Whaddaya mean, ya didn't know?

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Geriatrix

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http://www.moneyweb.co.za/mw/view/mw/en/page342028?oid=546391&sn=2009+Detail&pid=287226
Jittery economists suggest a big correction is coming.

JOHANNESBURG - Self-delusion is a dreadful human trait.

“We didn’t know it was happening,” said the Germans after the Nazis had run their country for a decade.

“We didn’t know it was happening,” said many white South Africans, after our country had been run by the National Party for 46 years.

What rot.

“Why didn’t the gurus in Davos tell us the global economic crisis was about to happen?” my friends asked me, often quite angrily.

Well, the gurus did. I wrote about it. Very few people listened.

Dire warnings and predications, detailed descriptions of disgusting things happening, logical expositions of what is about to happen that is potentially disastrous, are often ignored by readers or pooh-poohed by optimists.

We prefer the more optimistic stuff. In the midst of the tsunami we want to read about the one child saved, not the thousands who drowned.

In a financial tsunami, we want to hear of the one business which managed to make money, not the many desperate businesspeople who were forced to give up their dreams, often despite their very hard work.

I write all this to get you to listen, and listen carefully, so you do not say you weren’t told or did not know.

There is a crash coming. A big one.

America is more than 14trn dollars in debt. This rises (or plunges if you prefer) by a million a minute.

According to an astronomy site, it takes about two weeks to count to a million and 50 years to count to a billion, given time for sleep.

(Surprisingly, Googling “count to a million” gets a million different sites, most with vastly differing calculations. I used astronomers as they probably know best when it comes to really big numbers. See alternate calculation below*.)

To count to a trillion, say the astronomers, will take 31 709 years.

Think back 30 000 years ago. Can’t really, can we? Our recorded history only goes back about 7 000 years.

America is more than 14ytrn dollars in debt. There is no plan in place to reduce this amount, only plans to stop the acceleration.

Britain is not doing much better. Only the Chinese and Germans have any money in the bank. Moscow has just bailed out its biggest bank. Even Monaco is tightening purse-strings after splashing out on the wedding.

There are wars along the top of Africa, the Middle East is pretty unstable. Arab sheiks are nervous, and they should be.

From whence cometh our help?

From nowhere. A big correction is on the cards.

In economic terms “a big correction” is like your cardiologist telling you your heart is failing and you need “a big correction…” Be very afraid.

I am neither allowed to give you investment advice on what to do about this, nor do I profess to know, but global economics cannot continue to ignore the extraordinary profligacy of America.

A big, big correction is coming. Not the end of the world, or the rapture promised by the religious idiots. A big financial and economic correction.

Don’t say you weren’t told.

* (If you can count from 1 to 100 in one minute, and you keep counting every minute, without stopping, for eight hours every day (taking time off to eat, sleep, and go to school), you would reach 1 000 000 in 20 days, six hours, and 40 minutes, or almost three weeks.

If, however, you give up eating, sleeping, and school, and just count every minute of every hour of every day, you would reach 1 000 000 in six days, 22 hours, and 40 minutes, almost one week.

There are 86 400 seconds in every day.

If you gave yourself a second per number, this means you could count to a million in just over 11.5 days, and a billion in about 11 574.5 days—or about 31 years and 252 days.

Of course, the figures above don’t factor in sleeping, eating, or living a normal life.

So if you’d like to count only half the day and take the rest of the time off, you’d have to allow for more than 23 days for a million, and 63 years and 137 days to count to a billion.)

*Peter Sullivan edited The Star in the turbulent 1990s, was group editor-in-chief of Independent Newspapers in the past decade, and spends leisure time being chairman of BirdLife South Africa. Well connected in business, politics and philanthropy, he has moderated at Davos for a dozen years.
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I have a question that has entirely nothing to do with the contents of this article.

But with its format.

What the heck is this retarded style, where every sentence is a paragraph?

Do journalists at these media not have any faith in their readers?

Do they think readers can't comprehend two sentences in succession?

Even the BBC writes like that.

I am having a really hard time reading articles like this, it lacks coherence.
 
rainynight65 said:
I have a question that has entirely nothing to do with the contents of this article.

But with its format.

What the heck is this retarded style, where every sentence is a paragraph?

Do journalists at these media not have any faith in their readers?

Do they think readers can't comprehend two sentences in succession?

Even the BBC writes like that.

I am having a really hard time reading articles like this, it lacks coherence.
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You tell them Rainynight65!
 
rainynight65 said:
I have a question that has entirely nothing to do with the contents of this article.

But with its format.

What the heck is this retarded style, where every sentence is a paragraph?

Do journalists at these media not have any faith in their readers?

Do they think readers can't comprehend two sentences in succession?

Even the BBC writes like that.

I am having a really hard time reading articles like this, it lacks coherence.
Click to expand...

I don't know. I kind of like this style. Does seem as if I can read the article faster, skip parts I don't want to read without missing the parts I do want to read.
 
Make 100 predictions and 1 will come true, then you can also write an article saying "I told you so"
 
MY biggest problem with all this is WHO is that $14trn owed to? Not the Chinese. They only hold about $1trn US debt. Not Europe. They hold about $800bln?

In fact, it is owed to the Fed by the US Gov. Thus, they basically owe themselves the money. Its all a big joke and a cover for inflation (i.e. Printing more money.)

If the US puts twice as much money in circulation, since everything is connected to the dollar, everything becomes twice as expensive. Thus, the cost of everything skyrocketing over the past few years.
 
He says the Germans have money in the bank. Doesn't help much when the rest of Europe is screwed, and the Euro is busy disintegrating.
 
stricken said:
MY biggest problem with all this is WHO is that $14trn owed to? Not the Chinese. They only hold about $1trn US debt. Not Europe. They hold about $800bln?

In fact, it is owed to the Fed by the US Gov. Thus, they basically owe themselves the money. Its all a big joke and a cover for inflation (i.e. Printing more money.)

If the US puts twice as much money in circulation, since everything is connected to the dollar, everything becomes twice as expensive. Thus, the cost of everything skyrocketing over the past few years.
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Read up on the Fed. It's not government owned. ;)
 
All this debt is not owed to other countries or other banks or even their own federal reserve bank. Its owed to private individuals.
 
The 'correction' already happened and is continuing to happen for about 2 years now. He's a bit late to the party.
 
cerebus said:
The 'correction' already happened and is continuing to happen for about 2 years now. He's a bit late to the party.
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Nope. That huge deficit needs to be corrected still. It was used to plug the 2008 party. But this time there won't be any bailouts available.When the levie breaks...
 
I predict there is a big bull run coming...

disclaimer: this may be 1 year or 50 years from now, before or after the crash
 
Good article. I saw a few of these before the sub-prime crash. They were few and far between and everybody (mostly more knowledgeable than me in this field) was ignoring them when I pointed them out. Then the crash came and I was the only person who wasn't surprised. Economics - more witchcraft than science, isn't it?
 
Geriatrix said:
Read up on the Fed. It's not government owned. ;)
Click to expand...

Its a government mandated monpoly. The only have any wealth because they are allowed to print money. The point he was making is, pushing some buttons or writing stuff on legislation doesn't change the economic fundementals. The state basically writes an IUO in the form of a bond. The fed writes up paper money and they swap.
 
cerebus said:
The 'correction' already happened and is continuing to happen for about 2 years now. He's a bit late to the party.
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Officially the recession ended in 2009. What he means is that the offical pundits, the government and fed chairman said we are passed the worst of it and out of the woods, and were basically on our way to a nice slow recovery.

What the author is saying is we might have had a short up-turn, but that will be corrected by another downturn and it is all part of the same big mess.
 
K3NS31 said:
Good article. I saw a few of these before the sub-prime crash. They were few and far between and everybody (mostly more knowledgeable than me in this field) was ignoring them when I pointed them out. Then the crash came and I was the only person who wasn't surprised. Economics - more witchcraft than science, isn't it?
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If 4 different economists have 4 different theories. Whom is correct? It is hard to tell, maybe none of them.

What I do know is that MOST mainstream guys are from the Keynesian background (Overseas at least), then you kinda have the Chicago School guys and various others and a very, very small portion are the Austrians, a number of whom got it right and all them argue it is due to their theory of the business of cycle and not a lucky guess.

http://www.lewrockwell.com/blog/lewrw/archives/73123.html

Blumen, Robert. 2005. “Housing Bubble: Are We There Yet?” May 8;

Corrigan, Sean. tba

De Coster, Karen. 2003. “The House that Greenspan Built: Irrationally Exuberant Wall Street Welfare Parasites and Their Fed-God” September 12;

Economics of contempt. 2008. “The Unofficial List of Pundits/Experts Who Were Wrong on the Housing Bubble” July 16;

Englund, Eric. 2004. “Monetizing Envy and America’s Housing Bubble” July 19;

Englund, Eric. 2005A. “Houses Are Consumer Durables, Not Investments” June 8;

Englund, Eric. 2005B. “Diminishing Property Rights Will Lead to a Higher Rate of Mortgage Defaults”

Englund, Eric. 2005C. “When the Housing Bubble Bursts, Will President Bush Practice Mugabenomics?” July, 19;

Englund, Eric. 2005D. “When Will America's Housing Bubble Burst?” November 4;

Englund, Eric. 2006. “The Federal Reserve and Housing: A Cluster of Errors?” April 22;

Englund, Eric. 2007. "From Prime to Subprime, America's Home-Mortgage Meltdown Has Just Begun” September 24;

Englund, Eric. 2008. “Countrywide Financial Corporation and the Failure of Mortgage Socialism” January 28;

Mayer, Chris. 2003. "The Housing Bubble” The Free Market. Volume 23, Number 8 August;

Murphy, Robert P. 2007 “The Fed’s Role in the Housing Bubble” December 28;

Murphy, Robert P. 2008. “Did the Fed, or Asian Saving, Cause the Housing Bubble?” November 19;

Paul, Ron, 2002. Testimony to U.S. House of Representatives, July 16; text of speech in Woods (2009, 16-17):

“The special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.

“Despite the long-term damage to the economy inflicted by the government's interference in the housing market, the government's policy of diverting capital to other uses creates a short-term boom in housing. Like all artificially created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged overinvestment in housing.”

Rockwell, Llewellyn H, Jr. 2008. The Left, the Right, and the State Auburn, AL: The Mises Institute

Schiff, Peter. Undated A.

Schiff, Peter. Undated B.

Schiff, Peter. Undated C.

Schiff, Peter. Undated D.

Schiff, Peter. 2006. Mortgage Bankers Speech to the Western Regional Mortgage Bankers Conference in Las Vegas; November 13;

Schiff, Peter. 2007. Crash Proof: How To Profit in the Coming Economic Collapse New York, N.Y.: Wiley

Shostak, Frank. 2003. “Housing Bubble: Myth or Reality?” March 4;

Shostak, Frank. 2005 “Is There a Glut of Saving?” August 4;

Thornton, Mark. 2004. “Housing: Too Good To Be True” June 4;

Thornton, Mark. 2009. “The Economics of Housing Bubbles”

Thornton, Mark. Undated.
See also Woods (2009, p. 188 for a further bibliography on this)

Woods, Thomas E. Jr. 2009. Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse Washington D.C.: Regnery Publishing

PS: Please note, it is a myth to assume the job of economics is forecasting, it isn't...
Robert Wenzel in this blog mentions the "the success of the Austrian forecasters" in predicting the housing bubble. Now, of course, praxeology is not a predictive science; the Austrian forecasters who succeeded in predicting the housing bubble did this not as praxeologists, but qua thymologists, or economic historians. Nevertheless, credit should go where it is due, and, certainly, these Austrians deserve every accolade for their understanding (verstehen) of the economic realities. I have tried to amass a bibliography on this, and have done a pretty thorough job of it, if I say so myself. Below, I share this information with my tentative listing. Please, if I am in error in any of this, either by omission or commission, do correct me. I would like to have as accurate a record of this wonderful episode in Austrianism as possible. Here goes:
 
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I'm not fussed if everything falls apart I'm really not. I'll pitch my tent in a caravan park down the coast somewhere, grab a fishing rod and chill out. I ain't even mad.
 
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