Re: OT: Scary Graph

So they are selective about the sources they publicise. If you look over enough predictions you are bound to find one that predicts incipient disaster.

The fact that they've copied the graph without any supporting text is roughly what you'd expect from an unscrupulous doom monger.

I got my request for a million dollars, twice. 1E6 exactly. But then later I lost it, twice.

I never borrow money. The problem is, people expect you to pay it back.

The reason is the general belief, certainly not confined simply to ZH contributors, that the era of fiat issue money (backed by nothing but public faith since 1971) is coming to an end and that although we know with 100% certainty this *will* happen, we don't know exactly *when*. Holding physical gold and silver (preferably in coin form) is the ultimate protection against a sudden and unexpected currency collapse wherever you may be in the world. If paper currency suddenly becomes worthless, you will be able to buy NOTHING with it and society will have no choice but to return to either barter or else coinage with intrinsic worth based on the scarcity of the metal it's made from. So the message is, "get stackin'." :-)

If you're truly worried about the end, buy food and bullets. You can't eat gold and you aren't going to keep it without bullets.

The massive US government debt can only be fixed by printing money, but we needn't drive the value of the dollar to zero. Cutting its value by a factor of 2:1 or maybe 3:1 will do.

Real estate is a good investment too.

Economists have sucessfully predicted 5 of the last three recessions.

-- Paul Hovnanian mailto: snipped-for-privacy@Hovnanian.com

------------------------------------------------------------------ This isn't right. This isn't even wrong. -- Wolfgang Pauli

I cranked my oceanographic instrument company up to the $2M level, and ran out of space and flexibility. So I borrowed $1.00M, with an industrial bond, and purchased and renovated an old mill building on the Charles river. But running at a larger size, with a bigger payroll, restricted my management choices, and ultimately forced me to sell my company. That was my first big loss, and later in an RE downturn, sold my grand old mill building for a 2nd big loss.

You can't eat gold or silver, so this isn't quite as wise as Cursitor Doom thinks.

Conservatives think that what worked for their parents will work for them, which does make gold and silver attractive to them.

Barter isn't going to support the kind of high tech agriculture that keeps most of us fed, so the immediate consequence of a loss of faith in paper cu rrency - or the electronic medium of exchange which has largely replaced it (not that Cursitor Doom seems to have noticed) - would be a population cra sh.

The - much smaller - surviving population will probably have more immediate problems that stacking bars of gold and silver.

Gold and silver will still have a use since they are dense and can be used to transport "options/choices/influences" from here to there.

Quite what the exchange rate will be is open to question. Maybe it will be a Golgafrincham leaf/peanut ratio.

Wework looks to me like it has already hit the wall. YMMV

It is kind of odd really with interest rates so low that zombie companies can survive although equally some good companies with really bad overpaid management that took on insane debt to exploit the low interest rates can go to the wall despite some parts being profitable.

Recent example in the UK was the travel firm Thomas Cook.

Some things have real intrinsic value irrespective of market conditions like food and shelter. Other things like art works and company shares are only worth what the next sucker will pay for them.

The economic models are surprisingly sophisticated and non-linear but fail to model things like old school tie connections that allow hedge funds to obtain price sensitive information before anyone else does.

Problem is that they haven't been able to model the herd instinct that results in people getting carried away in auctions and boom bust cycles. Those have been going on since before economics was a formal discipline. Mississippi paper, South Sea bubble, Tulip Mania - take your pick.

Researching the UK railways shows the Bank of England writing stern letters to other banks in much the same tone as after the 2008 crash.

It isn't the economists fault that some people are pretty dumb. I met the guy who nearly bankrupt the UK mobile phone operators by his incredibly clever design of the 3G frequency auction. As a demo he

decisions. These were people who buy and sell shares for a living too ;-)

Do younger people have such surpluses to invest these days? I assume you're talking about the ones who don't still live with their parents as they don't earn enough to go it alone.

Depends what their funds are invested in. Certainly if they're invested in anything stock-linked, but there are many more who have their money in, for the sake of safety, investment grade bonds. This is the rentier class so hated by the Slomans of this world and they've seen their incomes, which come from the interest on those bonds, virtually wiped out over the last 12 years. In fact we're increasingly entering into the uncharted territory of *negative* rates now, owing to concerns of a global downturn. Strange times indeed. The next war to fight and no ammo left to fight it with. Nothing to do but print more money.

WeWork could be a positive-feedback factor on a business real estate crash. Too much class-A office space, not enough geeks.

Real estate in non-overbuilt areas is probably a good investment, if not loaded down by debt.

Sophisticated doesn't mean real. Economics is a "consensus science", experts reinforcing the opinions of other experts.

Absolutely. Fear and greed don't model well.

Government policy should be to dampen unstable feedbacks. It's usually the opposite. Or the wrong timing, which is the same thing.

In the UK real estate goes up almost without limit though a crash is near certain at some point. Buying a home is now out of reach of almost everyone on an average salary these days. Generation rent...

Some parts of it are more justified than others. I had a chance to play with the UK economic model in the early noughties. Main problems I can see is that the economic input data is never trustworthy. You can have companies reporting audited accounts which are works of fiction.

They are getting better at it. I have a respect for macro economics even if I think like you do that most economists are charlatans. It isn't called the dismal science for nothing.

It is hard to do that when your reliable information is typically six months behind real time and even then subject to radical revision when some new accounting black hole opens up in audited accounts. Auditors, management consultants and creative accounting have a lot to answer for.

That's the problem with trying to damp the system in real time. It's easy to make things worse. And macroeconomists live to meddle.

Some steady, long-term policies would help. Tax short-term gains more than long-term. Tax transactions, less tax on long-term gains. Make the banks be banks again. Encourage genuine productive enterprises, ideally by leaving them alone more.

STOP playing stupid anti-market-force games like QE.

You are Montgomery C. Burns and ICTTD.

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Just the younger people groups I monitor! :-)

As I mentioned these are people that believe if they live well below their income and invest their savings, they can build a nest egg that they can live off of for the rest of there lives, and never have to work for money again. A few have found they want to continue working, but the fact they don't need the job, makes life so much nicer. Others have what they call FU money and it gives them so much maneuver room in the place of employment. Some great stories about that.

Once we acquired a good networth I haven't had what I think is a good entry point to get into bonds. I'm some what afraid of them now. I have less than 3% in a bond fund. I still want growth not a hedge on inflation and that's all bonds do a the rates paid now. You can get some REITs stocks or preferreds stocks paying a dividend of 7% to 12%, but buy beware. Mikek

Yes.

There are indications that they may come under more scrutiny, and that the Thomas Cook failure was a response to that possibility.

If true, the auditor's motives are left as an exercise for the student.

Short-term, limited QE could be useful.

Long-term it looks like an attempt to delay the inevitable, by transferring money from the poor/middle classes to the rich, and by transferring the problems onto our children.