DOW at new record

[TPS]

 

 

Oh, so the payroll tax increase affected fourth quarter GDP. Okey dokey

It was my projection for 2013 denso.

[GG]

that's what you get from that graft? not that commodities started rising in 2003 hit peaks 2008 then crashed and have been moving up to pre-crash levels? so now the rise is just QE so what caused the rise in commodities before ( the economic rise of China, India and the rest of the developing world) or was that QE too?

 

Uhm, yeah. The global growth expectation pre-2008 was much greater than it is now. So what would you attribute the commodity rise and the equities rise, if growth expectations are still muted? If our resident professor was blaming speculators for the commodity spikes pre-2008, wouldn't they be the prime culprit now, especially armed with virtually free money?

[Magox]

It was my projection for 2013 denso.

 

A few months ago I suggested that the economy was gaining strength (which was why I said bullish bets were pushing up oil prices), but that didn't sit well with Obama haters. Despite the payroll tax increase and the recent cuts, the economy seems to have some decent momentum independent of stupid policies from both sides...

 

Hold on a second, so a few months ago you saw the economy was gaining strength despite the flat GDP growth? Dude, you're not making any sense.

 

Uhm, yeah. The global growth expectation pre-2008 was much greater than it is now. So what would you attribute the commodity rise and the equities rise, if growth expectations are still muted? If our resident professor was blaming speculators for the commodity spikes pre-2008, wouldn't they be the prime culprit now, especially armed with virtually free money?

 

You are going up against a brick wall here, this is the point that I made to both of them, and they were both incapable of comprehending this point. Global growth is much weaker today than it was then, yet commodity prices are considerably higher. But yeah, easy money policies has nothing to do with it. Morons

[TakeYouToTasker]

Starting from the low number justifies his world view. You won't change that.

So you've moved on from hackery to outright lies? As I've pointed out before, I didn't start from the bottom of the market. Had I done that, I'd be referrencing 45% inflation instead of 36%.

 

GG has the right of it. Economic activity is stunted to levels well below the pre-crash marketplace. What forces are accounting for the rise in commodity prices if it isn't a robust gloabal economy spurring demand?

[....lybob]

Uhm, yeah. The global growth expectation pre-2008 was much greater than it is now. So what would you attribute the commodity rise and the equities rise, if growth expectations are still muted? If our resident professor was blaming speculators for the commodity spikes pre-2008, wouldn't they be the prime culprit now, especially armed with virtually free money?

while growth expectations may be lower now, China, India, and other developing nations have grown in absolute terms and are using more commodities - yes much Europe has stagnate growth or even a shrinking GDP , The UK is having a rough time , Japan is floundering , and the US can't take off- the big question is can China hold on or will they crash like people have been predicting for 30+ years because if you like cheap commodities and China crashes you'll have your wish- China goes and Australia, Russia, Brazil, Iran, much of Africa and Canada take a hit , American and German car companies lose 15% of their sales on the plus side maybe we'll see 3 dollar gas again on the minus side it's more likely that's the moment they chose to bomb Iran.

[Magox]

The professor is one of the few "economists" on this planet, that believes that currency devaluation doesn't lead to higher commodity inflation. It is basic economics 101, you devalue a currency, the price of commodities tend to go up. Facts be damned! Who cares that growth rates are slowing and supply is increasing, yet prices are steadily rising.

 

 

 

It's almost unfathomable how someone who purports to understand the economy, doesn't understand this basic principle.

 

Prices are rising for a number of reasons, but the long-term trend is for two main reasons, global growth and monetary policy. Global Growth along with dollar devaluation led us to an explosive rise pre 2008. Ever since then Growth has lagged, yet the price of commodities have either risen or remained elevated. Coincidentally, we've seen the augmentation of currency devaluation policies through out the developed world.

 

If growth was still relatively strong, we would see an explosive rise in commodities, but we don't. So the main engine of commodity price growth is coming from monetary policy. If Growth remained where we are today, and monetary policy were to tighten considerably, then I guarantee you that the price of commodities would drop off sharply.

[TPS]

Hmmm....someone just decided to agree with my prediction....

http://www.bloomberg.com/news/2013-03-08/gross-raises-u-s-economic-growth-forecast-to-3-in-2013.html

[Magox]

There does seem to be some sort of underlying strength in the economy, today's job reports was pretty positive. Without a doubt rising stocks and home prices are helping out as Gross suggests. We'll see how these additional taxes and cuts will play out... Also, there are questions to the sustainability of the rise in equities.....People see their 401k's and home prices rise, they feel richer and therefore spend more. However, there is evidence that the additional spending coming from the economy comes at the expense of savings. That is not a good sign. So we'll see how things play out.

[TPS]

There does seem to be some sort of underlying strength in the economy, today's job reports was pretty positive. Without a doubt rising stocks and home prices are helping out as Gross suggests. We'll see how these additional taxes and cuts will play out... Also, there are questions to the sustainability of the rise in equities.....People see their 401k's and home prices rise, they feel richer and therefore spend more. However, there is evidence that the additional spending coming from the economy comes at the expense of savings. That is not a good sign. So we'll see how things play out.

That is so totally wrong-headed. Edited March 8, 2013 by TPS

[Magox]

That is so totally wrong-headed.

Wow! So you think increased household spending, with stagnant incomes, which comes at the expense of personal savings is a positive?

 

It's not

 

[TPS]

 

Wow! So you think increased household spending, with stagnant incomes, which comes at the expense of personal savings is a positive?

 

It's not

Since the primary need/goal is growth and deficit reduction, household spending generates sales, and sales generate jobs, and jobs generate taxes.

[dayman]

silly Magox....savings is for Asian countries

[TPS]

silly Magox....savings is for Asian countries

You can't have high private sector savings without having either a high public sector deficit and/or Balance of Trade surplus.

Any countries with significant private sector savings will have one or both of those conditions.

 

In the US, since the crisis began, private sector decisions to save vs spending is the main cause of high public sector deficits, and our trade deficit also contributes (causes) to the public sector deficits. This is why Magox if "fundamentally wrong."

[TakeYouToTasker]

The above post is one of the central flaws with Keynesian thought.

 

Spending and debt are not a practical substitute for savings at the micro level. The aggregate doesn't have to consider ageing, or sending it's kids to college, or paying it's bills.

 

Your disregard of individual human motivation in favor of abstract modeling is absurd.

[Magox]

Since the primary need/goal is growth and deficit reduction, household spending generates sales, and sales generate jobs, and jobs generate taxes.

This is a perfect example that you belong to a failed economic orthodoxy.

 

Whether its on a government or personal household level your only one trick pony solution is to spend more. Doesn't matter the external circumstances, if we are facing structural issues, your prescription is to spend more. If families are facing declining wages relative to inflation, your solution is to spend more. That's all you have to offer, spend spend spend. I just hope that you aren't in a position to where you are teaching young, impressionable minds, because if you are, you are dangerous and destructive.

 

We've already proven that Krugman was wrong on his policy prescription of Keynesian spending to get us out of this downturn, which you fully supported. We have stagnant growth and the lowest labor participation rate in over three decades. So you were wrong on that.

 

Now on a personal household level, we are seeing wages decline relative to inflation, increased personal spending and the loss of savings and you say this is what is needed? In a healthy economy you will see steadily increasing wages, savings and spending. Right now only one of three is what we are seeing. It's unsustainable, if savings continue to decrease, which they will IF spending continues on pace while seeing the same trend in wages, then at some point spending will slow down because of the exhaustion of personal savings. At this current trajectory, all we are doing is borrowing future spending, with risks attached to it. Of course the other nasty side effect of the depletion of savings is increased personal household debt. There are many risks associated with this.

 

One of the flaws of your failed economic orthodoxy was fully exposed during the banking melt down, which was personal household debt imploded. People racked up so much debt and personal savings was so low that when the **** hit the fan, people were !@#$ed. Personal savings rates have been declining since the late 80s and really began to plummet in the 90s, which left households more vulnerable to shocks in the economy than what would have been the case if we didn't have such an insatiable appetite to consume.

 

I'm not saying spending is a bad thing, what I'm saying is that if we have an economy that has declining wages relative to inflation, that it is a risky and ultimately harmful development to see increased spending at the expense of savings rate. It doesn't surprise me one bit that you are incapable of seeing the risks that I'm attempting to explain to you. I mean lets not forget that you were trying to explain to me about the oil markets and you didn't even know the impacts of spare oil capacity has on prices. Or that you don't even know the basic concepts of the relationship between currencies and commodities.

 

Your problem is that you are a rigid economic ideologue, and when I use the term orthodoxy, it applies in every sense of the word when it comes to you, because its basically become a religion to you, founded on faith. The faith that spending cures all ills. You don't have a pragmatic bone in your body, professor.

 

I on the other hand am not opposed to spending or austerity on either a government or personal household level. I'm not opposed to higher or lower taxes depending on the situation. I'm not for or opposed to devaluing currencies or tight or loose monetary policy. I dont believe all regulations are bad and do believe they have a place in our economy. However you are virtually always for more spending, higher taxes and increased regulation. This makes you a prisoner of your ideology.

Edited March 9, 2013 by Magox

[TPS]

This is a perfect example that you belong to a failed economic orthodoxy.

 

Whether its on a government or personal household level your only one trick pony solution is to spend more. Doesn't matter the external circumstances, if we are facing structural issues, your prescription is to spend more. If families are facing declining wages relative to inflation, your solution is to spend more. That's all you have to offer, spend spend spend. I just hope that you aren't in a position to where you are teaching young, impressionable minds, because if you are, you are dangerous and destructive.

 

We've already proven that Krugman was wrong on his policy prescription of Keynesian spending to get us out of this downturn, which you fully supported. We have stagnant growth and the lowest labor participation rate in over three decades. So you were wrong on that.

 

Now on a personal household level, we are seeing wages decline relative to inflation, increased personal spending and the loss of savings and you say this is what is needed? In a healthy economy you will see steadily increasing wages, savings and spending. Right now only one of three is what we are seeing. It's unsustainable, if savings continue to decrease, which they will IF spending continues on pace while seeing the same trend in wages, then at some point spending will slow down because of the exhaustion of personal savings. At this current trajectory, all we are doing is borrowing future spending, with risks attached to it. Of course the other nasty side effect of the depletion of savings is increased personal household debt. There are many risks associated with this.

 

One of the flaws of your failed economic orthodoxy was fully exposed during the banking melt down, which was personal household debt imploded. People racked up so much debt and personal savings was so low that when the **** hit the fan, people were !@#$ed. Personal savings rates have been declining since the late 80s and really began to plummet in the 90s, which left households more vulnerable to shocks in the economy than what would have been the case if we didn't have such an insatiable appetite to consume.

 

I'm not saying spending is a bad thing, what I'm saying is that if we have an economy that has declining wages relative to inflation, that it is a risky and ultimately harmful development to see increased spending at the expense of savings rate. It doesn't surprise me one bit that you are incapable of seeing the risks that I'm attempting to explain to you. I mean lets not forget that you were trying to explain to me about the oil markets and you didn't even know the impacts of spare oil capacity has on prices. Or that you don't even know the basic concepts of the relationship between currencies and commodities.

 

Your problem is that you are a rigid economic ideologue, and when I use the term orthodoxy, it applies in every sense of the word when it comes to you, because its basically become a religion to you, founded on faith. The faith that spending cures all ills. You don't have a pragmatic bone in your body, professor.

 

I on the other hand am not opposed to spending or austerity on either a government or personal household level. I'm not opposed to higher or lower taxes depending on the situation. I'm not for or opposed to devaluing currencies or tight or loose monetary policy. I dont believe all regulations are bad and do believe they have a place in our economy. However you are virtually always for more spending, higher taxes and increased regulation. This makes you a prisoner of your ideology.

Read my other post. You obviously don't understand basic economic balances.

 

Regarding capacity, that's such a basic overall economic concept in pricing that it wasn't worth responding to. The general level of (under) capacity utilization in the US economy is the reason I've constantly argued there will be no macro inflation.

 

Re dollar and oil, I understand there is a relationship, I've done the correlations, and I resonded to that a year or so ago. Since the 1970s, there have been periods of negative correlation and periods of positive correlation. Your explanation can't fit those facts.

 

Someone who is not pragmatic can't exlain reality. I think I have a pretty good track record in my predictions. You pooh-poohed my prediction that the economy was gaining strength until your guru jumped on the bandwagon. While I still think we'll do well overall this year, I'm not sure we wont' see some bumps from spending cuts--there I go again....

[Magox]

Read my other post. You obviously don't understand basic economic balances.

 

Regarding capacity, that's such a basic overall economic concept in pricing that it wasn't worth responding to. The general level of (under) capacity utilization in the US economy is the reason I've constantly argued there will be no macro inflation.

 

Re dollar and oil, I understand there is a relationship, I've done the correlations, and I resonded to that a year or so ago. Since the 1970s, there have been periods of negative correlation and periods of positive correlation. Your explanation can't fit those facts.

 

Someone who is not pragmatic can't exlain reality. I think I have a pretty good track record in my predictions. You pooh-poohed my prediction that the economy was gaining strength until your guru jumped on the bandwagon. While I still think we'll do well overall this year, I'm not sure we wont' see some bumps from spending cuts--there I go again....

 

bull **** on all accounts. You weren't aware of excess spare capacity and its affects on pricing, you don't understand the relationship of currencies and commodities and you subscribe to a failed rigid economic orthodoxy

 

A few months ago I suggested that the economy was gaining strength (which was why I said bullish bets were pushing up oil prices), but that didn't sit well with Obama haters. Despite the payroll tax increase and the recent cuts, the economy seems to have some decent momentum independent of stupid policies from both sides...

 

Also what I "pooh poo'hd" on wasn't your projection, I never made mention of it, what I criticized was your statement that the economy a few months ago was "gaining strength". There is a difference. Which was why I referenced 4th quarter GDP.

 

Not only do you not understand the basic principles of excess spare capacity, the relationships of currencies with commodities and basic math, but now we can add basic reading and comprehension to the list.

Edited March 9, 2013 by Magox

[TPS]

 

bull **** on all accounts. You weren't aware of excess spare capacity and its affects on pricing, you don't understand the relationship of currencies and commodities and you subscribe to a failed rigid economic orthodoxy

 

Also what I "pooh poo'hd" on wasn't your projection, I never made mention of it, what I criticized was your statement that the economy a few months ago was "gaining strength". There is a difference. Which was why I referenced 4th quarter GDP.

 

Not only do you not understand the basic principles of excess spare capacity, the relationships of currencies with commodities and basic math, but now we can add basic reading and comprehension to the list.

Yes, yes, whatever you say must be true....

[....lybob]

Geez I think I remember TPS making the point that businesses were running at slightly under 70% of capacity and thus the "too much money chasing too few goods" meme portending some near term hyperinflation was invalid.

[Magox]

Geez I think I remember TPS making the point that businesses were running at slightly under 70% of capacity and thus the "too much money chasing too few goods" meme portending some near term hyperinflation was invalid.

 

Hyperinflation? Link?

 

We get it, you are also a denier that the devaluation of currencies have contributed to higher prices.

 

Any "economist" worth their salt would agree with that. You and professor dingbat on the other hand believe that currency devaluation hasn't had an appreciable affect on prices. You guys are wrong and its as simple as that.

 

 

There is no middle ground with you ideologues, it's either all or nothing.

 

Also, the spare capacity reference is to excess OIL spare capacity.

 

But thanks for playin

Edited March 9, 2013 by Magox