Black Swan: America’s economic future is a disaster. Next crash, bigger, longer than 2000 and 2008 combined. We are our own worst enemy. U.S. GDP on the road to zero growth by 2050.
from Paul B. Farrell:
Near zero economic growth by 2050? Yes, America’s economy is collapsing. Fast. Yes, the “most depressing forecast ever,” says InvestmentNews, trusted source for 90,000 professional financial advisers across America.
Actually it’s worse than depressing if you read the details in “On Road to Zero Growth,” the latest Quarterly Letter from Jeremy Grantham, founder and chief investment strategist for the $100 billion GMO money managers.
Yes, today’s fiscal-cliff drama is just a warm-up for what’s coming. America’s economic future is a disaster. We are going over a bigger game-changing economic cliff, into a long-term chasm. And it’s unavoidable.
Why? Because our myopic Congressional leaders and Fed chairman are focused on short-term fixes, piling on more monetary-stimulus debt, while avoiding America’s systemic long-term problems. Yes, we are our own worst enemy and nothing will keep us from driving down the road to zero growth and into painful austerity, just like the 1930s.
Listen closely: here’s Grantham’s overview of America’s economy from the late 1900s through 2050: “The trend for U.S. GDP growth up until about 1980 was remarkable: 3.4% a year for a full hundred years.” That powered the great American Dream. “But after 1980 the trend began to slip.” And unfortunately the economy is “not going back to the glory days of the U.S. GDP growth.”
Get it? A century of high-growth prosperity, then our GDP growth dropped “by over 1.5% from its peak in the 1960s and nearly 1% from the average of the last 30 years.”
Black Swan: next crash, bigger, longer than 2000 and 2008 combined
Grantham is a realist, understands human nature, personally, nationally, globally. It will probably take a global catastrophe — pandemic, famine, WWIII or a monetary system crash bigger than 2000 and 2008 combined — to awaken America: “Attitudes are sticky. We cling to the idea of the good old days with enthusiasm. When offered unpleasant ideas (or even unpleasant facts) we jump around looking for more palatable alternatives.”
Why? Americans are dreaming, in denial, trapped in a delusion: The return to 3%+ GDP growth. Politicians are even biggest dreamers: “The tech boom and bust and the following housing boom and housing and financial busts helped camouflage the recent unpleasant economic development lying below the surface: the steady and important drop in long-term U.S. growth,” warns Grantham.
Global GDP will drop, too, but far outperform America. The “bottom line for U.S. real growth,” says Grantham, “is 0.9% a year through 2030, decreasing to 0.4% from 2030 to 2050.”
The Global Economy Has Done A Complete 180, Now It’s The US’ Turn To Be Weak. ISM MANUFACTURING FALLS TO 49.5 (Analysts Expected 51.4)!!! Differences Between First Half Of Year And Remaining Half Are Very Dramatic
Bill Gross Presents The Big 4 Structural Issues That Will Haunt The US Economy For Years
Bill Gross: Debt, demographics, technology and globalization are weighing on U.S. economic prospects, Pimco’s Bill Gross said Tuesday in his monthly newsletter.
Forces beyond our control.
1.) Developed global economies such as the U.S.’s are carrying too much debt. “As we attempt to resolve the dilemma, the resultant austerity should lower real growth for years to come,” Gross says.
2.) Globalization has sparked growth, “but if it slows, then the caffeine may wear off,” Gross warns.
3.) While technology has been a boon to productivity and therefore real economic growth, it has its shady side, he adds. “In the past decade, machines and robotics have rather silently replaced humans, as the U.S. and other advanced economies have sought to counter the influence of cheap Asian labor.”
4.) Gross points out that demographics are becoming a silent growth killer. “Almost all developed economies, including the U.S., are gradually aging and witnessing a larger and larger percentage of their adult population move past the critical 55-year-old mark,” Gross says. “This means several things for economic growth: First of all from the supply side, it means productivity and employment growth rates will slow. From the demand side, it suggests a greater emphasis on savings and reduced consumption. Those approaching their seventh decade need fewer cars and new homes.”
IRWIN KELLNER: Get ready to go over the fiscal cliff. Austerity is coming, even if cliff is avoided.
Agreement or not, 2013 will bring higher taxes and lower spending, so be prepared.
But just because pols are not likely to pull a Thelma & Louise and drive us off the cliff, don’t think for one moment that getting through 2013 is going to be a piece of cake. Indeed, it will be just the opposite.
Let’s start with one indisputable fact: In order to avoid going over the cliff, the pols are going to have to come up with an agreement of one kind or another that will allow them to modify the current law while still appealing to their respective bases. This agreement has to involve raising tax revenues and cutting spending in order to shrink the deficit and thus reduce the size of our debt relative to GDP.
Obviously the amount that will be siphoned from the economy won’t be as much as $600 billion, but it will still hurt. Look at it as sliding down a slope, rather than falling off a cliff — we’ll still be going down.
And contrary to what you may have read, this drop will take place sooner rather than later. Indeed, it’s been underway since the middle of 2012. (See my June 19, 2012, column “Fiscal cliff is closer than you think.”)
RON PAUL: GOVERNMENT SPENDING WILL SEND US OVER THE FISCAL CLIFF
Liberty always loses in the 11th hour.
As the year draws to an end, America faces yet another Congressionally-manufactured crisis which will likely end in yet another 11th hour compromise, resulting in more government growth touted as “saving” the economy. While cutting taxes is always a good idea, setting up a ticking time bomb with a sunset provision, as the Bush tax cuts did, is terrible policy. Congress should have just cut taxes. But instead, we have a crisis that is sure not to go to waste.
The hysteria surrounding the January 1 deadline for the Budget Control Act’s spending cuts and expiration of the Bush tax cuts seems all too familiar. Even the language is predictably hysterical: if government reduces planned spending increases by even a tiny amount, the economy will go over a “fiscal cliff.” This is nonsense.
This rhetoric is based on the belief that government spending sustains the economy, when in fact the opposite is true. Every dollar the government spends is a dollar taken from consumers, businessmen, or investors. Reducing spending can only help the economy by putting money back in the hands of ordinary Americans. Politicians who claim to support the free market and the lower and middle-class should take this to heart.
The reality is, however, that neither Republicans nor Democrats are serious about cutting spending. Even though U.S. military spending is exponentially larger than any other country and is notorious for its inefficiency and cost overruns, Republicans cannot seem to stomach even one penny of cuts to the Pentagon’s budget. This is unfortunate because this is the easiest, most obvious place to start getting spending under control. The military-industrial complex and unconstitutional overseas military interventions should be the first place we look for budget cuts.
Similarly, Democrats are digging in their heels on not cutting any welfare or entitlement spending and instead propose to fix the deficit by raising taxes on the rich, even though the U.S. Government already has a progressive tax code and the rich already pay more than their fair share. Furthermore, these higher taxes would fall on small business owners, investors, and entrepreneurs—in other words, the source of economic growth and new jobs!
Worst Since World War II: 50% Unemployment: Over Six Million Teens and Young Adults Are Out of Work and Not In School
Amid a worsening fiscal crisis, a crumbling economy, and the destruction of over 40% of America’s wealth in just the last few years, it should be quite clear that this is no ordinary recession. In fact, with progressively dwindling job opportunities, a long-term downward trend in real estate prices, and the near doubling of participation in emergency benefits programs like food stamps and disability, one could make the argument that the United States is smack-dab in the middle of the next Great Depression.
The notion that we are potentially facing a decades-long paradigm shift which threatens to alter the very fabric of American life is becoming a stark reality for many, especially America’s younger generations who, according to a new report from the Annie E. Casey Foundation, are experiencing the highest jobless rates since at least World War II:
Forty years ago, a teenager leaving high school — with or without a diploma — could find a job in a local factory. Twenty years ago, even as manufacturing jobs moved offshore, young people could still gain a foothold in the workforce through neighborhood stores and restaurants. Amid the housing boom of the past decade, youth with some training could find a career track in the construction field. But today — with millions of jobs lost and experienced workers scrambling for every available position — America’s young people stand last in line for jobs.
Youth employment is at its lowest level since World War II; only about half of young people ages 16 to 24 held jobs in 2011. Among the teens in that group, only 1 in 4 is now employed, compared to 46 percent in 2000.
Overall, 6.5 million people ages 16 to 24 are both out of school and out of work, statistics that suggest dire consequences for financial stability and employment prospects in that population.
Housing bubble in motion. Home prices only go up, right…
It will make sense once you see it working. The green bar represents median household income, the orange bars represent housing prices in selected cities.
Case Shiiler real estate data and median income compared in a time lapsed film using microsoft excel and camtasia software. The creator is Nick Gogerty…
Jon Stewart and the Fiscal Cliff
by Greg Hunter, USAWatchdog:
I don’t know about you, but I’m already sick of the so-called “Fiscal Cliff” battle in Congress. That’s the mandatory concoction of tax increases and spending cuts that kick in January 1st if Democrats and Republicans can’t reach a compromise. Comedian Jon Stewart gave his perspective recently on “The Daily Show.”…