Perspectives on the global economic meltdown

ss_roy · Post by **ss_roy** » 24 Oct 2009 07:19

Hari,

I never left, just prefer to keep quiet until something big happens (or will happen). I can be found in other discussions on BR.

The most important changes:

1] Public opinion in the US is shifting much faster than pundits thought, but I predicted. (you have linked to a couple of articles about that)

2] Extended unemployment benefits are starting to run out in the US. This is far bigger than most of you realize.

3] Ordinary people are starting to realize that they have been had, jobs are not coming back, pensions are DOA and the current system cannot reform. A year ago many thought that the system would recover if they thought positively, not any more.

4] State and local governments are suffering record tax collection deficits. The real economy is still deflating.

5] The 'system' is still playing as if the old ways work..

Their last chance to crash land was in April 2009 (after the second stock market dip).. now it can only crash. The rest of world, including PRC, will go down with them.

The west, japan, korea, PRC have a demographic profile that will hinder their ability to come back (to their original positions), barring a miracle.

Hari Seldon · Post by **Hari Seldon** » 24 Oct 2009 08:20

ss_roy,

The most important changes:

1] Public opinion in the US is shifting much faster than pundits thought, but I predicted. (you have linked to a couple of articles about that)

Agreed. But counterpoint is, so what? Its not clear the public has leadership, direction, purpose even to achieve anything tangible or premanent against the establishment even now.

2] Extended unemployment benefits are starting to run out in the US. This is far bigger than most of you realize.

Something the establishment is well aware of. They will 400% extend unemp benefits even more. Just printed notes are used for this, ain't it? Not doing so carries risks whereas printing a trillion odd more is no big deal now, really.

3] Ordinary people are starting to realize that they have been had, jobs are not coming back, pensions are DOA and the current system cannot reform. A year ago many thought that the system would recover if they thought positively, not any more.

In bits and pieces only. The corporate media and gubmint agencies are deployed in record strength to prevent a coalesce of critical mass under a purposeful, directed leadership anywhere. So far they have succeeded remarkably well. Their latest acts like placing a 29-yr-old goldmanite into the SEC's enforcement chair is beyond audacious. ANd they seem to have gotten away with it clean, so far.

4] State and local governments are suffering record tax collection deficits. The real economy is still deflating.

This is irretrievable. This is where the collapse will start from, IMO. Pension and other gubmint worker unions will have to be fought off. Tax increases are a no-no anc could actually lead to tax-revolts in true US revolutionary tradition in redneck country and spread from there, perhaps.

5] The 'system' is still playing as if the old ways work..

Their last chance to crash land was in April 2009 (after the second stock market dip).. now it can only crash. The rest of world, including PRC, will go down with them.

Would love to know your thoughts on what it may mean for yindia. What'llhappen to our energy mkts? Oil? food? commodities? service sector? global trade crashing and burning? OMG scary scenario onlee....

The west, japan, korea, PRC have a demographic profile that will hinder their ability to come back (to their original positions), barring a miracle.

Howlong can they stave it off at most? How long can they continue to mooch off the labor of the rest of us SDREs keeping exchange rates so low??

Just wondering. TIA.

ss_roy · Post by **ss_roy** » 24 Oct 2009 10:12

Hari,

Empires are made of people, and just like them, empires are mortal. It is not public action that changes history, it is public revulsion and disengagement that destroys empires.

They can print as much as they want, but they cannot maintain status quo because of a series of interlinked problems. Unemployment benefits are minimal and cannot support increased consumption, growth or even underwater mortgages. China can buy US debt only as long as average americans can afford to buy an ever increasing amount of chinese stuff. The chinese cultural mindset is too mercantile to encourage domestic consumption on that level.

People act only when they have to... so wait till a worthwhile % of previously well off people lose hope . We have already reached that point, in at least a few US states. The unemployment benefit issue might just be the spark that sets it on fire.

The one big difference between the US and all other western countries is civilian ownership of guns. It is one thing firing on iraqis and afghans or firing on protesters in the pre-internet era, but if push came to shove- it is likely that the original purpose of the 2nd amendment will be asserted. It might be chaotic and prolonged, but no advanced and productive society can work without the consent of the majority.

For India this is both an opportunity, and a challenge (Indian "leaders" are deferential to whites). The best hope is that whatever happens will destroy the status quo in all countries, including India. I am not averse to bloodshed, as that is the most common means of systemic change (though not always for the better).

The OCED countries cannot mooch off others for a long time (not more than 5 years, more likely <2) for two simple reasons:

1. Their systems depend on taxation, which in turn depends on its citizen's income. People in india do not pay taxes to US or european countries (nor do they earn enough to pay them, if forced).

2. In the current setup, the majority of taxes come from people in the working age group. However since many industries in these countries are supported by the government (and hence tax revenue), a drop in tax revenue causes a drop in employment causing a further drop in tax revenue causing further job loss.. you get the picture?

Singha · Post by **Singha** » 24 Oct 2009 10:57

an increase in junior and high school costs, cost of petrol, cost of medical insurance, increase in social security tax to pay for baby boomers retirement from a smaller pool of working adults in combination would be disastrous for the avg american family at their current levels of consumption and energy use and leave them with almost no savings for old age.

there is plenty of meat on the bone in terms of discretionary expenses in chasing after the latest-anything with short replacement cycles to trim out . literally also americans need to get smaller and eat less. yesterday I was digitizing some old miniDV tapes taken on trips within the khanate and after 5 yrs of not being there was shocking to see the sheer size and bulk of most people over there which looked 'normal' to me then.

the new found 10% family savings rate could disappear in a instant if qakhan cannot hold the line on items in first para. things could get quite ugly like insurers shipping off people en-masse to mehico or offshore thai/india owned ships functioning as floating hospitals in international waters to cut costs. expenses on cosmetic treatments , lotions and surgeries which I bet is a fortune over a urban american woman's lifetime would need trimming, as would eating out, cinemas, cellphone yak yak expenses , the latest ithing etc.

one of the side effects of cheap land and housing compared to europe is people have
no space constraint between the attic , garage and basement and keep on buying
and piling up tons of stuff they do not really need. living in row houses, apartments in europe and asia encourages some inventory discipline in this matter. plus ofcourse nobody supplies them as cheap or stacks them as deep as wal mart.

when the median new suburban home size declines to 1200 sq ft from 2400 sq ft there will be sustainable economy.

Hari Seldon · Post by **Hari Seldon** » 24 Oct 2009 14:44

Richard Koo is a guy I would listen to. He's also the guy who (first?) correctly diagonized the disease ad gave it a name - "balance-sheet recession". The disease was then afflicting Japan p[ost the '89 bubble thunderburst and continues to hold japan down into deflation even today. Koo was on location in Tokyo when the nightmare unfolded there.

He later showed how the same disease perfectly explains the symptoms of what happened after the 1929 crash that became the great depression.

U.S. Risks Japan-Like ‘Lost Decade’ on Stimulus Exit

U.S. officials contemplating an exit from record fiscal stimulus are in danger of repeating mistakes that plunged Japan into its lost decade of stagnant growth, according to Richard Koo of Nomura Research Institute Ltd.

“This isn’t a cold, its more like pneumonia,” said Koo, author of “Balance Sheet Recession,” a 2003 book about the malaise that hit Japan after its stock and real-estate markets crashed in 1990. “We still need more government spending,” he said, adding it could take “three to five years to get out of this mess, even under the best of circumstances.”

Koo’s comments echo the view of economists including Nobel laureate Paul Krugman, who warn that the U.S.’s likely return to growth in the second half of 2009 doesn’t mean a sustained recovery is assured. The Obama administration aims to rein in a record $1.4 trillion budget deficit as growth returns, seeking to safeguard the value of a declining dollar.

“If you learn your lesson from the Japanese experience, you don’t remove your fiscal stimulus until private sector de- leveraging is over,” Koo, 55, chief economist at the research arm of Japan’s biggest brokerage, said in an interview at his Tokyo office last week. “When we see the private sector coming to borrow again, I’ll be the loudest person on earth arguing for fiscal reform. That’s the exit.”

Koo calculates that the bursting of Japan’s asset bubble in 1990 erased 1,500 trillion yen ($16 trillion) in wealth, equivalent to three times the size of the economy. Companies focused on repaying debt rather than undertaking new projects, causing demand to plummet and triggering a cycle in which cash flows fell, asset prices dropped and balance sheets deteriorated.

This time it’s the U.S. consumer that’s inundated with debt. Household debt soared more than 10 percent each year from 2002 to 2005, when the economy expanded an average of 2.75 percent.

“We have zero interest rates and still nothing’s happening,” Koo said. Businesses and households don’t want to borrow money even at zero rates; they’re too busy rebuilding savings and paying off debt, he said.

“We had these false starts,” Koo said. “The economy would begin to improve and then we’d say ‘oh my god, the budget deficit is too large.’ Then we’d cut fiscal stimulus and collapse again. We went through this zigzag for 15 years.”

I must add I don't buy Koo's prescription even though I agree with his diagnosis. The deleveragibng in the povt sector should happen w/o gubmint props to the banking system. The banking sys should have been nationalized and then carefully broken up bit by bit. Bailing out those turds was the worst thing - achieved nothing and saddled the taxpayer with a near-unpayable debt burden. bad bad bad.

Neshant · Post by **Neshant** » 24 Oct 2009 17:29

Bill Lagner on where the economy is headed

Part 1 : http://www.youtube.com/watch?v=nwRd9HgEHD4

Part 2 : http://www.youtube.com/watch?v=qwjvXryXB9A

Part 3 : http://www.youtube.com/watch?v=yUW4t4D3370

Part 4 : http://www.youtube.com/watch?v=XouOzpN310Y

Part 5 : http://www.youtube.com/watch?v=iEo5Vt3rqCY

Hari Seldon · Post by **Hari Seldon** » 26 Oct 2009 16:12

UK households 'lost 13pc of wealth in one year'

The huge impact of the economic turmoil on households in Britain has been revealed by new figures that show that household wealth in Britain fell by £844bn between 2007 and 2008, driven by sharp falls in house prices and the collapse of the stock market.

Cry me a bucket. 13% is hardly 'huge'. Dropoffs across major asset classes - property, stocks and others were more devastating than merely 13%. Seems like propagandu is on.

The findings, by the National Institute of Economic and Social Research (NIESR), were described as "staggering" by Simon Kirby, research fellow at the think tank.

"In just one year that's almost the total annual income of households wiped from their stock of wealth," he said.

Pensioners, and people who are close to retirement, have been among the worst affected by the decline in wealth. Shareholder losses following the nationalisation of some of Britain's banks and building societies, will also have wiped out wealth for many.

Hari Seldon · Post by **Hari Seldon** » 26 Oct 2009 18:59

Capmark Seeks Chapter 11

One of the nation's largest commercial-real-estate lenders filed for bankruptcy protection in Delaware, the latest sign that problems in that market are far from over.

Capmark Financial Group Inc. has been one of the biggest lenders to U.S. investors and developers of office towers, strip malls, hotels and other commercial properties. An independent company that used to be the commercial lending unit of GMAC LLC, a financing affiliate of General Motors Co., it has been in financial straits for months and warned in September that it might have to file for Chapter 11 reorganization.

In its bankruptcy filing, Capmark listed assets of $20.1 billion and liabilities of $21 billion as of June 30. Citigroup Inc. is the agent on much of Capmark's secured debt. Other holders of Capmark's secured debt include hedge funds Paulson & Co., Anchorage Advisors and Silverpoint Capital, a person familiar with the matter said. (The asset - liabilities balance does not seem all that bad. Just how dodgy and marked to fantasy are those assets anyway? - Jesse)

Some of Capmark's debt that can't be repaid might be converted to stock, the person said. Current plans call for all Capmark businesses to be preserved as part of a reorganized company or "sold as going concerns for full value," the same person said.

The filing comes amid similar troubles in the commercial-property arena. Mall-giant General Growth Properties and hotel-chain Extended Stay Inc. filed for bankruptcy in the past year, and more commercial-company real-estate ventures could fail amid an inability to refinance debts and reduced customer traffic as consumers continue to pull back.

Jesse is among the more careful, astute khanomic commentators I'm following of late. So his(?) take here, quite alarming for one so otherwise measured, is IMO worth reproducing in full:

We are watching a train wreck in slow motion, with the Fed and Treasury putting on a smoke and mirrors show to hide the gory details of perfidy.

Recovery without jobs, solvency, real consumption, or increased manufacturing is not a recovery. This is the corpse of an economy coughing up the remnants of its vitality in response to the Fed's monetary Heimlich maneuver.

And when it is done there will be nothing left, except a pile of markers and an unpayable debt, insolvency and default.

Oh, the dollar will surely stagger for a while, and do some turns and twists to confound the speculators, but its condition is worsening. And what is unthinkable to those who maintain a studied ignorance of history will be a fait accompli... fin du régime, le siècle du dollar.

Katare · Post by **Katare** » 26 Oct 2009 21:52

Hari Sahib,

What is going on with ya! Where are your positive vibes

Good things would happen they always do to ones who keep their faith in tough times! Hang on there buddy, we are all in it together

ss_roy · Post by **ss_roy** » 27 Oct 2009 01:51

and I repeat again.. the problems with our current setup are:

1. There has been no real growth in the west for over 30 years, just fancy accounting and confidence scams.

2. The classical and neo-classical western economic model is a patched up version of medieval banking/trade. It was never designed for our reality..

3. Demography is a bitch.. debt based money is a even bigger one.

4. We have very high productivity, but require few people to do real work. But without a high level of consumption, we get a deflationary spiral.

5. The so called capitalist model never applied to the rich. What we now have is the end result of human kleptocrarcy, greed, hubris and belief in experts. The old model worked for a pre-industrial and early industrial world..

6. Technology for communication, transport, weapons has spread + we cannot exist without a ordered world- supply chains, trade, logistics etc.

7. Short of paying people, non-debt based money, to spend the system will collapse.

Umrao Das · Post by **Umrao Das** » 27 Oct 2009 02:30

It is not job creation saaru, it is what kind of jobs and what kind of products that come out job.

A plumber might be paid $65.00 per hour, doesnt mean that community college generate hundreds of plumbers with snakes in their hands to unclogg the drains at $65.00. There should be enough new toilets installed that get clogged to keep this activity humming. no?

The Khan land is consumption driven ( yeah in way it is what TB used to be called in Victorian times because it consumes the lungs), for high consumption to continue you need high incomes or easy credit. The second part we have seen in motion last decade and TARP money. Printing money is not creation wealth , it is creation of debt which passes from hand to another ( I promise to pay the bearer a sum of ...... is debt note).

The old paradiagm of service jobs like in Taco Bell Pizza hut paying $5.75 per hour but the very same job holder can borrow $35,000 for Mustang is gone.

Khan lclan leaders have to come up with new technologies, new products , new projects which create wealth in the Khan land to be viable. Printing green pictures of Obama or Jackson in Canada that too is not going to help.

Ross perot was dead right in 1992, only thing was he was short of length ( in height) and mickey mouse voice ( instead Mic Jaeger voice, I cant get no saaaaaatisfaaaaaaction....)

Hari Seldon · Post by **Hari Seldon** » 27 Oct 2009 06:00

katare saab,

Katare wrote:Hari Sahib,

What is going on with ya! Where are your positive vibes

Good things would happen they always do to ones who keep their faith in tough times! Hang on there buddy, we are all in it together

Sure, I am a soulful of hope, believe it or not. I hope the human condition is not saddled with lots of misery in the yrs to come as a result of patent absurdities in the way the economic model has been arranged (setup to fail?).

I hope a peacful solution can be found to all our ekhanomic problems that doesn't involve wanton destruction to 'our way of life'.

Just that what I hope for has little in common with what I expect will happen.

For more on that, plz see ss_roy's elucidation. There is no doubt in my mind that acredit based system is unsustainable simply because new money created is as debt (and a lot is being created lately) and will have to be repaid with interest. And there is no way this debt burden can be or will be serviced, IMO. The only options I see are either wanton debasement of the currency to make it easier to payoff the debt in nominal terms or outright default.

Sonow you see why I am not so positive aajkal. Not because I don't want to be or try to be, for sure.

Just that

ss_roy · Post by **ss_roy** » 27 Oct 2009 06:48

We require a worldwide jubilee, at the very least.

The problem with debt based money, is that you have to create more debt to repay the old debt. Do you see the problem?

The west dodged the bullet for 150 years because of productivity increases, colonialism, and demography. The last 30 years were just inertia. There is no escape now..

Hari Seldon · Post by **Hari Seldon** » 27 Oct 2009 06:59

ss_roy wrote:We require a worldwide jubilee, at the very least.

Maybe I should take out as many loans as I can before the whole thing before the jubilee happens....

The problem with debt based money, is that you have to create more debt to repay the old debt. Do you see the problem?

The west dodged the bullet for 150 years because of productivity increases, colonialism, and demography. The last 30 years were just inertia. There is no escape now..

Aptly put.

ss_roy · Post by **ss_roy** » 27 Oct 2009 07:11

Worldwide Jubilee or Worldwide War/Unrest - Make your Choice.

Hari,

Given that loans in the current system are unserviceable (>5 yrs), short of the 2nd coming of Christ (or your favorite deity), why not?

Umrao Das · Post by **Umrao Das** » 27 Oct 2009 07:21

"for a ticketless traveller, ticket price hike is the least deterrent, actually his opportunity cost utitility increases"
Naked Sage Fakurrudin Baba PBUH

Singha · Post by **Singha** » 27 Oct 2009 08:50

have any of you khan dwellers expressed your confidence in rome by shifting more retirement resources to india since 2007?

Umrao Das · Post by **Umrao Das** » 27 Oct 2009 08:56

exploratory yes

vina · Post by **vina** » 27 Oct 2009 09:09

Ouch!. This must hurt real bad like a swift kick in the balls. Iceland's fall to turd world status is now confirmed.

McDonalds pulls out of Iceland. Notice the reason behind it. The country cannot afford imports any more. Time back to "self sufficiency" like India in the 60s and 70s or the North Korean like "Juche" I guess.

ss_roy · Post by **ss_roy** » 27 Oct 2009 10:07

prad,

You want to believe that status quo can be maintained. I don't think we can do that.. Let's see how things work out.

Hari Seldon · Post by **Hari Seldon** » 27 Oct 2009 10:18

prad,

I doubt the G&Ders here, myself included are predicting human extinction or anything that catastrophic. Oh, no. That was a distinctly poor quality strawman, IMO.

Russia survived after defaulting in 1998 by going back essentially to a barter economy before emerging to be strong and ok again. They went for a quick tooth-pull rather than a prolonged dental dance the kind japan has endured for the past 2 decades now.

Hence, nobody is quite saying humans will starve to death because of currency collapse etc, though such scenarios have significantly non-zero probabilities of playing out, sometimes one feels.

And make no mistake, no one here, G&Der or not, *wants* a human catastrophe anywhere. Heck, no one wanted WWI either, from what I gather. It happened anyway. And turned out to be good for yindia because it bankrupted the brit empire and began the process of its eventual dismemberment. Sometimes things have a peculiar tendency to play out despite no player wanting that particular play. Its like the abyss staring back at you.

The fear here, IMO, is that the smarties at central banks and in gubmints know the system is unsustainable but are hanging on anyway because the impetus to do drastic surgery isn't yet here. It will get here sometime but the longer the world waits the worse things get before they get better.

The big banks have become parasites, essentially. Holding the rest of society and economy to ransom. They should be nationalised forthwith and broken down piece by deliberate piece. Its not going to happen unless conditions deteriorate sufficiently for that to be forced. And who knows where that point is and when it might come?

arnab · Post by **arnab** » 27 Oct 2009 11:13

I have some issues with the type of reasoning being forwarded here – actually a genuine curiosity because I am interested in intergenerational sustainability type of issues. Please note that this is only a debate so happy to be proven wrong

Forgetting the polemics, your basic argument is that the ‘consumption led’ growth of the west is unsustainable because it creates a spiral of debt / deficit leading to more debt, which finally become unsustainable. Why?

1. Because of demographics – west is ageing and therefore overtime government expenses will only rise and there will be fewer tax payers contributing lesser amount to government revenues.

2. The options before the western governments is then either raise more revenue (through higher taxes) or reduce services (by cutting down expenses / pensions) etc.
3. Conclusion: these facts would eventually turn the west into the paradise that India is today

Now my counterpoints:

1. Economic growth depends on: population, productivity and participation. Typically in the west a lot of the growth in the last decade has been driven by participation of older aged workers (60-70 age group, due to better health, improved technology etc). My query is can’t older workforce participation in the west increase at least over the next few years and the gap be met by migration? In India, for instance people retire by 60 and die by 65, A recent survey in India showed youth unemployment (15-25) is around 17 per cent and this co-exists with a skill shortage in India in almost every field. Isn’t dealing with such challanges far more difficult? In India we have a high population, poor productivity and poor participation. So won’t an ‘equilibrium’ be reached where countries that are ‘surplus’ in labour would export them to the ‘labour deficient’ nations?

2. Next is the issue of unsustainable debt. Most western countries offer some form of social security support (pensions, unemployment benefit, health benefits). Some are piss poor in managing them (US) and some are relatively better (Australia). This ‘social contract’ between the state and it citizens leads to an ‘excessive consumption’ behaviour. The argument goes – since the government will provide for me in my old age / adversity, why would I need to save for a rainy day? Unlike say in India or China where the state has abdicated most such services, the citizenery here know that they only have themselves or their family to fall back upon in times of adversity. Hence the savings rate of 30-40 per cent. So what do Indians do with these high savings? Why – they promptly lend it to the Government by investing in NSC etc. Now of course these are ‘gilt edged securities’ so there would never be a default by GOI on them. However, we also know that if every indian citizen wanted their money back at the same time – GOI would only be able to do so by printing money wholesale thereby destroying their value forever. So why does the Indian citizen not worry about the unsustainability of Indian debt?

3. This brings us to the main reason why we feel Indian debt creation is sustainable. This is because India’s debt is primarily ‘internal’, whereas western debt is external because internally people do not save enough. However, do note that India has a chronic deficit problem. GOI has never ever been able to live within its means. Increasing population and need for infrastructure means that expense pressures for GOI will only rise. Increased borrowings will lead to higher inflation overtime and this cannot auger well for a large proportion of Indian society. This of course raises the spectre that overtime citizens may lose confidence in GOI’s ability to deliver. Already we see rumblings at every Finance Commission meetings where Maharashtra / Gujarat complain that they collect the lions share of taxes but receive only a pittance in return.

4. OTOH, most western countries (even the US) has had a history of delivering budget surpluses (this even when they were not colonising anybody!!). Possibly, even the US just may be able to embark on prudent fiscal management once the initial scare of the financial crisis has abated. This will on US’s part lead to a significant reprioritisation of resources, which may work in India’s favour, geopolitically speaking.

5. In conclusion, the west has to learn to save more and India and China will have to consume more. This is necessary for India’s own industrial base to develop to be able to employ the large labour surpluses we have. The only way to do this would be for India to build institutions that deliver good outcomes in terms of health, justice, education etc. Otherwise it would be easy for the west to free-ride on India’s education system and skim a significant protion of the productive workforce away from the country.
6. So as Katare ji said – we are all in this together

Singha · Post by **Singha** » 27 Oct 2009 11:22

So won’t an ‘equilibrium’ be reached where countries that are ‘surplus’ in labour would export them to the ‘labour deficient’ nations?

and you think the US natives will allow the import of millions of people from china/india/mehico/indonesia ?

the social opposition will be even stronger in europe and japan.

they cannot import people to tide over shortages. the idea of working people to death
in their old age is fine, but healthcare expenses will also need to be borne for it. employers might find they have to pay more med insurance costs for older workforce naturally.

arnab · Post by **arnab** » 27 Oct 2009 11:31

Singha wrote:So won’t an ‘equilibrium’ be reached where countries that are ‘surplus’ in labour would export them to the ‘labour deficient’ nations?

and you think the US natives will allow the import of millions of people from china/india/mehico/indonesia ?

the social opposition will be even stronger in europe and japan.

they cannot import people to tide over shortages. the idea of working people to death
in their old age is fine, but healthcare expenses will also need to be borne for it. employers might find they have to pay more med insurance costs for older workforce naturally.

Well I do not expect the US to suddenly open the gates to allow people in. Demographic ageing is a fairly predictable and gradual process. migration can be tailored to meet the 'gap'. Of course health care needs to be organised - that is what obamacare is all about. This has to start today so that you are ready 20 years down the line.

Hari Seldon · Post by **Hari Seldon** » 27 Oct 2009 11:35

Demography may or maynot be destiny but the situation presently is quite w/o parallel in history. Part of the nervousness also stems from the fact that below replacement birthrates so widespread in so many societies in the emerged world despite there being all material resources available to support larger populations is quite an unprecedented problem.

I recall reading Carrol Quigley's (1920 or 1940?) lecture to a US military audience. He predicted great advances and strides till 2000 when lifespans would inexorably rise as diseases got conquered, in the western world. His predictions stopped around 1999. A lifespan of 70+ for so many millions, in fact a decent fraction of the total popn, is quite unprecedented in recorded history.

And its not as if societies are unaware and not doing anything about it. All manner of incentives and stuff have failed to coax up the birthrate. Quebec had a fertility rate of 4+ right into the 60s. It was 6+ in the early 20th century. Its below 1 now and shows no signs of moving up despite massive efforts by gubmints and others for yrs now.

So yes, we are in uncharted waters in many ways. Lets hope some workable, peaceful decent solution will be found. But really, what are the odds of that?

ss_roy · Post by **ss_roy** » 27 Oct 2009 12:22

arnab,

Maybe you should read more current statistics, and stop linearizing trends.That is how we got into this mess in the first place.. do you believe that you are gonna extend the trend and make 70-80 year olds work?

In India, for instance people retire by 60 and die by 65

Unemployment in India is high because people are mercantile in nature, and it is about the unemployment rate for that age group in the west. I personally am not opposed to mass replacement of geriatric leaders and babus. Talking about skill shortage in India, have you ever talked with a few average HS students in the west?

A recent survey in India showed youth unemployment (15-25) is around 17 per cent and this co-exists with a skill shortage in India in almost every field.

It is obvious that you lack the ability, or the willingness, to ask basic questions- where does money come from? what is money? does credit creation precede monetary expansion, unlike what textbooks say?

Why does money have to created through debt?

What does the bank lend you? Think about it.. we are in a world of fiat currency, not gold. and yes the present GOI system (political and administrative) is going to cause some very nasty problems

This is not a crisis that can be massaged away through time, fake accounting or demography. This not a problem in the system, this is a problem of the system.

Saving money is among the worst things that you can do in a post industrial world. Savings takes money out of the economy and destroys the multiplier effect. What we require is nothing short of a new type of socio-economic system, and no current system can fill that role.

ss_roy · Post by **ss_roy** » 27 Oct 2009 12:30

Hari,

Change never occurs because people want it, or agree to it. It happens because all other options have been exhausted.

I do not believe that change will be smooth, linear or particularly peaceful. Nobody gives up what they think they deserve.

The effects of demographic change will not be gradual because:

1. You cannot treat people poorly one day, and ask them to care about you the next.
2. Most younger non-whites do not look up to whites.
3. Non-whites are often paid less, and thus will pay less taxes. If you try to tax them more, they will cheat.
4. Our current system cannot be operated by unwilling slaves, and even chinese workers are motivated by the promise of a brighter future.

People reap what they sow... and the west is mortal.

ss_roy · Post by **ss_roy** » 27 Oct 2009 12:37

I would argue that nasty wars and genocides do more to correct systemic imbalances (and advance technology) than all the agreements/ memoranda ever signed.

WWI did far more good to those who lived through it, and the same is true for every major war (Crimean, WW2, Korean, Cold war) in the last 150 years. Old ways have to destroyed through the death and discrediting of it's most fervent supporters.

Singha · Post by **Singha** » 27 Oct 2009 15:29

could some strong reasons for the decline in birth rates in western countries be:

[a] 50% of marriages end in divorce. moms dont want to be left holding the bag.

due to social security , pension and medicare the need to put up a couple
brats and hope they will extend some financial support to good old daddy
eventually is not there.

[c] lack of family pressure to "settle down by a certain age and have kids"
unlike in developing countries

[d] the church is dead among the youth and unable to influence people along
the same lines as [c]

[e] people do not want to sacrifice their enjoyable lifestyle at the altar of
kid rearing and the inevitable time sink that becomes.

Raghz · Post by **Raghz** » 27 Oct 2009 18:32

simple saar...

Education + Economic level inversely proportional to number of kids.

Higher your education and/or economic status, lesser the number of kids. The same is happenning in India as well. Just that more kids are being produced by the less educated / poor, so we dont actually see a decline in the quality of next generation being produced.

Singha · Post by **Singha** » 27 Oct 2009 19:40

but the rich actually have more means to feed and raise kids. why would being rich act
as a dampener on one's loins? the saudis were plenty rich per capita once upon a time,
but they seem to producing a huge surge in population.

Paul · Post by **Paul** » 27 Oct 2009 20:28

have any of you khan dwellers expressed your confidence in rome by shifting more retirement resources to india since 2007?

YES!

SwamyG · Post by **SwamyG** » 27 Oct 2009 20:29

Singha wrote:have any of you khan dwellers expressed your confidence in rome by shifting more retirement resources to india since 2007?

Yes. I have been doing that ever since I landed in Maasa

SwamyG · Post by **SwamyG** » 27 Oct 2009 20:39

Prad & Arnab:
Empires are like human beings, they are born, flourish and then wither away - only to be replaced by newer ones which will go through the same cycle. The newer ones could come from the same Empire or from a totally different collection of countries. No Empire has yet shown that it can buck this trend. Can Unkilland do it?

Bade · Post by **Bade** » 27 Oct 2009 20:41

I have paid up all loans (almost) on all acquisitions and real investments made in India. I have unpaid loans on my house and cars here in massa.

If something bad happens job loss wise, the idea is to make a quick retreat and live happily and comfortably in India. Karma bhoomi is for pillage and satisfying minimal luxury needs when young.

svinayak · Post by **svinayak** » 28 Oct 2009 03:00

http://www.reuters.com/article/rbssCons ... 2820091027

US home price gains may not be sustainable-Shiller
Tue Oct 27, 2009 3:23pm EDT
(Adds quotes, background)

NEW YORK, Oct 27 (Reuters) - The gains in U.S. home prices in recent months may not be sustainable and increases in some areas of the country appear to be in "bubble territory," an economist known for his property market expertise said on Tuesday.

Robert Shiller, an economics professor at Yale University and co-developer of Standard and Poor's S&P/Case-Shiller Home Price Indices, told Reuters Television he does not give quantitative forecasts on where home prices are headed but is concerned about the recent pace of increases.

Home prices in certain areas, such as Minneapolis and San Francisco, have risen by double-digits over a mere four months, and if viewed on an annualized basis, they look like they are in "bubble territory," Shiller said.

"It is a time of great uncertainty," he said.

U.S. home prices in August rose for the fourth straight month. The Standard & Poor's/Case-Shiller composite index of home prices in 20 metropolitan areas rose 1.2 percent in August from July, topping the estimate of a 0.7 percent rise according to in a Reuters poll.

"The prominent fact that we are seeing with this data is that home prices are just zipping up," Shiller said.

"It is entirely possible that even with the bad news we are getting, home prices could start a major increase," he said.

Prices in the top 10 U.S. metropolitan areas gained 1.3 percent in August after a 1.7 percent rise the previous month, according to the S&P composite index.

Shiller said he does not agree with analysts who believe that rising unemployment will hurt home prices. The U.S. jobless rate reached a 26-year high of 9.8 percent in September.

"It is unlikely that we will have the major, colossal bubble we had a few years ago, but even in the Great Depression real home prices were rising with the unemployment rate above 12 percent," he said. "Just because we have high unemployment does not mean the stock market cannot boom and the housing market cannot boom.

"What happens from here will depend on people's animal spirits and speculative impulses," Shiller said. (Reporting by Jennifer Rogers; Editing by Leslie Adler)

Ameet · Post by **Ameet** » 28 Oct 2009 03:35

Thousands protest bailout bonuses at Chicago bank meeting

http://news.yahoo.com/s/afp/20091027/ts ... nceprotest

Organizers said the American Bankers Association and six top banks have spent 35 million dollars fighting financial reforms after accepting 17.8 trillion dollars in taxpayer bailouts and backstops.

Ameet · Post by **Ameet** » 28 Oct 2009 03:38

There's fu#$%ed and then there's fu#$%ed. Iceland is fu#$%ed. Granted its only 3 restaurants, but its their entire operations in Iceland.

McDonald's to close in Iceland

http://articles.moneycentral.msn.com/In ... at=1337596

arnab · Post by **arnab** » 28 Oct 2009 04:42

ss_roy wrote:arnab,

Maybe you should read more current statistics, and stop linearizing trends.That is how we got into this mess in the first place.. do you believe that you are gonna extend the trend and make 70-80 year olds work?

Did I say that? I merely argued that demographic change in the west has been happening for a while and they have till now maintained growth through increasing the partiticipation of 'mature age workers'. The rest they can fill through migration. Afterall considering when even an avowed critic of the west like yourself, are not exactly 'voting with your feet' to move to India, isn't it likely that there would be many in India (and other developing countries) willing to move to the west should the opportunity arise?

Unemployment in India is high because people are mercantile in nature, and it is about the unemployment rate for that age group in the west. I personally am not opposed to mass replacement of geriatric leaders and babus. Talking about skill shortage in India, have you ever talked with a few average HS students in the west?

So? does it really matter if we are mercantile in nature? does it matter if HS students in the west are dumb? point is unemployment and skill shortages co-exist in India. It does not in the west.

It is obvious that you lack the ability, or the willingness, to ask basic questions- where does money come from? what is money? does credit creation precede monetary expansion, unlike what textbooks say?

Why does money have to created through debt? What does the bank lend you? Think about it.. we are in a world of fiat currency, not gold. and yes the present GOI system (political and administrative) is going to cause some very nasty problems

This is not a crisis that can be massaged away through time, fake accounting or demography. This not a problem in the system, this is a problem of the system.

[/quote]

I'm sure you have thought about this a lot - but not sure how any of this is germane to the issue at hand. Meanwhile - what do you think of parliamentary representation in India? Once the freeze on population based representation ends in 2026 - The northern states will gain far more parliamentarians in the Centre (due to their demograhic dividend) and the southern states will lose due to their better population management. Do you forsee any problems in our federal system then?

arnab · Post by **arnab** » 28 Oct 2009 05:14

SwamyG wrote:Prad & Arnab:
Empires are like human beings, they are born, flourish and then wither away - only to be replaced by newer ones which will go through the same cycle. The newer ones could come from the same Empire or from a totally different collection of countries. No Empire has yet shown that it can buck this trend. Can Unkilland do it?

No unkil can't - but whether unkil can do it or not was not my point at all. I have always been interested in 'relatives' rather than 'absolutes', and in that context, the challenges faced by India in the current global economic environment.