Worthwhile albeit depressing article

[kevink]

I thought this was an interesting analysis of where the economy has been and where we're likely headed. I think his analysis is largely spot-on, and should appeal to realists across a pretty broad range of political backgrounds.

That said, he makes even folks like Roubini look like optimists and I don't go along with his 100% cash proposed short-term solution, which sounds all-too-close to 100% gold, guns, gold, and MRE's and other tin foil hat strategies we've all heard about.

Will be interested in other's take.

http://www.nytimes.com/2013/03/31/opinion/sunday/sundown-in-america.html?pagewanted=all&_r=3&

 

[REWahoo]

Isn't this already being discussed in another thread?

 

[cantlogin]

I'm not sophisticated or prescient enough to determine whether the predictions are valid or not but the history seems accurate enough.

I'd like to see the recommended solution implemented too.

Oh well, I guess it's different this time.

 

[Chuckanut]

Yes, it has been discussed.

IMHO, the real threats to capitalism are things like to-big-to-fail banks, and the ability of large institutions to buy/influence favorable treatment under our laws and regulations, - treatment than little guys and even medium sized businesses can't get.

 

[MichaelB]

Moved to the politics forum. Nonetheless, this really needs to tie into ER. Reminding folks of the forum sticky

Threads belong here if the focus is predominantly opinion based, concerning public policy, prominent political figures, or topics about governmental conduct. Posts must be related to the subject of early retirement in more than a tenuous fashion.

 

[M Paquette]

It's David Stockman.

“I invest in anything that Bernanke can’t destroy, including gold, canned beans, bottled water and flashlight batteries."

I'm not entirely sure this is the most prudent investing plan for a long retirement. It's far from certain that Certain Doom (TM) is coming.

I'll go with something that seems to have worked well over time. http://www.bogleheads.org/wiki/Asset_Allocation

 

[pb4uski]

.....Will be interested in other's take. ...

It seemed to me to just be a long, rambling rant about how everything that we have done since 1933 has been stoopid...... and don't forget to buy my new book. Reminds me of chicken little. Let's see how 100% cash works out for him.

 

[gardenfun]

Yep, he's got a huge new book out. I had totally forgotten about Stockman. Wonder why he's popping up again after 30 years...

oh yeah, his book!

 

[haha]

That's right, just go back to sleep. Like Michael says, this really has to be tied into ER, and no way any of this could affect ER.

I say ban it!

Ha

 

[REWahoo]

That's right, just go back to sleep. Like Michael says, this really has to be tied into ER, and no way any of this could affect ER.

I say ban it!

Nah. Just up your AA into companies making black paint and asteroid survival shelters - you can't lose...

 

[Chuckanut]

that's right, just go back to sleep. Like michael says, this really has to be tied into er, and no way any of this could affect er.

zzzzzzzzzzzzz............

 

[heeyy_joe]

I was trying to come up with something worthwhile to add but since Stockman's article didn't I shouldn't have too either.

 

[haha]

Nah. Just up your AA into companies making black paint and you can't lose...

I hope so. But looking at the mess in Europe, and realizing that every day we are more like them, I am not so sure.

Expressing concern about current events or conditions is usually a quick way to garner ridicule here, but I am not sure why that should be so.

I don't really get the point of obsessing over tiny differences in withdrawal rates, or extreme frugality, while ignoring very large possibly negative macro-trends. Surely 2000 and 2008 should have shown us that paying no attention does not make negative things go away.

David Stockman certainly has had a mixed record, and he is not an unbiased observer. Plus he has many ideas that I personally do not like. But few intelligent people fail to find ideas that they prefer over other ideas. I don't think I would buy his book, but I am on a fairly short list to get it from the library.

I lot of smart people are currently being very careful with their own money, though not necessarily with other people's money that they may manage or advise. And certainly not with their public pronouncements.

My philosophy is that if you get the big things more of less right, you can ignore most of the rest. Especially unpleasant things like extreme frugality. To me that is fine as a response to difficult events, but hardly an attractive lifestyle to plan on.


Ha

 

[Gatordoc50]

Dow down triple digits today and tonight a source states that the Fed will stop or slow treasury buys this summer. Looks like we are finally going to find out if this market has been falsely propped. Tomorrow will be a good indicator.

 

[kevink]

Moved to the politics forum. Nonetheless, this really needs to tie into ER. Reminding folks of the forum sticky
[/B][/COLOR]

I think Stockman's analysis of where we've been and his thoughts on where we're headed are very relevant to ER if you believe socioeconomic and global political realities ought to be factors in how you invest. It's the moderator's call to move this to the politics thread but I disagree with the decision.

I certainly wouldn't implement Stockton's investment advice, but I think his analysis of the bubble's we've seen since we went off the gold standard as well as the current gridlock are quite accurate.

 

[MichaelB]

That's right, just go back to sleep. Like Michael says, this really has to be tied into ER, and no way any of this could affect ER.

I say ban it!

Ha

I'm not suggesting the topic doesn't affect us. Just asking that the dialog here center around ER, not Mr. Stockman. After all, the OpEd he wrote is more about selling his book than helping us.

 

[MichaelB]

Expressing concern about current events or conditions is usually a quick way to garner ridicule here, but I am not sure why that should be so.

I don't really get the point of obsessing over tiny differences in withdrawal rates, or extreme frugality, while ignoring very large possibly negative macro-trends. Surely 2000 and 2008 should have shown us that paying no attention does not make negative things go away.

Just to add, we also focus more on annual return, when it might make sense to think about portfolio survival.

 

[haha]

I'm not suggesting the topic doesn't affect us. Just asking that the dialog here center around ER, not Mr. Stockman. After all, the OpEd he wrote is more about selling his book than helping us.

I imagine you have modest interest in discussing this, because these things can get out of hand. However, the reason the thread quickly went to dissing Stockman is because shooting the messenger is often the best way of dismissing a message, without really having to engage with its content. Remember back in 2008, when the favorite way of squelching anyone who saw the dark possibilities was starting to bleat about tinfoil hats?

His position, as detailed in the Op-Ed, will never lead to attempts to incorporating any of his ideas into government for the reasons that he mentions- it would cut off too many gravy trains.

We have tried the big government, big economic intrusion approach, and it has gunned the stock market and some commodity markets, but it has done very little to advance productive employment and it has perhaps made the economy less stable overall.

Stockman has a very spotty record as an investor, but to me at least an interesting government career.

Ha

 

[ERhoosier]

What's most surprising about this article is where it was published- the NYT!

IMHO- Articles such as this have much to do with ER. The biggest threat to most ER's is not the logical financial plan they (and their FA's) choose to follow but what happens in their nation/region. Look at all the present retirees in Greece (or certain other EU nations). Or think about what happened to those Japanese who ER'ed in 1989 when the Nikkei was 39+k, Japan was projected to become the world's largest equity market, & the yen was poised to become the world's new reserve currency. How'd that work out? Or even ER's in US who were heavily into tech back in Mar 2000 when Nasdaq peaked over 5k? Point is that ER's are potentially MORE affected by macro events if only because they have less life time left to recover.

In terms of investment advice, I find it fascinating that despite all the doom & gloom and advice to exit the markets, Mr. Stockman ultimately advises to hide out in "cash". Apparently he feels that in the sea of global financial turmoil he predicts, the US dollar will ultimately remain solid. Might have thought he would have favored gold. Most ER's won't survive long-term on cash alone- unless their pile is HUGE or the world sinks into sustained deflation.

 

[Powor]

I think most articles about our economy are going to be pretty depressing. This is largely because we are pretty much stuck in this rut and the people who have the power to do something about it are too busy giving themselves raises.

 

[48Fire]

Thanks for bumping this thread. I enjoyed the article, and just put my name on the hold list to get the book from the library. I believe it is important to prepare for mitigating disasters.

 

[ERhoosier]

No one can see into the future, but ironic that gold is down ~25% in qtr since this article was published.

 

[Brett_Cameron]

This article, like so many, is based on a basic lack of understanding of charltalism.
Chartalism - Wikipedia, the free encyclopedia

Chartalism is a descriptive economic theory that details the procedures and consequences of using government-issued tokens as the unit of money, i.e., fiat money. The name derives from the Latin charta, in the sense of a token or ticket.[1] The modern theoretical body of work on chartalism is known as Modern Monetary Theory (MMT).
MMT aims to describe and analyze modern economies in which the national currency is fiat money, established and created exclusively by the government. In MMT, money enters circulation through government spending. Taxation establishes the fiat money as currency, giving it value by creating demand for it in the form of a private tax obligation that must be met using the government's currency.[2][3] An ongoing tax obligation, in concert with private confidence and acceptance of the currency, maintains its value. Because the government can issue its own currency at will, MMT maintains that the level of taxation relative to government spending (the government's deficit spending or budget surplus) is in reality a policy tool that regulates inflation and unemployment, and not a means of funding the government's activities per se.