"Fear mongering" OR Reality?

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Davos's picture
Davos
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"Fear mongering" OR Reality?

Link

"John Williams site leans a bit toward the fear mongering side."

Link

Let me recount two personal experiences. Back in late-1989, I contended that the U.S. economy was in or headed into a deep recession. CNBC had me in to discuss my views along with a senior economist for a large New York bank, who was looking for continued economic growth. Before the show, the bank economist and I shared our views in the Green Room. I outlined my case for a major recession, and, to my shock, his response was, 'I think that pretty much is the consensus.' 

We got on the air, I gave my recession pitch, and he proclaimed a booming economy for the year ahead. He was a good economist and knew what was happening, but he had to put out the story mandated by his employer, or he would not have had a job. 

More recently, following an interview on a major cable news network (not CNBC), I was advised off-air by the producer that they were operating under a corporate mandate to give the economic news a positive spin, irrespective of how bad it was." 

John Williams, Shadow Government Statistics

In Summary: As ugly as the economic situation is, I refuse to operate under a delusional personal mandate that gives the economic news a positive spin. I'm amazed how people discredit genuine information, label those who bring it as fear mongers or like BM's piece 'bunker loons'.

And oh by the way, this is a must read.

Trinity's picture
Trinity
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Re: "Fear mongering" OR Reality?

Censor-matic

 

 

machinehead's picture
machinehead
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Re: "Fear mongering" OR Reality?

Good find, Dr. D -- the Calculated Risk article about sovereign debt. It covers similar ground to Rogoff and Reinhart's This Time Is Different, but using other sources. A quote and a chart from part 1 of the article:

Debt issued by governments worldwide is immense. According to the Bank for International Settlements, at year end 2009 worldwide sovereign debt exceeded $34 trillion, and is greater than the amount of corporate bonds outstanding. 

Japan and the US dwarf most other borrowers. Together they have about half of all sovereign debt worldwide. Still, 23 other countries have over $100 billion of debt outstanding. The other 100+ countries worldwide have a total debt of about $1.4 trillion.

For the US, figures include public holdings of Treasuries, but not Fannie Mae or Freddie Mac (about $8.1 trillion year end 2009, per BIS), or the “intragovernmental holdings” of Social Security, Medicare, the Civil Service Retirement Fund, etc. (about $4.5 trillion year end 2009, per US Bureau of Public Debt).

http://www.calculatedriskblog.com/2010/07/how-large-is-outstanding-value-of.html

Japan's case is stunning. It has a similar debt level to the U.S., piled onto a population only 40% as large. Only Japan's trade surplus (meaning that it is not dependent on imported capital), insular investors, and fractional interest rates make its debt level tolerable.

But as Sidney Homer demonstrated with his 'bathtub curves' in A History of Interest Rates, low interest rates never last. A war comes along, or an oil shock, and rates shoot up.

When Japanese interest rates rise even modestly -- two or three percentage points -- debt default is inevitable. Japan is our 'canary in the coal mine.' If Japan blows, contagion will spread overnight to the U.S. -- totally dependent on capital imports raised at vast weekly debt auctions.

Humans may be individually intelligent, but in large groups (e.g. governments), humans make fruit flies look like winged Einsteins.

Davos's picture
Davos
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Re: "Fear mongering" OR Reality?
machinehead wrote:

Humans may be individually intelligent, but in large groups (e.g. governments), humans make fruit flies look like winged Einsteins.

I TOTALLY AGREE !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

+1 to the other fine points you make.

xraymike79's picture
xraymike79
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Re: "Fear mongering" OR Reality?
Davos wrote:
machinehead wrote:

Humans may be individually intelligent, but in large groups (e.g. governments), humans make fruit flies look like winged Einsteins.

I TOTALLY AGREE !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

+1 to the other fine points you make.

LOL. Like that quote as well. The amount of defaults seem to be accelerating since 1979:

Davos's picture
Davos
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Re: "Fear mongering" OR Reality?
xraymike79 wrote:
Davos wrote:
machinehead wrote:

Humans may be individually intelligent, but in large groups (e.g. governments), humans make fruit flies look like winged Einsteins.

I TOTALLY AGREE !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

+1 to the other fine points you make.

LOL. Like that quote as well. The amount of defaults seem to be accelerating since 1979:

Well, if I found a genie in a bottle and got ONE wish, one thing I could fix, I'd wish for that (a fix to "Humans may be individually intelligent, but in large groups (e.g. governments), humans make fruit flies look like winged Einsteins.")

In my write of June 27th I didn't word it so eloquently but I did manage to blurt it out (* V note: Yes it was said in my usual "mono-moronic 1 adjective vocabulary  that I rely on to describe people with NO common sense"):

"Law of Morons": Years ago, while serving on a committee I came to a sad realization. Like gravity, there is the another invisible force which I dubbed "The Law of Morons". Put a group of very intelligent, well meaning people in a room together, put them on a committee or some governmental body that is devoid of guiding principles or merit based decision making and "The Law of Morons" will prevail. The collective IQ will drop to the smallest shoe size in the room. And hope for loafers, because collectively this body won't be able to tie anything together - not even a single shoelace. 

Government Creates Problems: Basically our government is comprised of many well meaning intelligent people who for whatever reason, re-election, greed the "Law of Morons", corporate puppet strings (read: lobbyist), self interest, corporatocracy or whatever else, do nothing but create massive problems. Lack of regulation, too much regulation. 

And without any uncertainty --- too much DEBT along with a deficit that will NEVER be paid. 

They have failed us.

 

Terribly!

pinecarr's picture
pinecarr
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Re: "Fear mongering" OR Reality?
Davos wrote:

In Summary: As ugly as the economic situation is, I refuse to operate under a delusional personal mandate that gives the economic news a positive spin. I'm amazed how people discredit genuine information, label those who bring it as fear mongers or like BM's piece 'bunker loons'.

Ain't that the truth, Davos?! 

investorzzo's picture
investorzzo
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Re: "Fear mongering" OR Reality?

Thanks Trinity, kept that image in my archive.  Jon

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