muses of the moment

November 2, 2012

Very Interesting… Market Reaction

Filed under: Economic Crisis, Gold and Silver Investing, Stock Market, Unemployment — totallygroovygirlfriday @ 1:09 pm

Jobs numbers are “great”, but it is a “sell everything not nailed down” day?

Click here.

Perhaps the market knows what gg knows….Sandy has doomed the economy of one fifth of the country for the next 12 months at least. And guaranteed even more government debt than originally thought in the next 12 months. Ugly!

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25 Comments »

  1. On the other hand rebuilding will stimulate the economy.

    Comment by Guy de Simon — November 2, 2012 @ 1:19 pm

  2. Guy,

    The only thing rebuilding can do is make up for the loss in consumer spending and productivity. The best, best, we can hope for is a wash between higher insurance rates, straight out losses, loss of productivity, and higher national and state debt due to clean-up, infrastructure re-build, and emergency services. There is no capital to pay for rebuilding, it will come from more debt. And it hit two of the worse off states: NY and NJ. Next to California, they were not in the best economic shape before Sandy hit, especially NJ.

    The GDP will show only one side, it will not reflect the added debt and interest to service that debt.

    Disasters do not stimulate economies long-term.

    gg

    Comment by totallygroovygirlfriday — November 2, 2012 @ 1:31 pm

  3. Rebuilding will employ unemployed labour which means that they will have a disposable income to spend and real demand will rise.. Demand for buiding materials,etc, will also increase which in turn means higher output and more employment. This is the kind of stimulus that gets the economy going but has not been used by the past few administrations.

    Comment by Guy de Simon — November 2, 2012 @ 1:44 pm

  4. Guy,

    If rebuilding stimulates economies, why don’t we just drop bombs on half the cities in the US?

    I you believe this to be true, test your theory out:

    Support your local economy by throwing rocks through the windows of all the struggling businesses in your town. See if that helps them thrive again…

    Comment by soleirolia — November 2, 2012 @ 1:56 pm

  5. Guy,

    I suppose the past few administrations didn’t have the ability to raise sea levels and create devastating natural disasters.

    [speechless]

    Comment by soleirolia — November 2, 2012 @ 3:07 pm

  6. GG, I love you, BUT
    Any political economist could have told you years in advance that if the problem is the economy then the economic data would look better before the election. And if the economy is fine then the deciding factor will probably be foreign policy or a scandal.
    Look at post WW1 and WW2 economic figures and they support what you suggest, namely dropping bombs. The point is that what works for the economy does not necessarily work for the individual or your neighbour on the micro ec. level

    Comment by Guy de Simon — November 2, 2012 @ 3:27 pm

  7. Really, what about Katrina and New Orleans? You were being sarcastic, weren´t you?

    Comment by Guy de Simon — November 2, 2012 @ 3:41 pm

  8. Guy,

    I didn’t make the bombing comment. But since you bring it up.

    Anyhoo, if you look back at the debt to GDP ratio after WWI and II, it was what it now (well over 100%). And it took 10 plus years (less for WWI, I have my thoughts on that) of real manufacturing productivity to pay it down. But, personally, I question if we really paid it down after WWII, but just used the Bretton Woods monetary agreement to create too many dollars to pay it off and then had to resort to Nixon’s 1971 “temporary” decision. Which, in gg’s mind, could be a default on all the debt used to build up the US infrastructure (highways, etc), send all the GIs to college in the 1950’s (and let’s not forget the the nuclear weapon build up with Russia). All that productivity took debt that the US did not “pay off”, but defaulted on through the break with gold/dollar system. So, my question: is it really productive when we had to default?

    Governments use debt to finance war, not capital, because war is so expensive (since you destroy stuff, not create it). Then when governments are faced with huge debts from wars and no money, they blame the poor economic conditions on the wars, when it really is the debt. The only people that get rich off of war is the bankers that lend governments the money. And then they lend the money for the rebuilding of infrastructure since the governments still have no money after war.

    War would be a good economic model IF it didn’t produce so much debt during the process, and then require more debt to rebuild.

    gg

    Comment by totallygroovygirlfriday — November 2, 2012 @ 4:03 pm

  9. Let´s not forget 911, shall we? Sorry GG, I didn´t realise that someone else was wearing your shoes. I saw some of http://www.occudoc.org on RT this evening and recomend it highly to those of you who haven´t figured out what is wrong with what was once a good and thereby great nation.

    Comment by Guy de Simon — November 2, 2012 @ 4:05 pm

  10. Guy,

    I may be missing your point here. Could you expand a little?

    I don’t doubt that the economy “looks” wonderful before an election. Why do you think I don’t?

    gg

    Comment by totallygroovygirlfriday — November 2, 2012 @ 4:07 pm

  11. Guy,

    So are you saying 911 helped the US economy? If so, I do not agree.

    gg

    Comment by totallygroovygirlfriday — November 2, 2012 @ 4:14 pm

  12. We have a time lag communication problem which I suppose basically is a metaphor for debt and interest. Anyway,the point is that if the extra productivity can pay off debt and make society better off then it is worth it. However the ideal solution would be to default and let the money lenders be f….ed and for nation states to produce their own money linked to precious metals. The problem there is not the supply of metals as scarcity of gold will lead to a higher price and thereby more dollars per ounce, but that the money lenders have all the nations indebted so if you don´t tow the line they´ll bring you down through their proxies. As for any leader of such a revolt you have Kennedy as a pertinent reminder.

    Comment by Guy de Simon — November 2, 2012 @ 4:16 pm

  13. Guy,

    Ok, I will go with that.

    I just can not recall a war in any history that didn’t have the “double debt” problem. Debt from the actual war and debt from the restructure. That’s a lot of productivity to create. The only wars that rebounded better than others where those fought in lands with new and abundant resources that could be mined and sold globally, such as the American Revolutionary War.

    The only thing that creates the “illusion” of productivity from war is the fiat money system. But even that has its limits.

    gg

    Comment by totallygroovygirlfriday — November 2, 2012 @ 4:25 pm

  14. 911 helped the last admin. and Israel´s agenda. It also established the framework for fascism which corporate America etc. needs to retain power in the face of the growing contradictions that result from capitalism and are ever more apparent to the populace. Think about it. They knew the debt bubble was going to implode and they needed all that they could get off the people to keep the system afloat and them in power. The war on terror not only enabled them to assist Israel, go after energy resources and pipelines and help the military ind. complex and Cheney´s Halliburton, but most importantly ensure there was no money laundering on the part of joe blogs although the big boys still do it and sometimes get caught with their pants down, money laundering being a euphemism (re;the small man) for tax evasion.. On top of that they froze Iraq, Iran and Libya´s foreign assetts and have in effect stolen them although they allow a trickle back which I suppose represents interest.
    Did you know 3 or 4 weeks before the 2008 meltdown the B.I.S. raised the capital reserve ratio for banks which started the musical chairs fiasco ending with Lehman.. The B.I.S. are private bankers just as the Fed is.

    Comment by Guy de Simon — November 2, 2012 @ 4:37 pm

  15. You´re right GG about the double debt problem but as they play out both are expedient and necessary unless you have the gold!

    Comment by Guy de Simon — November 2, 2012 @ 4:40 pm

  16. Agree with your comment. I think we are on the same chapter here.

    Regarding your link: Movie looks good. Although I don’t personally agree with absolutely everything in the Occupy Movement. groovygirl completely supports their right to voice their opinion and assemble freely. She supports their demand for change. And she completely supports their non-violent protest procedures. A very good move.

    Non-violence is the only possible way for change to come and we still have a whole nation at the other end.

    gg

    Comment by totallygroovygirlfriday — November 2, 2012 @ 4:49 pm

  17. Capitalism is great provided it does not have power to influence the branches of government. Clearly this is the case in the U.S. and E.E.C.

    Comment by Guy de Simon — November 2, 2012 @ 4:51 pm

  18. The contradiction with capitalism is that it can produce more and more using less and less labour which means supply goes up but real demand goes down. Putting out work to China exaccerbates the problem. It may expand markets but it doesn´t help the source nation and nor does the tax system they have in place.The putting out system is a feudal model by the way.

    Comment by Guy de Simon — November 2, 2012 @ 4:56 pm

  19. MA is wrong about the gold standard not working.If there is not enough gold the the dollar price adjusts. We can quibble about terms but in essence that is what a gold standard would amount to today.
    The problem today is obesity and apathy. Non violence didn´t work for Ireland. Nor did violence until they attacked the square mile,i.e. the banking centre.

    Comment by Guy de Simon — November 2, 2012 @ 5:04 pm

  20. I cannot remember which British statesman said this, perhaps Walpole, but he said nothing in politics happens by accident.

    Comment by Guy de Simon — November 2, 2012 @ 5:15 pm

  21. Last comment for the night as here we´re 5 hours behind east coast time. With drones and the development in nano technology for military use , armies and revolts will be a thing of the past. As I say to my friends, “We are either going to get a Hitler or Christ visiting us soon. We are at an extreme and that is when things flip.
    Peace, love and gold!
    P.S. Do you live in MA? I´ve just traced my loving maternal sister there.

    Comment by Guy de Simon — November 2, 2012 @ 5:34 pm

  22. I do not condone violence: all I´m doing is relating how obesity is correlated to apathy and how violence towards the banking centre brought about dialogue and peace. I think human beings and society at large are pathetic. People need to fast to become aware and focus their power in number and aim to change the system non violently. One can´t blame those who have benefited from our apathy to profit. The blame entirely lies vwith the people and as such the people have got what they deserved. “Instant Karma is going to get you” ( John Lennon)

    Comment by Guy de Simon — November 2, 2012 @ 7:17 pm

  23. Common sense and basic logic tell us this breaking window to stimulate the economy idea is just crazy, some theorists should look outside their windows more often.

    At local / specific levels, the economy will grow due to rebuilding, but the economy at large will suffer, because the cost of rebuilding has to be paid for.

    Otherwise as soleirolia said, why don’t just destroy and start again? It’s never a good idea for a society to suffer large scale disasters, this is a sure way to destroy wealth, even though some people will benefit.

    I see gold tanked overnight. Maybe Armstrong is right that the low in Gold will come early 2013. Time to do a final load before the take off in mid-2013

    Comment by Firebug — November 2, 2012 @ 9:00 pm

  24. I was addressing the benefits regarding economic activity and not the benefit to society. The latter concerns you quite rightly but as far as the powers that be are concerned their focus is the former as that is where job, output and profit numbers are derived.This is not theoretical economics but applied political economy.
    As regarding M.A. “don´t follow gurus and watch those parking metres” (Bob Dylan). No economic model can be proved to be 100 percent infallible, so follow him by all means but be cautious.

    Comment by Guy de Simon — November 3, 2012 @ 9:05 am

  25. Thanks Guy.

    As far as M.A. is concerned, I have noticed some of his calls in the past didn’t materialise. I think M.A. is correct on the rough direction where the markets are heading.

    Comment by Firebug — November 9, 2012 @ 8:30 pm


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