patrick.net

dodgerfanjohn says

I'll be raping white women too.

Can we move this topic to the "Sex" section, please. This is the RE section, and this is a serious topic.

dunnross says

The bond bubble has been growing for the last 30 years, where gold isn't even in a bubble, yet.

Bwahahahahaha.

Sure!

Kevin says

Bwahahahahaha.

Sure!

Yes, we haven't seen the last phase of the gold bubble, which is the public awareness phase. When you see long lines in front of every coin shop, like you did in the late 70's, then you will know that the gold bubble has arrived.

dunnross says

Kevin says

Bwahahahahaha.

Sure!

Yes, we haven't seen the last phase of the gold bubble, which is the public awareness phase. When you see long lines in front of every coin shop, like you did in the late 70's, then you will know that the gold bubble has arrived.

Clearly you've never watched Fox News.

Kevin says

Clearly you've never watched Fox News.

Yes I have. Currently, the stage of the gold bubble in most western countries, is at a point of sex in middle school. Everyone is talking about it, but nobody has gotten it. If you take all the gold which is held by private individuals and divide by the US population, you don't even have 1oz/person. Silver is even less. Now compare that to the bubbles we had in the past, and you will understand why gold is nowhere close to the bubble phase.

Most people I know, have never even seen a Krugerrand. Most Americans still don't even know what a Krugerrand is.

dunnross says

Kevin says

Clearly you've never watched Fox News.

Yes I have. Currently, the stage of the gold bubble in most western countries, is at a point of sex in middle school. Everyone is talking about it, but nobody has gotten it. If you take all the gold which is held by private individuals and divide by the US population, you don't even have 1oz/person. Silver is even less. Now compare that to the bubbles we had in the past, and you will understand why gold is nowhere close to the bubble phase.

*shrug*

Gold has been flat for over a year. The bubble blowers seem to have run out of people to convince. Gold had a great run up from 2007-2011 but it just doesn't seem to be going anywhere any time soon.

The basic arguments used to try to convince people to invest in gold are of the conspiracy theory / anti government / doomsday types. Most people don't think about how the government is going to collapse every day, so they aren't rushing out to buy gold.

By comparison, the arguments for housing made sense to pretty much everybody at the time. Same goes for tech stocks.

That's why I don't think any massive consumer gold bubble will ever appear. There's already a bubble in gold, but it isn't going to get much bigger.

Metals are much too cumbersome. Young Americans, the chosen ones who will be employed providing security and necessary services, while global corporations provide all essentials, will be only too happy to receive the new digital currency, required at your local franchise tax board, good for all debts public and private and the only thing legal with which to pay property taxes. The financial goon squad will be reneging on all the old promises but will be making fresh ones. Works every time.

E-man says

When do you think this will happen? How would you change your investment strategy if this doesn't happen by then?

Much sooner than most people think. Perhaps in the next 2-3 years. Utah and some other states are already recognizing silver as legal tender, albeit, in parallel with the dollar.

1. The average down payment has sunk to 9%.
2. The percentage of jumbo loans being taken out is back to 2007 levels.
3. Market ass kicking, imminent.

dunnross says

Much sooner than most people think. Perhaps in the next 2-3 years.

Serious question. Is that 2-3 year window hard and fast dates (i.e. 2014-2015) or is that a sliding window that can be extended, just beyond one's reach, for years, or even decades on end?

As I noted on another thread, I know someone who has been putting off buying continuously since the late 1980s because he kept seeing the "imminent decline" 2-3 years away. Every 2-3 years, he would find yet another reason to wait out the imminent decline juuuust a little longer, such that its now been 24 years with no end in sight.

As I also noted in the other thread, I suspect that anyone waiting (starting say in 1980) for the Kondratieff winter to bring 1975 nominal prices has now been waiting for 32 years.

As it turns out, the believers in the Kondratieff have been doing just that, predicting "immient doom" for well over 3 decades now...

Read more: http://www.motherearthnews.com/nature-community/kondratieff-zmaz77mazbon.aspx?page=3#ixzz2Ch7pguKQ

So again, the question is, if its 2014-2015 and the imminent decline still hasnt materialized will you change your tune? Or will you then find yet another reason to wait 2-3 years longer?

By the way. If anyone is not inclined to go to the link, here are some exerpts from one of those "the govt can kick the can no further - imminent decline" preditions written way back in 1977.

Whats really amazing is that its an almost carbon copy of the doomer points we see here on patrick.net. Just substuitute the words "President Carter" with "President Obama" and "1982-1984" with 2012-2014" for the period of imminent decline, and its like traveling through a timewarp.

Enjoy!

+++++++++++++++++++++++++++++++++++++++++++

"Just as Carter's campaign promise to "sweep out" the ingrown Washington Establishment has already miserably failed... so, too, has his promise of bold, new, decisive economic policy failed to materialize."

"What we're presented with, instead, are the usual tired old fiddlings around with token tax cuts here and increases in already-bloated government spending there. More of the same old threadbare Keynesian "solutions" — in other words — that never have, do not now, and never will really and truly solve anything."

"(At best, such "solutions" only postpone the inevitable ... at their much more characteristic worst, they reinforce and magnify the inevitable while postponing it so that — in the end — it becomes just that much more terrible and destructive... in all candor, that that option no longer exists, and that insofar as it ever did exist, it only worked by injecting bigger doses of inflation into the economy followed by higher levels of unemployment as the next step. That is the history of the past twenty years"

"What we want to know is what's going to happen this year and next year and the year after that? Does the Kondratieff Wave Theory have anything to say about now?....According to Kondratieff's projections, a commodity price explosion was due in 1974 ... which was exactly when it did take place. The Western world has now entered the end of its growth period for this cycle and is entering a roughly 25-year period of economic decline...This is the time when the inflationism of our governments will be balanced briefly by the deflationary forces that, sooner or later, are destined to overtake us."

"We will be far wiser during this plateau period — this time of transition between now and 1982 or 1984 — if we just sit back, relax, and enjoy the Last Great Boom of the 20th century"

Read more: http://www.motherearthnews.com/nature-community/kondratieff-zmaz77mazbon.aspx?page=3#ixzz2Ch7pguKQ

CDon says

So again, the question is, if its 2014-2015 and the imminent decline still hasnt materialized will you change your tune? Or will you then find yet another reason to wait 2-3 years longer?

But the noise and money machines scream doom and gloom louder than rational conclusions. Apocolypse sells and reinforces the same thoughts of it. You ever see a book or tv commercial that says 'everything will probably be just fine'?

It reminds me of the diet and exercise equipment "industry". 50-100 Billion dollars a year are spent on those two things, and yet people are getting fatter by the day.

CDon says

The Western world has now entered the end of its growth period for this cycle and is entering a roughly 25-year period of economic decline...This is the time when the inflationism of our governments will be balanced briefly by the deflationary forces that, sooner or later, are destined to overtake us."

I don't know what this guy is saying. According to the K-cycle, 70's was summer, which is followed by fall, which is the biggest season of economic boom. Anybody who has been waiting for the decline after summer, hasn't spent enough time to educate themselves on the K-cycle.

Hmm this discussion suddenly reminded me of the Mayan Calender and the year 2012. Isn't it almost the end of 2012 and so the world will be coming to an end soon??

lostand confused says

Hmm this discussion suddenly reminded me of the Mayan Calender and the year 2012. Isn't it almost the end of 2012 and so the world will be coming to an end soon??

LOL, and the sky is falling. The reason it hasn't landed is that it has such a long distance to fall.

Kevin: "Wage inflation is inevitable."

Nominated for the "Most Clueless Post on Patrick.net 2012" award.

Nice work getting it in before the deadline.

Looks like, the ink on my prediction from yesterday has barely dried, and we are already seeing it come to fruition. At least item #1:

1. Fiscal cliff will be kicked down the road, again.

"Over the weekend, leading Democratic and Republican lawmakers expressed confidence that they could reach a deal to avert the "fiscal cliff", even as they laid down markers on raising taxes and spending cuts that may make any agreement more difficult."

So #1 is already in the pocket. Stay tuned for #2.

dunnross says

CDon says

The Western world has now entered the end of its growth period for this cycle and is entering a roughly 25-year period of economic decline...This is the time when the inflationism of our governments will be balanced briefly by the deflationary forces that, sooner or later, are destined to overtake us."

I don't know what this guy is saying. According to the K-cycle, 70's was summer, which is followed by fall, which is the biggest season of economic boom. Anybody who has been waiting for the decline after summer, hasn't spent enough time to educate themselves on the K-cycle.

My point is, it is only the 2012 interpreters who view the 70s as Kondratieff Summer. The popular reading at the time was we were at the peak of the cycle and headed toward imminent calamity.

In any event, the guy who you are disparaging for "not spending enough time to educate himself" was apparently Julian Snyder, who ran the "International Moneyline" newsletter. In 1976, he wrote this book about Kondratieff Cycles and apparently went so far as to have Kondratieff's works translated from Russian to English.

http://raretradingbooks.blogspot.com/2010/09/economic-key-to-your-investment.html

It further looks like there were a number of authors in the 1970s who suddenly revived Kondratieff's works, and pretty much every one of them were then predicting the 70s as a peak in the cycle.

If all these guys who basically brought Kondratieff to the western world (Guy Daniels, John Shuttlesworth, Richard Russell, Joseph Schumpter, etc) could not predict where we were in the cycle, why do you think you will do any better?

CDon says

If all these guys who basically brought Kondratieff to the western world (Guy Daniels, John Shuttlesworth, Richard Russell, Joseph Schumpter, etc) could not predict where we were in the cycle, why do you think you will do any better?

This is because they didn't consider the grand-daddy of them all, the grand-super-cycle when making their predictions. The grand-super-cycle data was hard to acquire, since it started when there was no wall-street around. Without the grand-super-cycle data, it was easy to get summer confused with winter, and, the outcome could go either way. Now, that we see how it panned out, the grand-super-cycle is the only viable of the 2 alternatives.

dunnross says

This is because they didn't consider the grand-daddy of them all, the grand-super-cycle when making their predictions. The grand-super-cycle data was hard to acquire, since it started when there was no wall-street around. Without the grand-super-cycle data, it was easy to get summer confused with winter, and, the outcome could go either way. Now, that we see how it panned out, the grand-super-cycle is the only viable of the 2 alternatives.

Correct me if I am wrong, but the whole "grand supercycle" idea is a relic of Elliott Wave, not Kondratieff (although many bloggers do seem to confuse the two).

http://en.wikipedia.org/wiki/Grand_supercycle

In any event, this is precicely the objection with these sort of wave analysis. They insist one thing is going to happen, and when it doesnt, they add some further, lengthening, extentionary, data tortured, NEW analysis that shows why the were actually secretly right.

Likewise if the imminent deflaiton long predicted since the 70s doesnt show up by say 2020, they will say there was an EXTRA grand supercycle they failed to consider...oh and now here in 2020, this EXTRA grand supercycle has pretty much run its course so you better stay on the sidelines because its going to reverse itself... any day now...

Incidentally, I believe much of the "supercycle" talk started after Prechter's 1989 peak and "imminent depression" did not materialize in 1990 or 1991 as predicted - all as a way to explain why he was not really "wrong" but to salvage the whole wave explanation of the world.

http://query.nytimes.com/gst/fullpage.html?res=950DE0D61E39F935A35751C0A96F948260

Also, it appears that the Grand Supercycle may not be the "grand daddy of them all" as you suggest. There are others who try to explain why the 1987-1991 calamity didnt happen is because we were in some sort of "X wave" that lasts over 1000 years.

For example, here are some wave practicioners who predict in 1999 that Y2K will be the end of said X wave, bringing in a period of suffering rivaling that of the bubonic plague

http://www.gold-eagle.com/editorials_99/mbutler120299a.html

My favorite is their conclusion where they insist theirs is a "real world" analysis of what Y2K may bring and that they "avoided other possible causes of global doom and gloom favored by some of the more extreme doomsayers and catastrophe prophets"

I think this cycle theory stuff is missing the necessary factors such as which house the moon is in and maybe Mayan calendrical mathematics that would make it a true predictive tool.

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

is the cycle you need to understand

Bellingham Bill says

I think this cycle theory stuff is missing the necessary factors such as which house the moon is in and maybe Mayan calendrical mathematics that would make it a true predictive tool.

Hilariously, it appears that someone has tried just that - integrating the K wave with Mayan prophecy to give us a better understanding of what they are certain will happen:

http://quantumpranx.wordpress.com/2010/07/19/power-seeds-the-k-wave/

Every time someone talks about economic cycles I ask them how many cycles have occurred. The answer is inevitably 1.

Economics isn't a hard science. Anyone claiming otherwise is full of shit.

Darrell In Phoenix says

Don't be silly. There is no inflation without wage inflation.

Well, we are stagflating. Wages stay the same, the cost of everything people need, rent, monthlies for owning, services, tuition, healthcare, food, commuting, gas, all go up, salaries stay the same. We've been here before. Its miserable.

Turning on the printing press only makes consumables cost a lot more, but salaries for the most part are going to stay the same, mainly due to fungibility of work in the globalized world.

Lower standard of living, here we come.

Joy.

To all the doom and gloomers in here: while you worry about the economy I'll be surfing on my cheap used surfboard, hiking in the beautiful mountains here in California, and enjoying my recently purchased REO townhouse that I got for 77% less than what it was sold for in 2006. Gotta run, I have a date with a gorgeous brunette I met in Walgreens 2 days ago. : P

postbubblesucess says

To all the doom and gloomers in here: while you worry about the economy I'll be surfing on my cheap used surfboard, hiking in the beautiful mountains here in California, and enjoying my recently purchased REO townhouse that I got for 77% less than what it was sold for in 2006. Gotta run, I have a date with a gorgeous brunette I met in Walgreens 2 days ago. : P

You are already underwater by at least 6%(RE commission). Feel free to add all other losses and expenses.

postbubblesucess says

To all the doom and gloomers in here: while you worry about the economy I'll be surfing on my cheap used surfboard, hiking in the beautiful mountains here in California, and enjoying my recently purchased REO townhouse that I got for 77% less than what it was sold for in 2006. Gotta run, I have a date with a gorgeous brunette I met in Walgreens 2 days ago. : P

Really! At least you will be making love on a beautiful sandy beach at sunset, while a few of the posters on this site will be raping women. That's how much they hate life.

Love your positive outlook!

How does wage inflation happen? Being an infant the last time it happened in an epic way, I have no personal knowledge. I suspect it would go like this(feel free to correct me): dollar drops vs international currency. This makes American goods and real estate cheap. Landlords take advantage of this to raise rents. Public employee unions lobby for salary increases to cover inflation. Governments raise taxes to cover increased wage payments. High end workers ask for raises. Since their companies are making more money on the international market, they can afford it. Unions negotiate for more and get it for the same reasons. Non union employees, feeling left out, beg and maneuver into higher wages for themselves. The average wage goes up. Housing rises in lock step, assuming interest rates stay constant.
The USA takes in more taxes and acquires a "budget surplus" which it uses to pay some debts.
The public forgets about the crisis.
The next bubble begins to build.
Rinse, repeat.

Quigley says

This makes American goods and real estate cheap.

Problem is a weakening dollar also makes energy imports more expensive.

Plus we'll have to export more food to get the same dollar income, meaning less food here at home, meaning higher food prices. Energy & food is non-core inflation but if they go up then the rest of the economy also takes a hit.

The 1970s did have something of a wage-price spiral going on, as the various oil supply shocks resulted in price increases and then wage increases in response.

But the 2010s are NOT the 1970s.

The economy was adding 2-4 million jobs a year:

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

there's a big hole in that graph but that was due to the Fed fucking with the economy:

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

(red line, right axis is Fed rate)

by jacking up interest rates to 12%.

In percentage terms, job growth was 3-5%:

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

1972-1979

while job growth 2000-now has been -5% to 2%:

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

and that 2% growth was coming from the mother of all mortgage credit bubbles pumping a $1T into the consumer economy.

The Great Recovery 2009-now has shown ~1.5% job growth.

But we're still 4M jobs down from the 2008 peak:

http://research.stlouisfed.org/fred2/graph/?g=cZ1

and a lot of the jobs we have now are crappier than 2008.

This nation is so, so fucked.

Another reason the 2010s are not the 1970s is that the baby boom was aged 11 to 29 in 1975 and in 2015 they will be aged 51 to 69.

Can you spot the difference?

Now, in some ways the baby boom edging off into retirement will be VERY stimulative to the economy. TONS of jobs being opened up by their retirement, and also TONS of jobs being created by their new demand -- in health and other services they will command.

This will throw a lot of velocity into the economy and might make things better than I expect. We'll probably just keep raising the debt ceiling trillions at a time and borrowing to pay for all of this, with the Fed doing their part with their $40-$50B/mo monetary expansion, and that's how inflation will keep going.

War says

Worse yet, adjusted per capita wages are at 30 year lows.

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

is real (2012) per-capita wages.

Now, this is deceptive due to the increasing L-curve of wages being shifted to the upper decile and percentile I guess.

There are literally thousands of ways that the 2010s aren't the 1970s. So much so that it's extraordinarily difficult to draw conclusions based on what happened in the 70s.

As it turns out, there really aren't any patterns in economics. Each period is different, for different reasons. New technologies, wars, cultural shifts, politics, demographics, disease, and so many other factors contribute to the result.

Anyone claiming certainty about what will happen over the next 10 years is probably trying to sell you a book. Even if they're right about the direction, they're most likely way off about the magnitude. The number of people who have accurately predicted a major economic trend more than once is incredibly small...possibly zero. Many blowhards claim that they have, and yet they've never profited from such accurate powers of prediction for some reason.

Bellingham Bill says

Now, in some ways the baby boom edging off into retirement will be VERY stimulative to the economy. TONS of jobs being opened up by their retirement,

The average baby boomer without a company plan has 32k in retirement savings, with a company plan 88k. That is a whole 6k a year for average lifespan. With that kind of nest egg when do you suppose they will be retiring and opening up all these jobs?

Kevin says

here really aren't any patterns in economics. Each period is different, for different reasons. New technologies, wars, cultural shifts, politics, demographics, disease, and so many other factors contribute to the result.

No kidding. I just read in this morning's WSJ, 2nd consecutive year of Japanese trade deficit. Mainly because of an offshore earthquake causing a tsunami, and political discord with China.

Put that on your quant extrapolations.

bob2356 says

Bellingham Bill says

Now, in some ways the baby boom edging off into retirement will be VERY stimulative to the economy. TONS of jobs being opened up by their retirement,

The average baby boomer without a company plan has 32k in retirement savings, with a company plan 88k. That is a whole 6k a year for average lifespan. With that kind of nest egg when do you suppose they will be retiring and opening up all these jobs?

When they turn 65 and can get social security and medicare.

It won't have any real impact on the jobs market though.

Gold:
It's in a standard consolidation that's happened at least 3 times since 2001. It's just now entering the timing band to break out again.

K-cycle:
Yes I thought they were the length of a human life. I don't where people got the 70s from.

Points 1-7:
Everyone will think all those things are going to happen, causing the dollar to tank and gold to explode for a couple years. In the end only the minor ones will happen this time... Several year consolidation, solidify another level lower living standards level for all. Then come some more off the list, and then worse than the list. Rinse, Repeat for a decade or two.