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Do not mistake a resilient global economy for populist success

economist.com

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Re: Do not mistake a resilient global economy for populist success

#251

Post by piva00 »

mlrtime wrote: post #180
compsciphd wrote: post #103

Earlier quoted context omitted.

yes, but could one also argue that due to currency weakening, the S&P's growth can simply be due to the weakened currency? If I can say something has an "absolute" value of X, but I denominate it in USD, which is normally 1:1 to X, then it's value in USD in X. but if USD drops to being worth half an X, but its absolute value hasn't changed, it will now appear to be worth 2X in USD. so why can't one argue, if the doll…

Because the SP500 is a better indicator of the market than USD. Also if you look at the global dollar index, it is right at par historically. The companies in the 500 are mostly global companies, if the USD shrunk so much they would either be losing money, or it doesn't matter because the US market is so strong it dwarfs the others.

> The companies in the 500 are mostly global companies

Isn't that saying exactly what the parent comment mentioned? Since those companies are global, the growth of the S&P 500 which is USD denominated will track the devaluation of the USD as the underlying companies haven't lost value, the dollar has, and the S&P 500 would track that as growth in percentage to balance it.

I don't understand why they would be losing money since as you said they're global, and more untethered to the USD than the S&P 500.

Re: Do not mistake a resilient global economy for populist success

#252

Post by rdm_blackhole »

eecc wrote: post #86
TacticalCoder wrote: post #27

Earlier quoted context omitted.

It is an indicator and it's not totally non-meaningful. But GDP growth, when it's at the price of increasing the public debt and inflation, is no real growth. Instead of looking at the US, let's look at what used to be a relevant ally... In the eurozone, for example, politicians are hiding the lack of growth behind a growing mountain of public debt and the GDP growth ain't even beating inflation since the 2008 crisis…

Yeah but it wasn’t the unelected bureaucrats that fucked the EU. It was the German attitude towards debt and the redistribution of surplus. The Eurogroup sheepishly followed whatever Austerity fever dream of Schauble, tanked the Greek economy to teach every other Med country a lesson and by doing so, crippled any chance of post 2009 recovery

The euro group did not follow austerity measures.

Italy's debt has ballooned to 150% of it's GDP, France is heading for 130% in the near future. Whatever happened in the EU, was not Germany's responsibility. Even Greece's debt is way higher than it should be after the Euro zone austerity "cure".

If there had been real austerity and real slashing of the national budgets so that all countries of the euro-zone actually complied with the fiscal pact that says that euro countries should not have a level of debt higher than 60% of it's GDP, then the Euro-zone would actually have some dry powder left to face these uncertain times.

Instead, the only country who seems to try to do something currently is Germany, precisely because it's debt is lower than most Euro-zone countries and therefore it can afford to spend more to try to create growth.

France is running 5%+++ deficit each year and it has not complied with the euro-zone fiscal rules for the last 20 years. Finland has 10% unemployment, Italy is not doing much better.

Where do these countries go from here? Do they cut social services and risk getting ousted in the next election? Do they borrow more and more with not much to show for it? That is the question that is facing these countries and nobody has the answers.

Re: Do not mistake a resilient global economy for populist success

#253

Post by [deleted] »

eecc wrote: post #86
TacticalCoder wrote: post #27

Earlier quoted context omitted.

It is an indicator and it's not totally non-meaningful. But GDP growth, when it's at the price of increasing the public debt and inflation, is no real growth. Instead of looking at the US, let's look at what used to be a relevant ally... In the eurozone, for example, politicians are hiding the lack of growth behind a growing mountain of public debt and the GDP growth ain't even beating inflation since the 2008 crisis…

Yeah but it wasn’t the unelected bureaucrats that fucked the EU. It was the German attitude towards debt and the redistribution of surplus. The Eurogroup sheepishly followed whatever Austerity fever dream of Schauble, tanked the Greek economy to teach every other Med country a lesson and by doing so, crippled any chance of post 2009 recovery

[deleted]

Re: Do not mistake a resilient global economy for populist success

#254

Post by aswegs8 »

dottjt wrote: post #145
baxtr wrote: post #31

Earlier quoted context omitted.

I noticed this as well. I haven’t found a good cure for this other than diversifying globally.

I could be misunderstanding this, but you know that you can buy ETFs that are currency hedged? Taking Vanguard for example, VGS is global equities, but VGAD is global equities that are AUD-hedged (my home country). The only downside is that you pay more in fees (and they're less tax efficient). People generally don't bother with it though, because on a long enough time-line currencies usually revert to their long-ter…

TIL: currency moves have zero expected return

Re: Do not mistake a resilient global economy for populist success

#255

Post by Pooge »

mlrtime wrote: post #176
ciconia wrote: post #62

Earlier quoted context omitted.

This analogy is flawed. The conversion formula between Fahrenheit and Celsius is fixed. Not so for currencies.

They are two separate issues, you don't look at the returns on SPY vs every currency.

If you are outside the USA, then you absolutely do. Returns are denominated in the base currency but it doesn't paint the whole picture.

Re: Do not mistake a resilient global economy for populist success

#256

Post by dgb23 »

epolanski wrote: post #238
dgb23 wrote: post #208

Earlier quoted context omitted.

The financial markets collapsed in 2007/2008 and survived because of government intervention.

I well remember what happened in 2008 (caused by government's deregulation by the way, not "technocratic managerialist", whatever it means). Despite the severity of what happened, jobs rapidly recovered and were around the same pre-financial crisis levels (and well above US averages) in a matter of few years and workers earnings were at or above 2008 levels (inflation adjusted) by 2016. All in all, as severe 2008 was…

"Caused by government deregulation" could also be phrased as "not prevented by regulation, while caused by financial markets".

The rest of the market recovered quickly once the government re-arranged debt and prevented a full collapse.

But the lesson was that private debt was accumulating too quickly on a shaky basis, catalyzed by financial markets making the issue orders of magnitudes worse. Rapid private debt accumulation is still not discussed enough today for my taste.

Re: Do not mistake a resilient global economy for populist success

#257

Post by enaaem »

lm28469 wrote: post #231
baxtr wrote: post #71

Earlier quoted context omitted.

Oh yes sorry, I forgot that Russia is super successful in Ukraine and Europe is on the brink of collapse because it ran out of energy!

That's not my point at all Do you think Spain would fair better than Russia against Ukraine ?

Actually yes. Ukraine is far easier to invade for Russia. Geography is super flat. You can drive in from anywhere. Easy to supply thanks to sovjet rail. Spain is very mountainous and a pain in the ass to invade. How would Russia supply their troops that are completely rail dependent?

Re: Do not mistake a resilient global economy for populist success

#258

Post by solatic »

consp wrote: post #154
vladms wrote: post #153

Earlier quoted context omitted.

Renting for me generally sounds like a bad deal. On the same period the stock grew even more (ex: S&P x4.5 from 2000). So, if you want to say that if you lived 30 years ago in Munich AND did not save anything you would have lived better, I will have to answer that it was just delaying the issue of not being able to save - the ones that were able to save (maybe not living in Munich, maybe other ways), might at some po…

> Renting for me generally sounds like a bad deal. It always is but not everyone has the option of buying. It takes investment and not everyone's parents are wealthy.

Renting is actually a better deal, financially, in Israel compared to purchasing. Rent is cheaper than the mortgage payment, by hundreds and sometimes thousands of dollars a month, in a society where the average price of housing is more than 14x the average annual salary but most people are highly emotionally compelled to purchase housing as a symbol of stability and wealth creation - an emotional decision instead of a financial one.

As always, local circumstances matter.

Re: Do not mistake a resilient global economy for populist success

#259

Post by leosanchez »

instagraham wrote: post #125

There's a quote by Mahatma Gandhi that resonates whenever I see contrasting debates about this economic indicator or that: "I will give you a talisman. Whenever you are in doubt, or when the self becomes too much with you, apply the following test. Recall the face of the poorest and the weakest man [woman] whom you may have seen, and ask yourself, if the step you contemplate is going to be of any use to him [her]. Wi…

> But it will not benefit the poorest - social welfare schemes do that, but anti-homeless measures cancel it out.

Can you explain what you mean by anti-homeless measures ?

Re: Do not mistake a resilient global economy for populist success

#260

Post by lm28469 »

pepperball wrote: post #243
lm28469 wrote: post #233

Earlier quoted context omitted.

> Really? Spain army's is 1/10th of Ukraine's and basically haven't been in anything close to a war in decades, so yes, really and easily lmao. Ukraine alone produces more military drones per month than the entire EU per year btw.

I’m certain that if Russia somehow managed to attack or invade Spain, they would not be standing alone. I can’t imagine the French will be as content to sit around twiddling thumbs when their neighbor is lit up.

Sure but again that's not my point, my point is that people use GDP to compare all kind of things while it is a completely outdated metric that doesn't really tell you anything about anything unless you use it to compare similar economies or compare the development of a country year after year.
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