GROVETON AND RECESSION VS DEPRESSION

On the A QUESTION FOR VDOT string Groveton said:

“Long recession / depression?

“Do any of you guys watch any of the stock market indices?

…..

“All US stock indices have been surging since March. They have been rocking for 6 ½ months.”

EMR thought that it was uniformly agreed that stock and commodity markets were gambling venues, NOT indicators of economic health or investment intelligence.

“Do you guys really see a long recession / depression? If so, we can make a fortune right now. And I mean a real fortune.”

IT is not about making money, IT is about achieving a sustainable trajectory for civilization.

“Any chance this is a real recovery? You know … like the last 35 recessions and recoveries. Or, is this really The Great Depression II?”

Of course there is a ‘chance’ of a short term recovery – that is Option One of the three scenarios spelled out in the earlier post.

The point of the “QUESTION FOR VDOT” post was that what ever happens, Large, Private vehicles and the roadway systems to support Autocentric settlement patterns are dinosaurs. Those who do not yet understand this probably think the Dow going over 10,000 is a good thing.

The larger point is that NO ‘recovery’ can be sustained so long as ‘the REAL fundamentals’ – settlement patterns, per capita consumption, wealth distribution, public and private debt, population and most key resources that support human life (potable water, top soil, total energy, marine food chains, mission critical elements, etc.), ALL have unsustainable trajectories.

Of the three scenarios outlined in the earlier post, EMR would bet on the “Modest Recovery” model but if not that, then The Long Depression model is more likely than The Great Depression model. This is because at the end of The Great Depression there were still abundant key resources available AND there was a population that was willing to work as opposed to one that now believes that they are owed a consumptive life style (and unsustainable individual ‘freedoms’) and that technological miracles will solve any problems that pandering political Clans cannot patch over until after the next election.

Was it not Groveton himself that pointed out that during The Great Depression there were four stock market rallies? EMR’s maternal grandfather lost ‘a fortune’ in every on of those ‘panic booms.’

Neither irrational exuberance nor short selling will solve any known problem for society.

EMR

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13 responses to “GROVETON AND RECESSION VS DEPRESSION

  1. "It is not about making money, it is about achieving a sustainable trajectory for civilization."

    How do you propose achieving a sustainable trajectory without the profits to pay for it?

    If you buy stock in a company you are buying partial ownership of that company. That is not a gamble, it is a purchase.

    The purchase has risk associated with it, just as operating your own company has risk associated with it. The purchase has risk associated with it, just as being an employee of a company has risk associated. Whether you own a company, part of a company or work for a company, there is a risk that it won't do well and you will lose whatever it is you have invested in it, whether tht is money or you rjob, or both.

    None of those things is remotely similar to gambling, which is purely a game of chance.

    People are going to have to work to create that sustainable trajectory, and they will expect to get paid. They will work for companies and the owners of those companies expect to get paid. All of that comes ut of profits. The government expects to get paid, too, and that comes out of profits.

    Finally, the company itself needs to retain some profits so that IT can have a sustainable trajectory. It needs retained profits to rebuild its own infrastructure, and renew its own resources.

    Achieving a sustainable trajectory for all of civilization is going to take a lot of money, a lot of work, and, hopefully, it will generate a lot of profit.

    RH

  2. "…what ever happens, Large, Private vehicles and the roadway systems to support Autocentric settlement patterns them are dinosaurs. "

    ————————-

    Do you seriously suggest that we are going to uninvent roads and vehicles?

    What is it you have a problem with, Large or Private, or both?

    Large public buses are OK but large private ones are not?

    Up to a point we might be able to drive smaller vehicles and move all the same stuff to the same locations less expensively, but at some point we would trade size for efficiency and number of trips.

    Would you propose 50 million small public vehicles over 10 million larger private ones?

    RH

  3. For the record …

    I see no problem in making money in the stock market – whether it is a gambling venue or not.

    This won't solve society's ills. It will just make me more money.

    It just seems to me that the predictions of doom and gloom on this site are counter-indicated by the markets. I accept that the recent rally might be a false run up. The odds are against it but it's possible.

    However, a depression is unlikely to cause society to improve itself. The last worldwide depression sparked a world war. Today, that war would end quickly in a nuclear nightmare.

    I think the best hope is that America generates a substantial amount of wealth which will result in higher tax receipts.

    So, while I hope for economic recovery I am more than willing to make money by going short on a false rally. Then, I guess, President Obama can tax my profits and use the money to help pay for a migration to more sustainable human development patterns.

  4. here's what we have found out so far.

    that if you manage your own money investing it in the stock market – and you don't understand if not everything there is to know about a particular industry – or at least as much as the stock brokers tell you that they know –

    .. you are gambling…

    The company you invest in could get taken over, sucked dry of assets and spit out the back end – and as a layman "investor", you be none the wiser for it.

    option two is giving your money to someone who claims to know how to gamble better than you and we know how that turned out.

    I tell you the folks I would want to know more about and that would be the folks that knew all along that the whole deal was going to come apart from the credit default swaps and the whole ornery mess associated with it.

    Even Warren Buffet got hurt.

    so.. far.. the ones that I've heard about who did the best are the ones who bought gold.

    everyone else is talking about the size of their wounds.. not the sheen on their unmarred fiscal physique.

    but now we know that the settlement pattern cancer is WORLDWIDE and there apparently is not even a ranked list of which places comes CLOSEST to functional settlement patterns; all of them – are colossal
    failures.

    Sometimes, I feel like I'm sitting in a church listening to the preacher telling us that not only are we imperfect but we more than likely will burn in hell no matter what we do – but that will ultimately solve the problem of getting rid of the unworthy.

  5. Meanwhile dollar keeps going down…

    The older generations don't care as long that Social Security/Medicare check comes….

    The younger generations are being fed a bunch of propaganda and have still not come to terms with the challenges they face.

  6. Larry,

    You are making this way too hard.

    I'm no genius, pay very little attention to my stuff, and don't use a broker and I'm still up around 7% per year for the last 25 years, even with the recent troubles.

    On some of my holdings I have taken out more than I put in and there is still money left – guaranteed no way to lose on those.

    Given that you are not going to spend your monry on something you need today, it has to go somewhere.

    You can put it in a money market and right now it will make around 0.02%

    You could buy some equipment and lease it out, that's worked pretty well for me.

    You can make small loans.

    You can roll it over into a bigger or additional home…..;-)

    You can put it under your mattress, just don't forget and throw the mattress away, as one man did.

    But anythng you do has some risk.

    RH

  7. Meanwhile dollar keeps going down…

    Yeah, it makes my overseas investments look really good.

    RH

  8. The younger generations are being fed a bunch of propaganda and have still not come to terms with the challenges they face.

    Nonsense.

    Of course they face challenges, but even if e are bak to trading with wampum as currency, thaose that are in business or invested in business will do better than those that don't.

    I know a few people who went broke a cople of times, and now they still have more wealth than I do. They take more risks than I do.

    RH

  9. Oh, I am taking risks. I am pretty well hedged in the market and doing fine, thanks for your concern.

    But most citizens, especially young people, have no idea of what it means for the dollar to lose 25% of its value since the last time the Dow hit 10K.

    I think you are being disingenuous by refusing to recognize that.

  10. "I think you are being disingenuous by refusing to recognize that."

    OK, what does it mean other than I will pay more for imported goods?

    If I import goods I will get more $ for them, provided I can sell them?

    US jobs are more competitive with overseas jobs?

    I pay back my foreign loans with cheaper dollars (provided the loans are not denominatedin foreign currency)?

    As a young person, unless I'm doing foreign business of some kind, where is the effect?

    It makes American debt less attractive and raises the cost of loans.

    Besides that, what else?

    Even if we are reduced to trading in wampum, those with good investments will do better than those with no investments.

    RH

  11. EMR,
    Sure the stock market is gambling (the greater the risk the greater the gamble) but how else would you raise capital for corporate investments? Direct investments? Bonds? Government ownership? Is there a better way?

    Peter Galuszka

  12. Great post! I love your page!!
    COMMON CENTS
    http://www.commoncts.blogspot.com

    ps. Link Exchange?

  13. I don't think most folks are adverse to risk but I do feel they were lied to as to how much risk they were incurring and despite the more adventurous among you – the average person is going to put their money in a mutual fund that has been "recommended" as an "acceptable" risk.. and are fine with the ups and downs as long as the longer term trend is up and better than money market or CDs.

    But a whole bunch of people got hurt very badly by this meltdown.

    More than a few are going to have to work for 5 or 10 or more years than the originally planned and on top of that more than a few of them are upside down on their homes.

    I think it's going to take a while for folks to get over this – and the really bad part is – that for a lot of folks … they're not getting raises that they could use to try to sock down some catch up on their 401s.

    They're lucky to have jobs.. and in many cases, the escalation of health care premiums is threatening to leave them with LESS net income and no extra money to try to buy back a little.

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