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Slow Growth? Perhaps because all the growth that’s been ‘pulled forward’ from the orgy of borrowing over the last 50 years? I wonder if that could be it? The world may be tapped out, kinda like how financing energy these days robs the cradle for everything else.
I don’t think the central banks are even trying anymore. QE seems to be thinly veiled looting of the system. It makes no sense, has no logical structure that suggests it might stimulate the economy. It seems to be on the order of prayer, if we shovel money to the top of the economic chain, maybe people will spend money again. Let’s face it, we have ‘grown’ into every nook and cranny of the planet. Max finance, max exploitation, max pollution, nothing left but to circle the drain.
It is all about control and continued centralization. Otherwise there might be some sort of move towards debt cancellation, if they really wanted more ‘growth’. It seems almost absurd thinking of how long they have talked about lower rates being a stimulant. And yet they build a huge structure of insurance and funds and bonds and trusts predicated on good returns. Nothing like a little poison to pep you up after you have blown up your system from excess ! Put a bunch of bankers and lawyers together, and this is what you get, economics!
Negative interest rates seems to be a classical case of over control. Modernity has brought society a facade of control. Control of the people, control of commerce, control of nature. Yet we are seeing the reality of that pretense of control. Breaking historical relationships, as in risk and interest, has not been to the benefit of humanity. Central banking control of interest rates, in furtherance of their ‘control’ of the business cycle, has broken a central control cycle of capital. We are starting to see to the fruits of natural control as well. Growth, as the guiding principal for a finite world, has it’s limits
I remember doing a paper in college in 1975 about the growth and economies of scale in the US economic system being a natural source of conflict. I didn’t see the growing trend to centralization as the problem it has become these days, and adding to the problems. Finance seemed like a tiny utility function at the time, dwarfed by the industrial character of the day. It has certainly grown to dominate the global system. The collapse is going to be a terrible thing.
The D word in that MarketWatch article should have been deflation. Because they will never mention that either.
Of course QE makes everything worse. It is essentially stimulating the cancer in the economy that is deflation. There is no path for QE to improve the economy, it only further drains the real economy, so it is deflationary in a real sense.
Talk about playing checkers vs. playing chess ! Or perhaps bringing a knife to a gun fight might be a better description of the mismatch. There are substantial misunderstandings in play here, almost an old world/new world divergence. I fear for the new world.
Seems that the cover of forced Nazi loans is much better than the reality of the ECB as an umbrella looting organization for said Germans. And that is contrasted against the chaos of exit, whether jump or push. All that Euro funny money will evaporate like gasoline on hot pavement, to the great detriment of all things financial. Perhaps it is better to just go ahead and have at it, push the big red button and get the meltdown out of the way. Somehow I don’t see that as an option that is being considered.
One more example of why the economy and society are going nowhere. Markets and the economy exist in seperate spaces, and the economy is being crowded out. Those pesky factories are interfering with innovative finance, let’s move the last of that trash out soon.
the central banks have become one trick ponies for every problem, more credit…and keeping with the addiction meme, more credit is like more drugs, just going further into the problem…less productive economy….more casinos and less infrastructure
when every leg down means cranking up the money machine, everything that responds is credit centric, forget the long lead time, market driven, socially centered enterprise, that crap can pound sand, we get quick turnaround, high margin stuff….loans to suckers that can be securitized, new insurance programs for fast cash flow, no real estate this time, that’s still a smoking heap from the last crash
finance wants more finance, the oligarchs can’t imagine a world without full scale manpulation of everything, top down control…… but the world was built from the bottom up, productive meeting of needs, trade, manufacturing, old school economics
And all the collapse and scurrying about by financial parties world wide is brought about by the fundamental collapse of the energy equations. It is all interlinked when you know the motive force behind it all. A gazilion thanks to Gail T., and to you Raul, for giving me the key to make sense of the world seeming to shake itself to pieces.
If debt is indeed borrowing from the future, then the world is bankrupt for the balance of the century. There has been no growth in the US economy that was not based on debt, be it for homes, or cars, or retirement. The divorce of economic developement from demand to supply makes all of that growth meaningless. Now the world can sit in the midst of mountains of derivatives, sprawling tracts of MBS and securitized 7 year car loans, and wonder why there are no jobs.
It is amazing to see the headlines of some of these items, and then to click thru to see the spin that Bloomberg, or whoever, are putting on them, to make it seem like light and airy news. Spending is on a little holiday after working so hard, it will be back to pull us all out of our little doldrums, have no fear! Atomic workers were busy with the finishing touches on the upcoming fireworks exchange over Ukraine, to the delight of onlookers and armchair general everywhere!!!
Someone is in serious need of context adjustment, but that may be too macro for the press.
Pretend money spent on pretended obligations, and they pretend that, somehow, this will casue real people, with real limitations and debts, to spnd more of what they have been getting less of, for the last generation. If any real money changes hands in QE, it is from public pockets to private pockets that are already full. There is no rational path that will cause consumer stimulation from any central bank actions, yet that is what they claim to be after in the long run. A stimulus to the economy, delivered to the business sector, that depends on consumer spending, that is impoverished by central back actions. It is social suicide, or murder, take your pick.
It really is a different economy now. Central banking actions just encourage an increase in the cycle speed of boom to bust. The bubbles in beween are feeding frenzies for the financial class. QE is the active transfer phase of public to ologarch. By design or by acident, it is an acceleration of the return to two class society. Nuclear weapons keep the disruption of war far enough away to keep the upper class intact. At some point the model will break, either by war, climate change, pandemic, perhaps all of the above, leading to collapse. The more complex a network is, the more prone it is to sudden and total collapse. It’s hard to think it could get more complex than today. It is a very dark future ahead.
I was thinking the other day about how differently the ideal economy is viewed from topdown vs bottomup perspectives. A financial economy is certainly prefered in a topdown mode. Markets of markets, a primary focus on protection of the largest financial interests, anything else would just be noise. But that has to be built from a bottomup economy, innovation in the production of day to day needs of the populace. Farming, mining, manufacturing, infrastructure, a primary focus on trying to enable the greater good.
Looks like the great split, capital vs labor, ying v yang, etc.. resolution doubtfulJanuary 16, 2015 at 1:04 am in reply to: The End Of Fed QE Didn’t Start Market Madness, It Ended It #18397
I never cease to be amazed at the claims for the market and the fixes for the market. If the market blows up and threatens to melt totally away, the standard fix is to suspend the major forces of the market. Interest rates have to go to zero, and the government has to pump money into the market. Because we couldn’t have markets if we didn’t have banks to manipulate, make, and move the markets. But markets for banks are financial products, securities and derivatives and hedges, while markets for the rest, the bottom up markets, are business loans and mortages and car loans. So we will never be able to count on government or banks to fix real markets, because they don’t know or care about them.
Thanks for the history recap. I was reading this blog in those early days, not so much The Oil Drum, but that may have been where the links came from. It has been too long for me to say what came first, Juan Cole, or Naked Capitalism, or ZH, or Mish. Early days, for sure, for the scenes behind the scenes, the not mainstream explainations of the truth in all the twisted numbers and obvious fabrications. This price fall always had the seeds of collapse in it, even if it was started as some ‘scheme’ to get us, or the russians, or whatever. All the trillions that poured into Drill Baby Drill loaded decline with the potential to crash everything. It still could yet, assuming we don’t blow it up before collapse.
All of the above seems to imply a vast empty chamber underneath stock prices. A flash crash, without the instant bounce back will be the most likely result when everyone sees all the daylight under their feet. I just wonder if the secret ‘we prepare in secret’ departments are hard at work trying to fix a way that the oligarchs don’t lose their shirts in the process.
The quandry of the west seems to be a refusal to admit how wrong ‘economic theory’ is, or perhaps how bankrupt is is as a cover for giving all the money to people that already have most of it. Why no grand politico-economic schemes for IAP (income augmentation programe), if the purpose is to boost consumer spending? Certainly the US Fed has already committed substantial funds to feeding the business side of the equation, with nothing to show for it except trillions in over-wrought business valuations, stock markets, and all the other debris of finance. All the world has played the game of continual impoverishment of the consumer and society and the earth. Do we think that this global freeze is just an imbalance in business conditions? Does the business world need a better deal to justify continuation? The concept of a mutally beneficial relationship has left the world of finance and humanity. Small wonder the wheels have stopped.
One of the big questions I have is how likely is a war to preserve the EU? All the talk of how expensive it is for Greece to stay or leave, and how Germany does not want to spend money either way. I hope that means no action either way. But most likely will be an inconclusive Greek election, coupled with a less decisive government action in Greece than projected. Please let there be more muddle…
Wow, many loads of denial are spread out before us tonight. But the simple facts are before us, and as DD said, collapse will take care of it anyway. It seems quite organic and part of a loop that our particular life form would discover the substances that would both send it to the moon and overflow the flexibility of the planet to provide life as we know it. How many examples do we need from the past to see that humans are incapable of an off switch? It makes me curious to know what comes after this epoch. Will it be the small pockets of savages in the ruins, or a transcendant post homo sapiens mutation, or just one more ravaged planet in orbit?
As for the growth in the economy, you have the reality exactly. It always reminds me of a very old joke about lies, damn lies, and government statistics. Or the one about the applicants for an accounting job, where a lawyer gets the position after asking the CEO, ‘what do you want the answer to be?’.
1999 was the end of growth. We have seen nothing but national contraction since then,the reign of seasonal adjustments. A generation living in their parent’s basement, 15 years of deflation in incomes and occupations, national policy in the hands of bank sycophants, consumer sentiment at all time highs, you just can’t make stuff like this up. Oh, and I almost forgot about the national denial of an almost certain ecological catastrophe.
And KKR and the Carlyle Group think it’s a great time to buy….
We thought we had fought the world to make it safe for us, and all we had really done was try to homogenize it for our culture of consumerism. By our cars and our roads they knew us, pouring concrete and asphalt the world over. The 50’s saw even Afgahnistan and Iran temporarily made over in our image.
There could be a problem if the Oil crash starts to threaten systemic problems in bankland. It looks like prices could really crater, and stay there for an extended period. And with so much of the fed QE proceeds plowed into energy since ’08, things could turn into shit for TBTF very quickly. With the government in such a polarized disposition these days, I don’t see how they could do the same bailout, short of contriving a national security situation out of it. There are a lot of very bad possibilities out there that seem really close, but then again there always are. I will fall back on my favorite quote from the romans, ‘the more things change, the more they stay the same’.
I don’t go for any of the attributions to god, but it does seem logical that this is all part of the ‘natural’ process. Perhaps it has been repeated millions of times across the galaxy, a jump in the abilites of the dominant species that leads to a laying waste of the very environment that brought them forth. In a smaller scale we have seen the pattern before, and the money part is just a marker for a more advanced civilization?
As long as everyone is pretending, there is no need to introduce reality into the equation and spoil the party. That has been the mantra in the USSA since who knows when. All the fedsters can speak in tounges to confuse the few that are trying to pay attention. Deflation becomes a Real Recovery with minor adjustments to the obligatory statistical reporting. Money is borrowed into existance. Where do you think the chinese learned these tricks? But the flaw is that it can’t go on, and we are hearing the sounds from the understructure that indicate the collapse is nearly upon us.
So, how many have left the labor force, and how many have been down shifted in their earnings just since 2008? What if we measure back to 2000 for those same losses, what is the shrinkage, the deflation that is in play. We pretend the GDP has grown in the face of manufacturing jobs morphing into lawn care, auto spas, dog groomers and life coaches. Control frauds have replaced paid for homes, and pensions and 401k accounts with SSN disability and SNAP. The american dream in progress.
Yes, it has been the ‘vast right-wing conspiracy’, in their overwhelming greed and manipulation of the purported free markets, that has brought the scourge of deflation to the capitalist system. Suppresion of wages, exporting of the manufacturing base, financialization and privitization, have popped the bubble of western civilization. How ironic it happens as we discover the irreversable contamination of the single ecosphere inhabited by humanity. It could easily be mistaken for divine retribution, were not science advanced enough to eliminate the possibility of said intervention.
Retail is way down year over year, so we can expect glowing reports for the season to be revised ever downwards. New construction all around t-town, but only about a third of what was headlined. Continual short falls in Tulsa proper budget, like the holes in all the existing retail strips, hard to pull back previous infrastructure spending poorly spent.
I don’t think it would make enough difference if the ‘silents’ spent every dime they had locally. As you pointed out a few days back, we have been chasing broken models for how to govern and spend. Instead of creating a self renewing economy, wealth has concentrated in a very small segment of society. Those people have been able to protect their wealth by manipulating the tax code and the government in the last 75 years. If it was an endless loop, the top layers would be wiped out in crashes. It is not an endless loop, but we seem to be close to the end of this chapter of life on earth. I wonder if we are setting up the next stage, with overgrowth and climate modification?November 12, 2014 at 12:38 am in reply to: And Then There’s The Things You Couldn’t Even Make Up #16502
everybody thinks government money is free money, and yet it is everybody’s money in general but nobody’s in particular….make me have fond memories of when the only example anyone could cite was of paying farmers not to grow crops, JUST CRAZY… before tax policy was seen as an economic goody bag to encourage or discourage the activity du jour…strip alll that out of the budget and what is left? i really am curious what that number might be
If debt is borrowing from the future, we have reached the end of time.
One might suspect that the language of economy is being used to mask a massive robbery of the populace, much as is the case in Korprate Amurka. Regressive tax hikes and confiscatory fiscal policies seem aimed at a goal of population impoverisment, and not at financial inflation. I know that would seem shocking to global thinkers, but there you have it.November 4, 2014 at 4:48 am in reply to: Japan’s The Tinder That Set The World’s Bad News On Fire #16334
It’s almost as if they think the economy is a machine, and that doing X will always result in Y. That ridiculous image of pump priming from the 70’s comes to mind. But the patient has been on stimulants for so long now, it just waves it off. People and problems, individuals on a vast scale. We all read history, and we know this chapter is ending, along with the cheap oil. Will there still be nations when we are all back to firewood??