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You serious? Dairy has been hammered, you can get a gallon for $2.00 or so. You can get a loaf of bread for $.99 and hot dogs for $1.50. Even good quality hot dogs are only like $2.50 (You can get a 4-pack of Hebrew Nationals at Costco for around $9) If you are paying these prices for food someone is ripping you off.
Some times I wonder what planet some of you guys live on.
Planet Colorado here. ~$4/gal for milk, $2.33 for gas, and $2 for a loaf of bread. What planet are you on?
Planet Colorado here. ~$4/gal for milk, $2.33 for gas, and $2 for a loaf of bread. What planet are you on?
Oh yeah? Why is Safeway in Denver selling a gallon of milk for $1.58 then (front page of flier). Oh wait..is that a $.99 loaf of wheat bread on page 2? Yep.
Really? Why is that? If real economic activity grows then why would debt stay constant? It would not. You are seeing what you want to see, the correlation in the data does not tell you anything about causation. The two are connected in many ways.
Economic activity causes debt? Huh??
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Originally Posted by user_id
I'm not confusing the two, they are related. Increases in productivity will lead to increases in production. Production includes more than manufacturing. You measure production by the GDP, but you want to say its "illusory", so where is your alternative measure that shows this? You speak as if out-sourcing and things of that nature are not accounted for in the GDP, but they are. If production is out-sourced then either 1.) the products are not consumed anymore, 2.) they are imported. In either case it will subtract from the GDP! So where is the illusion?!
The illusion of increases to GDP is due to inflated valuations in a debt bubble. Money borrowed into existence as the result of creation of debt that will never be repaid is an illusion. When a homeower (sic) with the capacity to pay $400K for a $400K house pays $500K for the house, the $100K that will be defaulted never really existed except on paper. Including that in GDP (which we presently do) is just lying to ourselves.
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Originally Posted by user_id
You also want to link increases with debt with increases in GDP, but this is not what occurred! The period with the most excessive debt saw almost no increase in (adjusted) GDP. That is the point of looking at adjusted GDP it screens out monetary expansions in the form of increased debt utilization.
GDP increased ~4T in aggregate from 2000-2007, but debt increased by $12T, which is included in the GDP numbers. If adjusted GDP takes that into account, then GDP delta should be negative.
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Originally Posted by user_id
What you are complaining about shows up in the measure you want to call illusory. You are just not looking at it accurately. The adjusted GDP shows that the debt binge in the 00's did not result in any significant increase in economic activity. The adjusted GDP is adjusted in 2000's dollars. So both unadjusted and adjusted were the same in 2000, namely $9.6 trillion. The unadjusted is now $14 trillion and the adjusted is $11.3 trillion. That is $3.3 trillion that is essentially due to monetary expansion, not real growth in economic activity.
It resulted in a net increase in the headline numbers where a net decrease in actual production should be reflected. And I think we're arguing the same general point here...that debt is not responsible for creation of large gains in productivity, but rather the illusion of gains in the headline (nominal) GDP print.
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Originally Posted by user_id
The tax revenue is not a good measure of economic activity. A company can still be producing the same amount of goods, but see a major hit in profit. They'd pay a lot less in taxes, but economic activity would roughly stay the same.
But we're not talking about just "a company." We're talking about the entire revenue stream of California...property taxes, income taxes, sales taxes, etc. C'mon, you aren't gonna argue that a nearly 50% unanticipated drop in receivables YOY isn't an unqualified train wreck, are you?
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Originally Posted by user_id
The question is not whether it "can be done", its a question of what it means if such happens. It will be an event worse than the great depression. There is no sign that this is occurring. We can also go back to living like hunter and gathers.
I don't understand how, with growth impaired long-term from deleveraging, we can expect to maintain the same standard of living. As to signs of it occurring, I think it's still too early to declare victory. When housing prices actually reach equilibrium and stabilize, which has to relate directly to incomes that have been stagnant, I don't think we'll see nearly so many people building the large homes of today (or driving BMW and Lexus luxury cars), because incomes won't support it in a non-bubble environment with historically normal interest rates.
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Originally Posted by user_id
The eventuality? The economy is already aligning. Consumption is down and the savings rate is up. Of course, all the doomsday predictions are not occurring. The economy is doing just what it should.
The doomsday predictions have not reached fruition...yet. Again, too early to conclude that they are not actually occurring. Russian GDP is projected down a whopping 23% this year. Japan is down 15% YOY. UE rates are still horrible and not improving here, especially U-6 and/or Shadowstats' 1980-methodology equivalents, and double-especially continued UE claims prints.
From a macroscopic, big-picture perspective, what is out there now to fuel a recovery? The major industrial nations are all on the ropes...we can't simultaneously start exporting to each other as a solution. With marginal debt-to-GDP well below 1.0 and falling, stimulus isn't going to do much either. We have a growing population and shrinking real production, and a vicious feedback mechanism at work. Pretending otherwise just permits the spiral to steepen.
I am running into so many people who are unemployed or underemployed or not able to go back to college to gain job skills, or participate in professional development. All can be blamed on the recession.
I am starting to be concerned that maybe a whole generation of people may be hurt by this terrible economy. I am not talking about putting food on the table or paying the rent, most people will figure out a way to do that even if it involves working three minimum wage jobs. What I am talking about is the incredibly large number of Americans who are not able to do the type of work that they are talented in. Accountants and Financial Analysts who are working as Check Out Clerks for $7.00 an hour at the grocery store, Marketing Specialists working at Fast Food and IT Professionals working at Walmart. Or Engineers sitting at home all day watching television.
So many talented people with so many skills unable to use them. Isn't this one of the true causalities of the recession?
You haven't been through any other recessions have you?
I graduated in '06, my dad graduated from the same university in about 1972.
My curriculum was wildly different than his was. The majority of my classes taught technological-based skills and concepts that could not have existed in his day. We did live in the same freshman dorm, though.
The main difference is that for my generation, the federal government decided to "increase access to college" through subsidized debt. This caused the demand for college degrees to skyrocket. Indefinitely increasing demand leads to indefinitely increasing tuition, and indefinitely increasing graduate debt.
I heard recently: adjusted for inflation, my generation earns $800 per year less than our father's generation (the Baby Boomers) did.
Is there more opportunity? I don't know. Maybe. I'm inclined to believe that the increased opporunity is outpaced by increased competition for those opportunities.
If you take the position that x'ers and y'ers are living in a different world than previous generations....the cirriculum should be different to account for it. There are more technical skills in some classes, but who needs biology, french, chemistry, etc.
In the old paradigm of dad goes to work, mom stays home, I guess you could say you're giving people a well rounded education...they should take a few years of foreign language, some science, math, history, etc.
But now, its an incredible waste of time IMO. The cirriculum is too compartmentalized. Taking chinese should be paired with a class on "China in the 21st century". So, you see the bigger picture of why chinese may be important in the 21st century. Similar with spanish or other languages.
There should be at least a few classes on living standards, renting vs buying a home, and the differences across the country. The old paradigm of buy a home and live in it for 30 years isn't applicable anymore in many parts of the country. Why not give students a better set of choices....before they may get pressured from lenders or the national association of realtors to buy a home they can't afford?
Marketing is more aggressive than it was 30 years ago for many things.
-I think there's more opportunity in some things. The 15 year old web programmer, internet entrepreneur that didn't occur in 20 years ago. There should be more entrepreneurial classes. More opportunities for internships early, like 16 or something.
Compare x'ers, y'ers and previous generations...they both graduate from highschool at the same age, and college is still 4 years (suppose to graduate at 21 or 22), but there are more options now, there are more things to try, there's more aggressive lending/marketing/pressure from some groups...so, you basically have to figure out more things in the same amount of time.
From my own experience, I'm 31, I could feel things being dumbed down way back in the early 90's.
There was a certain amount of common sense and logic in the 80's that I grew up with. People knew what to do, they knew when to pay their bills. I don't remember anyone in the middle class being confused about their finances in the 80's. Not like it is now. People had more time to think. Their attention span was higher. If your attention span is higher, you're probably not going to fall for a lot of dumbed down tricks.
But starting in the 90's, things started to turn to jello. You start confusing people a little bit, then it snowballs. How much interest am I paying on my credit card? When is it? Doing simple things got more complicated...start thanking fico, banks, lenders, suze orman, the whole gang.
All these gurus started to rise to power...oprah, etc....and the inverse of their rise to power is the downfall of america's common sense.
-1989. People had common sense. Oprah was a regular talk show host. Not much different than Montel Williams, Sally Jessie Raphael, Donahue, etc.
Fast forward 10 years. In 1999, people have no common sense, and Oprah is telling you what APR stands for. And now you need her "money coach" to help you get out of all this debt you got in. The logic you had in the 80's was gone, given to her luxury advertisers and all the helpers, advisors and "coaches" that sprung up.
Survey: Most economists see recession end in '09 - Yahoo! News (http://news.yahoo.com/s/ap/20090527/ap_on_bi_ge/us_economic_recovery - broken link)
These clowns are still trying to put a positive spin on the economy. The government cooks the books, they inflate away debt and all the while the average worker/consumer gets pinched. Just because they inflated the money supply and GDP grows it does not increase purchasing power. Value comes from production, not consumption. This "recession" is setting up to be a depression like the 30's. The difference is that it will be inflationary as respects the dollar and deflationary as to real money like gold and silver.
An increase in economic activity will naturally lead to more lending and borrowing, i.e., more debt.
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Originally Posted by Bob from down south
The illusion of increases to GDP is due to inflated valuations in a debt bubble.
Dude...the adjusted GDP takes into account inflation. Increases in debt is really just (monetary) inflation at the hands of the banks. That is the most of the adjusted GDP, it adjusts for inflation (and again, increases in debt is just inflation).
Quote:
Originally Posted by Bob from down south
GDP increased ~4T in aggregate from 2000-2007, but debt increased by $12T, which is included in the GDP numbers. If adjusted GDP takes that into account, then GDP delta should be negative.
Which debt increased by 12 trillion? Regardless your comment does not make much sense. You don't adjust GDP by subtracting any increase in debt from the unadjusted GDP, that really makes no sense. GDP is a measure of economic activity, debt is not. You offset debt from the nations assets. Anyhow, the issues involving debt are accounted for in the GDP and issues regarding inflation (e.g., credit expansions) are accounted for by looking at adjusted GDP. Do you seriously think economists are so stupid as to not consider how debt effects a measure of economic activity?
Also, you seem to be under the impression that debt is always bad. But that is not the case. Who is better off, the homeless guy with nothing or the business owner with $100k in debt (funding an expansion) and $1 million assets?
Quote:
Originally Posted by Bob from down south
But we're not talking about just "a company." We're talking about the entire revenue stream of California...property taxes, income taxes, sales taxes, etc. C'mon, you aren't gonna argue that a nearly 50% unanticipated drop in receivables YOY isn't an unqualified train wreck, are you?
I'm saying that the shift in revenue does not tell you to what degree economic activity is declining. Its a train wreck from a state finance point of view, but can't be used to measure economic activity.
Quote:
Originally Posted by Bob from down south
I don't understand how, with growth impaired long-term from deleveraging, we can expect to maintain the same standard of living.
Real GDP has not grow that much since 2000 or so and the recession is likely to backtrack much of the growth seen this decade. Anyhow, there are really two groups of people here though Those that increased their standard of living with debt (CC, HELOC, etc) and those that did not. The ones that padded their standard of living with debt are not going to have the same standard of living, rather a lower standard of living as they have to start to service their debt. On the other hand there are people that did not borrow for such reasons and they won't see that big of a shift in their standard of living.
I think the idea that we are going to go back to a 80's standard of living is way to extreme. Instead, this decade is pretty much a "lost decade" and our standard of living will be idential in 2010 to what it was in 2000.
Quote:
Originally Posted by Bob from down south
From a macroscopic, big-picture perspective, what is out there now to fuel a recovery?
Any recovery is going to be rather slow, I would not be surprised if next decade was another "lost decade". But you don't need a recovery to keep the current standard of living, you just need the bleeding to stop.
Quote:
Originally Posted by Bob from down south
The major industrial nations are all on the ropes...we can't simultaneously start exporting to each other as a solution.
Actually, this would work wonders. The problem is that everyone wants to try to export their way out of a hole, but everyone can't do this. Everyone collectively needs to export and import their way out of the hole together.
And as to what a "McJob" can and will afford, it'll be more than you think, as it becomes more McMainstream. McPrices can't rise if McIncomes won't support them, and the crazy McLending that McSuckered in so many already is all but McHistory. Prices are falling, and will fall further. But if you aspire to the same kind of unsustainability as your forebears, it's entirely true that many will not get there.
That's McCraptastic! LOL. Seriously, I think the 'Mc xxxx' should be the catch-all phrase again versus the stupid 'green shoots' talk on the airwaves. We are having some McFlation followed by a McCommodity boom followed by McStagnation. We need McInnovation and a McPrayer.
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