The following story in The Wall Street Journal illustrates the concept of Sustainable Prosperity for one area:
SPX at 896.42 as this post is written
Archive for the ‘Sustainable Prosperity’ Category
A Story Illustrating Sustainable Prosperity
Friday, July 3rd, 2009More Questions Regarding Green Shoots
Sunday, June 28th, 2009In the last post, Warren Buffett commented what he was seeing with regard to signs of an upturn. This link contains what John Rice, Vice Chairman of GE recently (6/19) said:
“I am not particularly of the green shoots group yet,” Rice said today to the Atlanta Press Club, referring to a phrase used by Federal Reserve Chairman Ben S. Bernanke that described signs of a nascent recovery. “I have not seen it in our order patterns yet. At the macro level, there may be statistics suggesting the economy is starting to turn. I am not seeing it yet.”
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ayc5BDPO_GGs
Between Warren Buffett and John Rice, there is a tremendous size and breadth of businesses overseen. Their comments seem to support the question as to whether “green shoots” exist, i.e. is the economy showing signs of recovery?
This question is absolutely critical at this juncture, for a variety of reasons. Perhaps chief among them is the following: If there currently is no economic recovery, how sustainable is the stock market (as well as other markets’) rally since early March? If there is no economic recovery, is that some type of proof of the ineffectiveness, or failure, of the intervention efforts? Are we heading toward Sustainable Prosperity?
SPX at 918.90 as this post is written
Are We In a Depression?
Monday, June 22nd, 2009One of the questions that seems to be popular since the economic events of 2008 is whether we are in a Depression. As such, for the next few posts I will be commenting on the topic.
Here are two links that indicate that we are not in a Depression:
http://seekingalpha.com/article/142831-great-depression-ii-it-s-not-even-close?source=email
http://www.calculatedriskblog.com/2009/06/update-what-is-depression.html
Yet, as indicated in this following link, the rate of decline in various measures seems to indicate that our experience to date at least matches, if not exceeds, that of The Great Depression.
http://www.ft.com/cms/s/0/b31c06a2-5a7a-11de-8c14-00144feabdc0.html
So, as seen above, there seems to be contrasting measures regarding our current economic weakness. At this point, most in the mainstream use the term “severe recession” to classify our current economic predicament.
In my opinion, on an “all things considered” basis, I think the “severe recession” classification is apt, but one could also strongly argue for using a “mild Depression” tag at this point in time. The Unemployment Rate and GDP decline seem to be cited as the predominant statistics in determining whether a Depression exists. While it is true that both of these measures are not near those that would indicate a Depression, there are an array of other measures that have undergone severe declines and currently stand at (or near) multi-decade lows. As well, it just seems like there is an extraordinary level of stress evident from a fundamental perspective that is far out of the ordinary even for “tough times.”
Regardless of the economic classification used, I think the more important issue is the characteristics of the economy; the underlying problems and how easily they can be solved; and the economy’s future trend – either recovery or further decline. Of course, whether we are on a path to Sustainable Prosperity, as well as associated issues, should be considered.
SPX at 921.23 as this post is written
The Global Economic Future
Sunday, June 21st, 2009One of the questions I received when I first started this blog is why I didn’t choose to discuss the global economic future, as opposed to America’s Economic Future.
This is a good question. In essence, I do believe its focus is on the global economic future, as not only is the United States (obviously) the largest economy, but its economy and its characteristics are so pivotal to those of the rest of the world. Perhaps as importantly, the United States seems to have attained global leadership with regard to how to best ”manage” an economy, as well as how to “fix” The Economic Crisis. It is evident that many global economies, especially the more developed ones, have adopted (to varying degrees) the same philosophies and actions that the United States has as far as overcoming The Economic Crisis.
As such, I believe an economic discussion that focuses on the United States can in many ways be extended to other countries as well. The main issues of this blog, such as Sustainable Prosperity, Economic Greenfield vs. Economic Brownfield, etc. are certainly pertinent and applicable to countries and regions worldwide.
SPX at 921.23 as this post is written
Consumer-Led Recovery Story
Thursday, June 18th, 2009This story, “On Borrowed Time : Consumer-Led Recovery” was in The Wall Street Journal on June 9. I found the chart and its implications to be interesting. One is led to wonder “how much gas is left in the tank” with regard to Household Debt as a Percentage of Disposable Income. This is especially an issue with ”Income” and asset values under pressure.
Also, there are various implications concerning Sustainable Prosperity…
http://online.wsj.com/article/SB124449816432295655.html
SPX at 911.96 as this post is written
In Ben We Trust?
Wednesday, June 10th, 2009I will comment frequently on Ben Bernanke, due to his position, but perhaps more importantly, because of his stated theories, beliefs, and ideologies. It seems to me that the handling of The Financial Crisis certainly has the “fingerprints” of Ben Bernanke all over it. In fact, I believe that perhaps no other person’s ideologies have ever played such an outsized role in the U.S. economy (and various other global economies) than those of Ben Bernanke. In my opinion, the U.S. economy (and many financial markets) since The Financial Crisis, can be viewed as an ideologically-levered extension of Ben Bernanke’s beliefs and understandings.
Is this a good thing? It gets back to two central themes of this blog; are we heading toward Sustainable Prosperity? And will America’s Economic Future be one of an Economic Greenfield or Economic Brownfield?
As for me, I will let my writings speak for themselves with regard to our handling of The Financial Crisis. As one can guess, I do respect his background, and believe that he has an exceedingly difficult position; but I don’t necessarily concur with many of his theories, interpretations, or actions.
SPX at 939.35 as this post is written
The National Debt and Deficits
Tuesday, June 9th, 2009John Taylor wrote the following article “Exploding Debt Threatens America”:
http://www.ft.com/cms/s/0/71520770-4a2c-11de-8e7e-00144feabdc0.html?nclick_check=1
Although I don’t agree with some of his figures and reasoning, the central point is important: This debt level is a serious problem.
It also illustrates the difficulty of ridding ourselves of this level of indebtedness.
These issues will likely get greater attention now that sovereign debt levels are coming under renewed scrutiny.
Furthermore, a question that should be asked is whether amassing ever-greater deficits and debt levels is compatible with the concept of sustainable prosperity.
I’ve been meaning to write an article about our national debt, as I think the topic deserves much greater discussion.
SPX at 944.37 as this post is written
Sustainable Prosperity
Sunday, May 31st, 2009One term that I will use very frequently is “Sustainable Prosperity.” The term exemplifies the ultimate goal of what our national policies should be seeking to attain.