Ron Paul on the Lack of a Difference Between Obama And Romney

http://www.youtube.com/watch?feature=player_embedded&v=Z45_lpZmYps

Ron Paul is one of a very small band of Politicians, I would have much time for!

DOW down 313, to 12,932.

http://au.finance.yahoo.com/q?s=^DJI


So, it would seem there may be others who agree with my following comment?
perceptions_now wrote on Nov 7^th, 2012 at 4:43pm:

As for New Technologies, they have been one of the mainstays of the Global Economy

On 30 October 2012, a recession forecasting model developed by Marcelle Chauvet and Jeremy Piger reached what appears to be a critical threshold for anticipating a recession in the U.S. in the very near future:


The Reformed Broker's Joshua Brown comments (HT: Abnormal Returns):

        Do you see the percentages on the left side of the chart? 20% is the line in the sand. We've never hit that level and NOT had a recession. In 2006 we got close (18%?) but that particular Great Recession would be a year and half in the making. Note that we're back at that 20% line again. And I can't think of anything that keeps the leading indicators from going through it to the upside - the Fiscal Cliff stuff could only speed its ascent.

One thing we should note is that the data in the chart only covers the period through August 2012 - this is a delayed reaction to a developing situation. The probability of recession in the U.S. suddenly surged to the 20% level from the 2% level recorded a month earlier.

As it happens, we have another indicator which gave a slightly earlier signal that the U.S. economy is trending toward recession: the number of publicly-traded companies that have acted to cut their dividends. Here is what that data showed through the end of September:


We'd like to be able to update the chart through October 2012, however the aftermath of Hurricane Sandy has impacted Standard and Poor's operations, which has delayed the update of S&P's dividend action report.

As soon as that report has been updated, we'll post an updated version of our chart. In the meantime, we should note that this trend toward recession would seem to be occurring independently of whatever noise is going on in Washington D.C. with respect to the so-called fiscal cliff, which is confirmed by the Chauvet-Piger recession forecasting model, which does not consider that scenario.

We'll close by noting that what we're seeing in dividends now is not a result of the reactions to what we've described as the "dividend cliff". Here, there's really no hurry for companies to announce dividend cuts this year. Instead, the incentives are such that companies would more likely be announcing special dividend payments to beat the clock on the higher taxes for dividend income scheduled to begin in 2013, delaying the announcement of any plans they might be developing to cut dividends until the new year.

Link -
http://seekingalpha.com/article/989791-a-rising-probability-of-recession-in-the-...
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Welcome to 2013?

Reserve downgrades prospects

AUSTRALIA'S economic prospects have been downgraded by the Reserve Bank for the third time this year as weak export prices, a stubbornly high dollar and budget cuts take a hefty toll on growth.

The cut to forecasts came as global markets were rocked by fears of the looming ''fiscal cliff'' in the United States, which has the potential to drag the world's biggest economy into deep recession.

The Reserve also identified the so-called fiscal cliff as a key risk to its forecast, but assumed the US would avoid this disaster outcome by reaching a political resolution.

Amid weaker Chinese demand for iron ore and coal, the central bank said the peak in mining investment would be smaller and earlier than expected, which would cause the economy to slow. Over the 2013 calendar year it said the economy would grow between 2.25 and 3.25 per cent, down slightly from its previous forecast of 2.5 to 3.5 per cent. In February its top range for growth in 2013 was 4 per cent.

The trim to the Reserve's forecasts confirmed it was likely to cut official interest rates again later this year or early in 2013, economists said.

Interest rates have been cut by 1 percentage point this year, and the Reserve said this was starting to revive some parts of the economy, such as housing construction. But with jobs growth sluggish and unemployment on the rise, the board would be eyeing non-mining activity as the peak in resources investment neared.

The cut to its outlook was mainly driven by the plunge in commodity prices since its last statement in August. This has forced miners to put multibillion-dollar projects on ice.

The Australian dollar has also failed to fall in line with commodities, hurting miners that import capital equipment and export industries such as manufacturing, tourism and education.

Link -
http://www.smh.com.au/business/reserve-downgrades-prospects-20121109-293hs.html
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It has been apparent, for some time, that the OZ Economy would start to slow, due mainly the overseas factors, including the Declining demand for many Products, emanating out of the slowing European & US Economies.

This slowing Demand is driven by many factors, some short term, but some such as Demographic & Energy related issues are set to create very long term Demand Declines!

Going down the line (the Production lines), this Demand Decline, whether short or long term driven, is ensuring that Production in China & elsewhere is also slowing and that is where it hits Australia, as Demand for our Mining sector also & finally, takes a substantial hit.

So, whatever happens with the US Fiscal cliff,Demand will still Decline long term and whatever "solutions" are negotiated in regards the Fiscal cliff, the outcomes from that will still lower Economic activity in the US in the short term, which will then flow on, Globally!

Therefore, it is apparent that the period between now & the end of 2014, will be particularly difficult, with interest rates likely to fall further in OZ, but credit also likely to tighten considerably, as even the "big banks" come under a great deal of stress.

So, Good Luck & watch the Debt!    

QBE belted by Sandy storm claims

QBE Insurance Group has cut its full-year insurance profit margin forecast well below an earlier estimate and analysts' expectations, hurt by superstorm Sandy, and announced a $500 million capital raising.

Australia's top insurer by premium income, QBE said it expected its 2012 insurance profit margin would now come in at about 8 per cent. That compares with 12 per cent a year earlier and the 10-11 per cent projected by analysts after Sandy battered the United States.

Disaster modelling companies expect Sandy caused as much as $US20 billion in insured losses, not counting flood damage that could add billions more to the total, hurting insurers just coming off a disastrous 2011 that saw claims from earthquakes, to floods to tsunami.

Link -
http://www.smh.com.au/business/banking-and-finance/qbe-belted-by-sandy-storm-cla...
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Insurance companies generate their profits, from 2 major sources -
1) An underwriting Profit, which is basically Premiums written, less claims paid out.
2) Investing the Premiums they write, in various Financial formats, including Local & Global Share Markets.

Given the above and that we have now entered a lengthy period of likely larger "Natural Disasters", such as Hurricanes, Floods etc, PLUS we have entered an extended period of likely lower investment returns, particularly on Share Markets, IT IS LIKELY THAT INSURERS PROFITS WILL COME UNDER INCREASING STRESS, OVER THE YEARS AHEAD.

In order to offset likely problems, we MAY find that some insurers will try to reduce their exposure to problem areas, such as not writing any or at least significantly reducing the volume of business try write in some areas that are now likely to be MORE PRONE TO NATURAL DISASTERS.

This may expose some insurers to a higher % of Claim prone areas & they will seek to pass on their likely higher claims, via significantly higher PREMIUM INCREASES.

Therefore, some People, Farms &/or Businesses, are going to find themselves with some very "undesirable choices -
Pay much higher Premiums, such as 25%, each year,
OR Go "Uninsured or Under insured" & take some or all of the increased Risks themselves
AND some of those choices are going to become ABSOLUTER DISASTERS!

Big-Picture Forecasts Are Usually Nonsense

Big picture analysis, and the predictions of calamities that are sure to hit down the road, are fun to read. But such long-term forecasting is almost always based on the favorite forecasting tool of scientists and economists -- extending current trends in a straight line into the future, without considering that trends only continue until conditions change. So, as convincing as they seem at the time, big-picture predictions rarely work out as expected.

That is illustrated by the fact that the world hardly ever comes to an end. Yet for centuries "trend-extending" has regularly predicted just such a result -- based on everything from holy wars, black plague, and rising ocean levels in previous eras, to nuclear weapons proliferation, depletion of the ozone layer, and the AIDS epidemic, of more recent times.

The fault in such thinking is not only that trends continue only until conditions change, but that when trends are troubling, people and forces respond to bring about those changes.

In the 1940s and 1950s, by extending the trends of population growth and food production, it was scientific fact that the world was on a collision course with massive starvation.

And rather than the "big picture" prediction of a worldwide starvation catastrophe and substantial increase in the world death rate, in reality, the global death rate declined substantially, and average calories consumed per person increased by 24%, even though the population of the world doubled.

And so it goes, cycle after cycle, as conditions swing back and forth from one extreme to the other. Sometimes the pendulum catches a tailwind, and a trend lasts longer than usual. But at some point, the pendulum reaches an extreme and begins to swing in the opposite direction.

I was reminded of that in recent days, on reading of yet another dire big-picture prediction that has taken an unexpected turn.

It was not many years ago that it was predicted that at the rate the U.S. was consuming oil, its domestic sources of oil were being depleted, and its imports of foreign oil were soaring, the U.S. economy would soon be at the mercy of OPEC and foreign oil producers.

But trends only continue until conditions change.

Now, it's being projected that the U.S. will surpass Saudi Arabia as the world's biggest oil producer by the year 2017, and will eventually become totally energy independent.

endless trends; to downplay, if not totally ignore, the predictions from big-picture analysis that are based on extending whatever are the current conditions, and whatever is the current trend, in a straight line into the future; to keep in mind that there are always forces coming into the picture, not always discernible at the time, that are intent on changing the conditions and therefore, the trend.

Just a few thoughts to ponder as the stock market tumbles, and big-picture analysis extends the trend of the last couple of years of dysfunctional politics in Washington, predicting dire long-term consequences, even as there is increasing evidence of work being done to reach a compromise and end the dysfunction.

Link -
http://seekingalpha.com/article/1008981-big-picture-forecasts-are-usually-nonsen...
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A few observations -
1) What sort of “Oil” will deliver the increased Production, Conventional or Unconventional?
2) Assuming it will be Unconventional Oil, then what will be the Net increase in available Energy, if any?
3) If it takes nearly as much Energy or more, to make the increased Oil Supply, as can then be generated by the new Oil Product, then what is the point?
4) In Producing these new supplies of Unconventional Oil, if the Price of Production becomes more than the Economy is willing or able to pay, due to Declining Energy Prices, arising from Declining Demand, due to Declining Economic Activity, then why would business ramp up Production of the new “Oil” Products?
5) If Demand, for the entire range of "Goods & Services" is set into a long term Decline, because of Demographics realities set in concrete for over 40 years, first due to Baby Boomer Retirements & then their death, then how is Demand going to go back to "normal" and thus generate the Demand for the new “oil” Products, at the higher Prices?

That said, I agree nothing lasts forever, including the "status quo"!

Fiscal Abyss And Keynes: The Other Story

Fiscal cliff this, fiscal cliff that, and so goes the song, although the refrain is anything but appealing: Higher taxes across the board regardless of how you look at it. And that's the fiscal abyss. Yes, we're looking at higher government "revenue" and spending cuts, only because that is the only mathematically possible avenue to resolve the situation. Certainly everyone has heard how Greece keeps receiving bailout money while implementing austerity and enduring higher unemployment and lower GDP, while with every passing day the forecasts are adjusted to reflect the failure of European monetary and fiscal policies.



Politics aside, government deficits have been the thorn on the economic side for quite a while now, and although the housing crisis delivered a profound disruption to our economy, the current deficits and ballooning debt also state that the "recovery" will continue to be elusive. As we embark on yet another $1 trillion deficit for 2013, we must point out that over the last five years, government debt grew by about $7 trillion, and that is where the Keynesian stimulus received its test. In addition, the problem here is that the $7 trillion was added to $9 trillion and the existence of the previous debt was hardly justifiable.

President Obama is now seeking $1.6 trillion in new taxes over 10 years for those earning $250,000 or more, and when the meager $160 billion per year is superimposed on the chart above, we can quickly see how the problem is far from being solved. We may as well seek double or triple the taxes the president wants, and still fall short. In essence, we've been in a permanent state of Keynesian stimulus because government has virtually pumped money into the economy that it didn't have.

Certainly not all of the debt was caused by a direct stimulus, but the fact that government spending hasn't abated to match revenue is a Keynesian workout in itself. For example, the extension of jobless benefits, although a necessity, is an indirect economic stimulus that is far more powerful than any bridge or road that could be built. And while we're on the infrastructure topic, let's bring up Roosevelt's "New Deal" and how its effectiveness is still questioned almost 80 years later, while my belief is that World War II was the true economic remedy. Unlike Europe and Japan, the U.S. didn't have to rebuild damaged infrastructure at home.

    Except for a downturn in 1938 (historians still debate its origin), the economy and unemployment did improve after the onset of the New Deal. The country's real gross domestic product fell from $865 billion in 1929 to $635 billion in 1933 but rebounded to $1 trillion by 1940. The only hiccup was a decline from $911 billion in 1937 to $879 billion in 1938. But the percentage of jobless Americans remained in the double digits until the onset of World War II.

By the end of the war, the U.S. debt to GDP ratio was over 100%, and one can point to that fact as proof that it's not the end of the world. But consumer debt was nowhere to be found, and it only started to come into play after the credit card became mainstream in the late 1950s, adding another layer of borrowing demand -- and that's the missing economic link and its impact over the last 50 years is still misunderstood, yet predictable.

But contrasting a Keynesian type stimulus with private investment further highlights the deficiency of the former. Let's assume that John Doe decides to invest $1 million and he uses his savings and/or bank loans. If the investment fails, his savings are lost and the loans are either paid with collateral or become a loss for the bank. John Doe is bankrupt and it's the end of the story. Under Keynesian theory, the government borrows $1 million from John Doe and then proceeds with the investment. If the project fails, the government will tax John Doe and his friends to pay John Doe, and the government never has any skin in the game, allowing the process to repeat itself. Furthermore, private investment's driving force is profit, and jobs are always secondary and only a side effect of success. One does not open a business and hire people today for what one thinks revenue will be in three years. But isn't government building infrastructure? Probably, but there's yet another side to the story.

A Keynesian stimulus is best viewed as a non-organic economic growth model, because there's a difference between building a road to serve commerce and eventually paying for it through taxes generated from economic activity, and building a road just for the sake of building it. Just ask the Chinese how their empty roads and buildings are working out. I can comprehend the underlying logic, and it does make sense on the surface how the jobs created will feed into the economy, but even those building the road know that the future doesn't look bright and take the opportunity of earning a salary to save, not spend, and we're back to the widely misunderstood consumer behavior that flies in the face of mechanically driven economic theory that hinges on pulling a lever and getting everything fixed. Thus we get these jolts of economic expansion that never hold up.

Keynesian theory would probably work -- and "probably" is a big word here -- if government had a rainy-day fund stashed away, and then used the money to stimulate the economy during hard times. And when economic growth returned, the rainy-day fund would be replenished. But we'll never know, will we?

Considering that the U.S. and Europe are the consumer markets that matter, as illustrated in "The New World Order That Never Was," what exactly are we left with as far as global economic growth is concerned? Not much, if anything, and growth is the only other solution besides taxes and austerity. In addition, the usual buyers of U.S. government debt -- China, Japan, Europe -- are facing economic issues of their own, and even if they choose to hold their current portfolio of U.S. Treasuries, they're not in a position to keep feeding the beast in a meaningful manner. Certainly the current fiscal situation is solvable, but not without sacrifice across the social spectrum to take place over several years, and anyone that thinks otherwise must believe that the Earth is flat.

From an investment perspective, that's the background that we must understand, and while markets will always fluctuate between euphoria and despair as they are driven by snippets of daily and monthly economic data, as well as official sound bytes to mask the symptoms and dispel the disease, the key is finding the moments that are profitable -- and using Apple (AAPL) as an example, all logic will be defied along the way.

Link -
http://seekingalpha.com/article/1013231-fiscal-abyss-and-keynes-the-other-story?...
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At most other times during the modern Economic era, both the Keynesian & Austrian approaches, would have been appropriate& moreto the point, those approaches would have been the correct solution for certain periods, during the Economic cycle.

That said, this time really is different and NOW, NEITHERAPPROACH IS CAPABLEOF "FIXING" THEECONOMY!

For the why, you need to delve into the major Global Economic drivers, which are -
1) Demographics
2) Energy
3) Technology
4) Climate

For those who say, WHERE IS THE DEBT?

I simply say, Debt is largely an effect, not a basic Economic Driver. Although, when it gets to its current levels, it can nearly take on a life all of its own & nearly become both Driver & Effect!