Gooner

Im fine with the the current state the destroyed British Empire. A world war created the transition that had more to do with economic potential and capability in the long run. Not being the global economic super power is not the same as government collapse and economic crash. The debts of a government has yet to collapse a government in a modern globalized economy. Mostly due to economic self interest of market disruptions of the entities owed the debt.

Who calls in US debt to the level we can’t pay? Because then we call debt owed to us. In a matter of hours the global market incinerates itself. Anarchy world wide a few hours later.

The Great Recession was caused by a few financial institutions playing games with debt. The amount of madmen it would take to coordinate the fall of the dollar and federal government is astronomical since the entire 1% who own 60% of the money would be taken out.

For better or worse the system sustains itself as much from mutual self destruction as it does from being a good system.

gloopy

Define modern then I guess. Soviet Union was in the 90's. Venezuela's transition from 3rd richest in western hemisphere to third world status was after that. Greece around the same time, however they "bundled" their catastrophic failure into a fake nation state ala the MBS CDO's did leading up to 2007/8.

"Collapse" can take many forms. There is a lot of room for pain and suffering not experienced by our nation in a long time between the status quo and Mad Max. And the veneer of civilization is thin.

What's happening now is worse than someone "calling it in" which in many cases isn't even a thing anyway. Any given month we can always "print" the next payment. That's not the point. Where that fake wealth is cannibalized from does matter and it does add up. DYODD and look up current debt interest payments. Then increase that to your best guess as to where our debt will be at in 1-5-10 etc years. Then Multiply that by the difference in interest/debt servicing between now and then. By any semblance of reason it will be vastly in excess of our (already bloated) defense budget. Iceberg dead ahead, vector unavoidable, the only unknown is the distance (time).

It was immediately pumped back up too. The percent of dollars ever in circulation that have been created since is staggering. Trillions have been transferred from the working poor and middle class to mega corporations and billionaires. RE (and equity) valuations in many cases are absolutely asinine. We've traded a lot of airspeed for altitude and the domestic and international socioeconomic implications of going back down are something no one is ready to handle.

Its not about coordination or conspiracy. Its about radically unsustainable economics. Alexis de Toqueville famously said "The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money". That ship sailed over a century ago when the progs took over. "A Republic, if you can keep it..." is where we're at now. And there's very few signs we will be able to in the long run.

If "follow the money" was the only issue, that would serve as some sort of check I suppose. But those with that much money don't need more money. Follow the power is more accurate. Good thing all those with power in the vaunted modern age are selfless public servants doing their level best to safeguard their beloved working class like selfless servant leaders for the first and only time in human history. We truly live in a golden age of endless prosperity.

Gooner

This is true, but those examples I think also support the point that they weren’t allowed to fully collapse as that could destabilize the global market. As you say the veneer is thin, letting even Greece fail could have been catastrophic.

[/QUOTE=gloopy;3423188] What's happening now is worse than someone "calling it in" which in many cases isn't even a thing anyway. Any given month we can always "print" the next payment. That's not the point. Where that fake wealth is cannibalized from does matter and it does add up. DYODD and look up current debt interest payments. Then increase that to your best guess as to where our debt will be at in 1-5-10 etc years. Then Multiply that by the difference in interest/debt servicing between now and then. By any semblance of reason it will be vastly in excess of our (already bloated) defense budget. Iceberg dead ahead, vector unavoidable, the only unknown is the distance (time).



It was immediately pumped back up too. The percent of dollars ever in circulation that have been created since is staggering. Trillions have been transferred from the working poor and middle class to mega corporations and billionaires. RE (and equity) valuations in many cases are absolutely asinine. We've traded a lot of airspeed for altitude and the domestic and international socioeconomic implications of going back down are something no one is ready to handle.[/QUOTE]

This is absolutely true and the root of the problem. The classes are getting separated again. It does feel like it is accelerating and while I fear for how it is corrected I don’t think American government debt will be the trigger. That said Quantitative Easing was a solution ran to long that I think has played into this problem. With that hopefully ending, the interest rate and bond market stabilization into an actual market may bring that stress to the system to an end.


[/QUOTE=gloopy;3423188] Its not about coordination or conspiracy. Its about radically unsustainable economics. Alexis de Toqueville famously said "The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money". That ship sailed over a century ago when the progs took over. "A Republic, if you can keep it..." is where we're at now. And there's very few signs we will be able to in the long run.



If "follow the money" was the only issue, that would serve as some sort of check I suppose. But those with that much money don't need more money. Follow the power is more accurate. Good thing all those with power in the vaunted modern age are selfless public servants doing their level best to safeguard their beloved working class like selfless servant leaders for the first and only time in human history. We truly live in a golden age of endless prosperity.[/QUOTE]

I couldn’t agree more that the power of the corporation is the real crux of the problem since tech took to the market. The worry will be can the governments of the world resist their influence to let QE die and mega corporations not allowed to continue to grow in size, actually break some up would be the long term solution.

Long story short my fear horizon is a bit further out than yours.

gloopy

I don't think it will. Pumping back up the "real estate crisis" was a response to decades of failed government policies in that sector (several "community re-investment acts" etc) that merely reaped what they sewed despite them blaming it on the private sector and "capitalism" participating in the very gambling they set up in the first place. Now they're back at it not only in RE, but equities and cash itself. The dollar is "strengthening" while at the same time being wiped out by nearly double digits a year. There simply can't be a Volkarian savior at this point. If they even tried 15-20% interest rates, the house of cards would collapse completely. Right now (and for over a year at least) the "mandate" was to fix catastrophic inflation before the election, even if it meant a hit to "the market". But these Keynesian morons are punching way above their weight class on this.

Soon debt interest will permanently be bigger than our vastly bloated "defense" budget no matter what course they take. Bigger than SS or Medicare. We're broke. Its not salvageable at this point so the only question is how bad, fast and long will the pain be. The entire unipolitical class wants the pain to be delayed as long as possible, so whatever happens and whenever it happens, it will be way worse than it needed to be. In the meantime, bread and circuses for all, to include the entire planet that wants to write themselves checks from the bank of Cloward-Piven.

I don't have a specific "fear horizon" and absolutely do not know "the hour or the day" when all this unravels. No one does because no one can. While it could be relatively soon, it seems like it will be delayed as much as they can by rolling that growing snowball up the avalanche primed hill until there's no more hill. Its going to suck whenever it happens, but the longer before it does, the more it will suck. Meanwhile there are rumblings of a truly seismic shift to our relatively short lived monopolistic petro-dollar hegemony happening and the MSM could care less about it. I don't blame them anymore than I blame fast food companies for switching to crappy inflammatory "vegetable oils" and all that...they're just giving us the consumer what we're demanding they give us.

We've outsourced reality to central planners like every civilization that's ever came before. There's a reason why most "democracies" (we're not one, we were never supposed to be one, but we might as well be one) barely last as long as we have, and while I haven't made up my mind on it, there seems to be some hard to ignore "history may not always repeat but it sure does rhyme" to 4th turning theory. Fun times ahead and I'm as prepared as I can be financially either way.

The good news is we've seemed to have built a relatively resilient business model relative to most peers in the sector. Even if/when things get ugly, we don't have to outrun the angry bear; we only have to outrun the other slower hikers. I think we can probably do that.

Gooner

I really appreciate an actual reasoned argument to support your views.

The unraveling of the issues will be painful, I’m not sure how the world handles it. The poor and middle class will take the brunt of it I’m sure. I think our industry will remain intact, the positive side of being a necessary part of the economy, but there will be pain there as well.

Gooner

The levers available to them have turned into popsicles sticks. It will take bravery that economists and the political appointed Fed have not shown for too long to get back control. It will take pain to a market used to consistent gains to achieve a soft landing.

One crazy thing to me that we still look at GDP, inflation, and unemployment as our main measure of an economy. That’s like relying on total RBIs in current baseball contract negotiations. There is so many better tools with faster moving data sets that can indicate an actual economic state.

I look forward to analysis of how the stimulus of the pandemic are viewed. Particularly when meshed with the policies since 2007.

JustNarced

Agree, and right now the 1% are pointing blame at politicians and preserving that wealth and credibility by raising rates. What better way to force a double six figure income household out of a $1.2m home financed at 1.8% than to kill their source of income and have institutions buying up the same properties with cash at 60% of the high. But we need a crash to kill these low interest rate loans, strengthen the dollar, bring back high interest CDs and transfer more of the wealth into the 1%.

I see the world ending up with two systems and two economies, BRICS and SWIFT. The dollar loses strength in BRICS areas and maintains in a SWIFT world, the opposite is true of the yuan. Neither a win or lose, maybe more of a detente.

Trip7

Great tweet I came across this morning. Applies well to our high disposable income profession

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Gunfighter

This guy gets it. When your money comes from equity vs labor the tax bill is much lower. $0 tax due if you take that equity in the form of a loan against the appreciated asset.

gloopy

For now. They're on it though. The (zero point zero) one percent (and their gov cronies) don't like that the middle class has gotten too uppity and is starting to figure out their BBD strategy. They are already cooking up schemes to come after it, all while selling it to the masses as making "the rich" pay "their fair share".