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Calling the economic crisis



August 26, 2009 – Comments (9)

Mish has a great post on an economist that called the economic crisis correctly, as he looked at debt.  The information in the post is good.

I have no written a blog for over a month and here's what prompted me to write this one:

"What we are going through is a deleveraging crisis and we haven't experienced one of those since 1930. Last time it took 10 years and a world war to get rid of it, and this time we are staring up with 1.7 times the level of debt in America, not even mentioning the derivatives catastrophe that is also there."

 Here's an economist that is pointing out the same thing that has lead to me saying that things are worse then the depression.

I mentioned the easier lending laws in my post and Keen mentions the derivatives.  I have expressed consistent concerns about the derivates in other posts.

Something else to add to the Dr Gloom and Doom box is the aging population.

9 Comments – Post Your Own

#1) On August 26, 2009 at 10:22 PM, Tastylunch (28.56) wrote:

Hey dwot

great to see you back, I was beginning to get concerned that you had left CAPS like so many others seem to have lately.

Hope you are well.

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#2) On August 26, 2009 at 11:16 PM, ChrisGraley (28.51) wrote:

Good to see you back dwot!

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#3) On August 26, 2009 at 11:24 PM, GeneralDemon (26.28) wrote:

I second that. We need more Dwotings or whatever you may call it. It's always good to read up on your rural Canada experiences.

On your aging population notion, there was a researcher on CNBC a few days ago that said Japan and Russia will have rising equity markets because of the demographic (most % of people in their forties). Whadya think of that!

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#4) On August 27, 2009 at 6:14 AM, abitare (29.85) wrote:

Welcome back!

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#5) On August 27, 2009 at 12:15 PM, chk999 (99.96) wrote:

Welcome back!

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#6) On August 27, 2009 at 12:38 PM, ReadEmAnWeep (85.76) wrote:

That's a scary thing to hear. I hear all these things (such as that statement) and I wonder how we can actually know. It seems like most of the things economists say are just opinions.


But hey if something like that did happen, then what if you just kept buying stocks throughout the whole thing? Then in the end you would eventually make a killing when everything caught up right?

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#7) On August 27, 2009 at 2:37 PM, QualityPicks (64.14) wrote:

Don't worry yet, nobody is asking us to pay for all that debt. The US can get away with this Ponzi scheme only until somebody stops us. I'm not sure who will, since everybody believes they would be worse off than if they just let the game continue. I guess at some point somebody will cry uncle :)

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#8) On August 27, 2009 at 6:31 PM, dwot (28.95) wrote:

Thanks for the welcome back.

Today was the first day of school and it was great.  I love teaching in a small school.

GeneralDemon, I am unfamiliar with the reasons behind thinking there will be a rise in Japan.  It seems to me it is an export country and most places are reducing imports because of the stress in household finances. 

ReadEmAnWeep, I hear where you are coming from which is why I think things through for myself.  I have made a lot of major bad decisions based on bad economic forecasts and when I look back what I consistently see is following a trend and failing to appreciated where the trend comes from and what can change it.

I got hit very hard in the tech bubble and I have no intentions of dealing with that again, so I sit out.  A recovery built on government spending, which is what governments around the world are doing, is no recovery.  It is simply digging in deeper and eventually governments can not continue spending far in excess of what they bring in.  It seems to me that that is coming in the next year.  I just see a heck of a lot of downside risk right now.

QualityPicks, I would agree the US gets away with a lot.  :)


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#9) On August 27, 2009 at 8:47 PM, binve (< 20) wrote:

Hey dwot, yeah I watched that. It is a fantastic video! Thanks for sharing it!

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