Discussion of Housing Bubble, US Dollar, Debt, Trade Deficit, Oil, Gold, Consumer Spending, Central Banks, Inflation, Outsourcing and the Bleak Future of the US economy
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Not worse than the Great Depression, but possibly worse than the American Revolution
MUST WATCH!
posted by Randy @ 7:23 PM
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****HOME--MAIN BLOG PAGE**** I’m 44yrs old, retired from the USAF & manage a Telecomm organization. I have been writing about our bubble economy since 2005 & many of today’s economic events were actually anticipated and forewarned of. You should know that the U.S. Housing Bubble was only the latest symptom of much larger fundamental economic imbalances that have been building for decades - due to poor monetary and policymaking decisions. With that, I personally feel a major economic transformation is taking place right before our eyes & the prosperous “good life” that we’ve enjoyed in the US is ending. I have unrelated Telecom Eng. & Eng. Mgnt. Degrees, but have spent many thousands of hrs studying economic issues – providing me with a strong understanding of “the big picture” *****Disclaimer***** These articles reflect the opinion of this author and are by no means a guarantee of future economic conditions. Additionally, these articles are provided for INFORMATIONAL PURPOSES ONLY and are NOT MEANT to provide investment advice to anyone. For investment advice, please consult with your professional financial planner
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7 Comments:
I believe the people of the world are being put in a position of having no choice but to agree to the solution that will come in due time or face persecution as a trader and enemy combatant to the well being of the world. One that I will not partake in.
Traders Double Down on Puts in Casino Firms
Casino stocks plunged to lows, and few traders appeared willing to bet on a near-term rebound.
http://online.wsj.com/article/SB122481248622765421.html?mod=googlenews_wsj
Kerkorian's Troubles: Beyond MGM and Ford
He used his MGM stake to make his big bet on Ford, but an ill-starred Vegas megaproject has him on his heels
http://www.businessweek.com/magazine/content/08_44/b4106046089022.htm
For what it's worth, I transcribed most of Taleb's conversation (only a bit of Mandelbrot's) to help overcome the strong accents - “I don’t know if we are entering the most difficult period… not (even) since the Great Depression, since the American Revolution.”
“The banking system, the way we have it, is a monstrous giant built on the feet of clay, and if that topples, we’re gone. Never in the history of the world have we faced so much complexity combined with so much incompetence in understanding these properties.”
“Let me tell you why it’s not like before. Looks what’s happening: the world is getting so fragile that a small shortage of oil can lead to a price going from $25 to $150… A small excess demand of an agricultural product can lead to an explosion in price. We live in a world that is way too complicated for our traditional economic structure; it’s not as resilient as it used to be. We don’t have slack; it’s over optimized.”
“Let me tell you what is happening in the ecology of the banking system. They’re swelling the large banks because it’s more optimal to have one large bank than ten small banks; it’s more efficient. And, that consolidation is putting us at risk because one large bank makes a mistake it’s ten time worse than a small bank making a mistake.”
Mandelbrot says, “Turbulence is common to physics and social science. Everything which involves turbulence is enormously more complicated, not just a little bit more complicated.’
(Economic turbulence) “is not well understood. In fact it is misunderstood, for which tools have been developed which assume that changes are only very small. If one of them comes, nothing bad happens; if several of them come together, very bad things happen and the theory does not take account of that. And the theory does not take account of very large and sudden changes in anything. The theory thinks that things move slowly, gradually and can be corrected as they change. In fact, they may change extremely brutally.”
Taleb says, “Now you understand why I am worried. I hope that I am wrong. I wake up every morning… actually, I don’t wake up every morning now, I start to wake up at night the past couple of weeks hoping that I’m wrong… begging to be wrong. I think that we may be experiencing something that is vastly worse than we think it is.”
Solmon says, “And, we think it’s pretty bad.” Taleb counters, “It’s worse.” All the books you read on globalization, they talk about efficiency, all that stuff… the network effect of globalization, ok, means that a shock in the system can have much larger consequences.”
“I am convinced that the package, recently, of $700 billion is pocket money because they don’t understand the ripple effect Hedge Funds have, ok, that the banks not lending to Hedge Funds would force hedge funds to liquidate positions … sell off positions. These positions sold off by Hedge Funds will impact other entities, driving down the price. (For instance) a supermarket, ok, needing funding would not be able to find a bank solvent enough to lend them money against inventory to make payroll. Ok, you may have chain reactions never imagined before. And, these come from the intricate relationships of a system we don’t understand.”
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I do not think economic conditions are as bad as the great depression.
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