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Discussion: (24 comments)

  1. In a post last Friday titled “The Case for Optimism,” Scott Grannis featured 18 charts that support the case for a recovery, mostly for the US economy. This post and chart above suggest that the economic recovery is clearly a global phenomenon.

    You have a Fed that is printing more than $1 trillion a year to prop up the bond and housing markets and an economy that is dependent on low rates. As more money and credit are created the newly created purchasing power floods into various markets and distorts those markets. Bubbles are formed and those bubbles create new risks for those who don’t see what is going on. The last time the labor participation rate was as low as today rates were in the double digits and Volker was limiting the money supply. The number of people and the percentage of people on food stamps has never been higher. Neither has debt or the deficits. Housing is still well below the level it reached eight years ago. The prices for food and gasoline are rising. New graduates are saddled with massive amounts of debt and cannot find jobs. Around 80% of all individual tax revenues are diverted to fund military related activities that are bankrupting the nation. The states and cities are going broke. The EU is on the verge of falling apart and Chinese growth has slowed significantly. The Middle East is destabilising and governments around the worth are thrown out of office by desperate voters looking for a solution.

    1. ” The number of people and the percentage of people on food stamps has never been higher.”

      I don’t really disagree with your other points, but it’s worth noting that since day 1 the Obama administration has actively worked to hook more people on government handouts. Food stamp eligibility was expanded as part of the stimlulus and the allotments increased. The USDA has even run commercials(created by marketing firm paid with taxpayer $) on Spanish radio stations to entice immigrants, legal or illegal, to sign up. The Obama administration has had several meetings with Mexican government officials to coordinate “food stamp awareness.”

  2. Jon Murphy

    The pick-up in the global Industrial Production is very much a good thing, especially more so that the world economy is so much more integrated than it was even just 20 years ago.

    Just to break it down into some major countries’ numbers (all numbers are year-over-year):

    US: 3.3% Trend: Ongoing but slower growth
    EU: -2.1% Trend: Decline
    Brazil: -1.9% Trend: Recovery
    Russia: 2.2% Trend: Ongoing but Slower Growth
    India: 0.9% Trend: Re-accelerating growth
    China: 10.0% Trend: Reaccelerating growth (tentative)
    SE Asia (includes Korea): 1.9% Trend: Reaccelerating Growth
    Japan: -1.4% Trend: Decline

    As we can see, of the major countries/areas, all but two (EU, Japan) are growing. Brazil has reached the bottom of their trough. Asia is seeing reaccelerating growth. The US is still growing, albeit at a slower pace than 2012.

    1. thank god for china…

  3. Either the US gets away from its thirty year supply sided trickle down floats all boats propaganda or it is doomed. China is using demand side policy and is kicking our butts with it. China is becoming what the US was fourty to fifty years ago “an expanding middle class”. The Chinese regime understands one fact well,a middle class equals civil and political stability. No middle class equals civil and social unrest.Unfortunately the US is now resembling an oligarchy,and the people are just starting to figure out the great theft that has been forced upon them from the elite upper class. Oh we have a deficit we must slash food stamps,we must cut so called entitlements to the bone. Take away what is left on the bone for the lower classes and you will see the consequences. When the people get hungry enough they will come to eat the rich,and take back their birthright. Be warned the swarm is coming and they are very hungry!

    MP: Don’t forget the spaces between sentences.

    1. Jon Murphy

      I am marking this so when the China bubble bursts in a spectacular fashion in, oh, about 3-5 years, I can laugh my ass off.

      The Chinese regime understands one fact well,a middle class equals civil and political stability.

      So, then, why is there so much instability in China?

      When the people get hungry enough they will come to eat the rich,and take back their birthright. Be warned the swarm is coming and they are very hungry!

      Spoken like a true Communist. Well done, sir.

    2. Jon Murphy

      And another question. I apologize as I am taking this off-topic, but I’ve always wanted to ask this:

      Why do you portray the lower class as violent? I mean, if your goal is to get the “elite upper class” to help out the poor more, wouldn’t it make more sense to not describe them as violent animals? I mean, if I was told “You need to help these people because otherwise they will eat you” I’d be like “Forget that, I’m buying guns. No way am I turning into a zombie.”

      I mean, this type of rhetoric makes no sense and does nothing to advance your cause. Unless, you do actually believe the lower class to be a pack of animals, and only money makes a man?

      1. Jon,

        “Why do you portray the lower class as violent?”
        But most violent crime does come from the lower classes. They mostly kill each other. Would you be more afraid of walking through downtown Detroit or, say, north Scottsdale?

        1. Jon Murphy

          I’m not sure it’s fair to say “most” violent crime comes from the poor. It may be, but I’m not sure.

          Besides, that wasn’t what I was saying. The rhetoric that Kevin and most extreme leftists use implies that the poor are animals. They all are violent. I don’t believe that one’s nature is determined by the size of his bank account.

          1. morganovich

            jon-

            to play devil’s advocate here (which is always fun with deacons) what if the causality is reversed?

            while one’s nature may not determined by ones bank account (though there is always going to be a certain amount of “where you stand depends on where you sit”) perhaps one’s bank account to a great extent determined by one’s nature.

            if one is diligent, trustworthy, etc, it does not seem like a stretch to assume that they might do better than a lazy individual, all else equal.

            if it is not poverty that causes moral lassitude, but rather, moral lassitude that causes poverty, then the correlation might still hold despite bank account size not determining nature.

            this seems like one of the pivotal challenges with a lot of these demographic arguments. does using drugs tend to make you poor and or prone to other sorts of criminality or is there some other factor like poor moral grounding or some personality factor that makes you likely to use drugs, steal, and unlikely to work hard?

          2. morganovich

            eg.

            let’s say you have poor impulse control and are unwilling to work hard.

            you probably do poorly in school. you are more likely not to graduate. perhaps this predisposed you to use drugs, to commit petty crime, and makes you unwilling to find and hold down jobs.

            all these effects look highly correlated and you can pick any 2 and try to imply causality, but, really, they are all just effects of your character.

          3. Jon,

            I don’t think it’s disputable. The most crime-ridden areas are the poorest. At least that’s the case everywhere I’ve been or read about.

            “The rhetoric that Kevin and most extreme leftists use implies that the poor are animals. They all are violent.”

            That’s true. And then without missing a beat they’ll tell you the poor are all victims. They’re kept down by The Man who is hogging all the wealth for himself.

          4. Paul

            That’s true. And then without missing a beat they’ll tell you the poor are all victims. They’re kept down by The Man who is hogging all the wealth for himself.

            Well of course! wouldn’t you be upset if others shouldered you away from the trough so you were denied your absolute right to decent housing, a good job, food, medical care, etc.? :)

            Never mind that someone else must be forced to provide you with those things.

          5. Jon Murphy

            Morganovich:

            The causality may very well be reversed. You may be right Moral lassitude may very well be a cause of poverty. I am hesitant to think so, however, because there are just as many rich scumbags as there are honest, hardworking poor people. I mean, ultimately, it comes down largely to skill. If your only marketable skill is to take up space, you’ll likely be poor, no matter how hard you work.

            But you are right. This is a challenge in demographic arguments and why I don’t like them. There really is no “class.” There are just individuals. There is no “us vs them.” There is just “us.”

            Paul:

            Poverty-ridden areas do tend to be crime ridden. But I don’t know if they are necessarily more violent. Maybe it’s just better documented.

            Now, this is just a thought and I have no hard evidence to back this up, so take it for what it’s worth: what if suburbia crimes aren’t just as well reported as inner-city? Maybe, because the cop presence is heavier in the inner city, they are more likely to spot and document violent crime than in suburbia, where the cop presence is lesser?

            Like I said, just a thought.

          6. You are correct. Individuals act; classes don’t. That said, it is clear that members of the lower classes tend to be more violent and commit more petty crimes. Individuals from the upper class (think bankers) steal much more but do so legally because they get to write the laws.

          7. Jon,

            “what if suburbia crimes aren’t just as well reported as inner-city?”

            Like murder? Does that really sound plausible? If anything, I would bet crimes are under-reported in the inner-city because of the “no snitch rule.”

            http://www.npr.org/templates/story/story.php?storyId=102353811

            Again, would you be more afraid of walking through downtown Detroit or north Scottsdale(I live in Az, but pick any upper income area) ?

          8. Jon Murphy

            I’ve never been to Detroit, but I would follow the same rule as wherever I am: don’t make yourself a target and move with a group.

            Would I feel more comfortable walking by myself in Scottsdale? Probably. But I walk alone through South Boston and Dorchester and Roxbury, but I know those areas.

          9. Jon Murphy

            Oh Morganovich:

            I forgot to mention. I don’t like people calling me “deacon.” I prefer “His Holiness”

          10. I forgot to mention. I don’t like people calling me “deacon.” I prefer “His Holiness”

            Isn’t that title already in use elsewhere? Can there be multiple “His Holinesses”?

            Hmm. My spell checker doesn’t think so.

          11. Jon: “ Maybe, because the cop presence is heavier in the inner city, they are more likely to spot and document violent crime than in suburbia, where the cop presence is lesser?

            I’ve heard cops say they go fishing where the fish are.

            Or perhaps you are suggesting that the cop presence creates more crime.

            On a serious note, I don’t think people living in suburbia would tolerate the levels of crime seen in inner cities. If nothing else, people in wealthier neighborhoods spend more to provide their own security. When seconds count, the police are only minutes away.

          12. morganovich

            your jonnyness-

            i think you may still be finessing the question here. how does one acquire skill? generally through diligence and practice. sure, there are talents too and not everyone has equal gifts, but, for any give state of talent and gifts, you are more likely to acquire skills and succeed if you are diligent and conscientious.

            this all plays out as likelihoods and any given individual can buck the general rule, but by and large, it does out.

            being lazy, irresponsible, and entitled is a real driver of poverty. it’s not the only one, to be sure, but i think it’s pretty much impossible to argue that your economic and social achievement is not strongly impacted by your character.

            it’s far too complex a system to try to work in reverse and say “oh, you are rich and thus must have good character or poor and must have bad” (or have had it in another life if the shockingly repressive old school Buddhists are to be believed) , but, in general, those with poor character are less likely to succeed.

            sure, some jerk nephew of the boss can get an insurmountable leg up and still succeed, but such is the exception, not the rule, and the less you start with, the more important things like character would seem to be.

            i fear we have, as a society, really tried to bury this fact under an avalanche of ‘nothing is anyone’s fault” thinking, but that does not make it go away.

            i’m not sure how you get to the “no us vs them” conclusion though. while action is, to be sure, performed by individuals, individuals tend to form groups and act in concert on that basis and this becomes very powerful when the ballot box can be used to redistribute things.

            “we” who feel we do not earn enough demand money from “them” who we think have too much.

            “we” who dislike X demand that “they” be forbidden from doing it.

            we seem to have an awful lot of us v them thinking just now in the us.

    3. “China is becoming what the US was fourty to fifty years ago “an expanding middle class”.

      Rigggght. Yes, your Iphone was made by a middle class Chinese guy who leaves his nicely manicured 3 bedroom house in the suburbs each morning after kissing his wife goodbye and rolls into Foxconn:

      http://www.nytimes.com/2012/09/11/technology/foxconn-said-to-use-forced-student-labor-to-make-iphones.html?pagewanted=all&_r=0

    4. morganovich

      kevin-

      china is using demand side policy? what color is the sky on your world? china is using state supported supply side drivers. their actual consumption is very low. their whole gdp is being driven by I, not C, and the signs appear to portend that it is not just I but over I. like jon, i think it’s a bubble and that their economy is essentially a potemkin village that will fall to bits as passing their lewis point really bites on their cost advantages.

      and if you think the US is currently pursuing supply side economics, then you are either hopelessly deluded or do not know what these terms mean.

      taxes and federal spending are up. the tax base has become incredibly slanted and concentrated and the % paying no fed income tax is up from 14% to around 50%. we have wildly loose money and have seen stimulus after stimulus.

      this is the opposite of supply side. we are back into the keynsian morass.

      you need to get off that soapbox and over to the econ library. you do not seem to even understand the terms you are using or the facts of the situation.

  4. Michael W. Ehlinger

    According to the recently released San Antonio Chamber of Commerce 2012 3rd quarter report, global trade and industrial production were increasing at about 6% per year from 2004-2008, followed by a 14% decrease in 2009, a 10% increase in 2010, an 8% increase in 2011, and a 2% increase in 2012. This would appear to indicate a weakening recovery, and not something to be particularly optimistic about.

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