patrick.net

What happens next?

errc says

What happens next?

Enjoy a booming stock market, and real estate prices.

errc says

What happens next?

We will have a recession at some point, but we will also have better demographics, unlike 2007 where it peaked

Prime age labor force growth was good in 1980's and 1990's all this obsession over who was president is crazy, demographics run the show

get it that this a slightly tilted liberal economic view you guys have

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

Thats funny. Its not every day that I'm accused of not seeing things for how they are, because of my liberal bias.

Probably because nothing could be further from the truth. All i see is numbers and math, theres no political bent clouding my judgement or assessment abilities

errc says

Thats funny. Its not every day that I'm accused of not seeing things for how they are, because of my liberal bias

Liberal people = deflationary spiral

Conservative people = inflationary spiral

I am generalizing a bit

But its' the MMT view vs the Gold Bug view

I 100% believe both have been terribly wrong and don't understand demographic economics

My point is to only show why... why have the economic bears been wrong about America and why has all the economic drama happened outside the U.S. since 2011.. X out the fiscal bluff nonsense here

On another note

Bond market being flat today is amazing action! on U.S. 10 year

and on currencies .. anyone here taking a vacation in the next 2 months?

Going to Mexico and staying at the 4 seasons in Punta Mita and they're pushing currency exchange on their website! Awesome

http://www.fourseasons.com/puntamita/

Olympic greetings!

Call CalTrans!

Logan Mohtashami says

Global Yields Are Falling!

marcus says

Logan argues we will grow our way out or it.

As you all know I am a big demographic person

We had good demographics in 1980's and 1990's

Overall I believe mature countries are limited by growth anyway but the U.S. is going to have a great advantage in the next cycle as we are demographic light 2008-2019

But 2020-2024 we will have better prime age labor force growth numbers

Strategist says

QE will bail us out.

No QE... if something is to be done it's Fiscal not something the FED can do... velocity will be limited but it's a much better transmission (Fiscal) than anything the Fed can do

Not a Big QE fan here

Labor is becoming capital which has never happened before so it's not surprising that no one understands where this is going.

-----------

On its face, one would see this as a good thing, kinda. In our present system where you have a massive government with its grubby fingers on everything, not so much. Especially when the government takes its power primarily through (taxing/regulating) labor, and uses it to help prop up capital, all the while being the force that allows for private control of land. One would think that the negative effects could be smoothed over, if the government derived its power/revenue via Land Taxes, rather than Labor taxes. I'm reminded of my learnings here on patnet of Henry George and classical economics. Seems as applicable to todays problrms as it did over a century ago

On June 29, the #GDPNow model forecast for real GDP growth in Q2 2016 is 2.7% https://goo.gl/nrTp86

#USA .... get on board !!! ;-)

PCE growth is tracking over 4% in Q2

The current deflationary (or low inflation) environment to some extent is a chicken game between countries trying to force others to spend more. China in particular is still saving a huge amount and must spend more if things are to get better. What we see is the developed countries, Europe in particular, are going on strike and telling the Chinese: "we stop spending until YOU do."

Strawman. I said nothing about inflation. I was talking about savings. We don't need inflation for growth to happen, we just need people to spend the money they have so that money circulates.

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

Me thinks that flow chart is busted. The paycheck economy is tapped. They don't have savings to keep this all going.

errc says

Me thinks that flow chart is busted. The paycheck economy is tapped. They don't have savings to keep this all going.

errc says

The paycheck economy is tapped. They don't have savings to keep this all going.

Who doesn't have the savings? The richest boomers are loaded for savings precisely set aside to spend during their old age.

Logan Mohtashami says

You know, in the domain of AI, statistics are less and less regarded as a good angle to approach intelligence.
Why?
For the exact reason your chart illustrate: an average is not a good generalization. You can always calculate an average and you will find one. But this doesn't tell you whether this average is actually the center of a cluster or whether this is just a random point between clusters.

Follow the money. Healthcare is a dead end street. Any money spent into the paycheck economy is quickly recycled back into the coffers of the 1%. Where it goes to die. Because they don't have any avenues for spending (enough) money to support the consumer economy.

We're not broke(yet), we're just tapped out. Any money us paycheck economy actors get our hands on, we spend, and it's gone forever.

Rew says

If the consumer economies are dead

Retail Sales, Car Sales and Home Sales are near or at cycle highs

Why do you presume to call something dead when in a light demographic patch sales are at cycle highs

logan these threads are getting vexing.

1.60% break point. demographics. charts. charts. charts. brexit. charts. charts. dshort. charts dshort. 1.60% break point. 1.60% break point.

charts.

marcus says

From my view, something is broken, and the piper has to be paid in some way at some time, before markets will be somewhat "normal" again.

blue is total debt to GDP, red is fed funds rate.

Two regime changes happened under Greenspan, at the start of his time and at the end.

The turd in the pool as I can see it is simply:

http://www.bea.gov/newsreleases/international/intinv/intinvnewsrelease.htm

Collectively we each got ~$1,000 poorer -- more in the hole, actually -- in 2015.

What I don't know is what the end game for that is. Greenbacks become wallpaper I guess, but exactly how we go from now ("tallest midget" status) to that is the question.

Heraclitusstudent says

All I'm pointing out is that there is a wave of regular people that are in fact also accumulating money too and they are far more numerous than the rich.So the question is: how do these boomer retirement savings compare to the rich fortunes. I don't know the exact answer, but I would think the kind of order of magnitude.

WHAT? Wow, that conjecture is really wrong. Where have you been? There is hardly a week since Piketty's book in 2013/2014 that some newspaper or blog posts a chart or table showing the wealth distribution among various subgroups of the wealth spectrum.

https://en.wikipedia.org/wiki/Wealth_inequality_in_the_United_States

The top 1% has 34.6% of the wealth. That is over 1/3. That means the bottom 99% have 2/3, So the ratio of poor/rich total wealth is 2/1, roughly. That is a very far cry from "(an) order of magnitude" (which means 10 of times). Come on. you KNEW this, did you not?

landtof says

1.60% break point. demographics. charts. charts. charts. brexit. charts. charts. dshort. charts dshort. 1.60% break point. 1.60% break point.

charts.

US 30-Year Yield hit a new all-time low this morning: 2.20%. $TYX

Just to give the 30 year some love not the 10 ;-)

Here is one critique of the Perma Bear crowd

10 year getting this low since 2012... all events have nothing to do with domestic economics but world economics

Yes, I have a 1 handle in my 10 year calls in my prediction article but that has to do with the world demographic deflationary factors not a U.S. story

Here is my examples

Core inflation above 2%
Service inflation X energy is 3.2%
ECI wage inflation running at 3.5%
ECI wage inflation for job switchers are running at 4%

Now, I know this data because I track it, but this was never supposed to happen again in the U.S but it did

World deflationary factors are real, the world is old... old people don't spend .. this is a legit thesis .. but ... we do have better demographics than Europe and Japan

Logan Mohtashami says

Look at the graph. Lower lows, and lower highs. Rates are crashing.

My bond funds had an amazing June - it's scary. NAC (which I am not invested in) broke 17 today, crazy.

Strategist says

Look at the graph. Lower lows, and lower highs. Rates are crashing.

If you channel 10's with European Banks they are almost identical

Thank Europe and Japan for all this! :-)

Logan Mohtashami says

Strategist says

Look at the graph. Lower lows, and lower highs. Rates are crashing.

If you channel 10's with European Banks they are almost identical

Thank Europe and Japan for all this! :-)

I do, Ido. And the stocks are back to 18,000.

Strategist says

I do, Ido. And the stocks are back to 18,000.

Think about how many people bet against this country since March of 2009.... in big general themes

I am having way too much fun mocking my Anti American Cry Baby friends on facebook... they have nothing to say for themselves

Soft is Soft for a reason... we aren't Europe this is America

Hey Logan, in 2009 it was a no brainier. The Dow went so low that being anti American investing wise was actually very dumm. It was a huge oportunity.

Now being anti American (investing wise) is kind of reasonable. Almost 8 years roaring US stock market. The recession is due.

Ironworker says

The recession is due.

This is true, the economic expansion is on the verge of being the longest on record

Which I have created a data base of all the horrific calls since March of 2009... because people aren't versed in economics enough to make the difference between media yellow journalism marketing than to the best domestic economy in the world

The cycle lasted too long against the real hard core bears...

The data miners will be correct on their recession calls not all these people

That's what we want... we want to change the game ;-)

justme says

The top 1% has 34.6% of the wealth. That is over 1/3. That means the bottom 99% have 2/3, So the ratio of poor/rich total wealth is 2/1, roughly. That is a very far cry from "(an) ordersof magnitude" (which means 10 of times). Come on. you KNEW this, did you not?

Ok, but the top 20% owns ~85% of the wealth and they are likely disproportionately people (boomers) close to retirement (or already retired) sitting on a large nest egg.

It seems likely 35% out of these 85% is in fact retirement nest eggs. In any case, these nest eggs would be the same order of magnitude as the 35% of the top1%.

And you also need to consider companies and countries (foreign reserves).

I get the point that if there is a black hole in this system, any additional flow of money will always eventually fall into it.

In a system with a limited amount of money (gold standard), this kind of system would quickly result in a crash, as debts can't be paid and default/contagion takes place, leading to a new cycle. Limited money means limited possible run in the system, a sinus type of outcome rather than exponential.

Now with the government/central banks being a "white hole" producing an unlimited amount of cash, the economy becomes more and more a direct flow from the white to the black hole. No collapse happens, but the tidal forces still destroy a lot of what used to amount to a normal capitalistic economy.

I can fix this mess in a day. The government issues a check every year for the total income reported on a tax return up to about $15,000 and prints the money.

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

Thats not a solution, because it still leaves those without an income out in the cold. A better solution would be to eliminate the federal income tax, and print whatever money is needed to fund the governments expenses.

errc says

A better solution would be to eliminate the federal income tax, and print whatever money is needed to fund the governments expenses.

A scene from patnet?
https://en.wikipedia.org/wiki/The_Haywain_Triptych