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December 09, 2008

Prospects

Frightening


Oil spike and collapse


U.S. debt-adjusted real GDP


Nassim Taleb (author of the "The Black Swan"): illusion of stability

First h/t to Gail the Actuary at The Oil Drum for those first two graphs, excellent article & comments HERE. What do you suppose U.S. debt-adjusted real GDP is going to do now? Only through massive borrowing can total economic collapse be staved off--and then only temporarily. GDP has been supported entirely with debt for nearly a decade.

Commodities are entering a phase of wild, jagged swings, oil being a major example. This is a very bad sign for the energy picture. "Recovery" quickly could drive that spike upward again after the downswing has killed supply projects. Very, very bad.

Something is wrong with this picture. The stock markets & banking system are nothing but pretend, a confidence game. The guy interviewed on Charlie Rose sees collapse imminent and calls for a return to a capitalism where barbers & dentists cut hair and fixed teeth rather than be players.

Posted by The Owl at 02:09. Filed under: Economy

Comments

this old guy i worked for years ago told us that when oil drops and gold rises, hold on to your hat, cause it's time for a fall. (a crash/depression scale fall.) don't know how much truth there is to his theory, but now i'm thinking i should take a loan out of my 401k and get the what's left of it out of the market. come to think of it, probably should have done that months ago.

Posted by Montag on December 09, 2008 at 07:54

I've been out of my Wilshire 5000 index fund for a year, thank the Lord. The next decade will be terrible for financial assets, even if there are periods of extraordinary gains. Right now today, the serious re-thinking of the entire economic system that we need is not happening. It's all still about protecting the status quo. But events may change this sooner than we think.

Posted by The Owl on December 09, 2008 at 14:06
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