K,
well let see . . .
Demand, is always there, because people are not all about logic. If consumers were all about logic, no one would pay Hallmark for a $5 card, and perfume and makeup sales would hit the floor, Diamonds would not signal your engaged, and Germany would need to cut the price of their cars and old men would not spend a fortune on hookers and cigars.
2008 for the first time in 20 years we have a year of global cooling, scientists scratch their heads, and no doubt WWIII would fix the economy, but there is no one left with missiles and warheads who is right now far too busy worrying about their at home economy to be much interested in saber rattling. Except Korea, who I would strongly advise to keep his 5 nukes parked if Kim Jong-Il does not want to turn his country into a sheet of glow in the dark glass. Talk about a country no one wants to stand up for.
lets go back to your history lesson, here is mine:
In 1953 they told my dad to build an A bomb shelter, to be safe, head for the hills they yelled!
in 1963 the nifty fifty stocks tumbled and they shot JFK, society was doomed, head for the hills we are doomed.
in 1973 Americans lined up for gas and we were told there was no more gas and there never would be again - we had to keep our Christmas lights off to save America. -- head for the hills.
in 1983 Regan was president and oil was selling for its all time low inflation adjusted price, run for the hills
1989 the US banks collapsed, they lost all their money in bad Latin American debts, head for the hills
in 1993 Value investing was dead, Warren Buffet was called an idiot, and the new information super highway tech era was starting - clearly everything we knew about stock valuation was unimportant compared to the the high tech marvel -- the Pets.com sock puppet.
in 2001 the dot com bubble was burst, the twin towers were knocked down by Saudi rich kid with a religious bent searching for a Muslim utopia state based on life in 1900 desert culture. George Bush bent on revenge missed his target by a few thousand miles and hit Iraq. Blame it on WMD's they never found. We all found out the "leader of the free world" is an idiot, an idiot with over 4000 atomic warheads. Head for the hills.
During this time Allen Greenspan was Harolded as the greatest fed chairman in history because he undid every law that kept banks from going overboard -- result banks went overboard, -- 2008 we found out just how overboard. 30% of US mortgages went Tapioca, and investors around the world got burned on sub prime debt. While the US citizens walk from freshly renovated houses, paid for by Europe and Asia. The stock Market drops about 50% in a year. Americans use Chinese investment to put themselves 10% more in debt now its 12 trillion. Smart investors scoop up great stocks in companies with strong balance sheets for pennies on the dollar. Crisis ends. bottom fishing swing traders make a bundle.
I love your optimism bmaber. Great stuff much in demand.
However, coming back to demand - people will always want all that they don't need like cigars and diamonds, but without cheap and easy credit - demand has been lagging in its transmission to purchase. Without ability to earn ones way or consistent income flow demand will not be there in the future.
Low interest rates and tax cuts is precisely what got us into this mess and applying same policy is stoking inflation - which is about the only way debt will be reduced for future years. Is it the solution. No, as it will lead to loss of competitiveness and further deteriations in exchange rates.
Governments can reduce rates and taxes as much as they like but it doesn't make or feel one wealthy. Monetary policy has failed. Soon we will need to have negative interest rates. In fact based on inflation we already have it in the UK. Fall in property prices has had a dramatic reductions in net worth and wealth of people. Consequently spending patterns will be about making ends meet rather than pondering which holiday to go on or which car to upgrade to after three years of a product that has a 10+ year life.
Just as consumers waking up to over spending Governments will be waking up to long periods high taxes and public expenditure in the next 10-20 years. I believe it will take approx 30-50 years before any significant adjustments are seen in the real economy.
Here my views on some of your points with due respect:
I think Korea is the least of our worries. Only danger from Korea is its nuclear disobediance to US authority. Nothing more. I'd throw Iran, India & Pakistan in there too.
1950s great time - post war boom. Bomb shelters??? Good idea then and good idea now with all the nukes around the globe...
1960s great time - ahead with post war boom. Pentagon enforces its vision for the future. Establishment is much greater than any one man. Any president who doesn't bend will be snapped. Remember, free casual sex, the Beetles and flower power. Peace and love to all people.
1970s oil shock - yes significant and leading to stagflation and break down of Philips curve. WOW. However, pretty much based on US foreign policy. Vietnam & the Middle East. The main difference is with the dollar standard petrol priced in US$ I doubt you shared rest of worlds pain in gas prices. Scenarios considerably different and much worse now. Oil priced in Euros and substantial competition for supplies from India and China. Much worse imho. Without new discoveries any indication of recovery will take oil higher again.
1980s great time - Raegan whoops USSR with aid to Afghans and Osoma-bin with their stinger missiles. Hollywood claims Rocky and Rambo takes down USSR :cheesy:. As for meltdown in latin America due to massive explotation of the people paying interest on loans to Juntas kicking commy supporting rebels with weapons bought from the US. Really great time imo
1990s Brief pause - Hardly worth a mention for the US. Black Monday and so forth caused more ripples in Europe and Japan. Nothing major in comparrison to today. We had some Asian and Russian crises and that's about all. It was a signal that markets had extended them selves.
Perhaps 2000 millenium and bug crises fear distorted investment decisions a little.
2001 9/11 - Must ask for apologies here but I'm one of those people who believe it was an inside job. I believe with the evolution of a common enemy - communism changing its colours to capitalism the new common enemy to justify wars and Pentagon expenditure a new one was created. Muslim terrorist and war on terror. Plans were to take over oil fields and kick Syrian and Iranian arses too. However, it all went horribly wrong...
All that extra spending on wars bad for US good for rest of the globe. Bad for people under US bombs however. But who cares, we'll send in our contractors to rebuild the infrastructure and charge them quadrouple in exchange for oil.
I also feel UK involvement in these baseless wars is to sharpen forces in a well defined and manageable live exercise scenario. Maintain vision of a military force and give it the appearance of presence on the international stage. Paper tiger.
My view is considerably different and much worse then ever before in the last 100 years.
:-0
