The World in Three Years -- Whats your economic take?

What do you guys think the state of world, on an economic level, will be in three years? better off? worst off? entering a golden era?

I think that we will see unemployment back down to 7 or 7.5 percent or so and start to see some raising of interest rates back to historical averages for mortgages as well as the real estate market starting to flatten out due to rising mortgage rates pushing down on price pressures... hopefully other infrastructure issues will be resolved in terms of debt limits and so debt issues in both the EU and US. I also think that once we shed off a lot of the dead weight from companies and other inefficiencies that'll be destroyed by the poor economic times we'll see a lot more growth come of that but maybe more in a 5-7 year period as opposed to 3 years..

 
UFOinsider:
Better. Unless the economy collapses again. Then it will be worse.
Brilliant! I hear there's a job opening at the Oracle of Delphi.

In all seriousness, I think China is making Robert Moses look like small potatos on building worthless infrastructure. This is probably going to end with a war in Asia- perhaps involving Russia, India, and China.

Oh well. The US controls 35% of the world's food supply. That will come in handy when global warming sets in.

Long-term bullish on the US; bearish on third world countries without a lot of agriculture or resources.

 

worse worse worse, hopefully domestic employment will go up, but with europe going to shit I don't see much better unless there is heavy reform which will itself take awhile to see the effects of. also oil (in my opinion) is just going to keep up bc we actually are running out of it, and an efficient alternative is not yet attainable. china will keep growing and will soon overtake us. pollution will increase from these emerging economies and also just completely f* the world. I am quite liberal (despite being in finance) and will probably kill myself if someonel ike Bachmann or Palin is elected in 2012. Which I wouldn't put beyond the idiocy of America

"History doesn't repeat itself, but it does rhyme."
 
Chillguy:
streetwannabe:
I am quite liberal (despite being in finance) and will probably kill myself if someonel ike Bachmann or Palin is elected in 2012. Which I wouldn't put beyond the idiocy of America

Despite their politics, I think most people here would kill themselves if either Bachmann or Palin get elected. Thankfully they won't.

Unfortunately most of the people in this forum don't make up the majority of the US population. George was elected into office... twice. Welcome to the white house tea party idiots

"History doesn't repeat itself, but it does rhyme."
 

The world will not be better in 3 years. Right now we have all the makings for another very large war, wether its caused by food inflation or natural resource grabs it can happen just like that.

You don't have to believe me just be forwarned.....

"It is the nature of the human species to reject what is true but unpleasant and to embrace what is obviously false but comforting"

Don't fall into the above trap. We are in the midst of a 30 to 40 year credit expansion bubble collapse and it doesn't look pretty. All growth has been created by debt expansion, now that debt expansion doesn't create growth anymore..............

The one who does not fall, does not stand up
 

Maybe a CME will wipe out the power grid and one-third of the developed world's population will die in a short time span! How's that for a black swan event?

http://books.nap.edu/catalog.php?record_id=12507

Compared to the above scenario (which is not as low probability as we would think, google "Carrington event"), economic collapse, deflation/hyperinflation, peak oil, etc. are nothing to worry about whatsoever. Of course, let's see if the government and the utility companies take the steps necessary to prevent such an occurrence. Judging by what happened in New Orleans pre-Katrina as far as having appropriate levees, I doubt it...

 

Btw, if you're worried about CMEs, move to Texas, they have an independent grid (i.e. not connected to the rest of the country) and since they're further south would receive less of the highly charged particles (which the magnetic field diverts more to the poles).

A friend and I were talking the other day and came to the conclusion that multiplying probability of an event occurring by the amount of potential damage, that there is no bigger threat to humanity right now (whether natural or human-created) than a super CME wiping out the grid. It was hard for us to think of something that comes even close.

We assumed a probability of once every 500 years for a Carrington style event, so that's a 0.2% chance of it occurring every year (really hard to guess what the probability is). The only disasters we could even think of that would cause as much damage are ultra, ultra low probability on an annual basis (think, large asteroid impact, Yellowstone mega eruption, full-out global nuclear war - think, Terminator movies, not just two countries nuking each other). Given the "probability x damage", shielding the grid from such events should be priority number one as far as disaster prevention/awareness.

 
shorttheworld:
Wasn't saying we were going to be back in a 5 percent unemployment utopia :p was saying things will shuffle out a bit and be better than now. Historically there are always horrible headwinds from ltcm snl crisis Asian Contagion can go on endlessly but things will work themselves out, not to say it's going to be a smooth path
While there were bailouts in the examples you brought up, there has never been as much bailouts or stimulus spending as there has been in the past few years. The actual benefits of this spending are seriously questionable and the amount of debt that has been piled up in the process is unsustainable. If any of the bailouts or stimulus spending began to address any of the structural or even cyclical problems we are facing I would be a hell of a lot more optimistic but that's not the case. We've kicked the can too far down the road and have not even begun to address any of the problems that we are facing.
 

My opinion, the situation in the developed world is going to continue to get worse until one of a few potential different things happen: (note by developing nations I mean the quickly developing BRIC-esque countries) 1. we get rid of unions, minimum wages, etc. and low-skill workers accept wages/standards of life that are globally competitive. 2. trade gains and wealth in developing nations shift from state-level to individuals, who start demanding higher wages, and as their wages become higher relative to developed nations, developed nation labor becomes comparatively competitive again. 3. The developed (mostly free-market oriented) nations do something to counter the terribly anti-free trade policies of the developing nations. Most importantly, we do something about China's currency manipulation and intellectual property theft. It seems that we've given up on trying to keep the low-skill jobs domestic and if these countries are going to be stealing the end-results of high skill jobs (patents, copyrights) then we are left with not too much.

 
Best Response

I find it funny that this topic, somewhat optimistic, is written by shorttheworld. Names aside, i think it wil be better considering no matter what the pols say we will move in the right direction fiscally. It would be very hard for Obama to be re-elected I think, and hard for Palin to be elected either. Although her knowledge of history notwithstanding, Bachmann at least has sought out advisors that know what they are doing. And that is what Presidents should do, no one is a master of all arts. Smart Presidents are ones that need to know that they are not always right. Clinton listened to Greenspan, Reagan to Laffer and Volker. O the other hand, Obama listens to himself and liberals- not unlike Bush did with moderate Republicans and himself or Jimmy Carter with his green/oil agenda. Great Presidents are not smarter than everyone else, they know how and when to listen and implement ideas.

Also, streetwannabe, I am always leery of assessments of what the deficit "would be". Without the wars...OK. Let's say no Iraq, that was Bush. But look at Afghanistan- anyone would have done that, TARP- Democrats want another stimulus, and the economic policies that put us in this...namely the Federal Housing Enterprises Financial Saftey and Soundness Act and the other addendums to the Community Reinvestment acts occurred during the Clinton Administration. Rarely are the economic woes of an administration directly due to their practices. Bush I was Reagans, Bush II's was Clinton's, and Obama's was a carryover from the earlier. One of the only President that has directly caused an economic crisis was carter with the oil crisis. Obviously smaller economic problems can be caused by a sitting President, but since they have such a limited window to perform 4-8 years, Presidents enact policies often to the detriment of future generations for short term political gain.

Look at Obama, no matter what you say he has increased the yearly budget by 600 billion in 3 years, while Bush increased it that much in 6. And for a better references, Clinton increased it like 400 over his 8. Washington likes to spend other's money, nothing new there. Hopefully a republican gets in office and can sign the drastic cuts needed to regin in spending. Obama won't do it that's for sure. His constituency is the lower class and the wealthy- that is fact. And to retain the lower he has to keep entitlement spending the same or better- even though that is the greatest threat to our national security in my opinion.

http://en.wikipedia.org/wiki/Federal_Housing_Enterprises_Financial_Safe… http://en.wikipedia.org/wiki/Community_Reinvestment_Act#Legislative_cha…

The dude who said the New Deal was great obviously never read a bit of history other than that which was fed t him in public school. If you look at the facts, Keynesian economics has failed- hell we don't even really use that it's just some BS mix of economics that draws from Keynes that we use. What did Keynes purport? Keep interest rates as low as possible for as long as possible, deficit spending, and central planning. Yea, I see the TVA and the Hoover Dam pulling a hefty profit since their construction....oh wait... If you look at history through the rosy-liberal colored glasses of the textbook the New Deal is GREAT!!! Except it saddled us with a ton of debt, stole a bunch of gold from citizens at below market prices, LENGTHENED THE GREAT DEPRESSION, and essentially just served as the final "Fuck You" to states right's believers.

I think overall that the situation will be better, but not great in three years. If we can cut spending/debt (aka do better than balancing the budget)- especially regarding Medicare, Medicaid, Social Security, welfare, and defense we can restore confidence in the US economy. Right now I think that the largest threat facing the US isn't the debt, but the world's perception of our debt. Countries like the PIIGS are failing because they let spending spiral out of control and eventually one will fail. If we are in the same position as we are now, the collapse will shake the confidence that investors have in the US Government. And that is bad for everyone. I'm not saying save Greece. But we should try to get a balanced budget ASAP so we aren't the Merrill Lynch in the Lehman debacle. (Obviously not the greatest example, but mainly- the next to fail)

Reality hits you hard, bro...
 

I honestly can't see anything good, I think most likely Greece has defaulted by than which pushes other PIIGS close to it, I think this will most likely cause another Lehman brothers moment and would honestly be surprised if we are in a much better place, most likely I think poverty across the globe will fall but people in very poor countries will have access to less aid which will increase food poverty, I don't think the outlook is good at all tbh

 

Dutch disease and the beginings of middle income trap to hit much of Asia, Australasia and Lat Am, high growth to be in Africa, South-east Asia and e.Europe -- developed markets to continue slowly deleveraging with employment ticking up.

In europe - Greece and possibly portugal will have left the euro which will have rallied and be coming close to the debased $ as reserve currency amongst central banks.

Most commodities will continue to rise (except oil and gold).

 

Here is some of my take for the economy in 3 years:

The United States will see upward economic growth as inflation has increased to roughly a 5% standard. The devalueing of the dollar will in turn spur high employment in the United States; even though this will hurt those who are retired/not working, it will in turn drive the economic engine that is the United States forward to some degree. This is only one point of what will happen (or should happen) within the next 3 years..

Another thing to take note on is China! The Chinese are currently becoming wealthier and wealthier to the expense of the United States (and other countries). However, in China, there is a lot more risk than most financial professionals give credit to. First of all, has anyone on here really looked at the housing bubble in China? Everyone is stacking up longer and longer term loans in an effort to purchase more and more of the housing real estate in China. In the United States, it roughly takes an average income 3-5 years to pay off a house (if the entire income is spend on paying it off). In China, that figure is growing far past 3-5, and has gone as high as 35 in Shanghei (So i've heard). On top of this, if the United States continues to increase inflation (or simply keep it at a higher level than recent history), China will be dealing with their own currency being devalued, due to their currenly being fixed to the dollar. Even though the devalueing of our currenly will lead to better competition for US workers, hence more jobs, China is already at an employment-perfect level. When their currency gets weaker, they will only be seeing less profit margins for their workers, along with higher prices in stores. This will most likely force China to either strengthen their currency, or let the companies in China simply make their products more expensive. When this happens, China's competitive advantage decreases! .. There is some food for thought for yas!

 
EconS4days:
Another thing to take note on is China! The Chinese are currently becoming wealthier and wealthier to the expense of the United States (and other countries). However, in China, there is a lot more risk than most financial professionals give credit to. First of all, has anyone on here really looked at the housing bubble in China? Everyone is stacking up longer and longer term loans in an effort to purchase more and more of the housing real estate in China. In the United States, it roughly takes an average income 3-5 years to pay off a house (if the entire income is spend on paying it off). In China, that figure is growing far past 3-5, and has gone as high as 35 in Shanghei (So i've heard). On top of this, if the United States continues to increase inflation (or simply keep it at a higher level than recent history), China will be dealing with their own currency being devalued, due to their currenly being fixed to the dollar. Even though the devalueing of our currenly will lead to better competition for US workers, hence more jobs, China is already at an employment-perfect level. When their currency gets weaker, they will only be seeing less profit margins for their workers, along with higher prices in stores. This will most likely force China to either strengthen their currency, or let the companies in China simply make their products more expensive. When this happens, China's competitive advantage decreases! .. There is some food for thought for yas!
There's a lot that I disagree with here.
  1. China's peg to the dollar does not mean that the yuan will depreciate, it has in fact gradually appreciated against a global basket as the dollar has fallen.

  2. Not sure what you are referring to by 'employment perfect' - a majority of the working age chinese population continue to be engaged in subsistence farming on non-monetised land. In the (rapidly growing) cities employment is relatively high, however productivity gains, invesment and increasingly domestic consumption is growing the economy and the demand for additional labour.

  3. Inflation is a reality in China and it is driven by wage increases - this is leading to western (and Chinese) manufacturers moving new production to the rural inland and to IndoChina, where wage levels are lower. The higher waged urban populations are gradually moving up the value chain (making semiconductors rather than $1 tshirts) which will result in further exportation of deflation as western and eastern consumers increasingly spend a greater percentage of their disposable income on higer value products.

  4. The 'property bubble' in China is purely a Tier 1 city phenomena. Outside of tier 1 demand remains strong and the majority of new projects are funded by cash or c40-60% deposits.

China does have problems, just not the ones that you have mentioned.

 

I'm really of two minds on this. I want to believe things will get better, and reality and history tells us that over the long term they almost always do. But real improvement depends on strong, quality leadership, and very few places around the world right now have it. The US at present is not one of them.

So much will depend on the 2012 election and on whether we will continue to move away from the free market, just as ironically enough Europe is trying to move more towards it. As much as it irritates me to say this, it's a total wildcard at this point, and it's unnerving.

Metal. Music. Life. www.headofmetal.com
 
In The Flesh:
I'm really of two minds on this. I want to believe things will get better, and reality and history tells us that over the long term they almost always do. But real improvement depends on strong, quality leadership, and very few places around the world right now have it. The US at present is not one of them.

So much will depend on the 2012 election and on whether we will continue to move away from the free market, just as ironically enough Europe is trying to move more towards it. As much as it irritates me to say this, it's a total wildcard at this point, and it's unnerving.

Hahaha I was thinking the exact same thing. I feel like we are very close to being able to turn a corner and improve our future but no one who could make a difference is really reaching out and doing anything. In three years I think the world will begin to look brighter but we will still have a lot of headwinds.

I feel like the world will be marginally better in three years but that time span is way to short. The real question is what will the world look like in 10- 20 years? Thats when pollution, fuel and food prices, and over population really become a problem.

I think unless things really fall off a cliff then a massive war won't happen. These problems will slowly be solved and the future could be very bright.

So in short I'm still staying hopeful that the world will be better because as Flesh said above in history the world usually does improve, but this is the 21st century and things are completely different.

 
Freshcut:
In The Flesh:
I'm really of two minds on this. I want to believe things will get better, and reality and history tells us that over the long term they almost always do. But real improvement depends on strong, quality leadership, and very few places around the world right now have it. The US at present is not one of them.

So much will depend on the 2012 election and on whether we will continue to move away from the free market, just as ironically enough Europe is trying to move more towards it. As much as it irritates me to say this, it's a total wildcard at this point, and it's unnerving.

Hahaha I was thinking the exact same thing. I feel like we are very close to being able to turn a corner and improve our future but no one who could make a difference is really reaching out and doing anything. In three years I think the world will begin to look brighter but we will still have a lot of headwinds.

I feel like the world will be marginally better in three years but that time span is way to short. The real question is what will the world look like in 10- 20 years? Thats when pollution, fuel and food prices, and over population really become a problem.

I think unless things really fall off a cliff then a massive war won't happen. These problems will slowly be solved and the future could be very bright.

So in short I'm still staying hopeful that the world will be better because as Flesh said above in history the world usually does improve, but this is the 21st century and things are completely different.

Have you seen planet of the apes? The world does not constantly improve based on that theorem.

But it's funny, all "analysis" on this threat point to end of economic development scenario, and I actually believe in that as well, unless major changes (non-Obama like) are made (again no unions, cost of real estate reduction, etc). The govt will continue to borrow to support our debt-based lifestyle. the govt will not let this economy collapse simply becuse they are a bunch of p&^$&^ whom want to get votes.

 

lol I was reading up on some of the financial crises that we've experienced since ....1907! It's funny because every time it's purported to be the end of civilization as we know it. On to the next bubble.

I have to return some video tapes.
 

lol i meant to put no 2012 prophecies in the original post... i definitely believe a lot of the frontier/emerging markets will sort their shit out and grow much more quickly (as they should) than the developed nations and i think there are definitely head winds but i think theyll be fine.

and there are ALWAAAAAAYS issues this or issues that as ive said..... only time wil ltell :>

 

I really fail to see how the 2012 elections matter at all. No party has the political will to make significant cuts in spending in the places where it matters. Muthafuckaz can't even begin to seriously discuss cutting spending or raising taxes and instead just gridlock over a fucking bullshit debt ceiling. Do you really see this political climate changing in the next few years? The only way significant change will occur is when shit gets so bad that people are rioting in the streets all over the country.

 

the eurozone 'destruction' is definitely a plausible topic to make guesses on but i have no idea really to suggest one or the other may happen and i honestly dont think anyone can, at this point, make a correct prediction. you can guess plenty of things based on market scenarios but when you have politics involved, that voids everything :)

im a realistic not an optimist ;] although an optimistic realist... and i made this name back in 07 or so when the world was about to end ;P

 

I feel as if the U.S. is in a better position(mostly) than much of the world. Deleveraging has been making steady progress and most importantly, we are learning how to adapt to this. Growth will be understandably slow but the silver lining in that is that it will be organic growth not debt induced growth. More and more baby boomers are due to retire and this alone will lower unemployment if job creation does not. Main issue is medium and long term budget. Though I don't expect the current administration to correct this, republicans now have the ability to force Obama/Reid's hand in exchange for short term concessions such as raising the debt ceiling.

Europe is far to uncertain with all the shit they have going on but I really don't believe there is political will to enact the austerity necessary for debt restructuring. I do think the euro will survive in some form or another.

China is a lynchpin to so much of the world right now that if their growth rate falters 3%+ for a couple quarters it'll wreck or stall some economies. Australia, Chile, much of Africa, etc.. will have dutch disease if chinese demand drops. One of the best things for U.S. growth would be a chinese middle class that could actually afford to buy American products.

Making money is art and working is art and good business is the best art - Andy Warhol
 

so i havent researched this a ton but since the renminbi (or however the fuck it is pronounced and yes i like sounding aristocratic and using that word instead of yuan despite being unable to spell it correctly and im too lazy to type it into google to check) is pegged to the US isnt that going to maim the ability for chinese middle class to buy local products? besides the big US exports are weapons, medical devices and big ticket items vs consumer items...

 

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