Are we headed for a world wide meltdown?

[Tiny]

Originally Posted by Why_Yes_I_Do

I totally forgot to mention the new $17B Samsung chip plant being built in Taylor. So it's more of a pincer move than a push out.

Tesla too. The St. Louis Fed graph though, as you noted, shows this is happening all over the country, just not to the same extent as the Austin area.

[Tiny]

Originally Posted by CaptainMidnight

"What in the wide, wide world o' sports is a-goin' on here?"

- "Taggart" (Blazing Saddles)

(A lot of people are asking questions like that nowadays!)

My quick take on a couple of points:

B-Dud hits a few key points and gets a lot of things right in the Bloomberg piece, but makes no mention of the fiscal side and how a massive "pivot" is likely to make a whole lot of things look quite different within 6-12 months.

First, note that even center-left economists (like Summers) were saying a year ago that the $1.9 trillion "American Rescue Plan" was way over-the-top and profoundly irresponsible. In fact, taken together with everything else, policymakers were judged to have filled the estimated "output gap" three times over.

About a year ago, JPM put out an analyst's note saying that household bank balances, as a result of the multiple spending surges that dropped cash directly into household accounts, totaled about $2.5 trillion more than the prepandemic trend would have indicated.

That's more than 10% of GDP! Yet RGDP "headline" growth in calendar 2021 was approx. 5.7%. (Doesn't anyone think there's something just a little bit wrong with this picture?)

This year going into next will involve a big-time fiscal "pivot" from an unprecedented level of largesse to comparative budget austerity as the level of deficit spending will necessarily have to be wound down.

I know B-Dud was probably space-limited by Bloomberg editors and didn't have room to go into all this, but believe the fiscal pivot will create even more headwinds for the economy in 2023 than the proposed interest rate hikes.

Remember, too, the last time the Fed began a tightening cycle, in 2018-2019. It didn't go all that well, as it became clear by midyear 2019 that growth was markedly slowing after a series of 25-bippers over a multi-year period took the effective funds rate to about 2.4% at the peak. Then the Fed came under pressure to reverse course and lower rates, and then had to suddenly infuse a few truckloads of cash during the REPO freakout of September 2019.

https://en.wikipedia.org/wiki/Septem...S._repo_market

(As far as I know, whoever wrote the Wikipedia entry above had a pretty good take on the series of events.)

If the cycle couldn't ride all that well in the second half of 2019 after taking the "training wheels" off, who in the hell actually thinks it's likely to do so over the next 12-18 months?

For it should be plain for everyone to see that almost every elemental piece that makes up the macroeconomy is in much, much worse shape than it was three years ago.

.

So fiscal conditions will suck too. Well I guess the silver lining is that this will make it less likely, as you highlighted in another post, for the Progressives to take control in the near term and play havoc with our tax system and energy policy.

[WTF]

Originally Posted by Tiny

So fiscal conditions will suck too. Well I guess the silver lining is that this will make it less likely, as you highlighted in another post, for the Progressives to take control in the near term and play havoc with our tax system and energy policy.

That was never going to happen for any length of time.

I've provided you articles where even the banking sector falls back in love with big oil when the economic fundamentals are positive.

And how the pledge fidelity to the greenies when oil prices are low.

Did you miss that article?

There has been only one time in my lifetime where higher taxes were in play....in the 1990's after Reagan.

[lustylad]

Originally Posted by CaptainMidnight

For it should be plain for everyone to see that almost every elemental piece that makes up the macroeconomy is in much, much worse shape than it was three years ago.

Hmmm... would you kindly elaborate on that? I don't doubt that the pandemic wreaked a lot of havoc, but it hit some sectors of the economy harder than others and it's unclear to me how much damage is permanent versus fixable. Airlines, hospitality, cruise lines etc. got whacked. Big Pharma, online shopping, virtual platforms like zoom all cashed in. Now that the pandemic is segueing into an endemic, the trends should be reversing.

But you say "almost every elemental piece" of the macroeconomy is much, much worse off today. How do you define "elemental" and which specific industries are you referring to?

[lustylad]

Originally Posted by WTF

There has been only one time in my lifetime where higher taxes were in play....in the 1990's after Reagan.

That's bunk.

Reagan, Bush, Clinton and Obama all raised taxes. Reagan even raised them more than once (after cutting them in 1981).

You spout off your ignorant mouth way too much. Once in a while, you ought to take a moment to check the facts.

You are the AOC of eccie... "always wrong, but never in doubt!"

https://www.bloomberg.com/opinion/ar...s-of-1982-1993

[Tiny]

Originally Posted by lustylad

Hmmm... would you kindly elaborate on that? I don't doubt that the pandemic wreaked a lot of havoc, but it hit some sectors of the economy harder than others and it's unclear to me how much damage is permanent versus fixable. Airlines, hospitality, cruise lines etc. got whacked. Big Pharma, online shopping, virtual platforms like zoom all cashed in. Now that the pandemic is segueing into an endemic, the trends should be reversing.

But you say "almost every elemental piece" of the macroeconomy is much, much worse off today. How do you define "elemental" and which specific industries are you referring to?

If I wade into in a discussion or disagreement between Captain Midnight and Lusty Lad about macroeconomics, I'm going to come out looking like the village idiot. But that never stopped me before! So here goes.

The federal debt held by the public as a % of GDP, inflation, and current account deficit as a % of GDP are all up sharply compared to three years ago. Real interest rates are ridiculously low, maybe the lowest they've been in the history of the USA.

The Fed is faced with a dilemma. Keep interest rates low, so we potentially end up with out-of-control inflation. Or jack them way up, in which case we potentially go into a severe recession and interest payments on the federal debt explode.

Like you Lusty Lad, I'm not sure exactly what Captain Midnight means by "elemental piece", but we sure don't look to be in as good of shape as we did back in 2019.

[royamcr]

Originally Posted by The_Waco_Kid

this is the world wide meltdown

Need one of those after corralling all trumptards into a 1 mile radius. Thats how you MAGA...

[The_Waco_Kid]

Originally Posted by royamcr

Need one of those after corralling all trumptards into a 1 mile radius. Thats how you MAGA...

if you say so

[royamcr]

Originally Posted by The_Waco_Kid

if you say so

Thanks for agreeing this would MAGA.

[WTF]

Originally Posted by lustylad

That's bunk.

Reagan, Bush, Clinton and Obama all raised taxes. Reagan even raised them more than once (after cutting them in 1981).

You spout off your ignorant mouth way too much. Once in a while, you ought to take a moment to check the facts.

You are the AOC of eccie... "always wrong, but never in doubt!"

https://www.bloomberg.com/opinion/ar...s-of-1982-1993

This from your own article!...I'm taking a break from the blackjack table and don't have time to slap your silly notions back up your ass right now...

..The big rise in income inequality in the 1980s and 1990s also had a positive effect on revenue, because those with higher incomes pay taxes at higher rates, as did the stock market boom/bubble of the late 1990s....

[Why_Yes_I_Do]

Originally Posted by WTF

...those with higher incomes pay taxes at higher rates, as did the stock market boom/bubble of the late 1990s....

Hate to burst your 'equity' bubble Mr Bubbles, but the higher earners pay more in real dollars even at a lower percentage rate. Oh, and they also employ those lower wage earners and pay their salaries. And in the odd chance that they do not, why not? Are they fugitives from the law or law abiding citizens. Those are the two choices - whether it hurts your widdle feewins or not.

[lustylad]

Originally Posted by WTF

This from your own article!...

..The big rise in income inequality in the 1980s and 1990s also had a positive effect on revenue, because those with higher incomes pay taxes at higher rates....

Finding something in my link you agree with doesn't deflect from how stupid you were to say taxes only went up in the 90s - when in fact they've gone up under every President, including multiple times under Reagan.

And the excerpt you quote approvingly echoes the question you were too chickenshit to answer in Tiny's "how are we gonna pay for all this shit" thread.

If you want the govt to maximize tax revenues, then you must also favor greater income inequality, since "those with higher incomes pay taxes at higher rates".

So it's official then - you're in favor of maximizing BOTH tax revenues AND income inequality!

Glad we straightened that out for everyone!

[WTF]

The only thing you've seemed to straighten out is the banana up your ass...

I've posted many times how the SS and Medicare tax was raised in 86 I believe that distorted the true deficit. So I really do not count that regressive tax increase as a positive.

[lustylad]

Originally Posted by WTF

I've posted many times how the SS and Medicare tax was raised in 86 I believe that distorted the true deficit. So I really do not count that regressive tax increase as a positive.

You're a fucking idiot. I never said any of the tax increases were positive or negative. I expressed no value judgment whatsoever. I merely pointed out you are stupidly incorrect to say none occurred.

SS and Medicare taxes were raised in 1983, not 1986. Again, you're a fucking idiot.

[Why_Yes_I_Do]

Originally Posted by Tiny

So fiscal conditions will suck too. Well I guess the silver lining is that this will make it less likely, as you highlighted in another post, for the Progressives to take control in the near term and play havoc with our tax system and energy policy.

Interesting article out about the Fed. Basically, the normally dove-ish types on the Fed see a need to up the rates to get a handle on this 'transitory' issue.

What stood out to me was their observation that the current inflation tends to impact the lower income folks disproportionately as it is manifested in the everyday things like food, fuel, home, and rental price increases - which are the mainstay expenses for them..