit of turbulence here, but the pluck of the Great American People will overcome it and be better for it! Think most people won't eat this up like a guy in the desert downs water and dates in an oasis he just illusioned up? You've got it, folks! We'll sense all is not well here MORE THAN EVER. But consciously admit this? NEVER!!

But think on the bright side...at least Bush's popularity ratings will go down even further....

[tokyo_to_motueka]

$this->bbcode_second_pass_quote('DantesPeak', 'I')s there a way to follow Roubini & Sester on a daily basis?

[trespam]

$this->bbcode_second_pass_quote('tokyo_to_motueka', '')$this->bbcode_second_pass_quote('DantesPeak', 'I')s there a way to follow Roubini & Sester on a daily basis?

[DantesPeak]

Thanks for the three links.

The 4th current account deficit news released today, was at an annualized rate of $750 billion and an almost $100 billion faster rate than the thrid quarter.

Clearly the trade deficit is accelerating despite most all media comment to the contrary. Kind of like how peak oil developed, the faster the trade deficit grows the more extra money is pumped into the economy (from overseas to finance the deficit). The stronger economy pushes up the price of goods like oil, and as investors notice the trade problems, the dollar falls, which also pushes up the price of things. The higher prices and strong economy expand the deficit even more until we reach a point where no more savings can be sucked from the rest of the world.

The end of the dollar regime could be quite sudden, even over night after a couple of days of turbulence. Probably not real soon, but as they said, possible by the end of 2007.

[tokyo_to_motueka]

$this->bbcode_second_pass_quote('DantesPeak', '.')..the faster the trade deficit grows the more extra money is pumped into the economy (from overseas to finance the deficit). The stronger economy pushes up the price of goods like oil, and as investors notice the trade problems, the dollar falls, which also pushes up the price of things. The higher prices and strong economy expand the deficit even more until we reach a point where no more savings can be sucked from the rest of the world.

The end of the dollar regime could be quite sudden, even over night after a couple of days of turbulence. Probably not real soon, but as they said, possible by the end of 2007.

[roccman]

The US data is now relentlessly grim. Unemployment jumped from 4.7pc to 5pc - or 7.7m - in December, the biggest one-month rise since the dotcom bust and clear evidence that the housing crunch has spread to the real economy.

$this->bbcode_second_pass_quote('', 'J')udging by a well-briefed report in the Washington Post, a mood of deep alarm has taken hold in the upper echelons of the administration. "What everyone's looking at is what is the fastest way to get money out there," said a Bush aide.

[Bas]

yes that's inflationary, but take it that was a rhetorical question.

On the other hand, higher unemployment is deflationary, as with increased competition on the labor market as demands for payrises will be lower and employers won't have to engage in bidding wars for certain types of skilled labor that may have been hard to come by not too long ago.

Still, we have the inflation caused by commodities. Combine that with the other factors, and it looks like buying power of the average American laborer will take a sizable hit.

[hubbertspeak7777777]

$this->bbcode_second_pass_quote('roccman', '[')url=http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/01/07/ccview107.xml&CMP=ILC-mostviewedbox]The US data is now relentlessly grim. Unemployment jumped from 4.7pc to 5pc - or 7.7m - in December, the biggest one-month rise since the dotcom bust and clear evidence that the housing crunch has spread to the real economy.[/url]

$this->bbcode_second_pass_quote('', 'J')udging by a well-briefed report in the Washington Post, a mood of deep alarm has taken hold in the upper echelons of the administration. "What everyone's looking at is what is the fastest way to get money out there," said a Bush aide.

[roccman]

$this->bbcode_second_pass_quote('Bas', 'y')es that's inflationary, but take it that was a rhetorical question.

On the other hand, higher unemployment is deflationary, as with increased competition on the labor market as demands for payrises will be lower and employers won't have to engage in bidding wars for certain types of skilled labor that may have been hard to come by not too long ago.

Still, we have the inflation caused by commodities. Combine that with the other factors, and it looks like buying power of the average American laborer will take a sizable hit.

[Bas]

stagflation is a possibility, or something that approaches it anyway. On the other hand, American exports are already up considerably on the lower dollar and they will continue to increase over this year, while oil prices may go down if more numbers show the US economy slowing. (Gawd, I'm sounding like a talking head, am I?)

[roccman]

$this->bbcode_second_pass_quote('Bas', 's')tagflation is a possibility, or something that approaches it anyway. On the other hand, American exports are already up considerably on the lower dollar and they will continue to increase over this year, while oil prices may go down if more numbers show the US economy slowing. (Gawd, I'm sounding like a talking head, am I?)

[Bas]

Well, we'll see what the new year will bring, and indeed the clouds have gathered but I hardly expect an instant collapse (but anything is possible)

[roccman]

$this->bbcode_second_pass_quote('Bas', 'W')ell, we'll see what the new year will bring, and indeed the clouds have gathered but I hardly expect an instant collapse (but anything is possible)

[Bas]

it does matter in the short to medium term, and in the sense of how much time we have to change our ways to cope with the fallout of peakoil, but ofcourse the plateau or decline of oil production is ultimately the most important factor. I'm still waiting for $100 oil to feed through to the consumer and see how that affects things. This will be a very interesting year, and maybe the only year we have remaining in which we can look at those things with some sort of amusement. On the other hand we could struggle, keeping the economy more or less stationary until 2012 before it really starts to go downhill. Not a very exciting prospect but preferable for most people here and in the world I'd say.

But to try to answer your question, I guess it doesn't matter all that much, no. No one knows how things exactly are going to unfold though; I contemplate a lot of scenarios from uber doom to relatively peaceful powerdown and I think the most likely scenario is like always somewhere in the middle, but I wouldn't dare to say how exactly likely that "in the middle" -scenario would be. Sorry, but in good faith I can't be more specific than that...