Impending doom?

[Sangoma]

Inspired by one of the recent Joe Rogan's podcasts, the one with Peter Shiff. The latter has an interesting and somewhat convincing view of the American economy. On the other hand, I have heard about this for the last 25 years, but every time something drastic happens - September 11th, 2008 collapse etc. - it gets back on track fairly quickly. In fact, if you look at the stock market chart over the last 100 years all horrible events are small blips on the curve and are barely visible.

What do you guys reckon? Will we see serious social catastrophe in our lifetimes? Should we all start building underground shelters in the forest and stock up on food and ammunition?

[Fat Cat]

Impending doom? Why...yes.

You are going to get old. Along the way, you will get sick. And then, to top it all off, you will die. And there's nothing you can do about it.

So why worry?

[The Ginger Beard Man]

I don’t know who said this, but I read it last time Schiff was on Rogan:
“Peter Schiff has predicted forty of the last four recessions.”

[Sangoma]

Don't be a smart ass, you know what I am talking about. Major stock market collapse and economic meltdown for example. Say, suddenly most people realize that the dollar is just a piece of paper and that 60% of the economy is phony. Followed by major loss of jobs, severe devaluing of money, bankruptcy of the banking system (where, incidentally, all our money is), shortages of food and so on. Armageddon.

[Sangoma]

Yesterday, before I anaesthetised a guy - who happened to be some sort of investment manager - I chatted with him about his work. The guy was very bearish. His advice was to get out of all property and stocks and get stocked up on gold and cash.

I am on the fence in regards to the topic. Hence the question. Hence-fence. So to speak.

[JimZipCode]

Major stock market collapse and economic meltdown for example. Say, suddenly most people realize that the dollar is just a piece of paper and that 60% of the economy is phony. Followed by major loss of jobs, severe devaluing of money, bankruptcy ...

This happened in the 1930s, sort of happened in the 1970s (but very slowly), happened suddenly in 1987, happened twice in the 2000s. So far it's been shitty, but survivable. Not the end of civilization.

Global warming's obviously a much more imminent threat.

[Sangoma]

Can you elaborate, how is global warming an imminent threat? I mean what kind of scenarios do you imagine?

[SubClaw]

The more intertwined are the markets, the safer it is.

Big companies have worldwide interests, so it’s bad business either if Japan goes down the toilet or even if Thailand collapses (it’s a third world shithole, but most computer’s hard drives are manufactured there).

Global economy means the better all the countries are, the more happy consumers (or cheap laborers who, in turn, make happy customers elsewhere) you get.

Granted, it’s a delicate, assymetrical equilibirum, but it’s better than the way it was before, when national interests ruled the world.

A few decades ago, USA would have cheered a competitor’s collapse. Nowadays, China owns the majority of USA’s debt and neither one wants to see broke the other. And the EU wouldn’t want it either.

In short, the more connected we are, the biggers the companies are, the more common interests we all share and the less relevant regional governments are.

If India or Brazil catches a cold, suddenly all the planet shivers and sneezes. Even the big, powerful countries. And that’s a good thing in my book. We are clearly marching towards a planetary merge (in a century or two).

I read a very interesting article a few months ago which analyzed why is such good news that global companies like Facebook, Amazon, Google or Apple: those companies are investing shitloads of money in medical research.

And for a good reason: a healthy, long-lived individual will keep using social networks for decades, he will keep buying the lastest iPhone every year and he will keep using Amazon as his main shopping site.

It’s a selfish, damn good reason to keep us all alive and in good health as much time as possible.

[nafod]

The more intertwined are the markets, the safer it is.

Hmmm

From a systems dynamics point of view, the more intertwined the system is, the more prone it is to catastrophic behaviors. Once things get complex enough, the size of events (e.g., economic disturbances) obey power law distributions instead of exponential distributions. The distribution of the events has fat tails, so to speak.

If India or Brazil catches a cold, suddenly all the planet shivers and sneezes

Indeed. Bug or feature?

[Shafpocalypse Now]

Nope. It's a slow motion apocalypse at this point.

[SubClaw]

From a systems dynamics point of view, the more intertwined the system is, the more prone it is to catastrophic behaviors. Once things get complex enough, the size of events (e.g., economic disturbances) obey power law distributions instead of exponential distributions. The distribution of the events has fat tails, so to speak.

Thing is, a few decades ago countries were “isolated” economies and if one failed, it was good news for the rest of the competing countries (which, in some cases, may have engineered the market crash to profit).

Now it’s a very different picture. With every possible market truly connected to each other, trying to sabotage another’s country economy is a bad idea.

Think of it in terms of computer networking. Having an Internet presents some challenges and inherent risks, but it’s very unlikely a total, unrecoverable disaster because everyone will be rowing in the same general direction.

It sure beats having a myriad of isolated networks, partially connected at some points and using different communication protocols.

This new and “small” world allows for a permanent stand-off between countries and economies. Not so long ago, Europe would have been thrilled if the USA defaulted (and viceversa). Now everyone tries to keep everyone alive and in good health, which is an improvement.

Safety in numbers.

[Fat Cat]

[Turdacious]

[nafod]

From a systems dynamics point of view, the more intertwined the system is, the more prone it is to catastrophic behaviors. Once things get complex enough, the size of events (e.g., economic disturbances) obey power law distributions instead of exponential distributions. The distribution of the events has fat tails, so to speak.

Thing is, a few decades ago countries were “isolated” economies and if one failed, it was good news for the rest of the competing countries (which, in some cases, may have engineered the market crash to profit).

Now it’s a very different picture. With every possible market truly connected to each other, trying to sabotage another’s country economy is a bad idea.

But sabotage of markets is not how markets fail. They fail for lots of reasons, and now when they fail it can ripple through the economy.

The economies of Europe were tightly bound before.

Before WWI.

Never underestimate the stupidity of humanity.

Think of it in terms of computer networking. Having an Internet presents some challenges and inherent risks, but it’s very unlikely a total, unrecoverable disaster because everyone will be rowing in the same general direction.

It sure beats having a myriad of isolated networks, partially connected at some points and using different communication protocols.

If the internet runs at capacity, it can experience pretty horrible “denials of service” when a route fails and all the packets have to fight for limited bandwidth.

But think of the electrical grid, where a failure in one site can ripple across the whole grid, shutting it down and taking a metropolis into a blackout.

This new and “small” world allows for a permanent stand-off between countries and economies. Not so long ago, Europe would have been thrilled if the USA defaulted (and viceversa). Now everyone tries to keep everyone alive and in good health, which is an improvement.

Safety in numbers.

I agree intuitively having each country interlock their markets ought to be stabilizing, and probably is against certain destabilizers? But beware the unintended consequences.

Give “The Black Swan” a look some time.

[Sangoma]

Who owns the world? Tracing half the corporate giants’ shares to 30 owners

The largest 30 shareholders (out of more than 2,100 share controllers) owned or controlled some 51.4% of the assets of the 299 companies. This is a significant concentration of resources and power – 1.5% of shareholders controlling 51% of shares.

These 30 shareholders were made up of 21 private-sector shareholders and nine public-sector (that is, government-owned) shareholders. Nine government agencies between them account for 17% of the assets of the 299 very large corporations.

It's about large players and the risk they take. They also have serious ties with governments and can count on a bail out. The question is, what will happen when government runs out of options to do so.

[Fat Cat]

Those are publicly traded companies. Anyone can own them.

[powerlifter54]

Quarterly GDP out tomorrow. Rising interest rates and inflation, but need to be looked at in context of the cheap money Fed policies over the last 8 years. The market climbs a wall of worry. The mArket and economy will pull back eventually. Not likely now.

Not a random opinion. All in the market. For now.

[Gene]

Yesterday, before I anaesthetised a guy - who happened to be some sort of investment manager - I chatted with him about his work. The guy was very bearish. His advice was to get out of all property and stocks and get stocked up on gold and cash.

Depends upon where you are. You're in New Zealand, right? Might be different there than in Australia, Europe or the US.

He might just be bearish. Some people see disaster around every corner.