Last edited by The_Shooman (2008-10-25 10:45:27)

I thought the discussion about the current droughts in Australia and the U.S. brought up an interesting point. Obviously anyone can write up a laundry list of problems for their respective countries, much like during any time in history. But it's possible that these problems can get bigger and last much longer than anyone would like to think. I live in Georgia and see first hand the drought problem and while most people go about living like nothing is going on, Shooman bringing up Australia's farmers and how their treated and how the fact is that Australia is only physically able to support so many people spells out the main problem. How much is too much? How many is too many? Not only population-wise but production wise. In the U.S. people think we always have a fallback plan. Like if things head way south, we have great land that can be used for growing crops to sustain ourselves. But I was reading a piece a while back about a writer who went on a trip through the Midwest U.S. and all this land that is supposedly our safety net is being destroyed for random government projects or strip malls.

Combine that with the reality of droughts (Southern California, Arizona, New Mexico, etc. are basically deserts.. and we are making deserts support millions and millions of people. Even with technology, how long can that last?), it's possible we could have a worldwide potato famine-like scenario. I'm sure people think that this will won't happen and maybe it's unlikely in the near future that it will but what about in 20 years? 30 years? I heard an old man talking about the 70's and how things have changed so much in those 30 years that it scares him. We have the smartest guys in the world running the numbers and plotting the graphs and are probably confident but I'm not so sure. I think the game is different. Before it was probably a lot like baseball where the point was to hit it out of the park or at least get a walk. But now I think it's more like cricket where we are trying to protect our wicket from being obliterated. Problem is that we are still in the baseball mindset and we are swinging for the fences or looking for a ball against a chaotic hurling bowler with no regard for strike zones or our well-being.

I read in the paper yesterday about the corn-to-ethanol thing, how it is reducing food supply (for poor people). Industry is excited because it is a single product that can be used for transportation, energy, plastics, and oh yeah food. Sort of like how the hemp people claim hemp can do everything, including cure cancer.

Also the mountain glaciers have been shrinking rapidly. These provide year-round water supplies for farmers, but when they are gone, then nothing.

Mass migrations will occur, how do we deal with that? Shoot them?

Let all those poor people starve?

Last edited by John Rotten (2008-10-26 10:33:33)

Last edited by John Rotten (2008-10-27 10:29:36)

I have seen them, they are something to behold..

I think it will be some time before we see the S&P 500 above 1200.  The market was almost irrational with respect to risk these last few years, and I remember being very baffled at what I was seeing happen to equity risk premiums, which were unusually low.  While a normal equity risk premium could be expected to be in the 5% area, there was almost no risk premium embedded in the pricing of the broader indexes.  This is not a shocker, and by no means "discovered" this phenomenon, but so many people found so many ways to explain the lack of a price of risk, that I almost started believing maybe things were different somehow.

Not to be.  Things have not changed.  Too much cheap money chasing returns.  We are now returning to normalcy (although I think we have overshot to the downside, but this will pass also), and I actually feel a bit better about the market's valuation now than I did when the S&P was above 1400.

Real monetary historians might describe the last eight years as a battle between the east and the west. Republicans in NY who used to own the money always knew the virtues of fiscal discipline. The West always believed in the speculative value of investing in the future. The theme is as old as The Great Gatsby. Even older. The west always wanted money for speculation. That was always the part of the country that held out great prospects for quick money. Even in the tech bubble, the eastern money always looked west.
     I'm not sure the rules will hold in the future. A lot of the sensible investment advice seems to come from Bill Gross in California these days. But the rules of fiscal discipline: The northeast knows this stuff, at least some of the time. It's bred in the Puritan ethic. Have to read that book by David Hackett Fisher about the varying Colonial experiences: Albion's Seed.

It goes a lot further back then that, tom22. No one is clean on this one. If those so called leaders of the financial world claim they had no idea that this would happen, they are either lying or incompetent beyond belief. If the latter is true, they shouldn't even be allowed to work a cash register at Starbucks, let allow control billions of dollars.

Worst part about it is that nothing is going to change. Once the mess is cleaned up, it'll be the same old song and dance in the future. One thing is for sure; I didn't buy into it before and I'm not going to be buying into it now or later. "It" being the idea of free markets, economic rational thinking, and modern financial devices. It's fairytale B.S.

By the by: anyone who rants about tax increases. The W tax cuts were a fraud: Bush couldn't make them permanent in 2004-06 when he had a Republican Congress to deal with. Even the Republicans knew this was a massive financial fraud.
      McCain or OBama: the taxes must rise in order to pay for the massive financial misfeasance of the Bush years. The last eight years were charged to the national credit card: In the face of what everyone knew were demogrphic disasters for Social Security and Medicare.
       What happened was an outrage. The good news about the OBama presidency: The kid has a good act to follow.

Last edited by tom22 (2008-11-02 21:38:04)

Not tom22, there are better ways to get your post count up than all of these "and one more thing..." type posts..

Last edited by Dorian (2008-11-04 05:49:36)

People talk about the Depression, and JK Galbraith's book seems to be a hit these days.
   I know there is an alternate construct, but the history charts are pretty clear. The Great Depression ended circa 1933. That is when GDP stopped shrinking. It made a fairly steady climb until 1937 (It actually equalled 1929 GDP that year) and then the Fed raised interest interest rates. Bit of a dip and then a rise late 1938. The Dow Jones Industrial average actually tracked the GDP. facts are what they are. The Great Depression ended when FDR was elected. It was more or less straight up from there. FDR had a good act to follow.Just like BHO.