The U.S. Economy: Stand by for more worse news

[Captain Kremmen]

The shit was only hitting the fan before.
Now the shit is coming in a huge flood, carrying away the fan, the house, and every damn thing in its path.

 

[Billy T]

Thats interesting. Thats how it is in India as well. ... Its essentially one reason why people buy and sell land and property, to make undeclared funds "white" ...

China is even more corrupt than India or Brazil, so certainly there too many pay much less for property than is officially declared in the records. I wonder how much of China's "housing boom / bubble," which is based on official records, is really true.

My post 217 footnote started with: " A lot of people in Brazil hold large amounts of cash. ..."

I bet that is why a huge mount of gold is in India and being used to make rich Indian Ladies look more attractive. I.e. they hold their "not white" cash as gold. What do you think? Is my bet a winner?

 

[Billy T]

... Now the shit is coming in a huge flood, carrying away the fan, the house, and every damn thing in its path.

So I don't always come cross as a pessimist, look at the bright side of this: The amount of farm land is not increasing nearly as fast as the global population - Be happy and thank God for all this Fertilizer.

 

[Billy T]

Billy T, I don't think China nor Australia's economies are balanced.

I agree but as an economy union they are.

I have long stated that the fate of Brazil, Canada & Australia, etc. - the raw materials, energy, & food suppliers to Asian (especially China) is to be come "economic colonies" of China. They will import China's high value added products and pay for it with their low value added exports. The low valued manufactured shirts, shoes, plastic junk toys, etc. these colonies import will come from low labor cost Asian countries - Certainly not China any more as it already has labor shortage and resulting rapidly (>10% real purchasing power / year) rising labor costs.

The US and EU will be relatively unimportant economical in global trade as they will be in deep, long-lasting, depression soon. (China is tired of trading mainly with countries that need loans to buy and is rapidly growing it exports to these suppliers and other Asian countries who manufacture the simple components, like fans China builds into a car or its high value added electronic exports. Chinese exports to the 8 countries of SEATA were up 37% in 2010! When this intra-Asian trade and domestic demand plus the development of infrastructure in Africa, up 14% in last few years, fully occupy China's factories, they will tell the "borrow to buy" US & EU to go to Hell and say: "We don't finance the deficits of dead beats any more.")

China invested massively into factories to make cheap shit for Europeans and Americans and have built a massive property bubble and a number of ghost cities (not towns, cities). People who live off the land can not be expected to *poof* suddenly be happy getting up at 6am and working till 9pm to return to a small box of an apartment over night AND those buildings will begin deteriorating day lot. You really need someone there to take care of them.

Australia also has a huge property bubble, some say 40% over prices and is more highly leveraged than the USA. If shit takes a tumble in the USA, AU will probably fall flat on its face. Not to mention the economy is massively skewed to favor resources. Lots of jobs in mining, not to many in IT. Then there's the baby boomers. ...

Many of the "junk toy" factories along China's coast have closed or have been converted to supply the growing domestic demand, but this is just beginning. Yes there are problems with converting former pig farmers into urbanities - For example, the older men still piss in the streets. China is presiding over by far the greatest and most rapid mass urbanization in human history. Convert from a rural farm population to cities (100 new ones for 1 million population each, plus large expansion of the older cities in the interior.) in about a decade. That took the US > 50 years and involved many fewer people.

As far as the housing bubble in China & Australia is concerned first see my recent post, 222, replying to SAM and note that even with some falsely high data, the prices per square foot are a tiny fraction of those paid in Paris. I did not find any for Australia but Auckland NZ's averge cost is $450/sq. ft. In central Beijing, $400/ sq. ft. and for a “high end” apartment in Shanghai it is $500/ sq. ft. Compared to $3,287/ sq ft. in Paris!

Where did you say the housing bubble was?

Price per sq.ft. data and its reference sources are given here: http://www.sciforums.com/showpost.php?p=2840277&postcount=41

Where you can see a global map giving this data for a few dozen cities.

 

[S.A.M.]

China is even more corrupt than India or Brazil, so certainly there too many pay much less for property than is officially declared in the records. I wonder how much of China's "housing boom / bubble," which is based on official records, is really true.

My post 217 footnote started with: " A lot of people in Brazil hold large amounts of cash. ..."

I bet that is why a huge mount of gold is in India and being used to make rich Indian Ladies look more attractive. I.e. they hold their "not white" cash as gold. What do you think? Is my bet a winner?

Most of the money in India is in the hands of either politicians and businessmen who trade in paper assets. Such people do not really like to invest in gold because it is hard to conceal the paper trail and also hard to liquidate when you need large amounts [how many gold bricks can you keep in the basement, how many can you lug around with you] There are people who hoard gold like Sathya Sai Baba

More gold has been found at Yajur Temple in Puttaparthi, the personal chambers of late Shri Sathya Sai Baba. As four more rooms of the temple were opened on Saturday, Rs. 77 lakh worth of gold, silver and a diamond ring were found.

Earlier on June 17, a massive 12 crores in cash, 98 kg of gold and 300 kg of silver were found from the ashram. The millions were found by Trust members when they opened Sai Baba's chambers after his death.


Read more at: http://www.ndtv.com/article/india/m...hya-sai-babas-ashram-in-puttaparthi-116432&cp

But thats not the norm. I think most Indians would hold money in the form of property and assets abroad [see Laxmi Mittal ] and only some portion in gold.

Gold in India is a woman's assets because women have so few assets in industry or property and due to the dowry system and economic reliance on family members tend to be dependent on others for their well being. Having a lot of gold can significantly enhance the value of a woman in the eyes of all her family and especially if she is widowed or has no children

 

[Billy T]

More on Chinese housing bubble from Email just received from Matthews Asia <info@matthewsasia.com>:

" ... According to a leading Chinese developer, sales dropped 49% over last year in the 14 major cities it tracks. In October, transaction volume in many major cities retreated even further.

Due to weak sales and tighter loan quotas from banks, many developers have lowered prices in attempts to expedite sales. In Shanghai, prices for some units have declined 20% to 40%. The price drops in some cases have caused uproar. Many buyers, who made down payments during earlier phases of project construction, have stormed the sales offices of three developers who recently lowered prices, demanding the cancellation of their previous purchases. These scuffles do not appear to have ended well, with physical fighting and property damage reported.

The conflicts have prompted the Shanghai city government to require developers to report and file any price cuts of more than 20% with authorities. ..."

 

[Billy T]

“ … A recent assessment by the Congressional Research Service estimated that U.S. banks have $641 billion in loan exposure to Portugal, Ireland, Italy, Greece and Spain. But French and German banks themselves have considerable debt to those same countries, and U.S. banks have another $1.2 trillion in loan exposure to German and French banks.

And this is the heart of the problem. Who takes the losses, and if they fall, who do they then bring down in turn? If you’re somebody with funds to lend and don’t know the answer, in response to these fears what you do is cut back all kinds of lending. If that sounds familiar, it should, because it’s exactly this kind of ricocheting financial uncertainty that brought down the world economy in the fall of 2008. …”

From: http://www.economonitor.com/blog/2011/11/greece-italy-and-financial-stability/

 

[nietzschefan]

LOL hilarious. Hard to rape the U.S taxpayer for that one. fukin banks are useless.

 

[Billy T]

“… "We have all these unofficial debts that are massive compared to the official debt," Kotlikoff tells David Greene, guest host of weekends on NPR’s All Things Considered. "We're focused just on the official debt, so we're trying to balance the wrong books." Kotlikoff explains that America's "unofficial" payment obligations — like Social Security, Medicare and Medicaid benefits — jack up the debt figure substantially. "If you add up all the promises that have been made for spending obligations, including defense expenditures, and you subtract all the taxes that we expect to collect, the difference is $211 trillion. That's the fiscal gap," he says. "That's our true indebtedness."

We don't hear more about this enormous number, Kotlikoff says, because politicians have chosen their language carefully to keep most of the problem off the books. Why are these guys thinking about balancing the budget?" he says. "They should try and think about our long-term fiscal problems."

From: http://www.npr.org/2011/08/06/139027615/a-national-debt-of-14-trillion-try-211-trillion

Billy T comment Even if only $111 trillion of cost fall due over the next few decades the government income (which is net negative already) cannot pay them. There are four choices:

(1) print much more money
(2) nearly double raise taxes (on the “1%” that may be politically possible, but even if all they have were taken, it is less than 111 trillion)
(3) cut government expenditures by nearly 50% ,which will be impossible, if much of (1) is done as interest rates on the growing debt will rise dramatically and is politically impossible if done to the 99%.
(4) default on promises including bonds, etc.

I suspect a combination of (1), (2) & (3) will postpone (4) for about a decade more but that is too optimistic if I am correct in my long standing prediction that a run on the dollar will occur by or before Halloween 2014, which is less than three years from now.

 

[Captain Kremmen]

"Disaster for Germany"
Looks like people are losing confidence even in German Bonds.

http://www.businessweek.com/news/20...ds-at-10-year-auction-miss-target-by-35-.html

Stand by for another market fall, I think.
We'll see when the US market opens.
It sometimes amazes me how slowly the stock market reacts to news.
The DAX is actually slightly up this morning.

************************

UK had a big shock yesterday when Thomas Cook reported funding problems.
Thomas Cook invented organised foreign travel, and are a hugely respected old company.

 

[Billy T]

As many know about 5 or so years ago I predicted a run on the dollar, (before Halloween 2014) and quickly (a few months) to be followed by worst ever depression in US & EU, but not in China or their suppliers of the food, raw materials and energy (like Brazil, Australia and even Canada, which will become "economic colonies" of Asia.).

Thus I will ask the authors of book AfterShock for some of the royalities. - they are claiming the same as I predicted as I did but LATER.

If you are stupid enough to waste 15 minutes hearing them promote AfterShock go here:
http://w3.newsmax.com/a/aftershockb/video.cfm?promo_code=DA09-1
but do as I did - jut let it play in the back ground while do other things with your computer.

They do have one (often repeated) line I liked referring to QEx etc. as "Medicine" I.e. "The medicine has become the poison."

They speak of 100% annual inflation for at least three years starting in 2013 with greatest depression (50% unemployment, etc.) by 2014 - Do you think they have been "larking" at my posts?

 

[Billy T]

No comment needed. Picture worth 1000 words.

If image does not show but "place holder" does, right click on it and open in new tab / page - that still works for me, but not always - get "precondition failed" msg sometimes.

Here is link to picture: http://usa.chinadaily.com.cn/attachement/jpg/site181/20111210/b8ac6f4a88cd104d2bf609.jpg

 

[S.A.M.]

I can't see a picture - do you have a link to the page?

 

[Billy T]

I can't see a picture - do you have a link to the page?

Go HERE: http://usa.chinadaily.com.cn/

Now as it is today's China daily. Picture shows for me, but often will not up link in a few days - Perhaps they won't up link to India?

later by edit: picture is gone for me too now, but I copied and sent to your Old? gmail.com address - hope it still works for you.

Photo is most of way down front page page on right side. It shows "Uncle Sam" on bike with rear wheel OK as US stars on round blue field, but front wheel is the Euro symbol which is not a full circle - so Uncle Sam is stopped and about to fall over handle bars.

 

[S.A.M.]

Thanks

 

[Billy T]

US loses it main export market (Europe) when Euro falls
I.e. it is not just US banks holding European bonds that get hurt - more export related jobs will be lost.

 

[elte]

It can't be good for the U.S.A if such a large part of the world economy (Europe) remains in a great economic depression. Alas, the lean times that I've seen coming for so very long (about 25 years or so) are deepening. I just saw lots of signs of things heading downhill in overall prosperity back then, and didn't understand stuff about even a fraction of our present problems.

 

[Michael]

 

[charles brough]

Everyone seems to think we are heading for worse news. In economics, it is impossible for even most people to be right. It is the feeling of impending catastrophy that is working to avoid it. Now both the ECB and the Federal Reserve are buying S. European bonds to keep their economies from deflating. That means a vast increase in credit-money in circulation. With that and the US economy slowly recovering, I propose that the rising prices will prevent the collapse the public now expects.

However, down the line when confidence has been gradually, painstakenly restored, everyone will think we are entering a great new economic boom, one I propose, will be accompanied by hyperinflection.

In an effort to control the inflation, I predict that China, India, and Brazil will implode along with the whole global economy.

 

[Billy T]

This is the Jack up drill rig that in 20 meter waves (66 foot waves) recently sank in Russia’s NE oil field:

Russia is now the world's largest producer of crude oil but their production is moving offshore into very hostile conditions to compensate for accelerating crude oil extraction declines in the traditional production basins of Western Siberia. The West Arctic Sea (Russian and Norwegian) is also seeing considerable drilling in very difficult condition – for example drifting ice in winter or large waves in summer.

World is not “running out of oil” but it no longer can supply demand with cheap oil.
$5/ gallon gas in US is only a year or two away,* IMHO, as China & India greatly increased demand.** The production cost in some old fields may still be only a few dollars / barrel, but it will sell at same high price as oil from these difficult and expensive fields (except for some sold cheaper to the internal markets by state owned / controlled oil companies.)

When new car is sold in China or India etc, usually it is pure new oil demand as there is no old one being scrapped. In US a new car typically represents a slight decrease in demand as it is more fuel efficient than the old “clunker” going the the junk yard or steel furnaces.

* And with it (and other more important causes) the slide down into GWB's depression begins (soon after the run on the dollar).

** by edit, Just read: "passenger vehicles in India, a segment that’s grown by a compound annual growth rate of 17% over the past five years—this growth is a secular trend supported by a low car density rate of eight cars per 1,000 people in India. ..."
I think growth of car sales in China, world's largest car market, is significantly higher.