patrick.net

Interesting that things haven't been "this bad" since the early to mid 1990's.

Lets see... how did we get out of the recession of the early 90's.
Mostly the internet bubble....
Which beget the housing bubble...

Since we have no new bubbles on the horizon, it'll be interesting to see if things get worse before they get better.

We have an education bubble growing. I know plenty of people living off education loans. They are attending school and living off this money since the job market sucks. Some I know are already 100K in debt and that's only up to a graduate education.

EastCoastBubbleBoy says

Interesting that things haven't been "this bad" since the early to mid 1990's.

Lets see... how did we get out of the recession of the early 90's.

Mostly the internet bubble....

Which beget the housing bubble...

Since we have no new bubbles on the horizon, it'll be interesting to see if things get worse before they get better.

what most people don't see is the enormous bubble in the US dollar. They printed record amounts of dollars out of thin air and can't stop or the entire system will come crashing down. This is why we will probably see a severe currency crisis and interest rates above 18% (as high as 25%) in the near future.

This is why housing will probably collapse another 30-40%+ due to skyrocketing rates. People can make the argument that high inflation means higher home prices but with skyrocking inventory and no job growth, I don't see home prices moving up when rates are at record highs.

This is why gold will continue to move up in the coming years. Gold is not in a bubble. The US dollar is in a bubble!

Interesting that things haven't been "this bad" since the early to mid 1990's.

Lets see... how did we get out of the recession of the early 90's.
Mostly the internet bubble....
Which beget the housing bubble...

Makes you wonder what it will take to turn things around.

EastCoastBubbleBoy says

Lets see... how did we get out of the recession of the early 90's.

Lots of deep pocket investors pumped over $150B into the Tech economy. Rich folks... and not the Govt spending from higher taxes.

EastCoastBubbleBoy says

Mostly the internet bubble....

In the later half of the 90s, only effected SV and Boston region. Most of the companies had a valid business, some profitable some not, but their valuations were obscene. On the other hand, valuations on new IPOs from the early 90s were fairly valued. Think of Ciscos IPO at around $20 with low PE ratio.

EastCoastBubbleBoy says

Which beget the housing bubble...

Only in the SV and Boston region... later home buyers went nuts.

EastCoastBubbleBoy says

Makes you wonder what it will take to turn things around.

Can have the top rich pump (invest) $200-300B back into economy vs spending on some medical research which what is currently happening. Provided some common sense in the valuation of their investment so bubbles do not form. Meaning, Facebook isnt worth $20B or 50B as some claim.

Income and wages are going up? Huh?

http://www.ocregister.com/news/county-318306-percent-jobs.html

Agree with what was said above about an education bubble. Many Gen Y types have massive student loans and no real hope of paying them back. These people also wont be buying houses anytime soon.

thomas.wong1986 says

EastCoastBubbleBoy says

Lets see... how did we get out of the recession of the early 90's.

Lots of deep pocket investors pumped over $150B into the Tech economy. Rich folks... and not the Govt spending from higher taxes.

Ya know, the question of the 1990s has been puzzling me, but I think I found the answer today:

http://research.stlouisfed.org/fred2/graph/?g=2ps

I don't get it. What is that graph trying to show?

The graph shows the yuan was cut in half in the early 1990s.

I did not know that, I thought the yuan had always been cheap since the "Nixon Goes To China" days.

If wages remained constant, that meant Chinese labor costs were also cut in half, in dollar terms.

This served essentially as a vacuum that sucked every job that could be moved towards China in the 1990s.

The US benefited in the short-run with much cheaper consumer goods. Eg. Microwave ovens used to be major expenses in the 1980s, but they got cheap at Walmart.

Living in Japan in the 1990s I think I was able to perceive the change that bigbox retail was making on America better than Americans who were immersed in it -- I came back every year or two and thus saw the changes in batches (the growth of big-box in Gilroy was particularly educational for me).

Japan was also aggressively offshoring its production to China during this time, and reaped immense profits from moving from a $20/hr wage cost to sub $1/hr.

Cool stuff like Walkmans etc used to be made in Japan, good luck finding anything "Made in Japan" now.

So, anyway, the increasing incorporation of an essentially free labor pool into the US economy was a nice tailwind for us in the 1990s.

Another tailwind was the real cost of oil staying essentially free, too.

http://research.stlouisfed.org/fred2/graph/?g=2pu

hey, I found another tailwind for the 1990s, I think:

http://research.stlouisfed.org/fred2/graph/?g=2pC

BB, I thought we would have easily surpased the 1980's just from my personal observations. I wish I could have joined the military in the 80's, it must have been fat dumb and happy then. Hell, they weren't as globally committed either. The 80's must have been great for the military. Sigh!

I shoulda joined up in 1985, yeah. My ASVAB was such that I could have picked my billet. If I had been smart I'd have gone into the Chairforce.

I was even selected for a pretty cool visit to the academy in 1984 but got into an argument with my parents about not being sufficiently thankful for them buying the ticket to Colorado so I lost that opportunity.

I gather now that in general it's much easier to pull a 20+ year career enlisted rather than officer-type, and I didn't know back then that once you get your rockers you become a middle manager in partnership with the officer corps and not the permanent go-fer doing all the work forever.

I had a best bud go to the USNA but he couldn't get promoted in the 1990s fast enough to stay in the service. Army officers had that problem too I think.

I could be a retired E-9 now, sigh. My timing would have been good to get those top 3 stripes in the 00s:

http://usmilitary.about.com/library/milinfo/blafpromrates-cmsgt.htm

Best time to join as enlisted would have been from 85 to 93 and Officer would have been 98 to last year. We did take massive cuts in 92 to 93 which crushed promotions opportunities. If you could have made it until 9/11 it was open season for all ranks and all jobs. Just imagine the high ranking idiots we have promoted now because of the military increase. Good God!

tatupu70 says

2. Personal incomes have been rising. He has proven this by posting multiple links to data

Personal incomes have not been rising at all - food, petrol, services, prices, rents, utilities have skyrocketed far faster than income increases.

Bellingham Bob says

Ya know, the question of the 1990s has been puzzling me, but I think I found the answer today:

Not from China but Japan back in 1985 to 1995. Japan pretty much wiped out Silicon Valley High Tech and Electonics industries, excluding software. China may be more akin to the last 10 years.

I haven't done the research yet, but I think China has been Japan's catspaw since 2000, too.

Japan offshoring its production to China makes absolute tons of sense for them.

Look at this ridiculous population pyramid:

10m people in the baby boom echo cohort, declining to 6m in the next generation.

Plus a high yen vs. the dollar and a weak yuan vs. dollar gives them a ridiculous currency cross, too:

http://research.stlouisfed.org/fred2/graph/?g=2qw

is the cost of Chinese labor to the Japanese, eg. with the yen at 70 and the yuan at 6, one hour of Japanese labor at Y2000 converts into 170 yuan, which is close to the WEEKLY minimum wage in China (~1000 yuan/mo).

shows Japan's treasury holding increasing greatly last decade, I suspect that was also driven by their Chinese labor arbitrage, but I have zero data yet to back that up.

Why arent rents falling!!? Shouldnt they have fallen by now!? They are up since 2009? If people are unemployed and moving back home with parents... Then shouldnt rents be back to 2002 prices like houses!?

tjjenkins says

Agree with what was said above about an education bubble. Many Gen Y types have massive student loans and no real hope of paying them back. These people also wont be buying houses anytime soon.

If the economy doesnt recover the govt knows that everyone will just default on all student loan debt.... You cant squeeze blood from turnip.... So unless they start debtors prisons.... The govt will eventually have to inflate us out of this mess...

http://finance.yahoo.com/news/Homebuying-season-the-worst-apf-308078857.html?x=0&sec=topStories&pos=6&asset=&ccode=

1)Because the economy is barely growing and unemployment exceeds 9 percent
2)many people see a home purchase as too big a risk.
3)Some worry about losing their jobs.
4)Others can't afford the 20 percent down payment that most lenders now require.
5)Plunging stock prices and renewed recession fears

and then

Chen expects prices to bottom at the start of 2012. Really????????????

I know I'm on bubble's ignore list, but he's finally right about something! Incomes were down last month.

http://finance.yahoo.com/news/US-incomes-fall-for-first-apf-1607600365.html?x=0

Note: Incomes have been rising for the past 2 years, but they did fall last month.