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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (91937)	12/23/2008 4:52:26 PM
From: Sunny Jim	1 Recommendation Read Replies (2) \| Respond to of 116555

Looks like the FED will be the lender, owner, and ultimately consumer of last resort. Bernanke is bound and determined to prove his theory that lack of money was the cause of the great depression, so he's going to throw money at anything that won't move to try and avoid another great (or even greater) depression. Today it's cars, tomorrow, it'll be big screen TVs and IPODs. We keep hearing how this is the worst economic downturn since the great depression which set the bar for the period of history that everyone remembers and relates to. What they are failing to compare is the world then versus the world now. Then the world had far more natural resources for the level of population and the potential for growth then far exceeded what the world has today. Today we have billions more people and far fewer natural resources per capita. Plus the world has just been on what was the biggest consumption binge in the history of the world - in general we're not wanting for things because we already own them for the most part (or the banks do via the consumers' debt<G>). Our standard of living has grown steadily and most everyone was pretty happy until, well the past year when it all seemed to come unglued. I would pose the hypothesis that the situation in today's world makes it a virtual impossibility that the world economy can be stoked back to the obese level that it was running at in the peak of the credit bubble. While all the policy makers want to pin the tail on the credit donkey as the solution, the reality is the world doesn't have the resources to sustain the level of economic activity that we have just seen and yearn to go back to. I would further hypothesize that we've hit peak standard of living just like we've hit peak oil. Granted we have had technological evolution that has given us a much improved standard of living and the evolution will always continue, but we're well down the curve of that evolution. We are not at the forefront just poised to burst into a new explosion of technological breakthroughs. The politicians are acting like, gee all we need to do is redirect (throw) resources to technological innovation and, voila, it will happen. Of course I'm opinionated in this regard, but I've watched development of fuel cells for example in the past 15 years with total disappointment at the progress in commercializing them. They, like a lot of other "future" energy prospects, sound great until money gets poured into them and reality hits that the breakthroughs are extremely hard to come by. My point being that increased standard of living is going to be extremely hard to come by via technological breakthroughs. I guess to sum it up, we need to enjoy the next few months (years?) as money is thrown at the world's problems and people hope and dream of returning to yesteryear. When reality hits that the world is running out of resources and we're going to have to settle for less, all hell will break loose. It's totally un-American to even think let alone say such a thing. Sunny(Gloomy) Jim, PS: I should explain that I'm snow bound today, got cabin fever bad, the sky is grey, and my thoughts match the weather. I guess I just got tweaked into writing something based on Mish's post about the money that the FED is throwing at the problems.

To: mishedlo who wrote (91937)	12/23/2008 10:41:06 PM
From: Sr K	Read Replies (1) \| Respond to of 116555

Before I post an unbelievable editorial, here's some uplifting news. $30 Million Rescue for Los Angeles Museum By EDWARD WYATT and JORI FINKEL Published: December 23, 2008 LOS ANGELES — The Museum of Contemporary Art, known for its impressive collection of postwar paintings and sculpture but also for an ambitious exhibition program that has driven it to the brink of financial collapse, said Tuesday it had negotiated a $30 million bailout with Eli Broad, this city’s leading cultural patron. nytimes.com

To: mishedlo who wrote (91937)	12/23/2008 10:48:14 PM
From: Sr K	2 Recommendations Respond to of 116555

How much do you think the Ethanol Lobby should get as a "bailout"? - DECEMBER 24, 2008 An Ethanol Bailout? And we thought we'd seen everything. Along with Russia, Venezuela, Iran and the Dubai property market, add another name to the list of bubble economies hurt by the falling price of oil: the ethanol industry. And naturally, the ethanol lobby is looking for a bailout on top of its regular taxpayer subsidies. The commodity bust has clobbered corn ethanol, whose energy inefficiencies require high oil prices to be competitive. The price of ethanol at the pump has fallen nearly in half in recent months to $1.60 from $2.90 per gallon due to lower commodity prices, and that lower price now barely covers production costs even after accounting for federal subsidies. Three major producers are in or near bankruptcy, including giant VeraSun Energy. So here they go again back to the taxpayer for help. The Renewable Fuels Association, the industry lobby, is seeking $1 billion in short-term credit from the government to help plants stay in business and up to $50 billion in loan guarantees to finance expansion. The lobby would also like Congress to ease the 10% limit on how much ethanol can be added to gasoline for conventional cars and trucks -- never mind the potential damage to engines from such an unproven mix. Of course, the ethanol industry wouldn't even exist without the more than $25 billion in taxpayer handouts over the past 20 years. Congress only recently passed energy and farm bills that further greased ethanol production with a 51 cent a gallon tax credit, corn subsidies, plus increasingly stringent biofuel mandates. We were told, as usual, that profitability was just around the corner. The uglier realities of corn ethanol are at least becoming more widely recognized, even on the political left. The Environmental Working Group and five other environmental organizations said this week they oppose a bailout because subsidies "for corn-based ethanol have produced unintended, yet potentially catastrophic environmental consequences, with little or no return to taxpayers in energy security [or] protection from global warming." Don't expect Congress to listen. Ethanol may never be profitable in the real world, but in Washington it's a lucrative business that provides jobs and votes. Like Fannie Mae and Freddie Mac, ethanol is a business created by Congress that now has to be bailed out to save Congress from embarrassment. online.wsj.com