Paul Krugman - The Third Depression

[elltel]

not sure if it has been posted elsewhere....

 

Krugman or Paulson: Who You Gonna Bet On?

 

http://www.businessweek.com/magazine/content/10_28/b4186004424615.htm

 

 

 

[Guest ValueCarl]

Seems like this Paulson is attempting a PR campaign for himself while he talks his book including new positions-"potentially" long real estate-after setting the dominoes with Hank Paulson's crew at GOLDMAN.

 

After cleaning house on CDS', this scoundrel is now buying RE and utilizing investment teams in projects that fix and flip to the next greatest gainfully employed fool.

 

The only thing that remains important for where this is heading is "real unemployment rates" and the lack of more important, quality "jobs, jobs, jobs!" that continue to be evasive or non existent. Think Census Bureau. 

 

While talking to local store managers in places like Lowe's and restaurants like TGIF in CA and FL in an attempt to discern anecdotal clues, I keep hearing about comparative sales being down in double digits along with "foot traffic." As a matter of fact, I see "ghost towns" and "vacancy signs" in various commercial strip centers across my landscapes.

 

Until the deflationary spiral is in full force, watch the price of milk at COSTCO for clues as to how discretionary sales are shaping up. They gouge in Buffett like fashion on non-discretionary "essentials" when other sales are in harms way. 

 

GD2 in America seems plausible at this juncture and men including both Paulsons have had their hands in this destruction. imo

 

  < A New York investor named John A. Paulson is at the heart of the fraud lawsuit filed today by the Securities and Exchange Commission against Goldman Sachs.>

 

http://www.opensecrets.org/news/2010/04/hedge-fund-manager-in-goldman-sachs.html

 

[Packer16]

I think Krugman should study history before the 1940's.  In the 1930's & 1890's, the money supply contracted in combination with a deflationary debt burden.  In this case, the money supply has increased with a deflationary debt burden which historically led to inflation (which is what I think will happen in this case).  Whether inflation is long-term or short-term problem will depend on wether a structurial deficit can be brought under control. 

 

Packer

[Guest ValueCarl]

If Mark Twain was right, and history merely rhymes versus repeating itself, these Great Inflationists, including Messers Buffett, Munger and a host of others who believe in an unreserved, unchecked, fiat PRINTING MACHINE for offsetting this debt gone wild global pandemic, might end up being very disappointed dreaming about becoming first to trillion dollar market caps. 

 

For even if these jobless souls find any funds from the emboldened banks who stole their tax dollars while hoarding it to date, what will they do with the funds except to buy food.

 

If the Wiemar Republic is ones idea of inflation whereby "wheel barrows" of worthless dollars are the necessary currency to purchase a loaf of bread, then maybe that's the direction we're heading here in the Good Ole U.S.A. imo

 

The Great Depression began with the Wall Street Crash of October, 1929 and rapidly spread worldwide. The market crash marked the beginning of a decade of high unemployment, poverty, low profits, deflation, plunging farm incomes, and lost opportunities for economic growth and personal advancement. Although its causes are still uncertain and controversial, the net effect was a sudden and general loss of confidence in the economic future. The usual explanations include numerous factors, especially high consumer debt, ill-regulated markets that permitted overoptimistic loans by banks and investors, the lack of high-growth new industries,[1] and growing wealth inequality, all interacting to create a downward economic spiral of reduced spending, falling confidence, and lowered production.[2]

Industries that suffered the most included construction, agriculture, shipping, mining, and logging as well as durable goods like automobiles and appliances that could be postponed. The economy reached bottom in the winter of 1932-33; then came four years of very rapid growth until 1937, when the Recession of 1937 brought back 1934 levels of unemployment.[3] The depression caused major political changes in America. Three years into the depression, Herbert Hoover lost the 1932 presidential election to Franklin Delano Roosevelt in a sweeping landslide. Roosevelt's economic recovery plan, the New Deal, instituted unprecedented programs for relief, recovery and reform, and brought about a major realignment of American politics.

 

http://en.wikipedia.org/wiki/Great_Depression_in_the_United_States

 

 

 

 

[txlaw]

Check out Krugman vs. Ferguson on Fareed Zakaria GPS:

 

http://www.cnn.com/CNN/Programs/fareed.zakaria.gps/

[Myth465]

Ferguson's thoughts - http://www.gurufocus.com/news.php?id=99087

 

Krugman on Colbert - http://economistsview.typepad.com/economistsview/2010/07/krugman-on-colbert.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+EconomistsView+%28Economist%27s+View+%28EconomistsView%29%29&utm_content=Google+Reader

 

Summary of Soro's Thoughts - http://www.gurufocus.com/news.php?id=99084

[Myth465]

More thoughts from Ferguson - He asks where's Uncle Ben - http://www.gurufocus.com/news.php?id=99899

[Cardboard]

The ECRI on Friday showed a decline of 8.3%. We are now at a level that has always resulted in a recession over the past 40 years. I have also seen a chart of electric power usage in the U.S. and this is not showing growth either.

 

Maybe it is just a pause following the stimulus or boost and now the private sector will take it from here? One thing is for sure, I want to remain hedged at this point.

 

I also keep on thinking that no matter what they do that debt has to be repaid by someone one way or another. There is no magical solution. We saw the first phase which was to shift debt from the private to the public sector. In the second phase, there are more options, but none makes the debt disappear. If you inflate, holders of the debt lose as well as the citizens. If you default, holders of the debt lose as well as the citizens again. The pain can be spread over time or over more people, but it seems to me that the overall "pain" of debt repayment remains.

 

Cardboard