OECD World Outlook

  By Mystic | September 7, 2012 - 12:13 |

Not so good.
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Written by: Mystic on September 7, 2012.
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  • CSArichardo

    So maybe we have the perfect feedback loop for the next few years  …..  economy moves along at 1 – 2% growth and when it wants to go to 4% growth the oil price rising becomes an automatic stabilizer to pull it back to 2% growth.

    Of course governments will throw money at the economy to try and get it to 4% growth (in the UD down to 7% unemployment as per Evans rule) but all they do is provide money to pay higher prices for oil ?!

    • http://overthepeak.com/wordpress/ Mystic

       The price of oil has been termed `the new fed funds rate` ………. and with good reason.
      Growth will bump into high energy prices for sure.

      • CSArichardo

        Well if the Fed is in charge (of trying to keep oil prices down) they do not want a war in Iran !!

        • http://overthepeak.com/wordpress/ Mystic

           No.  The Fed is not in charge of the oil price (but the oil price works like the FFR used to do).

          No one wants a war in Iran.

  • John_by_the_creek

    Dear Mr. Mystic:
     
    A very informative presentation, and it raises a lot of thoughts and questions:
     
    1.  I’m guessing the US GDP growth has more to do with our reserve currency advantage than anything else.  We can “print” and the world takes it up the keester;
     
    2.  Mario can say what he likes, but in a few days, the German high court will determine if Mario is “blowing spaghetti”;
     
    3.  What Congress does about the “can” will be determined along party lines.  It will get nasty if the elections yield the wrong mix of “Ds” and “Rs”;
     
    4.  A closer look at the employment numbers tell a different story than the “O” administration is painting.  Take a peek at the labor participation rates to get a more realistic picture;
     
    5.  The oil issue is tricky.  This video offers some interesting insights: http://www.youtube.com/watch?v=Z4lxpZUw3bw and;
     
    6.  If our hair is thinning, China looks like it is about to get scalped.
     
    Discussion about the ”New System” will only commence in earnest AFTER the old system has crashed and burned.  A sub-optimum methodology, but we seem to be on that path.

    • http://overthepeak.com/wordpress/ Mystic

       I think US GDP is indirectly linked to reserve currency status ……….. as in, trillion dollar deficits must be helping out the economy.
      (trade deficits are tricky ……..would you like to talk of them~?)

      German High Court has been side-stepped by this Mario move.  They are discussing the ESM and Mario isn’t.
      The debtors have taken control.  All very democratic~!

      Your lot are in permanent electioneering mode.  They will do nothing.

      I watched the start of the video.  It looks good.  It shouts `has it come to this~!`.

      • John_by_the_creek

        Regarding:
         
        1. Trade deficits – We can discuss them if you like.  Unlimited fiat money makes it all very difficult for me to think about.  But my problem is I default to a ”rational/ logical” model.  And that is clearly not the model we are currently operating with.
         
        2. The Germans - I missed something with the “Mario thing”.  If he’s not talking about the ESM, where is he going to get the money from?

        • http://overthepeak.com/wordpress/ Mystic

          Mario is going to fire up the ECB printing presses~! 

          • John_by_the_creek

            Well, I learned something new.  I didn’t think he could do that.

            • amishlandTodd

              I found it interesting that after Mario made his QE announcement, and Ben made his, Gold jumped $34.00 per ounce.  My impression is that Mario is going to try to ease the burdens on Spain and Italy(Greece is a goner), at the cost of deflating the Euro.  I would bet that Ben is not too far behind with a QE3 of the same sort.

              It will be interesting to see what happens to the Chinese imports in Europe with the deflation of the Euro. 

              Just a rambling thought or two..

            • http://overthepeak.com/wordpress/ Mystic

               He says that it is to maintain `stable market function`.  Germany said `bollocks`, but the rest of the `committee said `yeah, go for it`.
              Germany said it was bailing out individual countries, therefore against their mandate …… and the committee said `bollocks, go for it`.
              Democracy in action~!
              (the `have-nots` are in the majority) …….. (and will take over the `austerity committee` next~!).
              Free money all round.

  • amishlandTodd

    Wouldn’t the unemployment chart look interesting if the US included all the folks that have fallen off the rolls???

    • http://overthepeak.com/wordpress/ Mystic

       I normally follow up with employment to population ratio charts.

      (long time no comment ToddMan ….. been somewhere nice~!?)

      • amishlandTodd

        Been dealing with Mom’s house, packing, storing, selling, etc.  Spent most of the summer on it.  I’ve popped in a few times to watch a video here or there.  Getting back into it now.   

        • http://overthepeak.com/wordpress/ Mystic

           A man has got to do …………….

          (good to have ye back~!)

  • windslice

    Is this significant?

    http://www.businessinsider.com/michael-woodford-endorses-ngdp-targeting-2012-9
    “If you just knew two things about the current state of the US economy — that unemployment was unacceptably high and that inflation was subdued — you’d suggest that the proper course for the Federal Reserve would be to lower interest rates, and make money cheaper.
    The problem is: interest rates are at ~0%.
    This is the defining monetary puzzle of our time.”

    Well, I dunno.

    All the experts and TPTB seem to be trying to convince us that things will get “back on track”. Growth will arrive on your doorstep. And we are all going to be back on the train to paradise, a chug-chug-chuggin along. Doubtless the promised land of early retirement, jobs for all, free medical care and free schooling will be getting aboard at the next stop. Even though they left some decade ago.

    I am a disbeliever, a non-believer; the 90′s and early 2000′s were as good as it is gonna get. 

    Unless you include telephones, cameras,TV’s and cyber-reality as a measure of your lifestyle.

    Food ain’t gonna get better.

    Clothes ain’t gonna get better.

    Housing ain’t gonna get better.

    Travel ain’t gonna get better.

    Or cheaper.

    But doubtless in a year or two I can have a 3d Mystic projected in front of me. Great. That’s going to improve my life immensely. But in fact, I’m quite happy with the 2d projection. I’m not terribly curious about the back of Mystic’s head.

    But back to the article.

    “Instead, what really works, are verbal commitments by central banks to target a certain economic or financial outcome”

    And this is something I’ve claimed for a long time.

    Although I very much doubt that I am the originator.

    • http://overthepeak.com/wordpress/ Mystic

       `Fed Watchers` were clear that Ben was clear that there clearly will be QE3 (probably after the election).

      The FOMC before the election may lay out what the thinking is.
      (hint* – It won’t be that they are powerless~!)
      This may include some sort of `target`…..Whereby they say that they will QEase `until such times as …………`.
      The question is, what will that be.

      They now know that QE as a grenade chuck, is estimated by Mrs. Market to do so much and to stop doing stuff at a certain time (and they pull out before that time).
      Ben has to put out a `long burner` that will diffuse into the economy over an extended period (maybe effectively indefinitely).

      Setting a target is cover for that sort of action (unemployment rate could be it).