Welcome to the No-Growth Paradigm

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Submitted by Arraya on June 7, 2012 - 9:47am

http://theautomaticearth.com/Energy/welc...
Western developed economies have been resorting to almost every possible trick they can conjure up to maintain financial stability and economic growth over the last few years. And while stimulus, interest rate cuts, monetary easing, currency swaps, liquidity operations, bailout/austerity programs, bank "re-capitalizations", loan guarantees, entitlement/welfare programs, data manipulation, etc. have kept them muddling through so far, the undeniable truth is that there will SOON come a time when none of those things makes the least bit of difference anymore.

For instance, Morgan Stanley just produced a report which concluded that the euphoric market effects of quantitative easing, the most potent monetary weapon possessed by CBs, may only last a few HOURS or DAYS, rather than weeks or months. This concept should be so familiar to readers of TAE by now that I don't even need to link to any of our articles for reference. Here's the bottom line - the U.S. population is still saturated with consumer, housing and business debts, as well as unserviceable public debts at the local/state level, and the deleveraging cycle is once again gaining momentum on the back of the Eurozone crisis.

And that means no amount of cheap liquidity will be able to substitute organic economic growth with artificial growth on paper. If monetary easing cannot even manage to temporarily juice housing data, jobs data, retail sales data, consumer sentiment data, manufacturing data, etc., then the big market players no longer have anything to hang their hats on. Without support for asset prices and corporate profits on paper via leveraged market speculation, most people in the the corporate AND consumer worlds will not feel wealthy, happy and complacent anymore. Thus, the panicked spiral of debt deflation picks up steam once again.

‹ America Loses Its Dominant Economic Role one indictment for bank fraud regarding HELOCs ›

Here we are with the
Submitted by The-Shoveler on June 7, 2012 - 10:02am.

Here we are with the chicken/egg thing again,
Need wage inflation to make debt service possible.
Need Jobs to get wage inflation.

Short of making minimum wage 20 dollars an hour, or the Gov. just sending everyone checks once a month I have no clue.

Confused as usual I am. A)How
Submitted by The-Shoveler on June 7, 2012 - 10:36am.

Confused as usual I am.
A)How can the big multinationals make more earnings when the rest of the world is slowing down say I?

B)Most of the growth was coming from emerging markets the last few years so if these are slowing down ?

C)Really The problems in Europe are all resolved ? (apparently it was easier to fix Europe than the USA it was).

D)Really how many more Iphones/ipads can they sell ? (apparently a lot more than me thinks).

E)If I had one device to connect to the world, it would be a Laptop (much cheaper than an ipad these days can’t be much profit in them).

To be honest I should be happy everything seems to be improving despite my apparently faulty reasoning’s.
Not been this confused since 2003 have I.
Maybe logic there is.

Arraya, you've said before
Submitted by briansd1 on June 7, 2012 - 11:06am.

Arraya, you've said before that financial products are just make-believe. So what's wrong with using make-believe products to goose up the economy and create products and services that sustain people?

As long at it works, it's worth trying.

And while stimulus, interest rate cuts, monetary easing, currency swaps, liquidity operations, bailout/austerity programs, bank "re-capitalizations", loan guarantees, entitlement/welfare programs, data manipulation, etc. have kept them muddling through so far

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