hey ben...
well, i was hardly suggesting that the family end up living beneath the overpass...but then again there's always this:
ipsnews.net
<g>
seriously, my point about the demographic issue and the development of a prolonged recession (or depression, if you will) has to do with the very difficult issue of boomers raising cash into their retirement (selling assets) to a generation, smaller, and more burdened by entitlements of their 'elders'
your notion of 'opening up borders' (haven't we been already?) assumes job growth and we simply are not seeing that. thus far, we've lost approximately 1M jobs this year and there appears to be no end in sight...and as our economy contracts, we have the situation (especially in CA) whereby you will have increased illegal immigration, not so much for jobs, but for social services they are unable to get in mexico (and beyond)....this will simply strain even more an economy constrained by job losses and asset depreciation...not a pleasant scenario
i truly hope i'm wrong about GD v 2.0...and even if it plays out, it won't be the same as in the 30's...but it will be ugly nonetheless
gov't will do a much better job of hiding the outcome of the credit bubble....unemployment number will rise, but like inflation numbers will be well hidden..but make no mistake about it...when job losses accelerate, it WILL affect the broader economy as spending contracts further and further....becoming a self reinforcing downward spiral...
can we muddle through with minimal pain due to gov't intervention?
it's possible.....but i don't think it's likely....decades of debt creation along with asset depreciation will not be easy to correct without some pain
my advice to anyone reading this is get out of debt, raise cash, and have patience....the one silver lining to GDv1.0 is that those with cash and little or no debt had tremendous opportunity to acquire overinflated assets CHEAP....while it's true that our gov't is doing it's best to prevent market forces to assert themselves fully, it is my opinion that inflated assets CAN NOT be supported at a 'permanently high plateau' and that despite the best efforts to do so, prices will revert inexorably to the mean or even beyond...markets tend to overshoot on both sides of optimism and pessimism
ps....
your point about the bullish period after the 1932 bottom is well taken, however, when you overlay the cash needs of the boomers entering retirement over the next decade, i don't think stock prices bode particularly well (and bonds potentially as well) as raising cash will continue to be job ONE |
