Wednesday, June 17, 2009

opposing traffic in the economy

Last month I said I might make a monthly entry here on the subject of the economy, and even thought it has been less than a month, I have been chomping at the bit to make this next entry.

This economy is presenting many serious paradoxes that will act like pitfalls over the next several years (actually, forever - but in a few years, some people will catch on, and compensate).

First, there is a slight up tic in some of the market indexes. Don't be fooled. As I stated on Combat Effective (ninth comment), corporations are not us. They can experience some gains without any benefit to the public at large.

Second, I have been asked why the price of gas has been going up. It is going up because demand is continuing to be high. Normally this runs up the price in May and then through June and July, the price drops a few cents. It isn't dropping this summer. In fact it raised about a dime since the end of May, and looks like it will raise another dime. But US gas consumption is mostly flat, so what is this rise all about? China.

The Chinese economy (repeatedly called "cash rich" in the media), is surging ahead with some early growth, and (as you can see from another article) they are moving to secure vital resources to insure future growth.

While we may be at the bottom (even the G8 is talking about this) , real recovery is looking even further away. Currently, there are a lot of forecasters expecting gold and the Euro to remain near flat, the pound to take a slide and the US economy to turn around. (Indeed, the dollar and pound may have already both taken a slide this past week, but it is too early to tell.) Of course, they are partially correct, and partly because in the short run, economic forecasting is somewhat a self fulfilling prophesy. But this is one prophesy that may backfire for the public at large.

Much of what looks like gain for the US economy falls into two broad categories. Increases in spending, much like an unemployed person going on a spending spree because he got a job interview. He doesn't have a job, but he feels better so he goes out and spends more money that he does not have. Second, there may be a lot of repositioning of corporations to take advantage of improving conditions in China and some other third world economies. Neither of these are good for the US public at large.

As a couple of final notes, I previously stated that unemployment wouldn't likely turn around for a year, and housing for at least two years. Well, on further thought, I would double that. Expect the job market to be dismal for at least two years, and housing prices to be down for at least four. Nothing has really changed, except my view of the timeline.

How do I get my view of the timeline. Not real scientific (I don't spend enough time on it to get any more science into it), but I look mostly at the interest rates on 6mo, 1yr, 2yr, 5yr and 10yr bonds. In (not very) recent history, they have been around .45, .9, 1.9, 2.9, 3.9 percents. respectively. I watch for trends in deviations from those numbers. In more recent times, the interest rates on the first three have been going down, and the interest rates on the last two have been steady. Therefore, I expect meaningful gains somewhere between 2 and 5 years.

As for gold, still overpriced. But, maybe a good idea anyway. If you can buy some, and hold it for at least 4 years. Of course, this entails a great deal of security, both of your financial position, and physical security. I am discussing physical gold coins, and therefore you have to have a place to store them. I would still recommend other durable things. By durable, I mean lasting more than ten years, so that rules out almost anything electronic. My choice is hand tools, but there may be other things too. A good bicycle should last more than ten years, except for the tires. You get the idea.

Well that is it, until next month.


Anonymous said...

Missed really reading your ninth comment at Combat Effective. Interesting! I gotta check it out. Do you have enough storage for my comment?

"...much like an unemployed person going on a spending spree because he got a job interview."

Now that is descriptive!

"...By durable..."

I got a job interview, Is BluRay durable? ;-)

Rex I am worried that the Financial elites will sell us out. That Alex Alnes believes our elites are an all white boys club. I hope that is true. Also hope you see my meaning has nothing to do with race. Has everything to do with keeping my dinner table from being depleted in order to serve sombody elses dinner table.

Anonymous said...

Sunday moun. Not a Christian but being raised in a Christian soceity, that the Obama says is not th case, ... and with the day off, ... the thoughts of deep hunabity sets in.

Not Christmas but 'peace on earth' a 'chicken in every pot', 'justice for all' and a loving family for every child.

OK! Back to the reality of geo- politics, human nature and the survival instinct.

Of all the wonderful fairy tales I have heard and read about goodness and love and peace, ...?

Christiabity is the only hope. I just have trouble adopting a belief that tells me I am a filty rag. I am acutely aware of that but when I am told that by another source my knickers get twisted and I go balistically secular. (that was a difficult and honest statement.

OK I wrote that dw

Anonymous said...

OT but that article about digital rights management was interesting and I noticed that it mentioned Disney Corp. Man when it comes bull I see that name alot. Most recent on trying to usurp you tube. I know u don't care for u tube but their is alot of good stuff there. Corperations want to make it 'their tube' bu controllig the site search engine.

TRex said...

Disney trying to Usurp U-Tube?

I missed that one.

If you can find out any more, let me know. I would like to follow that.

Anonymous said...

Well simgling out Disney may be a bias on my part but true I see their name alot and concerning You Tube. Could not find the specefic story yet. (will try again) but here are hints and facts that say prettty much the same thing.

Corperate power and the sierra club

a slide show but related

The concentration of corperate media limits political debate, diversity of viewpoints presented,
and media acess.

Corperations are usurping civic space. Publlic functions are being privatized.

Anonymous said...

YouTube API strategy may have business appeal

"YouTube is a “global network of interconnected users and partners and videos accessible through multiple end points, on and off the Web,” said Patterson."

"YouTube’s broadened scope presents some corporate use for those businesses with video-worthy content and the desire to share it internally or externally, he said. And Google’s sturdy and free backbone infrastructure means businesses can “outsource the pain” of video hosting and sharing, and limited bandwidth to a company that does it well, said O’Connor Clarke.

Furthermore, in the realm of corporate training, he said businesses can build their “own nicely branded intranet or other corporate training facility” using the APIs.

The fact that YouTube is a free platform with a massive audience reach, makes it a ripe stage for businesses to realize a return on investment as part of their marketing strategy, said Warren Shiau, senior associate with Toronto-based consulting firm The Strategic Counsel. He said Google is “certainly trying” to extend the previously un-monetized YouTube platform to corporate users, besides its consumer audience, with the enhanced APIs."
"And corporations need not be deterred by YouTube’s image as a consumer platform, he added, because although it has been driven by user-generated content till now, companies are increasingly repurposing corporate material for the site.

---> “The perception that it’s consumer dominated is starting to go away with more forward looking organizations,” he said."

I know their must be complaints about yu tube that will jsutify corperate chnges but haven't researched it.

Truth is, this kind of knowledge taxes my pea brain. I have to quote as I have no clear understanding but I definately smell one big rat here.


TRex said...

The "infoworld canada" link is kind of what I was looking for.

I don't know where this is going, but I think Google may have bitten off more than it can chew with its new enhancements. In other words all other corporations may look at this as free storage, at Google's expense.

There are already a few people who use G-Mail and Blogger for free storage and free Ad Space. This has to be taxing on Google, in some way.

Hopefully, Google will not sell off pieces to Micro$oft or Di$ney.

Anonymous said...

Found the video of changes to you tube. I have no doubt that the strategy behind the changes are evolving SOP cyber corperate procedure for comondeering any cyberspace that has massive grass roots traffic. Soon they will controll and dictate weather or not a grass roots website can even start or function without their approval.

Goodbye "You"tube, Hello Corporate Hacktube! (HuluTube)