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End of Golden Era for Investors Spells Troubles

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Re: End of Golden Era for Investors Spells Troubles

#71

Post by Amezarak »

trhway wrote: post #15
knieveltech wrote: post #3

Earlier quoted context omitted.

Gen X was standing on the same rug as you guys when it got pulled out. Take a look around next time you're in WalMart or McDonalds. All those 40ish looking people that look weirdly out of place in their uniform shirt? Yeah, that's us since the boomers nuked domestic manufacturing and construction wages made a run for the bottom. Don't even get me started on retirement. sigh

>All those 40ish looking people that look weirdly out of place in their uniform shirt? Yeah, that's us since the boomers nuked domestic manufacturing and construction wages made a run for the bottom. technology and economy do change. The changes can't be stopped. The question is how you adapt to them. When many people suddenly lost their job as soldiers 70 years ago there was in particular GI bill created to help man…

Globalization was not inevitable. It was a political choice. Domestic manufacturing jobs did not have to disappear.

Re: End of Golden Era for Investors Spells Troubles

#72

Post by cm2187 »

RobertoG wrote: post #65
cm2187 wrote: post #63

Earlier quoted context omitted.

The sort of inflation we are talking about here is when the government will print money to pay their debt. This type of inflation will be wiping out savings and pensioners.

So, we agree that default is not an issue? If there is any doubt here is in the words of Alan Greespan: "The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default" http://www.cnbc.com/id/44051683 Can we agree also that inflation is not a problem at the moment?

I am not sure what is the point of inflation being a problem at the moment. What I am saying is that savings will be wiped out by inflation.

As for governments defaults, history is full of governments defaulting even on debt in their own currencies, particularly in time of political instability. I am not sure what gives you the confidence that now things are different and that this will not happen.

Re: End of Golden Era for Investors Spells Troubles

#73

Post by ramblerman »

I don't know if there is reason to be either optimistic or pessimistic, but let's not be simplistic.

The long run is incredibly hard to predict, with all the cool tech around the corner and scientific advances that may be available in 30-50 years, the stock market may simply not be a big factor in most people's lives.

Maybe that is the worst fear of a company like Bloomberg that exists to be the ESPN of financial randomness.

Re: End of Golden Era for Investors Spells Troubles

#74

Post by RobertoG »

cm2187 wrote: post #72
RobertoG wrote: post #65

Earlier quoted context omitted.

So, we agree that default is not an issue? If there is any doubt here is in the words of Alan Greespan: "The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default" http://www.cnbc.com/id/44051683 Can we agree also that inflation is not a problem at the moment?

I am not sure what is the point of inflation being a problem at the moment. What I am saying is that savings will be wiped out by inflation. As for governments defaults, history is full of governments defaulting even on debt in their own currencies, particularly in time of political instability. I am not sure what gives you the confidence that now things are different and that this will not happen.

Money is debt. Debt is a promise of something. You default when you can't keep your promise.

If you promise gold or another country currency in exchange of yours, you can be in a position where you can't pay.

If the only thing you promise is to accept your currency back as tax payment, you are never in a position where you can't pay.

That inflation is low now is relevant because it invalidate the quantity of money view of inflation. We are in the middle of a huge "quantitative easing" and we don't see inflation. In fact we see the opposite. For instance, the ECB is injecting (if I remember properly, I didn't check) 80000 millions every month.

So, the "common sense" view of inflation have been proved wrong again and again but, we continue hearing the same thing again and again.

Re: End of Golden Era for Investors Spells Troubles

#75

Post by sgt101 »

Nokinside wrote: post #45
marvin wrote: post #7

Honest question: How is is possible to lend any weight to predictions like these when, even when it comes to the lower profits of the last few years, predictions have always been based on the recent past and wrong? There's any number of "black swan"-type events that could prove this to be incorrect.

I didn't read this McKinsey's report but the expectation of lower returns have been around a long time and there are good reasons for it. Most analysis of lower expected returns in long term is not based on recent past or any kind of trend spotting. Its based on looking how the expected marginal product of capital and growth in economy are expected to change. 1. Expected marginal product of capital. For the past 30 y…

growth is also achieved by social progress - widespread education, the rule of law and expectations of a social safety net promoting risk taking as examples.

Re: End of Golden Era for Investors Spells Troubles

#76

Post by Gmo »

gruez wrote: post #54
RobertoG wrote: post #19

Earlier quoted context omitted.

Massive defaults of states doesn't make sense. A country that have debt in its sovereign currency have not need to default. Inflation is not precisely the problem now, is it?

>A country that have debt in its sovereign currency have not need to default. How did that work out for Argentina?

Their debt was in dollars

Re: End of Golden Era for Investors Spells Troubles

#77

Post by jbooth »

cm2187 wrote: post #14

I think it can get much worse than that. I don't know why people think the current levels of accumulation of debt are sustainable but there is a limit to what even the US can roll in term of debt. All developped nations are at around 100% debt to GDP, more than 200% if you include private debt, and growing at 3-5% per annum. Now does anyone really think that sometime soon any developped country will start making publ…

People have been saying the same exact thing as you since 2008 though.. we're coming up on 10 years and no expected hyperinflation.

I'd suggest we need to revisit the macro models that predict it, especially considering that common attitudes towards 'work ethic' and 'family budget' really bias people in terms of expecting more badness out of the debt situation than we seem to be seeing.

Re: End of Golden Era for Investors Spells Troubles

#78

Post by sgt101 »

sgt101 wrote: post #75
Nokinside wrote: post #45

Earlier quoted context omitted.

I didn't read this McKinsey's report but the expectation of lower returns have been around a long time and there are good reasons for it. Most analysis of lower expected returns in long term is not based on recent past or any kind of trend spotting. Its based on looking how the expected marginal product of capital and growth in economy are expected to change. 1. Expected marginal product of capital. For the past 30 y…

growth is also achieved by social progress - widespread education, the rule of law and expectations of a social safety net promoting risk taking as examples.

Also exploration/conquest - although that might not be positive when summed everywhere. I think it's clear that the acquisition of crops from the new world (potatoes, tomatoes, chillies, okra, maize, squash) changed agriculture in Europe.

Re: End of Golden Era for Investors Spells Troubles

#79

Post by awakeasleep »

Amezarak wrote: post #70
cm2187 wrote: post #14

I think it can get much worse than that. I don't know why people think the current levels of accumulation of debt are sustainable but there is a limit to what even the US can roll in term of debt. All developped nations are at around 100% debt to GDP, more than 200% if you include private debt, and growing at 3-5% per annum. Now does anyone really think that sometime soon any developped country will start making publ…

The US federal debt was even higher in the wake of World War II. The US government did not run surpluses and deleverage in the following decades. The economy grew, without hyperinflation, and the debt became irrelevant. The solution to high levels of debt is sustainable economic growth, not deleveraging. Mass deleveraging would be an economic catastrophe.

Wasn't the US's situation post-ww2 sort of unique?

This sort of sounds like "just win the lottery again" type advice.

Re: End of Golden Era for Investors Spells Troubles

#80

Post by gedy »

justinjlynn wrote: post #2

The me generation was aptly named, generation X ate the table scraps, and now we millennials are being left with the bill. Edit: I suppose the question now is, what can we do about it?

Dude, Gen X is right here working along side, you raising kids, paying bills, etc. What's this "table" you speak of, as we haven't even got there yet.
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