Funny thing is that the latest forecasts in
The Economist have positive growth rates for
the next year for all the leading economies.
But, it does seem that things are slowing down.
And, historically, downturns have always been
badly forecast, and even the short ones tend
to go down sharply.
Barkley Rosser
-----Original Message-----
From: Rob Schaap <[EMAIL PROTECTED]>
To: [EMAIL PROTECTED] <[EMAIL PROTECTED]>
Cc: [EMAIL PROTECTED] <[EMAIL PROTECTED]>
Date: Sunday, December 03, 2000 7:39 AM
Subject: [PEN-L:5407] Re: the downturn
>Quoth Michael P.:
>
>>Each day, I am seeing more signs of a downturn. I am fairly convinced
>>that it is real. Jim D. keeps referring to a Godley-like scenario, which
>>seems to make sense. My question is whether it can unravel into a
>>full-blown disaster. I am not confident one way or another. I would
>>appreciate any feedback that you might have.
>
>Well, even at its healthiest, capitalism has its casualties and growing
>pains, but then, there are a lot of those around just at present. The
>bulls would have their work cut out arguing the insignificance of the stuff
>Pen-L, Crash-L and the finance press have been telling me of late. To wit
>(and these are but a sample):
>
>- investment banks exposed to seriously rotten junk bonds;
>
>- record defaults in the US, and tighter lending policy ensuing;
>
>- US spending outpacing US personal income (prior to the latest crop of
>margin calls,. at least);
>
>- a plethora of wireless internet applications lying fallow for want of
>venture capital;
>
>- capital goods manufacturers, caught with whopping inventories, are
winding
>down production (a bit of a problem, that; if Joel Popkin Co.'s latest
>report is right, and machine tools have been responsible for the apparent
>productivity improvements over the least few years);
>
>- car manufacturers caught with whopping inventories (GM & Forf for two);
>
>- a trade war between the US and Europe;
>
>- a quarter of US households having their savings on Wall St (quoth Wall St
>pundit Henry Kaufman: "At no time in the post-World War II period has the
>economic wellbeing of the US and the rest of the world hinged so
importantly
>on the performance of the American stockmarket");
>
>- a US Producer Price Index showing inflation *after you take out the
>soaring energy and volatile food sectors*;
>
>- a serious slump in consumer sentiment in Europe;
>
>- a serious slump in corporate pricing power in Europe;
>
>- the US treasury using T-bills to stem the NASDAQ bleed and the
Euro-slide;
>
>- a serious slump in world-wide telecommunications projections (and share
>prices);
>
>- the Asian Tiger economy recovery is stalling;
>
>Oh, and Ed Shann of Oz pundit-gurus Access Economics is sounding very Mark
>Jones all of a sudden: "Annual demand is growing at a rate of 1.5mbd, and
>lack of investment because of recent low oil prices means that spare
>capacity is limited. There is probably less than 3mbd of capacity available
>immediately ... Every $US5 on the price of a barrel of oil reduces the
>output of industrial nations by about 0.2% and boosts inflation by up to
0.4
>percentage points ... The bad news is that demand for oil is much less
>responsive to price than two decades ago. Most oil is now used for
>transport, rather than industry and power ... If demand surges due to a
>cold Northern Hemisphere winter by more than the usual 3mbd, prices could
>easily spike over $US40 a barrel, because stocks are at historic lows.
Worse
>is possible if supply is disrupted, given the limited spare capacity."
>
>Bit of a diaper-filler, eh?
>
>Looks like Goldman Sachs' prediction that "the Nasdaq composite index will
>rise to between 4800 and 5000 by the end of next year (ie 2000)" might be
>just a coupla points optimistic ...
>
>>Too bad Alan Greenspan did not get out a bit sooner without tarnishing his
>reputation as a genius.
>
>But mebbe no bad thing that Jowj Dubya Shrub might yet find himself sat
atop
>this crumbling edifice ...
>
>We're all of us in the gutter, but some us are looking down the drain, eh?
>
>Bearish grunts to all,
>Rob.
>
>
