Are we (in the US? the world?) headed for a major depression?

[straydog]

Griffin's book (The Creature from Jekyll Island) has a whole chapter
devoted to a 21st century depression and also reviews how the Federal
Reserve caused the depression of 1929, but, today's WSJ (May 17, 2005),
had a bunch of bad news articles.

1. Front page - how (stupid) people are burning the candle at both ends in
the USA to live it up. There is massive movement to get home equity loans
(as well as home buying loans, and loans to buy bigger homes than can be
sustained in the economic trends we have today) and five agencies (FR,
FDIC, and three others sent out letters to banks to tighten their criteria
for all of these loand).

2. Big drop in foreign purchase of T-bills, bonds in April. The dollar is
falling again (they don't want to lose their asses if the dollar drops
further).

3. The first time I've seen it: the trade deficit in Europe (yeah, Europe,
not the USA) with China has expanded far more rapidly in the last 3 years
than it has in the USA.

4. Real estate price increases in the hotest large city markets is running
30-45% per year now and I'm seeing more talk about the RE bubble.

5. Credit card debt load among people has also been skyrocketing in the
last 1-2 years and there are people out there with 20-30K debt on their
portfolio of cards, paying, what, 18+% per year in interest?

6. Bankruptcies, in Utah I think, are up just double (28 per 1000) in
recent 1-2 years.

That is six articles in one issue of the WSJ.

And, with jobs being shipped out of the country at the rate of, what,
about one percent per year and new jobs paying substantially less and
50-60% going to immigrants. Immigration up, so more people competing
for fewer jobs..... And, another article I read about Iraqi oil; oil
production is falling, more sabotage, pipeline attacks, and the
insurgency, which was supposed to die out after the elections, has gotten
worse.

[Ron Hipfner]

It's a tough call.

The new bankruptcy laws that were passed early this year had the desired
effect of getting consumers to reduce their credit card debt. So much, in
fact, that the credit card companies had their earnings hurt. HMO's are
happier, and more profitable since their debts have higher protection now.

Something like 80% of all US production is consumed internally, exports are
not a huge factor. But still, Europe appears to be drifting into recession
(led by Germany), so there's even less a market for your industrial exports.
But your sinking dollar has improved the competitiveness of those exports.

The recent high oil prices slowed down the consumer for a quarter, but
they're now back spending again. So the retail sector is happy once again.
Gasoline prices will stay low for the summer (due to oversupply) and then
energy prices are expected to skyrocket in the fall (looking at the future's
market).

The vast majority of an American's net worth is in their home. But the price
of getting to and fro (i.e. gasoline in the most part) and heating/cooling
will radically lower that value in the next couple of years.

If the softwood and ruminant animals (beef, sheep, etc.) protectionists lose
their court cases then the cost of lumber and protein will drop sharply as
exports from Canada resume, thereby lowering the cost of new homes by about
$5K and food (restaurants especially have been hurting in the past 2 years).

The expected revaluing of the Chinese Yuan won't have a dramatic impact. The
cost of (clothing, electronics) will increase, but that's just a blip.

Of course interest rates are rising and expected to hit 4 1/4 % by the end
of the year, slowing the economy.

If Bush gets his way and some more of the pension plan is privatized they'll
be another spending spree, and the investment community will benefit.

It looks like a "business as usual" year, the economy will bump along, the
average American will get a little poorer (what is it a $700 billion govt.
deficit this year?) and the economic situation a little more precarious.
That means that if something interesting happens (terrorist attack,
insurgency in China/Taiwan, North Korea explodes a bomb in Japan, Iraq
collapses into anarchy, US decides to "save" another country (Syria, Iran),
etc.) then the whole thing may tip over.

The US consumer is the driving economic force. When they stop, the whole
world stops.

Post by straydog
Griffin's book (The Creature from Jekyll Island) has a whole chapter
devoted to a 21st century depression and also reviews how the Federal
Reserve caused the depression of 1929, but, today's WSJ (May 17, 2005),
had a bunch of bad news articles.
1. Front page - how (stupid) people are burning the candle at both ends in
the USA to live it up. There is massive movement to get home equity loans
(as well as home buying loans, and loans to buy bigger homes than can be
sustained in the economic trends we have today) and five agencies (FR,
FDIC, and three others sent out letters to banks to tighten their criteria
for all of these loand).
2. Big drop in foreign purchase of T-bills, bonds in April. The dollar is
falling again (they don't want to lose their asses if the dollar drops
further).
3. The first time I've seen it: the trade deficit in Europe (yeah, Europe,
not the USA) with China has expanded far more rapidly in the last 3 years
than it has in the USA.
4. Real estate price increases in the hotest large city markets is running
30-45% per year now and I'm seeing more talk about the RE bubble.
5. Credit card debt load among people has also been skyrocketing in the
last 1-2 years and there are people out there with 20-30K debt on their
portfolio of cards, paying, what, 18+% per year in interest?
6. Bankruptcies, in Utah I think, are up just double (28 per 1000) in
recent 1-2 years.
That is six articles in one issue of the WSJ.
And, with jobs being shipped out of the country at the rate of, what,
about one percent per year and new jobs paying substantially less and
50-60% going to immigrants. Immigration up, so more people competing
for fewer jobs..... And, another article I read about Iraqi oil; oil
production is falling, more sabotage, pipeline attacks, and the
insurgency, which was supposed to die out after the elections, has gotten
worse.

[straydog]

Well, thanks for the speculation. I just see our (US) Medicaid costs,
Medicare costs, debt (personal, home equity, etc) skyrocketing,
corporate accounting tricks, etc., as a prelude to the great train wreck.

======= no change to below, included for reference and context ====

Date: Thu, 19 May 2005 11:16:32 -0400
Newsgroups: misc.invest.misc, misc.invest.canada, alt.invest.market.crash,
misc.invest.technical
Subject: Re: Are we (in the US? the world?) headed for a major depression?
It's a tough call.
The new bankruptcy laws that were passed early this year had the desired
effect of getting consumers to reduce their credit card debt. So much, in
fact, that the credit card companies had their earnings hurt. HMO's are
happier, and more profitable since their debts have higher protection now.
Something like 80% of all US production is consumed internally, exports are
not a huge factor. But still, Europe appears to be drifting into recession
(led by Germany), so there's even less a market for your industrial exports.
But your sinking dollar has improved the competitiveness of those exports.
The recent high oil prices slowed down the consumer for a quarter, but
they're now back spending again. So the retail sector is happy once again.
Gasoline prices will stay low for the summer (due to oversupply) and then
energy prices are expected to skyrocket in the fall (looking at the future's
market).
The vast majority of an American's net worth is in their home. But the price
of getting to and fro (i.e. gasoline in the most part) and heating/cooling
will radically lower that value in the next couple of years.
If the softwood and ruminant animals (beef, sheep, etc.) protectionists lose
their court cases then the cost of lumber and protein will drop sharply as
exports from Canada resume, thereby lowering the cost of new homes by about
$5K and food (restaurants especially have been hurting in the past 2 years).
The expected revaluing of the Chinese Yuan won't have a dramatic impact. The
cost of (clothing, electronics) will increase, but that's just a blip.
Of course interest rates are rising and expected to hit 4 1/4 % by the end
of the year, slowing the economy.
If Bush gets his way and some more of the pension plan is privatized they'll
be another spending spree, and the investment community will benefit.
It looks like a "business as usual" year, the economy will bump along, the
average American will get a little poorer (what is it a $700 billion govt.
deficit this year?) and the economic situation a little more precarious.
That means that if something interesting happens (terrorist attack,
insurgency in China/Taiwan, North Korea explodes a bomb in Japan, Iraq
collapses into anarchy, US decides to "save" another country (Syria, Iran),
etc.) then the whole thing may tip over.
The US consumer is the driving economic force. When they stop, the whole
world stops.

Post by straydog
Griffin's book (The Creature from Jekyll Island) has a whole chapter
devoted to a 21st century depression and also reviews how the Federal
Reserve caused the depression of 1929, but, today's WSJ (May 17, 2005),
had a bunch of bad news articles.
1. Front page - how (stupid) people are burning the candle at both ends in
the USA to live it up. There is massive movement to get home equity loans
(as well as home buying loans, and loans to buy bigger homes than can be
sustained in the economic trends we have today) and five agencies (FR,
FDIC, and three others sent out letters to banks to tighten their criteria
for all of these loand).
2. Big drop in foreign purchase of T-bills, bonds in April. The dollar is
falling again (they don't want to lose their asses if the dollar drops
further).
3. The first time I've seen it: the trade deficit in Europe (yeah, Europe,
not the USA) with China has expanded far more rapidly in the last 3 years
than it has in the USA.
4. Real estate price increases in the hotest large city markets is running
30-45% per year now and I'm seeing more talk about the RE bubble.
5. Credit card debt load among people has also been skyrocketing in the
last 1-2 years and there are people out there with 20-30K debt on their
portfolio of cards, paying, what, 18+% per year in interest?
6. Bankruptcies, in Utah I think, are up just double (28 per 1000) in
recent 1-2 years.
That is six articles in one issue of the WSJ.
And, with jobs being shipped out of the country at the rate of, what,
about one percent per year and new jobs paying substantially less and
50-60% going to immigrants. Immigration up, so more people competing
for fewer jobs..... And, another article I read about Iraqi oil; oil
production is falling, more sabotage, pipeline attacks, and the
insurgency, which was supposed to die out after the elections, has gotten
worse.

[darkness39]

Post by straydog
Well, thanks for the speculation. I just see our (US) Medicaid costs,
Medicare costs, debt (personal, home equity, etc) skyrocketing,
corporate accounting tricks, etc., as a prelude to the great train wreck.

The likely outcome is that the US economy will muddle through. It has
before and will again. If you recall the 1970s it looked like the sky
was falling (inflation, unemployment, energy crisis etc.) but the sky
did not fall. It won't most likely this time either.

The risk is of a Japan-style debt deflation bubble. But valuations
(although scary) are in no way as high as they got in Japan (when the
land under the Imperial Palace was worth the same as all the land in
California) and the US banking system is, to date, in far better shape.

Which doesn't mean a correction wouldn't be bloody: the *average* house
in San Diego sells for $550k. 40%+ of mortgages are ARMs. The new
bankruptcy law will make the workout very very painful.

Health costs will cease to rise at double digits. Again, this will
hurt, but it will happen. People will go without health insurance.

In a crash scenario the USD will fall and exporters will do well. Tilt
your portfolio towards exporters and companies which are relatively
insensitive to consumer spending, and away from retail financial
services and home-related.

[straydog]

Date: 23 May 2005 06:09:04 -0700
Newsgroups: misc.invest.misc, misc.invest.canada, alt.invest.market.crash,
misc.invest.technical
Subject: Re: Are we (in the US? the world?) headed for a major depression?

Post by straydog
Well, thanks for the speculation. I just see our (US) Medicaid costs,
Medicare costs, debt (personal, home equity, etc) skyrocketing,
corporate accounting tricks, etc., as a prelude to the great train

wreck.
The likely outcome is that the US economy will muddle through. It has
before and will again. If you recall the 1970s it looked like the sky
was falling (inflation, unemployment, energy crisis etc.) but the sky
did not fall. It won't most likely this time either.

I appreciate your optimism, but I recall a period around '29 when
important voices were saying something like "don't worry, its not bad and
things will be OK very soon".

The risk is of a Japan-style debt deflation bubble. But valuations
(although scary) are in no way as high as they got in Japan (when the
land under the Imperial Palace was worth the same as all the land in
California) and the US banking system is, to date, in far better shape.

So, what about our debt load? What about all this FDI? What about the job
movement to 3rd world? The dollar that may tank (or, already is)?

Which doesn't mean a correction wouldn't be bloody: the *average* house
in San Diego sells for $550k. 40%+ of mortgages are ARMs. The new
bankruptcy law will make the workout very very painful.

Well, I've been reading recently a lot of good/bad about the RE market.

So, who will lose? The people who loaned out the money to the banks (as
they made deposit accounts) which in turn loaned out the money to people
who can't make the payments? Griffin's book ("The Creature from Jekyll
Island") went into considerable history of bank failures, and that the Fed
actually caused the '29 depression, which should really be called the
depression of '30-31-33, and it sure took a long time to come out.

Health costs will cease to rise at double digits.

Why do you think this? I'm serious.

Again, this will

hurt, but it will happen. People will go without health insurance.

Well, this is already happening.

In a crash scenario the USD will fall and exporters will do well. Tilt
your portfolio towards exporters and companies which are relatively
insensitive to consumer spending, and away from retail financial
services and home-related.

Might be worth considering. Thanks for your thoughts.

[darkness39]

Post by straydog

Date: 23 May 2005 06:09:04 -0700
Newsgroups: misc.invest.misc, misc.invest.canada, alt.invest.market.crash,
misc.invest.technical
Subject: Re: Are we (in the US? the world?) headed for a major depression?

Post by straydog
Well, thanks for the speculation. I just see our (US) Medicaid costs,
Medicare costs, debt (personal, home equity, etc) skyrocketing,
corporate accounting tricks, etc., as a prelude to the great train

wreck.
The likely outcome is that the US economy will muddle through. It has
before and will again. If you recall the 1970s it looked like the sky
was falling (inflation, unemployment, energy crisis etc.) but the sky
did not fall. It won't most likely this time either.

I appreciate your optimism, but I recall a period around '29 when
important voices were saying something like "don't worry, its not bad and
things will be OK very soon".

It is not likely that the systematic policy mistakes of the 1930s will
be repeated: the government will not force banks into insolvency,
protectionism will not destroy world trade.

The US government employs far more people than it did then, and those
people will keep living and spending regardless of what happens.

Post by straydog

The risk is of a Japan-style debt deflation bubble. But valuations
(although scary) are in no way as high as they got in Japan (when the
land under the Imperial Palace was worth the same as all the land in
California) and the US banking system is, to date, in far better shape.

So, what about our debt load?

Risky. But you can show that people have been worrying about it all
the way up from 20% of GDP to 110%. A lot is simply a more efficient
debt market (eg mortgage backed securities).

What about all this FDI?

Foreign Direct Investment in the US is a (very) good thing. Where
would the US be if Toyota had not shown America how to make better
cars?

What about the job

Post by straydog
movement to 3rd world?

By and large a good thing. Americans will move to higher value add
activities in their own economy. Protectionism does nothing but
impoverish your own country.


The dollar that may tank (or, already is)?

Again a good thing. The US has borrowed in dollars from foreigners,
now it will repay them in deflated dollars. Exporters will do better,
imports will be substituted.

Post by straydog

Which doesn't mean a correction wouldn't be bloody: the *average* house
in San Diego sells for $550k. 40%+ of mortgages are ARMs. The new
bankruptcy law will make the workout very very painful.

Well, I've been reading recently a lot of good/bad about the RE market.

It's not a market where anyone makes money by being bearish so there
are very very few bears. I would say the US coastal markets are so
obviously bubble like that it makes the telco/ dot com bubble seem
small by comparison.

See endless back issues of the Economist.

Post by straydog
So, who will lose? The people who loaned out the money to the banks (as
they made deposit accounts)

No. FDIC (a big difference from the 1930s). The taxpayer would lose,
bailing out the banks.

which in turn loaned out the money to people

Post by straydog
who can't make the payments?

As long as those people are allowed to go bankrupt, the effect is not
too bad. They begin their lives again, the loans are written off, the
Fed provides liquidity. We've been through this before in the S&L
Crash of the early 90s.

Griffin's book ("The Creature from Jekyll

Post by straydog
Island") went into considerable history of bank failures, and that the Fed
actually caused the '29 depression, which should really be called the
depression of '30-31-33, and it sure took a long time to come out.

Indeed. But hopefully we will make fewer mistakes this time.

The big risk is a coup or revolution in Saudi Arabia. The next day,
oil will be $100/bl and a recession (and maybe depression) really will
start. People used to laugh at Pres. Carter asking them to drive less
on Sundays and turn their thermostats down.

Post by straydog

Health costs will cease to rise at double digits.

Why do you think this? I'm serious.

Because health costs cannot become bigger than GDP. At some level,
companies will simply not pay those bills.

Herbert Stein (Chief Economic Adviser to pres Nixon) 'something which
cannot go on forever, doesn't.'

I also think that eventually this will lead to national healthcare.
Every other country in the developed world spends (a lot) less per
person and as a per cent. of GDP on healthcare, and every other country
has a national healthcare system (in the UK we have one state provider,
the NHS, in France they have a multitude of private and state providers
-- both systems work, theirs is more expensive but gives much better
care).

http://www.pkarchive.org/

has Paul Krugman's recent NYT columns on international healthcare
comparisons. Well worth a read.

Post by straydog
Again, this will

hurt, but it will happen. People will go without health insurance.

Well, this is already happening.

See above. National healthcare is coming although it may take a crisis
to bring it about.

Post by straydog

In a crash scenario the USD will fall and exporters will do well. Tilt
your portfolio towards exporters and companies which are relatively
insensitive to consumer spending, and away from retail financial
services and home-related.

Might be worth considering. Thanks for your thoughts.

Think consumer staples, groceries, and exporters. Especially
exporters. Probably also utilities (interest sensitive but people
still need light and heat: I note Warren Buffet is making big
acquisitions in this area).

Although they are prima facie unattractive at these very low real
yields, it is also why I have held on to index linked bonds (TIPS) at
these levels. If inflation rises, there is considerable protection
there and 100% security of principal. I would definitely urge any
investor to make the maximum permitted use of I Bonds (but not being US
based its not a subject I know much about). The Pimco website has some
great stuff on bonds, commodities etc. (Bill Gross, Rob Arnott etc.).

I've lived through much bigger predictions of disaster in the 1970s.
It didn't happen then. The US economy is too diversified and too
flexible, with good demographics (all those Hispanics pouring in: those
huddled masses yearning to be free). Productivity is rising faster
than it has done any time since 1970 (with the exception of the very
late 1990s) and in the long run that will yield higher living standards
(at least for CEOs, if not the whole country).

There are big challenges. I agree the debt load is scary, so is the
Federal Deficit, so is healthcare. Watch for a very nasty few years in
real estate. The other danger is that the hedge funds drop the ball:
this GM thing was a warning sign. But one good thing about hedge funds
is that for every strategy there are many pursuing the opposite
strategy and making money-- but the investment banks will take a nasty
hit if their best clients dissolve.

[straydog]

(see quoted material below)

Well, thanks for your thoughts. I think the validity of some of your
predictions/explanations will depend very much on assumptions/conditions
and whether they may change suddenly and severely at some point in the
future. Maybe there will not be a Federal-Reserve-induced-depression, but
I've noticed that there has been a world of changes in money flow in the
last 10-15 years (securitization of credit, collateralized debt
obligations, securitization of revenues, selling of liabilities [in the
insurance industry], hedge strategies, etc., all of which I understand
very poorly) and if Enron/Andersen can take place (and all of our other
bad CEO-theives [whether they knew what they were doing or not]), I'd
place my bet that Murphy's Law will not be disproven. In other words, some
other thing will happen and upset the apple cart. Even something far out
such as a new disease, or an impact from a large asteroid. There have been
bubbles before; tulips in Amsterdam, when, around 1600 something? Other
stock market crashes in the 1800s, other depressions/recessions in the
1800s, and before (so the books say). I just hate to see large numbers of
innocent people get hurt.

======= no change to below, included for reference and context ====

Date: 25 May 2005 01:13:17 -0700
Newsgroups: misc.invest.misc, misc.invest.canada, alt.invest.market.crash,
misc.invest.technical
Subject: Re: Are we (in the US? the world?) headed for a major depression?

Post by straydog

Date: 23 May 2005 06:09:04 -0700
Newsgroups: misc.invest.misc, misc.invest.canada, alt.invest.market.crash,
misc.invest.technical
Subject: Re: Are we (in the US? the world?) headed for a major depression?

Post by straydog
Well, thanks for the speculation. I just see our (US) Medicaid costs,
Medicare costs, debt (personal, home equity, etc) skyrocketing,
corporate accounting tricks, etc., as a prelude to the great train

wreck.
The likely outcome is that the US economy will muddle through. It has
before and will again. If you recall the 1970s it looked like the sky
was falling (inflation, unemployment, energy crisis etc.) but the sky
did not fall. It won't most likely this time either.

I appreciate your optimism, but I recall a period around '29 when
important voices were saying something like "don't worry, its not bad and
things will be OK very soon".

It is not likely that the systematic policy mistakes of the 1930s will
be repeated: the government will not force banks into insolvency,
protectionism will not destroy world trade.
The US government employs far more people than it did then, and those
people will keep living and spending regardless of what happens.

Post by straydog

The risk is of a Japan-style debt deflation bubble. But valuations
(although scary) are in no way as high as they got in Japan (when the
land under the Imperial Palace was worth the same as all the land in
California) and the US banking system is, to date, in far better shape.

So, what about our debt load?

Risky. But you can show that people have been worrying about it all
the way up from 20% of GDP to 110%. A lot is simply a more efficient
debt market (eg mortgage backed securities).
What about all this FDI?
Foreign Direct Investment in the US is a (very) good thing. Where
would the US be if Toyota had not shown America how to make better
cars?
What about the job

Post by straydog
movement to 3rd world?

By and large a good thing. Americans will move to higher value add
activities in their own economy. Protectionism does nothing but
impoverish your own country.
The dollar that may tank (or, already is)?
Again a good thing. The US has borrowed in dollars from foreigners,
now it will repay them in deflated dollars. Exporters will do better,
imports will be substituted.

Post by straydog

Which doesn't mean a correction wouldn't be bloody: the *average* house
in San Diego sells for $550k. 40%+ of mortgages are ARMs. The new
bankruptcy law will make the workout very very painful.

Well, I've been reading recently a lot of good/bad about the RE market.

It's not a market where anyone makes money by being bearish so there
are very very few bears. I would say the US coastal markets are so
obviously bubble like that it makes the telco/ dot com bubble seem
small by comparison.
See endless back issues of the Economist.

Post by straydog
So, who will lose? The people who loaned out the money to the banks (as
they made deposit accounts)

No. FDIC (a big difference from the 1930s). The taxpayer would lose,
bailing out the banks.
which in turn loaned out the money to people

Post by straydog
who can't make the payments?

As long as those people are allowed to go bankrupt, the effect is not
too bad. They begin their lives again, the loans are written off, the
Fed provides liquidity. We've been through this before in the S&L
Crash of the early 90s.
Griffin's book ("The Creature from Jekyll

Post by straydog
Island") went into considerable history of bank failures, and that the Fed
actually caused the '29 depression, which should really be called the
depression of '30-31-33, and it sure took a long time to come out.

Indeed. But hopefully we will make fewer mistakes this time.
The big risk is a coup or revolution in Saudi Arabia. The next day,
oil will be $100/bl and a recession (and maybe depression) really will
start. People used to laugh at Pres. Carter asking them to drive less
on Sundays and turn their thermostats down.

Post by straydog

Health costs will cease to rise at double digits.

Why do you think this? I'm serious.

Because health costs cannot become bigger than GDP. At some level,
companies will simply not pay those bills.
Herbert Stein (Chief Economic Adviser to pres Nixon) 'something which
cannot go on forever, doesn't.'
I also think that eventually this will lead to national healthcare.
Every other country in the developed world spends (a lot) less per
person and as a per cent. of GDP on healthcare, and every other country
has a national healthcare system (in the UK we have one state provider,
the NHS, in France they have a multitude of private and state providers
-- both systems work, theirs is more expensive but gives much better
care).
http://www.pkarchive.org/
has Paul Krugman's recent NYT columns on international healthcare
comparisons. Well worth a read.

Post by straydog
Again, this will

hurt, but it will happen. People will go without health insurance.

Well, this is already happening.

See above. National healthcare is coming although it may take a crisis
to bring it about.

Post by straydog

In a crash scenario the USD will fall and exporters will do well. Tilt
your portfolio towards exporters and companies which are relatively
insensitive to consumer spending, and away from retail financial
services and home-related.

Might be worth considering. Thanks for your thoughts.

Think consumer staples, groceries, and exporters. Especially
exporters. Probably also utilities (interest sensitive but people
still need light and heat: I note Warren Buffet is making big
acquisitions in this area).
Although they are prima facie unattractive at these very low real
yields, it is also why I have held on to index linked bonds (TIPS) at
these levels. If inflation rises, there is considerable protection
there and 100% security of principal. I would definitely urge any
investor to make the maximum permitted use of I Bonds (but not being US
based its not a subject I know much about). The Pimco website has some
great stuff on bonds, commodities etc. (Bill Gross, Rob Arnott etc.).
I've lived through much bigger predictions of disaster in the 1970s.
It didn't happen then. The US economy is too diversified and too
flexible, with good demographics (all those Hispanics pouring in: those
huddled masses yearning to be free). Productivity is rising faster
than it has done any time since 1970 (with the exception of the very
late 1990s) and in the long run that will yield higher living standards
(at least for CEOs, if not the whole country).
There are big challenges. I agree the debt load is scary, so is the
Federal Deficit, so is healthcare. Watch for a very nasty few years in
this GM thing was a warning sign. But one good thing about hedge funds
is that for every strategy there are many pursuing the opposite
strategy and making money-- but the investment banks will take a nasty
hit if their best clients dissolve.

[darkness39]

If you want to lie awake at night worry about Asian flu.

The world does not have enough vaccine production capability and
governments like the US will not invest in it, anti virals will be
rationed, and the disease has already started spreading.

The guess is 30 million dead. Mostly very young and very old, but fit
adults as well.

[straydog]

Date: 27 May 2005 08:29:40 -0700
Newsgroups: misc.invest.misc, misc.invest.canada, alt.invest.market.crash,
misc.invest.technical
Subject: Re: Are we (in the US? the world?) headed for a major depression?
If you want to lie awake at night worry about Asian flu.

How about mad cow? Want to die quickly or die going out of your mind?

How about an uncharted, unmapped asteroid impact. 4-5 miles in diameter
would make 30 mil dead seem like micky mouse; think mass riots, upheavals,
hysteria. At least that's what I was reading from the astrophysics guys
who know much more than I do about these things.

I can think of more things to worry about, too, if you want to extrapolate
terrorism.

The world does not have enough vaccine production capability and
governments like the US will not invest in it, anti virals will be
rationed, and the disease has already started spreading.

Malaria? Everything out there now is DDT resistant mutants. Get it into
the USA....and mortality like in Africa: about 30% deaths.

The guess is 30 million dead. Mostly very young and very old, but fit
adults as well.

A few years ago, I read an article in a scientific journal (_Science_, and
its not the kindergarten stuff) about we are now in a post-antibiotic era.
Hospital staph is deadly and resistant to most of the standard
anti-biotics. There are several other communicable diseases, in addition
to whatever might come out of somewhere in the future, that the standard
antibiotics don't touch any more.

I'm also worried about the tropical viruses. There are some down there
that have been known for decades and they are very very very ugly, no
cures, and if they become highly contageous most of the world could be
dead in two weeks. I had a graduate level course in virology, and with
laboratory (we were working with several live viruses [fortunately
species specific to the animals, not us]).

Nah, I'd rather worry about the economy; I understand it much less than
the other stuff and all of my life's experiences have caused me more pain
from the things I didn't understand.

[darkness39]

The Asian avian flu is far far closer than the other things you
mentioned (except MRSA: but we can fight that it will merely take lots
of money to clean hospitals-- it raises individual risk but at a
societal level its not huge).

Mad cow is so rare that it's not worth worrying about.

Asian avian flu is now and is spreading and we are not ready. In 1919
20 million people died, on the same basis that would be over 100
million now.

On the economic side I agree that things may be rough in some sectors,
but by and large the US economy adapts and moves on. There are more
stabilisation mechanisms (such as social security and
medicaid/medicare) which are built into the US economy to maintain
consumption than there were in the 1920s. And the Department of
Homeland Security alone (as well as the Pentagon) are much larger and
more stable pieces of the US economy than total government activity was
then.

As long as there is no global move to protectionism, and no severe
disruption in oil supplies (eg a coup in Saudi Arabia) then the world
economy will keep growing.

[Bill Pringlemeir]

[Followups set, does this thread need to go to all these groups?]

Post by darkness39
The Asian avian flu is far far closer than the other things you
mentioned (except MRSA: but we can fight that it will merely take
lots of money to clean hospitals-- it raises individual risk but at
a societal level its not huge).
Mad cow is so rare that it's not worth worrying about.

Paranoia is also a big concern. It can lead to irrationality and/or
mass hysteria. It will not *OCCUR* in the U.S.

I don't know what this thread has to do with technical investing?

fwiw,
Bill Pringlemeir.

[straydog]

Well, thank you again for your thoughts. I think its too early to tell
about Avian Flu. Some of these diseases have a "contageability" component,
an environment component, and a susceptibilty component, and a genetic
mutability component that can make them more serious problems in some
areas than others. We all rationalize our appraisals of dangers
differently in the absense of more definite information. It seems to me
that human psychology (herd instincts) can have bigger effects on
markets/investing than market fundamentals.

======= no change to below, included for reference and context ====

Date: 28 May 2005 01:09:06 -0700
Newsgroups: misc.invest.misc, misc.invest.canada, alt.invest.market.crash,
misc.invest.technical
Subject: Re: Are we (in the US? the world?) headed for a major depression?
The Asian avian flu is far far closer than the other things you
mentioned (except MRSA: but we can fight that it will merely take lots
of money to clean hospitals-- it raises individual risk but at a
societal level its not huge).
Mad cow is so rare that it's not worth worrying about.
Asian avian flu is now and is spreading and we are not ready. In 1919
20 million people died, on the same basis that would be over 100
million now.
On the economic side I agree that things may be rough in some sectors,
but by and large the US economy adapts and moves on. There are more
stabilisation mechanisms (such as social security and
medicaid/medicare) which are built into the US economy to maintain
consumption than there were in the 1920s. And the Department of
Homeland Security alone (as well as the Pentagon) are much larger and
more stable pieces of the US economy than total government activity was
then.
As long as there is no global move to protectionism, and no severe
disruption in oil supplies (eg a coup in Saudi Arabia) then the world
economy will keep growing.