9 ms·

Maybe This Global Slowdown Is Different

74 points by whocansay 11y ago

blowski 11y ago
This article, while interesting, is like reading a weather forecast that says "there might be a big storm at the end of the week, but there might not". The idea that the population can't keep on growing exponentially and using ever more resources has been around since ancient Greece at least. I'm sure that if we were able to look at long term economic stats for the last 2 millennia, there would be graphs that looked very similar to those in this article. Of course, one day the population and our use of resources has to stop growing, but I doubt we'll see it coming 100 years in advance.
- gph 11y ago
  >Of course, one day the population and our use of resources has to stop growing, but I doubt we'll see it coming 100 years in advance. I can't speak to resource usage, but I think you'll find population models have the global population plateauing within the next 50-100 years. We aren't talking about what's going to happen in 2000 years here, that no one can be certain of. Your argument is like saying it's rained and stormed for 2000 years why even try to predict the weather for the rest of the week? I hope you don't mind, but I think I'll still pay attention to the weather forecast even if it isn't always 100% accurate.
nevinera 11y ago
Every recession in history has generated this same category of article - every generation feels that their recession is special because "things have changed now!" Maybe this one is different - that's a possibility. But I wouldn't bet my money on it.
- gph 11y ago
  To be fair, the world is constantly changing. I don't know if that means each recession is special so much as unique. Just looking at the last major recession in the 70s, things did change quite a bit from there. Manufacturing and distribution of goods started to form into the global supply chain we have today, that was certainly a unique development in our world based on changing technologies. It's not that much of a stretch to expect similar unique changes to the global economy today due to changing technology and consumer habits.
  - nevinera 11y ago
    It is, and eventually, we will probably run into a real game-changer.. but I'm mostly concerned for all the people that are saving money in index funds. Every recession, the news and the discourse are about how this one is special, and how the causes of this recession run so deep. People are not good at remembering that we had those same conversations last time and the time before - they get a gut feeling that 'this is the big one', and they pull their money out of the market during the recession and put it back in after everything's ok, essentially tossing a major fraction of their life savings overboard. What people seem to never consider is that when we actually move out of an expansionist economy, the effects will be much broader than "our stock returns are not so good anymore"; their inability to retire at 65 would be the least of their concerns.
    - anti-shill 11y ago
      but the casino aspect of the economy has grown stronger and more pervasive over time. Look at a chart of the 10 year US bond. The interest rates have plummeted over the last 30 years. These low rates have intensified the casino aspect of the stock market. The rates were lowered after the crashes of 2001-2002 and 2008-2009. But the rates cannot be lowered any more. Why? They are at zero, effectively. That is different.
      - nevinera 11y ago
        The point is that there are always differences - each recession is a snowflake, with distinct causes and circumstances. That doesn't impact the fact that they all behave pretty much the same way at the large scale, and it shouldn't affect your decisions about the market (unless you are an expert, and inordinately good at avoiding various cognitive biases). Gloom and Doom sells papers, and it always has.
        mrdodge 11y ago
        There is nothing about growth that is guaranteed. Perhaps thinking that the entire world can adopt western style institutions and would become good consumers was too optimistic.
- hga 11y ago
  There's even a relevant book with that this phrase as its title, This Time Is Different: Eight Centuries of Financial Folly (http://www.amazon.com/This-Time-Different-Centuries-Financial/dp/0691152640/ http://www.amazon.com/This-Time-Different-Centuries-Financia...).
- ArekDymalski 11y ago
  As always: it all depends on how meta/abstract approach someone uses. On certain level of abstraction each crisis seems to follow the same mechanism (and any possible differences can be explained on even higher level of abstraction). And when you analyse things on the more detailed level you notice that "this time it's different", but of course "any possible differences (...) higher level of abstraction". Ans doth approaches seem to be equally valid in their specific contexts and applications.
- mslot 11y ago
  Our economy has reached a point where it's becoming so harmful to the environment it exploits that it's causing a mass extinction, an event that hasn't occurred for 250 million years. On the timescale of a few decades, things are becoming very, very different.
  - shoo 11y ago
    yup. we're putting CO2 into the atmosphere at a ridiculous and ever-increasing rate. 40 gigatons of CO2 last year -- that's around 5 tons of CO2 / (person * year), assuming a fantasy version of the world where we're all contributing an equal amount of pollution. it's not just "the economy", it is (people) * (polluting affluent lifestyles). that said, it doesn't help that the people with the bulk of the wealth and political power are the ones that perceive they have the most to lose if the status quo changes. it also doesn't help that it is very difficult to stay focused on longer-term problems, while society tends to focus on playing the game for short term wins. invest, speculate, profit. it'll be an interesting few decades. hopefully we realise that ideas that served us well in the past are context-dependent, and the context is changing.
  - blisterpeanuts 11y ago
    Mass extinctions have occurred with much greater regularity than every 250 million years. The ice ages come in pulses, to use the geological term, and both the warming and cooling trends have inflicted vast changes in the species inhabiting the planet. As far as CO2 emissions, the EPA's own statistics suggest a static-to-downward trend since the early 2000s in the U.S. (http://www.epa.gov/climatechange/ghgemissions/gases/co2.html http://www.epa.gov/climatechange/ghgemissions/gases/co2.html). We're barely above where we were in 1990, despite an increase in population from 250 million in 1990 to 319 million today. 3rd World economies will eventually follow suit, as they adopt the cheap new green tech that we're getting. The trend today is toward more efficient vehicles, cheaper and more available solar for houses, a massive switch in electric power plants from coal and oil to inexpensive natural gas which emits less carbon. Technology, Chinese mass production of green energy products like solar panels, American fracking of natural gas, all will conspire to reduce the carbon emissions. The trends are heartening.
  - 11y ago
motters 11y ago
I hope it's not another recession. We've not even recovered from the last one yet.
WDCDev 11y ago
The best evidence I have seen for falling Chinese demand for natural resources is over-capacity, and not some tranistion to a services based economy. http://www.cnbc.com/2015/05/07/more-pain-ahead-for-china-steel.html http://www.cnbc.com/2015/05/07/more-pain-ahead-for-china-ste... I think we are reaching a stasis point in the global economy. Aging populations across Europe, Japan and the US are driving demand lower. Developing economies could pick up the slack, and China has been trying to get their population to save less and spend more, but the results haven't been that great so far.
- saryant 11y ago
  The services sector is now a larger share of Chinese output than industry.
  - WDCDev 11y ago
    Last I saw it was about an even when expressed as a percentage of GDP (around 44%). I don't think the that really invalidates my main point. The Chinese have a massive industrial over-capacity that will have to be either liquidated or supported via the PBoC.
- poutine 11y ago
  China is aging as well, their percentage of working adults peaked recently and is now declining. Interestingly while Europe has this problem as well, the US does not thanks in a large part due to immigration.
  - Daishiman 11y ago
    The issue is that the immigrants are also having less children, and the countries where they're from are also drastically reducing their birth rates. Honestly, as an environmentalist it's not a bad thing at all, since the peak in resource consumtion will come about either because of a voluntary population reduction, or catastrophic mismanagement of growth. However, we probably have never had a similar situation in human history, and I don't know how our economies will adapt.
joeyspn 11y ago
Maybe the "patches" made in 2008 didn't actually fix anything and we're just back to square one... maybe...
ThomPete 11y ago
What are seeing isn't a shift to the service economy but a shift to the automation and digitalization economy. In other words and to paraphrase – It's the technology stupid! Look at any sector and you will see that the only way to further improve production-output is to add more technology or artificial enhancements, which means slowly; less and less; jobs for everyone. Now if the price on all products and services went down at the same time as the number of jobs are disappearing and the wages goes down, we wouldn't have any issues. But the problem is that urbanization pushes prices up and so even though production gets cheaper and cheaper, the cost of living still seems to be going up which means we will need to digitalize even more to make up for it. But that takes time and in the meantime millions and millions of people in the west are loosing any ability to participate in the job-market because they aren't just competing against each other or outsourcing but everyone is competing against automation and digitalization. This global slowdown is different because the shift to the service economy in China means that production have no other way to go than automation which means you won't have the benefits of humans getting jobs and therefore become part of the global economy. Instead wealth goes to those who own the robots and Marx although wrong in most things, was finally right about something :)
- cylinder 11y ago
  I agree with you, I think the deflationary effects of technology are vastly underestimated. Have a look around at what technology is doing day-to-day to consumption and costs and it should be obvious, and yet talking heads still expect CPI inflation. We just got a nice patch because of China's malinvestment stimulus but now they are forced to rebalance regardless of Xi. The commodity supercycle is over and that's bad news for many countries (not really the US).
  - ThomPete 11y ago
    Exactly. What happened was that globalization moved the jobs somewhere else, it didn't create more in the west. In fact each decade less and less jobs have been created. The fact is that there is no new industry for people to flee into and if people think there is they have to explain what that would be. https://plot.ly/~BethS/8/job-growth-by-decade-in-the-united-states/ https://plot.ly/~BethS/8/job-growth-by-decade-in-the-united-... As long as economist keep talking about technology as an externality, they have no business talking about where the economy is headed. IMO.
monochromatic 11y ago
That graph of population reaching a plateau is utter bullshit when you consider we're only at 2015. Are they just guessing?
- hyperpape 11y ago
  Short answer: no, but it is extremely unpredictable (hence the billions of people between the low and high forecasts). You can look at countries as incomes increase, infant mortality decreases etc, and see patterns in fertility. And fertility rates do sometimes increase or decrease for poorly understood reasons, but they're not random: https://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&met_y=sp_dyn_tfrt_in&idim=country:USA:CHN:JPN&hl=en&dl=en https://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&....
- kbutler 11y ago
  They are guessing much less than those who simply extrapolate exponential growth. The population plateau is based on the development trends observed in developed and developing countries. As standard of living increases, with improved life expectancy and education, population growth slows. Many developed countries are below the replacement rate, and any population growth is as a result of immigration from less-developed countries.
- ThomPete 11y ago
  Not according to Hans Rosling. http://www.ted.com/talks/hans_rosling_shows_the_best_stats_you_ve_ever_seen?language=en http://www.ted.com/talks/hans_rosling_shows_the_best_stats_y...
  - wernerpm 11y ago
    and this talk is already 9 years old
- swalsh 11y ago
  When you live in a society dominated by agriculture children are an asset. When you live in an industrial/service based society like our own children are a cost. So generally speaking, most people have fewer children. As the world develops the trend continues. China is probably a data anomaly because of it's one child policy... however if it had not had it, i'd be willing to bet you could watch the trend. I'll just throw this out there, I pay $1600 a month for daycare. It's the reason I have 1 kid, and waiting before having a second. Throw into the mix better birth control tech/education/use, and this kind of restraint is possible.
dovereconomics 11y ago
I wouldn't be naive to try to point out reasons for such slowdown, but this response is somewhat dangerous. The rhetoric of 'WE NEED MORE DEMAND' has hurt many countries and is probably one of the causes of this slowdown.
oldpond 11y ago
Banking master plan Step 1. Go global. Check. Step 2. Sell all the debt you can. Check. Now what? One thing to consider is that the baby boomer generations are all hitting 60. This large population group is entering the period in their lives when they stop buying stuff. There's only one planet, and once the banks have everyone in debt where's their business model? The reason interest rates are effectively zero is because if they raise them the entire world will declare bankruptcy. The banking system is screwed. Time for a reset.
- swalsh 11y ago
  It's too bad the millennial generation isn't larger than the baby boomers, and doesn't have houses and childcare things to buy. The economy might have had a chance to keep on being an economy.
- deleted 11y ago
  [deleted]
- forgetsusername 11y ago
  >Step 1. Go global. Check. Step 2. Sell all the debt you can. Check. Now what? You tell me. It sounds like you believe all of that "sold debt" is just vaporized and results in nothing, instead of centuries of insane global growth. Don't believe it? Look out your window.
  - oldpond 11y ago
    There is no "now what". That's the problem. There's only so much "good debt" to buy and it's all bought. These systems depend on continuous growth to function, and unless you can figure out how to sell mortgages to Martians, you are fresh out of growth. Maybe I'm wrong, and maybe they'll figure out how to have another bull run, but I think they've hit the wall.
    - forgetsusername 11y ago
      What times we live in, to be the generation that experiences the "end of growth"! Ill bet anything that you're wrong, though.
jhulla 11y ago
Central banks [Federal Reserve/European Central Bank/Bank of Japan/People's Bank of China/Swiss National Bank] are responsible for global capital misallocation. Due to immense and unrelenting political pressure, central banks the world over have mispriced capital at gargantuan scales. This has led to immense distortions in capital markets. The level of central bank intervention has only grown in the past 30 years. So the resulting economic growth or slowdown is measurably different than before. Anecdotally, look at the following to see one example of capital distortion in action: The Swiss National Bank digitally printed an enormous amount of Swiss Francs and bought Euros in order to peg their currency lower (didn't work). They used this excess of digitally printed capital to buy real capital assets such as global equities. A question to ponder: what is the fair market price of global equities when some buyers can print money? Does it matter? http://www.bloomberg.com/news/articles/2015-05-06/snb-boosts-stake-in-apple-exxon-in-37-5-billion-u-s-portfolio http://www.bloomberg.com/news/articles/2015-05-06/snb-boosts... "The SNB stands out among major central banks for its equity investments. It had 522 billion francs ($572 billion) of foreign exchange reserves at the end of March, acquired due to interventions to defend the currency cap of 1.20 per euro it had in place from 2011 to early 2015." Swiss National Bank's Portfolio 6/30/2015: http://www.nasdaq.com/quotes/institutional-portfolio/swiss-national-bank-913041 http://www.nasdaq.com/quotes/institutional-portfolio/swiss-n...
- unoti 11y ago
  > what is the fair market price of global equities when some buyers can print money? You raise a good point. "Fair" has long gone out the window when one or more participants has a standing army. Which of course ties in to which participants can print money.
  - Zigurd 11y ago
    Certain powers having "standing armies" is a quaint way to describe it. The US is on a permanent war footing in the Global War on Terror and surveils its allies as assiduously as they would a hostile party in a hot war. Not even a small crack in the neoliberal hegemony is allowed. Not even internal doubt. Repatriate your gold? How amusing. We're all in this together. Or else.

74 points by whocansay 11y ago

This article, while interesting, is like reading a weather forecast that says "there might be a big storm at the end of the week, but there might not". The idea that the population can't keep on growing exponentially and using ever more resources has been around since ancient Greece at least. I'm sure that if we were able to look at long term economic stats for the last 2 millennia, there would be graphs that looked very similar to those in this article. Of course, one day the population and our use of resources has to stop growing, but I doubt we'll see it coming 100 years in advance.

gph 11y ago
>Of course, one day the population and our use of resources has to stop growing, but I doubt we'll see it coming 100 years in advance. I can't speak to resource usage, but I think you'll find population models have the global population plateauing within the next 50-100 years. We aren't talking about what's going to happen in 2000 years here, that no one can be certain of. Your argument is like saying it's rained and stormed for 2000 years why even try to predict the weather for the rest of the week? I hope you don't mind, but I think I'll still pay attention to the weather forecast even if it isn't always 100% accurate.

nevinera 11y ago

Every recession in history has generated this same category of article - every generation feels that their recession is special because "things have changed now!" Maybe this one is different - that's a possibility. But I wouldn't bet my money on it.

gph 11y ago
To be fair, the world is constantly changing. I don't know if that means each recession is special so much as unique. Just looking at the last major recession in the 70s, things did change quite a bit from there. Manufacturing and distribution of goods started to form into the global supply chain we have today, that was certainly a unique development in our world based on changing technologies. It's not that much of a stretch to expect similar unique changes to the global economy today due to changing technology and consumer habits.
- nevinera 11y ago
  It is, and eventually, we will probably run into a real game-changer.. but I'm mostly concerned for all the people that are saving money in index funds. Every recession, the news and the discourse are about how this one is special, and how the causes of this recession run so deep. People are not good at remembering that we had those same conversations last time and the time before - they get a gut feeling that 'this is the big one', and they pull their money out of the market during the recession and put it back in after everything's ok, essentially tossing a major fraction of their life savings overboard. What people seem to never consider is that when we actually move out of an expansionist economy, the effects will be much broader than "our stock returns are not so good anymore"; their inability to retire at 65 would be the least of their concerns.
  - anti-shill 11y ago
    but the casino aspect of the economy has grown stronger and more pervasive over time. Look at a chart of the 10 year US bond. The interest rates have plummeted over the last 30 years. These low rates have intensified the casino aspect of the stock market. The rates were lowered after the crashes of 2001-2002 and 2008-2009. But the rates cannot be lowered any more. Why? They are at zero, effectively. That is different.
    - nevinera 11y ago
      The point is that there are always differences - each recession is a snowflake, with distinct causes and circumstances. That doesn't impact the fact that they all behave pretty much the same way at the large scale, and it shouldn't affect your decisions about the market (unless you are an expert, and inordinately good at avoiding various cognitive biases). Gloom and Doom sells papers, and it always has.
      - mrdodge 11y ago
        There is nothing about growth that is guaranteed. Perhaps thinking that the entire world can adopt western style institutions and would become good consumers was too optimistic.
hga 11y ago
There's even a relevant book with that this phrase as its title, This Time Is Different: Eight Centuries of Financial Folly (http://www.amazon.com/This-Time-Different-Centuries-Financial/dp/0691152640/ http://www.amazon.com/This-Time-Different-Centuries-Financia...).
ArekDymalski 11y ago
As always: it all depends on how meta/abstract approach someone uses. On certain level of abstraction each crisis seems to follow the same mechanism (and any possible differences can be explained on even higher level of abstraction). And when you analyse things on the more detailed level you notice that "this time it's different", but of course "any possible differences (...) higher level of abstraction". Ans doth approaches seem to be equally valid in their specific contexts and applications.
mslot 11y ago
Our economy has reached a point where it's becoming so harmful to the environment it exploits that it's causing a mass extinction, an event that hasn't occurred for 250 million years. On the timescale of a few decades, things are becoming very, very different.
- shoo 11y ago
  yup. we're putting CO2 into the atmosphere at a ridiculous and ever-increasing rate. 40 gigatons of CO2 last year -- that's around 5 tons of CO2 / (person * year), assuming a fantasy version of the world where we're all contributing an equal amount of pollution. it's not just "the economy", it is (people) * (polluting affluent lifestyles). that said, it doesn't help that the people with the bulk of the wealth and political power are the ones that perceive they have the most to lose if the status quo changes. it also doesn't help that it is very difficult to stay focused on longer-term problems, while society tends to focus on playing the game for short term wins. invest, speculate, profit. it'll be an interesting few decades. hopefully we realise that ideas that served us well in the past are context-dependent, and the context is changing.
- blisterpeanuts 11y ago
  Mass extinctions have occurred with much greater regularity than every 250 million years. The ice ages come in pulses, to use the geological term, and both the warming and cooling trends have inflicted vast changes in the species inhabiting the planet. As far as CO2 emissions, the EPA's own statistics suggest a static-to-downward trend since the early 2000s in the U.S. (http://www.epa.gov/climatechange/ghgemissions/gases/co2.html http://www.epa.gov/climatechange/ghgemissions/gases/co2.html). We're barely above where we were in 1990, despite an increase in population from 250 million in 1990 to 319 million today. 3rd World economies will eventually follow suit, as they adopt the cheap new green tech that we're getting. The trend today is toward more efficient vehicles, cheaper and more available solar for houses, a massive switch in electric power plants from coal and oil to inexpensive natural gas which emits less carbon. Technology, Chinese mass production of green energy products like solar panels, American fracking of natural gas, all will conspire to reduce the carbon emissions. The trends are heartening.
- 11y ago

motters 11y ago

I hope it's not another recession. We've not even recovered from the last one yet.

WDCDev 11y ago

The best evidence I have seen for falling Chinese demand for natural resources is over-capacity, and not some tranistion to a services based economy. http://www.cnbc.com/2015/05/07/more-pain-ahead-for-china-steel.html http://www.cnbc.com/2015/05/07/more-pain-ahead-for-china-ste... I think we are reaching a stasis point in the global economy. Aging populations across Europe, Japan and the US are driving demand lower. Developing economies could pick up the slack, and China has been trying to get their population to save less and spend more, but the results haven't been that great so far.

saryant 11y ago
The services sector is now a larger share of Chinese output than industry.
- WDCDev 11y ago
  Last I saw it was about an even when expressed as a percentage of GDP (around 44%). I don't think the that really invalidates my main point. The Chinese have a massive industrial over-capacity that will have to be either liquidated or supported via the PBoC.
poutine 11y ago
China is aging as well, their percentage of working adults peaked recently and is now declining. Interestingly while Europe has this problem as well, the US does not thanks in a large part due to immigration.
- Daishiman 11y ago
  The issue is that the immigrants are also having less children, and the countries where they're from are also drastically reducing their birth rates. Honestly, as an environmentalist it's not a bad thing at all, since the peak in resource consumtion will come about either because of a voluntary population reduction, or catastrophic mismanagement of growth. However, we probably have never had a similar situation in human history, and I don't know how our economies will adapt.

joeyspn 11y ago

Maybe the "patches" made in 2008 didn't actually fix anything and we're just back to square one... maybe...

ThomPete 11y ago

What are seeing isn't a shift to the service economy but a shift to the automation and digitalization economy. In other words and to paraphrase – It's the technology stupid! Look at any sector and you will see that the only way to further improve production-output is to add more technology or artificial enhancements, which means slowly; less and less; jobs for everyone. Now if the price on all products and services went down at the same time as the number of jobs are disappearing and the wages goes down, we wouldn't have any issues. But the problem is that urbanization pushes prices up and so even though production gets cheaper and cheaper, the cost of living still seems to be going up which means we will need to digitalize even more to make up for it. But that takes time and in the meantime millions and millions of people in the west are loosing any ability to participate in the job-market because they aren't just competing against each other or outsourcing but everyone is competing against automation and digitalization. This global slowdown is different because the shift to the service economy in China means that production have no other way to go than automation which means you won't have the benefits of humans getting jobs and therefore become part of the global economy. Instead wealth goes to those who own the robots and Marx although wrong in most things, was finally right about something :)

cylinder 11y ago
I agree with you, I think the deflationary effects of technology are vastly underestimated. Have a look around at what technology is doing day-to-day to consumption and costs and it should be obvious, and yet talking heads still expect CPI inflation. We just got a nice patch because of China's malinvestment stimulus but now they are forced to rebalance regardless of Xi. The commodity supercycle is over and that's bad news for many countries (not really the US).
- ThomPete 11y ago
  Exactly. What happened was that globalization moved the jobs somewhere else, it didn't create more in the west. In fact each decade less and less jobs have been created. The fact is that there is no new industry for people to flee into and if people think there is they have to explain what that would be. https://plot.ly/~BethS/8/job-growth-by-decade-in-the-united-states/ https://plot.ly/~BethS/8/job-growth-by-decade-in-the-united-... As long as economist keep talking about technology as an externality, they have no business talking about where the economy is headed. IMO.

monochromatic 11y ago

That graph of population reaching a plateau is utter bullshit when you consider we're only at 2015. Are they just guessing?

hyperpape 11y ago
Short answer: no, but it is extremely unpredictable (hence the billions of people between the low and high forecasts). You can look at countries as incomes increase, infant mortality decreases etc, and see patterns in fertility. And fertility rates do sometimes increase or decrease for poorly understood reasons, but they're not random: https://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&met_y=sp_dyn_tfrt_in&idim=country:USA:CHN:JPN&hl=en&dl=en https://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&....
kbutler 11y ago
They are guessing much less than those who simply extrapolate exponential growth. The population plateau is based on the development trends observed in developed and developing countries. As standard of living increases, with improved life expectancy and education, population growth slows. Many developed countries are below the replacement rate, and any population growth is as a result of immigration from less-developed countries.
ThomPete 11y ago
Not according to Hans Rosling. http://www.ted.com/talks/hans_rosling_shows_the_best_stats_you_ve_ever_seen?language=en http://www.ted.com/talks/hans_rosling_shows_the_best_stats_y...
- wernerpm 11y ago
  and this talk is already 9 years old
swalsh 11y ago
When you live in a society dominated by agriculture children are an asset. When you live in an industrial/service based society like our own children are a cost. So generally speaking, most people have fewer children. As the world develops the trend continues. China is probably a data anomaly because of it's one child policy... however if it had not had it, i'd be willing to bet you could watch the trend. I'll just throw this out there, I pay $1600 a month for daycare. It's the reason I have 1 kid, and waiting before having a second. Throw into the mix better birth control tech/education/use, and this kind of restraint is possible.

dovereconomics 11y ago

I wouldn't be naive to try to point out reasons for such slowdown, but this response is somewhat dangerous. The rhetoric of 'WE NEED MORE DEMAND' has hurt many countries and is probably one of the causes of this slowdown.

oldpond 11y ago

Banking master plan Step 1. Go global. Check. Step 2. Sell all the debt you can. Check. Now what? One thing to consider is that the baby boomer generations are all hitting 60. This large population group is entering the period in their lives when they stop buying stuff. There's only one planet, and once the banks have everyone in debt where's their business model? The reason interest rates are effectively zero is because if they raise them the entire world will declare bankruptcy. The banking system is screwed. Time for a reset.

swalsh 11y ago
It's too bad the millennial generation isn't larger than the baby boomers, and doesn't have houses and childcare things to buy. The economy might have had a chance to keep on being an economy.
deleted 11y ago
[deleted]
forgetsusername 11y ago
>Step 1. Go global. Check. Step 2. Sell all the debt you can. Check. Now what? You tell me. It sounds like you believe all of that "sold debt" is just vaporized and results in nothing, instead of centuries of insane global growth. Don't believe it? Look out your window.
- oldpond 11y ago
  There is no "now what". That's the problem. There's only so much "good debt" to buy and it's all bought. These systems depend on continuous growth to function, and unless you can figure out how to sell mortgages to Martians, you are fresh out of growth. Maybe I'm wrong, and maybe they'll figure out how to have another bull run, but I think they've hit the wall.
  - forgetsusername 11y ago
    What times we live in, to be the generation that experiences the "end of growth"! Ill bet anything that you're wrong, though.

jhulla 11y ago

Central banks [Federal Reserve/European Central Bank/Bank of Japan/People's Bank of China/Swiss National Bank] are responsible for global capital misallocation. Due to immense and unrelenting political pressure, central banks the world over have mispriced capital at gargantuan scales. This has led to immense distortions in capital markets. The level of central bank intervention has only grown in the past 30 years. So the resulting economic growth or slowdown is measurably different than before. Anecdotally, look at the following to see one example of capital distortion in action: The Swiss National Bank digitally printed an enormous amount of Swiss Francs and bought Euros in order to peg their currency lower (didn't work). They used this excess of digitally printed capital to buy real capital assets such as global equities. A question to ponder: what is the fair market price of global equities when some buyers can print money? Does it matter? http://www.bloomberg.com/news/articles/2015-05-06/snb-boosts-stake-in-apple-exxon-in-37-5-billion-u-s-portfolio http://www.bloomberg.com/news/articles/2015-05-06/snb-boosts... "The SNB stands out among major central banks for its equity investments. It had 522 billion francs ($572 billion) of foreign exchange reserves at the end of March, acquired due to interventions to defend the currency cap of 1.20 per euro it had in place from 2011 to early 2015." Swiss National Bank's Portfolio 6/30/2015: http://www.nasdaq.com/quotes/institutional-portfolio/swiss-national-bank-913041 http://www.nasdaq.com/quotes/institutional-portfolio/swiss-n...

unoti 11y ago
> what is the fair market price of global equities when some buyers can print money? You raise a good point. "Fair" has long gone out the window when one or more participants has a standing army. Which of course ties in to which participants can print money.
- Zigurd 11y ago
  Certain powers having "standing armies" is a quaint way to describe it. The US is on a permanent war footing in the Global War on Terror and surveils its allies as assiduously as they would a hostile party in a hot war. Not even a small crack in the neoliberal hegemony is allowed. Not even internal doubt. Repatriate your gold? How amusing. We're all in this together. Or else.