Moon of Alabama Brecht quote
February 06, 2009

Scary Economic News

So far I was on the opinion side of 'a big global recession'. I now officially move into the 'massive global depression' camp. These numbers are huge. But what is really scary are not the huge numbers but the speed at which the occcure. That speed is unprecedented. It may turn this beast globally into something very different, i.e. much worse, than the Great Depression the U.S. had in the 1930s.

The cars of that time made some 30 miles per hour. The recent modern globalized economy car, financed by zero-rate credit, made some 200+ miles per hour. It now ran into a human wall at full speed. While the modern car has some safety belts that protect the drivers, the damage for the crowd the car ran into will  likely be much bigger than in the earlier crash.

Kenya hit by drought, food prices and grain shortage

Field after field of maize across the marginal agricultural areas of Kenya stands blitzed by the tropical sun, unable to mature after the rains failed. For many, this is the third consecutive failed harvest.

Cancellations exceed orders at both Airbus and Boeing

Both Airbus and Boeing have dipped into negative net orders for the year to date, having suffered more cancellations than secured sales.

South Korean Exports Fall by Record, China Manufacturing Slumps

South Korea’s shipments fell 32.8 percent from a year earlier, the Ministry of Knowledge Economy said. Manufacturing in China shrank for a sixth month, the CLSA China Purchasing Managers’ Index showed.

Japan output falls at record pace, unemployment rises

The government also said that production is expected to decrease 9.1% in January and 4.7% in February, according to its Survey of Production Forecast in Manufacturing.

If the projected cuts materialize, Japan's industrial output would have shrunk by one-third over the space of a year, according to calculations by J.P. Morgan. The contraction effectively knocks Japan's industrial economy back to roughly the size it was in the mid-to-late 1980s.

German industrial orders fall sharply

Germany’s economic ministry reported orders fell by 6.9 per cent in December, extending a 5.3 per cent fall in November. It was the fourth consecutive monthly fall and much larger than expected. December’s industrial orders from within the eurozone were tumbled by more than 15 per cent.
..
Earlier, Spain had reported a record 19.6 per cent fall in industrial output in the year to December as businesses and households reeled from the collapse of the country’s housing bubble.

Payrolls plunge by 598,000, the most since 1974

Nonfarm payrolls fell by a seasonally adjusted 598,000 in January, on the heels of a revised loss of 577,000 in December, the [U.S.] government said.

IDLE CONTAINER FLEET REACHES 675,000 TEUS

The number of laid-up container ships reached 255 vessels by mid-January as the global economic downturn forces carriers to continue to retrench. The idle ships have a capacity of 675,000 TEUs. That represents 5.5 percent of the world container shipping fleet by capacity, according to AXS-Alphaliner, a Paris-based consultant.
...
The situation will only get worse for the carriers as deliveries of new ships will swell the world fleet about 14 percent this year, Alphaliner said.

China suffering worst drought in 50 years

Since November northern and central China has had little rain. Many places have not had rainfall for more than 100 days.
..
"The extent of drought is quite extensive, the impact is quite great," forecaster Zhang Peiqun said in an interview with state television CCTV. "Rainfall on average has been 50 to 80 percent less than that of last year."

Posted by b on February 6, 2009 at 02:28 PM | Permalink

Comments

A big downer is that I know humanity will not learn to live "low" (energywise) and with decentralized stability.

Instead we will use the depression as an excuse* for continued pollution, toxic industries, and fossil-fuel depletion ("gotta get that growth going!").

Then as soon as we are able we will re-inflate our beloved centralized model, with volatile high-energy times back again!

*obviously the pollution was gonna happen anyway, but now there's this instant and universal excuse

Posted by: Cloud | Feb 6, 2009 2:51:12 PM | 1

A big downer is that I know humanity will not learn to live "low" (energywise) and with decentralized stability.

Instead we will use the depression as an excuse* for continued pollution, toxic industries, and fossil-fuel depletion ("gotta get that growth going!").

Then as soon as we are able we will re-inflate our beloved centralized model, with volatile high-energy times back again!

*obviously the pollution was gonna happen anyway, but now there's this instant and universal excuse

Posted by: Cloud | Feb 6, 2009 2:51:48 PM | 2

Sorry about the double post

Posted by: Cloud | Feb 6, 2009 2:52:48 PM | 3

I visited towns and tourists spots outside Moscow in November 2003. Lots of snow, and cold as hell frozen over. These same small wooden houses are perfect examples of insulation ideas that we have forgotten.

Posted by: Cloned Poster | Feb 6, 2009 3:14:52 PM | 4

and the worst bit about these news is that they are still just the tip of the ice berg, as this is only what politician/business man admit or can not hide anymore.
How bad is it out there?

Maybe i should be re-reading Ben Eltons Stark?

Posted by: sabine | Feb 6, 2009 3:47:41 PM | 5

it is beyond question that the times we are living through are catastrophic & we are just on the cusp of it - soon the white heat of this inferno will be even greater

unfortunately, for the endtimers(with the exception of netanyahu going nuts), it is not the end but even given the menace of fascism of any form - the hope of solidarities are great - personally i feel that greater solidarities are not only possible but inevitable

Posted by: remembereringgiap | Feb 6, 2009 4:07:09 PM | 6

Let's not forget the new cars sitting in lots unsold and unwanted...

cars wait

The times they are a'changin'...

Posted by: David | Feb 6, 2009 4:31:42 PM | 7

That being the case, we little peoples are supposed to be doing what, exactly?

Posted by: Card-carrying Buddhist | Feb 6, 2009 4:59:12 PM | 8

donr't mourn, organise

Posted by: remembereringgiap | Feb 6, 2009 5:10:53 PM | 9

Cloud, my humble opinion is that we won't be doing any re-inflating this time.

The "old" system is reliant on the saw "grow or die" and we done used up all the money. Money, whatever that is - nobody seems to have a good definition of it.

The advice from those who seem to have a decent grasp of this collapse is: Leave the city. Grow your own food. Convert your assets into tools, food, land, buildings while you still have time.

Or sit tight and hope for the best, a very risky position IMO.

Posted by: rapt | Feb 6, 2009 5:13:20 PM | 10

@8,

Smoke some Hope (TM). Collect the unemployment checks while they keep coming. Create community. I'd add - 'fuck shit up,' but that's been taken care of.

Posted by: biklett | Feb 6, 2009 5:19:41 PM | 11

Endtimes! Booga Booga!

Posted by: Slarty | Feb 6, 2009 5:23:42 PM | 12

The "old" system is reliant on the saw "grow or die" and we done used up all the money. Money, whatever that is - nobody seems to have a good definition of it.

Actually, it's not all that difficult to understand.

A big part of the liberal response to this crisis is to honor the self-serving mystification of money. It's a bad move.

Posted by: slothrop | Feb 6, 2009 5:39:55 PM | 13

Who could disagree, b? The question is, what is the solution? I appreciate your ideas, b. They as are as good as any. I hope they are tried.

In the meantime, my only consolation is that a block may be put on further military adventures in the Middle East. It won't be stated openly, but the surge in Afghanistan is already in question, for the reasons of logistics we have already dicussed on other threads. Iraq? Maintain a full military occupation, as is necessary? No chance. What if Netanyahu attacks Iran, expecting US support? Cold US reaction, I would say. At least there may be a positive side to depression.

Posted by: Alex | Feb 6, 2009 5:50:43 PM | 14

Community. Know your community, know the resources available in your community but most importantly get to know your neighbors.

The global economy is collapsing, it doesn't mean the local economy needs to, it just depends on where you live.

There is going to be a major shaking-up of how business is done; this event could mean massive decentralization of governments and economies as communities work to save themselves.

Corporate america is reeling from the debt they burdened their companies with to expand their minor fiefdoms. Individual companies are doing ok, but they alone can't carry the burden of an entire corporation's debt, or absorb the red ledgers from it's other poorly managed units. But I'd guess it's the debt burden that is killing most everyone and everything.

In many ways corporations are minor countries that thrive or fail depending on immediate access to cash. The big difference between government and corporations, is that government forces the public to buy it's product with taxes. Corporations are still at the mercy of markets...

Except for banks...

Oh, and I guess The Big Three Auto makers...

Yeah, I guess the parts manufacturers...

Don't forget the politicians, not one has taken a pay cut or cut staff or perks... They would be wise to take a lesson from the French and start to take cuts now, because the type of cut the public will demand later... OUCH!

We live in interesting times. Good luck! (luck favors the prepared.)


Posted by: David | Feb 6, 2009 5:56:47 PM | 15

we little peoples are supposed to be doing what, exactly?
card-carrying buddhist

the hope of solidarities are great - personally i feel that greater solidarities are not only possible but inevitable
r’giap

Leave the city. Grow your own food. Convert your assets into tools, food, land, buildings while you still have time.
rapt

Here is part of the answer c-c buddhist. Solidify our individual community relationships to become independent of the system but interdependent with our neighbors. For those who are trapped in a job and/or in the cities, search out a spot somewhere more rural and simplify your lives. Not an easy thing to do perhaps but these are difficult times and extraordinary measures will probably become the necessary norm. There are many rural families-farmsteads that with industrious live-in’s can work together to first eat and then re-create a more sustainable and sane culture. If the elites don’t become so desperate that they co-opt/usurp/invade the resources of we who exist independent of them, then “greater solidarities are inevitable”. How do we insure the elites don’t fuck over our last bastions of individuality and democracy? Recognizing and exposing their psychopathic tendencies is in my mind a necessary beginning tactic that really hasn’t received much attention from progressives so far.

I read just yesterday somewhere that Dickhead Cheney has predicted another major “terrorist” attack on a U.S. city sometime in the near future because of Obama’s softness. Just the thing I would suggest if I were a psychopath living at his level of power and wanted to instill and insure a total mind-set of fear in the proletariat. False flag attacks and provocateurs have been and continue to be a highly effective weapon in the powerful psychopath’s arsenal. Unfortunately coming from such a the above mentioned dickhead the probability of such an event happening is high. Let’s expose him first, hopefully in a docket at the Hague.

Posted by: Juannie | Feb 6, 2009 6:06:15 PM | 16

The advice from those who seem to have a decent grasp of this collapse is: Leave the city. Grow your own food. Convert your assets into tools, food, land, buildings while you still have time.

leave the city, how is this possible, there is not enough 'land' in most countries, for this to be possible.

Organize with neighbors, convert empty lots into veggie gardens - i myself am very fond of urban guerrilla gardening - i tend to plant veggies and the one or other fruit tree and bush in/on puplic lands, or the other native tree/shrub here and there, and check on them occasionally to see if they are still there, most are (smiles), and do a bit of harvesting, this year i eat my first own grown blueberrys (yummy)

Share, Share and one more time, share. The mad max scenario is that really how we will react? Why? Because Hollywood told us so? Because some geezer in a suit tells us to?
Be afraid of you and me and them and our own kids? Why? To validate those that have brought this misery over us?

Share, organize, look out for yourself, your loved ones and your community, share the land, share the water (start collecting rainwater again - are we with stupid?), share!!!!
And than trade - service for service, work for service, hausing, food etc. it was done before it can be done again.

Why do we believe that the sky will fall on our heads, when the sky sofar has never fallen on our heads.

We will have to live, there is no way around it, now is the time to choose how.

In the words of my beloved Dorothy Parker:

Resume

Razors pain you,
Rivers are damp,
Acids stain you,
and drugs cause cramp,
Guns aren't lawful,*
nooses give,
gas smells awful;
You might as well live.

* at least not everywhere.

Posted by: sabine | Feb 6, 2009 6:18:27 PM | 17

we little peoples are supposed to be doing what, exactly?

Another possibility: Man Robs Bank So He Can Go Back To Jail

h/t housing doom

Posted by: Hamburger | Feb 6, 2009 6:20:06 PM | 18

@9 Nope, not tonight. I am gonna look at this picture of a dozen obnoxious, rowdy, attention-starved kids who pestered the crap out of me daily to the point where I actually had to admit I liked them, knowing that postwar reconstruction depends on export of a mineral used mainly for pigment in house paint and that statistically most of them will be right there when absolute poverty comes to town and seasonal destitution lasts all year, and that probably more than one of them will find she can't afford a midwife so she cuts the umbilical cord with a hoe and then she watches her baby die of lockjaw, and will learn for herself what people said about the old days, how hunger hurts and burns and lays you out for worms and amebas and sores and fills your bed with soupy green shit and melts your eyeballs and engorges your veins but never lets you rest, and I am gonna get drunk and mourn my ass off.

Posted by: ...---... | Feb 6, 2009 6:22:26 PM | 19

i am in as delicate a position as any of the people - communities i work for & with. i do not celebrate misery. but yes, i welcome a war when i see it & that is the only way people are going to get through this. by solidarity & by knowing who exactly they are & if you like who they serve

i do not delight in the coming catastrophe & as an unreconstructed maoist i am surprised with the rapidity of events - the inevitability of collapse

but civilisations too have to throw of childish things & become

Posted by: remembereringgiap | Feb 6, 2009 7:39:47 PM | 20

just watch the mad fuckers in what they call a legislative body in the u s - we at our hysteric worst is not even marginally as mad as these fucking fools

lenin sd you could seel the ruling class the rope to hang them

what we witness is just such a display of greed, avarice & stupidity

they are burying themselves

watching one screaming senator after another defies decency but also belief. they are mad & stupid.

hubris hauled from the hole within them

thar hole is where they want us to fall into

we have to resist that at every opportunity

your losing 2 million jobs in a little over 2 months & they call that a recession. they are completely fucking raving barking mad

Posted by: | Feb 6, 2009 8:24:26 PM | 21

me, absolutely

Posted by: remembereringgiap | Feb 6, 2009 8:25:30 PM | 22

i'm a dark little fucker but really i do not see any way for capital to 'get out' of its deepening crisis unless it goes into a form of generalised war

at this stage - their stupidity & incompetence is so obvious - i really do not know what exact hell they are making

i can't believe they are this stupid but if i read paul craig roberts i realise i am moderate in my feelings

Posted by: remembereringgiap | Feb 6, 2009 8:28:49 PM | 23

remembereringgiap–

This is Rome televised; Versailles; industrial England,

The fall of empire, heard (and witnessed) the world 'round

Posted by: David | Feb 6, 2009 8:38:49 PM | 24

giap,

They (those stupid ass senators) really look like a bunch of clueless idiots don't they? Yet, they likely can't pass a mirror without looking.

Posted by: jdp | Feb 6, 2009 8:52:57 PM | 25

davif

that is the strangest thing - - willl die a communist - but really i cannot believe my ears - it is like something i might have imagined feverously at 14 after reading mao - it's beyond burlesque further along the line than farce & surprisingly, sad, deeply sad

Posted by: remembereringgiap | Feb 6, 2009 8:58:02 PM | 26

And yet the Market rallies 250 pts on this news. Of course, we know the Market is not an indication of anything other than insanity, but still. It's all rather odd. Certainly not your Father's Depression. Until the Bread & Circuses disappear, there will be little more than a passing concern, but, by the time the b&c does disappear, it will be too late to do anything about it. The damage will be permanent. Hell, it may already be permanent, and in all liklihood is.

Posted by: Obamageddon | Feb 6, 2009 9:10:55 PM | 27

Been reading Barraclough, who sez that throughout the paroxysms of the world wars and their failure to prevent the eclipse of Europe, two things maintained some continuity: middle-class government and nationalism. Now middle-class government is gone for good, having degenerated into a big kleptocratic clusterfuck. It would be nice to think that nationalism is going away too, since our most dangerous american fascists find it so important and useful. Supranational organizations can't entirely displace nationalism, as much as they frighten the right. Maybe the people's war robot chick can do it (I myself would follow her to the ends of the earth). Can't help thinking that capital, properly shook up and reorganized, could also do the trick. Capital's not going away any time soon. The red-hat capitalists in China hang Mao from their rear-view mirrors to ward off car wrecks, like with a miraculous medal (it's a big goof), but boy they like their money.

Posted by: ...---... | Feb 6, 2009 9:50:41 PM | 28

unfortunately, the people's-war-robot-chick is created by some goofy guy in minneapolis & as far from redeeming revolution as some sombre stalinist cleaning his teeth in sinkaing province

if we are lucky it will pass as it is happening in latin america - western societies do no merit it - drowned as they have been in privilege of oppression - but if history is kind we can learn from the bolivians

Posted by: remembereringgiap | Feb 6, 2009 10:08:34 PM | 29

That being the case, we little peoples are supposed to be doing what, exactly?

Only you can answer that, but you will find the answer if you read Henry David Thoreau's "Walden".

excerpt:
So I went on for some days cutting and hewing timber, and also studs and rafters, all with my narrow axe, not having many communicable or scholar-like thoughts, singing to myself, —

Men say they know many things;
But lo! they have taken wings —
The arts and sciences,
And a thousand appliances;
The wind that blows
Is all that any body knows

http://thoreau.eserver.org/walden1c.html

Posted by: Don Bacon | Feb 6, 2009 10:30:16 PM | 30

Gratifying that they kicked USAID out of the provinces that produce their excellent coca tea. My source for the Peruvian varietals has dried up now. I miss it but I am proud to make the sacrifice for PEOPLE'S WAR!

Posted by: ...---... | Feb 6, 2009 10:34:34 PM | 31

Obamageddon@27

Something I read, kind of makes sense when you look at market trends since the TARP funds were passed, was that someone was manipulating the market (with TARP $) before close on fridays so most fridays closed "up". Some weird trades were made for sure. I'm not saying that's today's reason, but it made sense back in Nov, Dec...

Also (to contradict myself) back during the great depression, the market was very unstable and according to some reading I did, made some crazy up-swings, but the over-all trend was sinking.

I wish I would have found a place like MoA when I was 12 or 13, then I'd have time to focus my reading on the books many here seem to have digested. My reading; too much trash, not enough depth... My post are absent the references from literature to commonly understood ideas and concepts. I'll have something to do (read) if I'm ever able to retire...

I made a reference in another thread about the biggest problem facing america from capitalism was the change in corporate law which made corporations supernatural beings, affording them many of the same rights as a human, but with the ability to "live" forever. When they did away with the rules regulating the amount of time a corporation could be chartered for, we opened the door to this current hell.

A human will have to answer for his/her actions, corporations rarely face the same problems individuals do, and so these corporations become lawless pirate isles, were criminal minds can safely hide from taking any personal responsibility for their actions.

Sort of like a really mean version of that Monty Python skit...

Here is some interesting reading:

Link to info

You might have to hit link twice.

Posted by: David | Feb 6, 2009 10:42:03 PM | 32

Here is something that might make you laugh if you have a black sense of humor:

youtube fknnewz interviews Death

The guy is loud, and some might even call him annoying, but he has a funny way of telling the truth. His recent program on drugs is pretty silly also.

Posted by: David | Feb 6, 2009 10:54:54 PM | 33

The economy was in a tailspin around the time the War in Iraq started. The assumption was that the war would help the economy. The housing bubble was already reaching alarming proportions but was manageable in 2003, was allowed to grow further until the benefits of war showed up in the economy. The second idea was to keep the bubble going as faltering economy would not help the war efforts and support for the war would dwindle fast. The war did not help the economy and the housing bubble grew into derivatives that were piled on to already suspicious assets.

The current economic conditions would be used to drive down the US standards of living by reducing the wages, forcing people into permanent poverty and increase the supply of cheap labor in the country.

Posted by: Hoss | Feb 6, 2009 11:17:59 PM | 34

i do not see any way for capital to 'get out'

Socialize the costs of capitalist class rescue while carefully buying the loyalty of workers. Also, the undeveloped countries bypassed by capitalist expansion must be dragged kicking and screaming into capitalist modernity. This will require permanent prophylactic war and global 4th-world subsidies. This must all occur at Davos, or some other orgy among the capitalist powers, who understand that the model of export-led production and development and debt-financed western consumption must be sustained.

Write off US debt?

Posted by: slothrop | Feb 6, 2009 11:35:14 PM | 35

rapt 10) we did that in the '70's much worse recession than now, 'back to the land' back when you could lease farmland, not today, back to the land when you could buy used farm equipment or borrow your neighbor's, not today, back when you could farm without the State crawling up your bunghole about stream setbacks and till-less farming and bother herbicides, 'why don't you boys invest in hoes'. 40 acres we leased, and rented 20 more, and grew plenty of food, if you like eating chapatis everyday, and drowning in sun-dried zucchini bread, and roasting and grinding and baking with a wood stove by fuel oil lantern. we ended up growing pot and moving back to the city, selling Mexican chillums over the counter in the farmer's market, and 'come back later tonight' homegrown under the counter, and still we all had to find regular jobs just to have seed money, fertilizer, fuel, herbicides, all those things that city folks with no idea about farming imagine they can do without. try plowing 60 acres with a single bottom between when the ground is dry enough to work in the spring, and when it sets to near concrete once the rains have stopped. try harvesting 60 acres with an old belt combine, storm clouds on the horizon and half of it already lodged. many folks still believe you can live on an urban greenhouse and fish pond but the facts are that fish farming is non-profitable with less than 10 acres under roof in the north and double that in ponds in the south, and you still haven't sold a single fish and your feed is rotting without refrigeration. it's all a hobby, face it, you can live on your urban lot and grow organic celery under a 1000W grow light setup, but you'd be a stone fool to. look at worm farmers, mushroom farmers, landscape nurseries, pig pens, organic salad gardens, all the concentrated suburban farming ideas are getting slammed by rising costs and falling markets and taxes. there's a huge oversupply of food in the industrial world, we are a black hole, don't waste your money on land and property taxes and equipment, buy in bulk direct from farmers, a sack of wheat, sack of beans and a container of dried vegetables costs less than a single month's cell phone bill! concentrate on turning the lamp down, flushing the toilet less, living with more people in less space. where they're going to get you isn't the food supply, it's the sales taxes, property taxes and huge utility bills. they'll drive you off your property with tax auctions, then you're fookted, doomed to wander the earth with the rest. don't make the mistake of thinking you can go 'back to the land', just look at the iceland shakinah, or french vintners, or british livestockers, brazil pounded back to zero gdp, you need to focus on finding as much cash as you can and reducing your burn rate, there will always be more food than people can consume in industrial society.

Posted by: Chéri Optera | Feb 7, 2009 12:33:20 AM | 36

hoss 34) what cheney did to iraq was deliberate oil supply destruction, the peak oil boys are bad-faith-based cons who never took an economics class in their lives and wouldn't know price sensitivity or margin saturation if it bit them on the ass. cheney saw chindia rising and knew rising economies have rising demands that run inevitably into capped wages, as ehrlich would say, into the limiting resource, the cost of oil distribution, the invisible hand of the market, the short sellers, the fee men, landlords. cheney knew chindia would florish and bloom then strangulate and oil economy would crash, so he engineered the war, engineered destruction of the cheapest oil on the planet, saddam's oil, took his $500M oil spike profits and forgad abahd et in dubai, or whatever rock he crawled under. and they're all the same, they read from the same playbook, they're not stupid, grant them that. wall street knows every penny that everyone puts away, they knew the party was over on credit, cars, housing, toys, the limiting resource was worker income, they knew a crash was coming, so they ARM'd themselves and offered obscene credit swindles and did to housing what cheney did to oil, got their $7T profits out and faghed abahd et in the bahamas, or whatever rock madoff tried to crawl under. there are very few limiting resources left to swindle now. we've lost $17T in equity to the Bushkers. we're mold that's outrun it's petri dish, liquefying into bacterial ooze. we're immuno-suppressed aids victims, our skin suppurating with sores and cancres. we're elephants walking the serengheti of kenya, bones sticking from crepe paper skin, searching for that last drop of water. really, face it, it was just 'business', a science like any other. they won, they took their winnings. we lost, get over it. 'the current economic conditions' won't be used to do anything, there's no point in even sticking around. the corn is dead, husks broken open, sun blackened shriveled seed spilled on the cracked earth. van gogh's crows. it's poliburo vers prols now, politburo feasting on taxes like worms at a banquet, swelling the ranks of the disenfranchished, unemployed, homeless, cellphoneless. it's desiderata time.

Posted by: Chéri Optera | Feb 7, 2009 1:04:55 AM | 37

@37,
So, how 'bout them Steelers?

Posted by: biklett | Feb 7, 2009 1:35:13 AM | 38

What a superb interactive graphic in the NYT. It speaks volumes for Clintonomics, a period during which the Dow rose 240 %, unemployment sank dramatically, the Dollar Index rose by 20 %, the National Debt actually sank and $ 150 billion budget deficits were transformed into $ 350 billion surpluses:


INTERACTIVE JOBLESS GRAPHIC IN NEW YORK TIMES

Posted by: Parviz | Feb 7, 2009 5:34:36 AM | 39

Doug Noland: The Government Finance Bubble

As I’ve noted in previous writings, analysts made a momentous blunder earlier this decade when they mistook the collapse of the technology Bubble (and attendant recession and corporate debt problems) for the onset of “deflation.” Reflationary policymaking without regard to the nature of inflationary consequences proved disastrous. We’re about to repeat this error.
...
The Government Finance Bubble is enormous and powerful - and should be anything but underestimated. Akin to the previous Bubble in Wall Street finance, the epicenter of this Bubble is here in the U.S. But I would argue that this unfolding Bubble dynamic has greater potential to engulf the entire world than even U.S.-style mortgages and derivatives did starting back around 2002. Welcome to the new world of synchronized stimulus, deficits, and reflationary policymaking.
...
It is imperative for policymakers to ensure that the Government Finance Bubble does not follow in the footsteps of the runaway excess associated with Wall Street/mortgage finance. Yet it’s clear that policymaking (monetary and fiscal) is setting a course to guarantee just such an outcome. And, as has been the case for some time now, markets are keen to fall in love with – and aggressively accommodate – whatever might be the Bubble of the Day.
...
Structural realities dictate that Government Finance cannot simply enter the fray and miraculously make things right. A moderate amount of stimulus would be expected to assist the post-Bubble economic adjustment, while inordinate government Credit inflation and market intervention will only work to compound systemic fragility.
...
The Government Finance Bubble is being called upon to reflate with little assistance from private Credit, while at the same time it is faced with a Deeply Maladjusted Economic Structure still overly dependent upon inflationary Credit expansion. Throwing mega-Trillions at our distorted economy is just asking for trouble.

It is in this context that I fear that the Trillions of Government Finance spent to save the world from “deflation” will, in the end, require perpetual needs for Trillions more.
...
We’ve commenced a new cycle dominated by government electronic printing presses in all their various forms. The inflationary consequences will be a different variety than we’ve grown accustomed to from previous reflations. But the bottom line is – and there’s ample history to support this view – that once the “printing presses” get humming along it’s going to be darn difficult to slow them down.

Posted by: b | Feb 7, 2009 8:00:31 AM | 40

Well, b, Doug Noland echoes what I've been saying, the difference being that my words are in baby language, namely:

The U.S. has to invest in the things that will truly contribute to long-term growth:

-- free education nationwide
-- massive infrastructural build-up
-- government-sponsored, advanced industrial job training schemes
-- universal access to, and acceleration of, internet speeds
-- increased regulation to prevent waste and fraud
-- universal health care (= prevention rather than cure)

The above will help to correct what Noland correctly refers to as the "Deeply Maladjusted Economic Structure still overly dependent upon inflationary Credit expansion" (= I'll buy your stray cat for $ 100,000 if you buy my stray dog for $ 100,000 so we each have a legally registered $ 100,000 asset).

The U.S. manufacturing base has already shrunk 60 % since the end of WWII. Does it have to sink to zero percent before policy makers wake up?

Posted by: Parviz | Feb 7, 2009 8:37:31 AM | 41

leave the city, how is this possible, there is not enough 'land' in most countries, for this to be possible.
By now, I thought people would have realised that most of us won't make it alive out of this shit.


B could have added some bit about the massive drought in Australia, which could well terminate its agriculture, except as a local subsistance agriculture.


I've begun to wonder if one underlying cause is that the massive overcapacity of early 1929 - notably the US one - actually never got resolved. They got WWII which didn't change anything in the US, except growing even more its industrial overcapacity, and allowed it to remain because the entire European industrial capacity got bombed to smithereens. Then, instead of actually downsizing the US capacity to allow the rest of the world to get back on track without a new massive depression. US insane industrial capacity was never reduced, it was merely transferred to China's cheaper labour, instead of letting a good chunk of it disappear and being actually wiped out of the face of the Earth. And to add insult to injury, Japan and Europe went into relative overcapacity as well...

Posted by: CluelessJoe | Feb 7, 2009 9:45:56 AM | 42

CluelessJoe-

I wouldn't worry too much about the drought, trust me, when people get hungry enough,they will find a way to grow food. The are many technologies developed that allow farmers to grow crops with very, very little water. The problem with many farms is they use out-dated and wasteful practices to grow food. Too much water goes into the atmosphere and too little to the plant.

The israelis have done amazing research and developed many ways to grow food in the desert. This is one area the israelis are very advanced and it doesn't have anything to do with killing people.

Posted by: David | Feb 7, 2009 10:21:08 AM | 43

The israelis have done amazing research and developed many ways to grow food in the desert.

Haha! It's done by stealing other people's water, and piping it down to the Negev. Nothing else really. The heavily show-cased "techniques" are just the froth on the top.

Posted by: Alex | Feb 7, 2009 10:52:43 AM | 44

There has been no or little ‘growth’ in the west for 20 years. It thus became necessary to exploit cheap, slave, labor abroad and tighten military and diplomatic domination.

Neo-colonialism, humanitarian war, ‘globalization’, IMF robbery, etc. I associate all this to peak fossil fuels, or even Net Peak Energy, if anyone could calculate it. Rising population, too.

The finance ‘industry’ so called, thus turned into a betting hall, going for a last glorious spree, its actors fleecing anyone who could be duped, cashing in before the house of cards tumbled. This sortie was based on debt, that is the expectation of future growth, which is now, finally, shown to be a fiction.

That is one way of looking at it.

Another is simpler: the slow and steady rise of a predator class, in corporations, gvmt., finance, the media, and a booming, blooming illegal or invisible (not informal) economy: drugs - arms - slaves - contraband - fraudulent finance, held up by coercion, minimal growth, freakonomics and Mafiosi-type power.

Seen under this angle, we note the failure of ‘democracy’ and ‘capitalism’ as compared to their stated aims and advantages. Perhaps this was an inevitable result of practically free energy and post WWII expansion - population, science, technology, infrastructure, the green revolution, etc. In times of plenty, the common good gives way to individualism, a consumerist society (necessary to drive expansion), and the sacrosanct mantra of competition leads to an adversial culture, waste, exploitation (of ppl, of the environment) lack or coordination, and zero planning.

If this vision has merit, the future is stark: proto-fascism and war.

(Even more basic: humans are greedy and brainy, thus their very essence is powerful and manipulative, and they will end up getting their comeuppance from Nature...)

Anyway, once the unwinding begins, as growth is kaput, the effects ricochet and cascade all thru the now-global system. Ppl keep muttering about how the banks should lend, offer credit, but how can they as growth has come to a halt? When that ‘growth’ was largely pinned on financial hijinks, on perpetually sending the IOU notes elsewhere, ponzi style?

don't mourn, organise- r giap

Posted by: Tangerine | Feb 7, 2009 11:05:02 AM | 45

Technology is technology. It is sad they're stealing water... but then who doesn't? I live in a part of the world where the well known phrase, "Whisky's for drinking, water's for fightin' over." was coined.

If enough people die, you can always just render the water out of them. Plant five watermelon seeds in every bellybutton and wait...

Posted by: David | Feb 7, 2009 11:10:03 AM | 46

If we have so little faith in our own survival abilities we're going to deserve the Mad Max dystopia some of us are predicting.

It's the end of consumerism as we know it, but not the end of the world.

If enough people die, you can always just render the water out of them. Plant five watermelon seeds in every bellybutton and wait... David, that's a peculiarly heartless remark. What did you mean?

Posted by: Tantalus | Feb 7, 2009 11:46:46 AM | 47

Technology is technology. Is it technology when it doesn't have any effect?

Posted by: Alex | Feb 7, 2009 12:10:12 PM | 48

This chart is really scary ...

Posted by: b | Feb 7, 2009 12:29:08 PM | 49

hoss 34) what cheney did to iraq was deliberate oil supply destruction, the peak oil boys are bad-faith-based cons who never took an economics class in their lives and wouldn't know price sensitivity or margin saturation if it bit them on the ass.

Chéri Optera 37

Simply don’t agree with this thesis. If nothing else, the US has been able to soften opposition in Iraq and has created environments that will help the future oil needs of the US. The US stood no such chance with Sadam in power. You can’t win all objectives but the ones that have been won in Iraq, would help the US. But this military adventure has cost the US a pretty penny.

I don’t know whether the gains in Iraq would sufficiently offset the losses in the mainland US. Looking at the current environments it appears to me that the US has lost more than any future or current gains in Iraq or in the Middle East.

Blaming it only on Cheney is pretty much giving a free pass to the interested groups that helped create the policies that Cheney and Bush implemented. Cheney at best was a vile manipulator of the government system, he was not an independent thinker, nor was he brilliant enough to manage the whole thing on his own. They spent years in planning the attack on Iraq and I doubt that they overlooked the economy under war conditions.

While wars are good for some industries they are bad for the others. Wars are good for the military and the defense related folks but they are bad for the common folks and the US experience with the last two wars-- the Second World War and the Vietnam war-- made it pretty clear to the Planners of the Iraq war that if they lost handle on the economy during the war, the whole effort would be a disaster.

They planned the Iraq war to last long. It was never meant to be a short duration exercise and the control of the US economy for the whole duration was a challenge. The idea behind perpetuating the housing bubble, encouraging the derivatives and other fancy instruments was to maintain a façade of good and booming economy to maintain support of the Iraq-Afghan war.

You can read Greenspam’s statements and see how he was cheerleading the housing bubble and the derivatives throughout the 2003-2007 timeframe.

I believe that the plan was to continue with the fake economy until the Bush term was over but to their dismay, the bubble finally got punctured or the Democrats in the finance industry hastened the demise of the fake economy to win elections. The Obama admin is clearly rewarding the financial gurus that brought the story to the public's attention just around the election time.

Posted by: Hoss | Feb 7, 2009 12:50:30 PM | 50

the good news is that globalism is dead, or at least comatose. The oil-bubble came & went and on the plus side it created significantly heightened & hopefully lasting increases & activity in sustainable fuels & energy conservation.

the world has lived with financial models & market mechanisms primed to favor the West, most particularly its bankers, oligarchs & corporatists. And those models are no longer sustainable & will be forced to give way. These models have also consistently harmed the masses in the West who have routinely been suckered by the banksters/developers/corporatists every other generation or so.

with each boom-bubble-bust cycle, other countries have responded with controls, adjustments & innovations to protect their economies from international predators. Some have responded better than others with China perhaps getting the most out of its efforts. China also furthers its rejection of Western models by going very easy on infringers of patents & copyrights. Also, many of those countries known as emerging-markets have put in place controls to mitigate the capital flight type crashes that ended the boom years in Indonesia & other countries. This is probably one of the main reasons why the economic downturn in the West has not been felt as severely overseas.

The point is that a lot of what we are seeing is irreversible. The oil bubble for example has put Russia's economic agenda in turmoil. Hence they will take steps to make sure they are never burnt in this way again. Listening to Putin today, he sounds like an accomplished economist and I suspect its going to be very difficult for Western derivatives-markets (NYMEX/ICE/PLATTS) to be used as agents for oil-bubble manipulations in the future.

protection of intellectual properties is another interesting Western model on which reasonable people can sharply differ. One of my favorite examples is pharmaceuticals. Should anyone even be allowed to hold a patent on a medication that can save lives or help feed the hungry & starving ?

the fact is that a lot or most of what (i.e the models) we have been taught to believe in is crap. But its way easier to conform than to challenge. And this applies to everyone. And one way to survive these times is to approach it with two minds. One for the crap we are forced to conform with. The other for truth, ideas & community.

also, with setbacks come opportunities. We need to be doing some of what the psychopaths, predators & vultures do all the time -- look for ways to transform the mis-fortunes of others, but for a common & wholesome good and for community. With the credit-drought, more & more people will not be able to buy new cars & toys every other year. Hence they will need mechanics & tradesmen they can trust. This will be a totally new experience for the huge number of consumers for whom disposable products have become the norm. Also, many business will die off, not because of a lack of demand but because they are over-leveraged and/or unable to adjust to suitably-tight & thrifty business models especially in domains that cater to peoples real needs.

Posted by: jony_b_cool | Feb 7, 2009 12:55:03 PM | 51

b@49- Got a parachute? Maybe some really sharp skis? That's an ugly slope. I feel it in the air... What ever the "IT" may be, it's hanging like a fart.

Tantalus@47-

Sorry to offend. I figure when a person is dead, they're, well... dead and if you're starving to death some niceties can be forgotten and forgiven. I'd volunteer my carcass to the needy, I might even have enough bellybutton lint to cover the seeds...

Alex@48, It's technology when nature has been modified by a being, to achieve a desired result. Of course technology has an effect, but it's our human perception of those effects that define it as good, bad or indifferent.

There is a lot of crap in the world. There is about to be a whole lot more. I suppose I feel a bit of smugness about the whole mess, but I have hope too. Maybe with some real adversity in people's lives they may remember there are other's sharing the planet. When big systems collapse, as in our financial structure, it creates opportunity for us to re-examine and re-think how we exist.

Is it possible to find the silver lining in the clouds? I imagine for most of the world's poor, they are smiling a bit (on the inside) watching the fall of Rome. Poor is poor, and a booming economy might trickle down some sweetmeats; but when your poor, the bone thrown to you has been scraped clean. In a booming economy it is often more difficult to be poor as your are directly and immediately affected by inflation but rarely benefit much from a growing economy.

In some ways, the dreamer in me would like to believe that when there is a large enough population in the United States that feels the same pinch of poverty that many societies have known for generations, there will begin to be some positive changes.

Everywhere people are complaining about scarcity of resources when there is more than enough. It's the wasteful management of those resources that have caused the "scarcities."

Arrrgh! I rant and roll, sorry. Peace.

Posted by: David | Feb 7, 2009 1:05:49 PM | 52

And then there's always http://thrandur.net/chitchat/two-cows-economics-world-iceland/>Cow Economics, in part:

SOCIALISM
You have 2 cows.
You give one to your neighbour.

COMMUNISM
You have 2 cows.
The State takes both and gives you some milk.

FASCISM
You have 2 cows.
The State takes both and sells you some milk.

NAZISM
You have 2 cows.
The State takes both and shoots you.

BUREAUCRATISM
You have 2 cows.
The State takes both, shoots one, milks the other, and then throws the milk away…

TRADITIONAL CAPITALISM
You have two cows.
You sell one and buy a bull.
Your herd multiplies, and the economy grows.
You sell them and retire on the income.

SURREALISM
You have two giraffes.
The government requires you to take harmonica lessons.......(there's more)

Posted by: anna missed | Feb 7, 2009 3:33:37 PM | 53

anna missed@53-

Funny post, kind of makes a person want to be a vegetarian :)

Posted by: David | Feb 7, 2009 7:27:53 PM | 54

I have several times related the ‘economic crisis’ to lack of growth in the real economy, it is a common idea amongst those who worry about energy, etc. How exactly the relationship works I can’t chart or even sketch out.

Energy buffs offer short causal chains such as rise in oil prices (due to speculation, due to slosh which has nowhere to go) > nail in the coffin of sub prime home owners (add on psychological effects) > defaults > positive feedback loops > banks in difficulties > etc. Rather lame. My difficulty is with the economic end of things and I need to study.

This post by Keen, The Roving Cavaliers of Credit, the title is Marx inspired, on Naked Capitalism shows, or can be interpreted as implying, that *a decrease in borrowing* was the primary cause of the ‘credit crunch.’ (I overstate, see the post.) Post is strongly anti Keynesian-clap-trap and provides an alternative model of what a banks and money actually are. http://www.nakedcapitalism.com/2009/02/steve-keen-roving-cavaliers-of-credit.html>link

Interfluidity, discussing others, notably Winterspeak (1), accepts that the hub of the system is the Gvmt. and not the banks, and lays out the exchanges in those terms. Skipping to the end, again, the whole has to be read to judge the argument made:

“Ultimately, a financial system has to find productive projects for the private parties to invest in. The government can invest directly, can delegate investment to the best and the brightest, can saturate the public's demand for money until private parties try to find other means of storing wealth. But it's what real human beings do with real resources that ultimately matters. Our financial system didn't fail because it was overlevered....” http://www.interfluidity.com/posts/1233118501.shtml>link

http://www.winterspeak.com/>1) Winterspeak

Ok one seeks confirmation but I thought interesting enough to post.

Posted by: Tangerine | Feb 8, 2009 10:34:37 AM | 55

Cisco Wheeler interviewed in 1997:
"I believe that the people in the world are going to wake up some day very soon and realize that the stock market has crashed, that financially the world has been crushed. They are going to realize that their food and grain has been contaminated, that their medical field has been dominated by the Illuminati medical force because the Illuminati has infiltrated every aspect of our lives. They are going to realize that we don't have the freedom to even speak for our children, that the government has more to say in regards to our children than we do, they can take them and control them at any given point. We are going to realize that the churches are not what they seem to have been - that the churches have been infiltrated. There is nothing left. There is nothing that has not been touched by the Illuminati and its family."

Posted by: James Crow | Feb 8, 2009 6:21:09 PM | 56

Ms. Wheeler also had this to say 1997:
"I believe that people need to understand there is a time to weep, and there is a time for war, every man and every woman should have the insight or the foreknowledge within themselves the answer to themselves. When they look around, if they are honest with themselves, they can see that the world is falling apart at its seams, something big is coming down, they need to look at themselves. Listen to themselves. Look and see and hear what is happening around them, and they need to start preparing themselves for the worst because the worst is coming. They need to be in a place, and in a state of mind that when the military soldiers are knocking at their doors and come after their children to take them down, that they say "not me, not me, not me and my house." We are in a fight. There is a time to fight."

Posted by: James Crow | Feb 8, 2009 6:23:07 PM | 57

Last Cisco Wheeler interview quote 1997:
"They have already accomplished it ... by taking our constitutional rights away from us ... by having a government within a government, like a box within a box. By creating famines, by having wars and rumours of wars, by the American people and the Canadian people no longer having the freedoms that once were theirs."

Posted by: James Crow | Feb 8, 2009 6:29:55 PM | 58

b. this is a really scary economic forecast for the DOW/S&P which I believe all barflies should read. O.K., it's a sales pitch, but it's argued so coldly and logically that the message is worth noting. You might wish to create a sepaarte thread:


Really, really scary stock market forecast


Posted by: Parviz | Feb 9, 2009 1:51:49 PM | 59

Failure to save East Europe will lead to worldwide meltdown

Posted by: Rick | Feb 14, 2009 7:55:56 PM | 60

rick

each day, a little more frightening & to think it arrived mostly by hubris & incompetence

Posted by: remembereringgiap | Feb 14, 2009 8:44:55 PM | 61

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