You don't have to be a doom-sayer to be respectful of probability

[Kurt_and_Hunter]

Well, what I think is...

The housing bubble and the internet bubble are the same thing. The internet bubble never burst. There was a blow-off of some clown companies with $0 earnings and $10 billion market caps but the "collapse" of stocks was a fairly orderly sell-off where a lot of stock bubble play-money was captured and diverted into other investment classes. (And 9/11 put in a false bottom, but that's a topic for another rant.)

No bubble is truly burst until it has eliminated all bubble gains and then some. Had the stock market been crushed in 2000 down to 1992 valuations Bush would have won for real and the US would have entered a very serious economic contraction but the stock bubble would not have metastasized into real estate.

It is distinctly possible that real-estate bubbles have unique (and malevolent) features. 1) Real estate is very non-liquid. Only a small percentage of homes change hands in any short time-frame. 2) Real estate appraisals are used to leverage a lot of money.

The marketplace is bad at valuing real-estate because the market is thin. (Thin markets are less efficient at finding value and tend to magnify speculative effects.)

And there is a case to be made that almost all above-trend real-estate valuation since 1996 is part of one very big stock/real-estate bubble.

So I think it is possible--since all bubble collapses well over-shoot the mark--that real-estate has to make it to 1980s-1990s valuations, not merely 2002 valuations.

The implication of that is that it is possible that even the direst projections with which our leaders are working are just the orchestra tuning up.

I am not predicting a total global collapse. I am, however, assigning a lively probability to an economic collapse that far exceeds anything our policy makers are preparing for. 5%? 10%? 20%? Nobody knows.

If, however, there is a 10% chance of a "thirty-percent unemployment, regional militias, global war for resources, rise of overt theocratic fascism" event then responsible policy makers have to address it as an eventuality. Any nation that glosses over 10% probability dooms will tend to be destroyed, on average, after five crises. (If ancient Egypt budgeted based on 10-year average flows of the Nile it would have been wiped out pretty fast. It created a society with a big labor surplus that could rebuild the irrigation system quickly after 50-year and 100-year and 500-year floods. During normal years that surplus labor dragged stones up pyramids.)

So here's the question. Set aside what economists think likeliest and ask, "How many economists are willing to set the odds of true Cecil B. DeMille style catastrophe at less than 5%?"

And that is why I am so appalled by our collective response to all of this. We are planning based on likeliest scenarios which is, in the context of our situation, like building levees for average rain-fall.

[natrat]

1. sadly people like pat robertson and the gop want that 10% event

so take their position and combine it with the "bipartisan" democratic morons' position and you are mostly there

[BlooInBloo]

2. Show me the probability calculation, else you're just making shit up.

[cliffordu]

4. Buh- Buh- Buh- But this is Democratic (fucking) Underground!!!!!!

We're SUPPOSED to make shit up.

It suppresses the need to DO something at bay.

[BlooInBloo]

5. Fuck people who claim to be "respectful" of math, while in the same fucking breath...

making a mockery of it.

It's one thing to be stupid - it's quite another to try to pass it off as intellect.

[Dreamer Tatum]

3. We have more resources to fight against collapse

We're fighting against a correction in asset values. The Egyptians were fighting against Nature.

We have the social contrivance of money and the actual phenomenon of real productivity on our side.
I think that at the very worst, governments will fall over this crisis, and some, perhaps many, banks
will be publicly owned. The upshot is that there will probably be a change in the way that financial
resources are allocated for quite some time.

It is not clear that an economic collapse will lead to war. An economic collapse lowers demand for resources,
not raises it. We saw prices for oil that were utterly unheard of, yet there is still an orderly market
for it.

I would argue that war is far more likely as countries begin to EMERGE from a Depression, but I don't think
we are headed for one, anyway. I think the economy will start to turn around in the late 2nd quarter, although
we will continue to see increases in unemployment until early 2010. I think Citi and B of A will not exist in their
current form. I think once GDP growth turns positive for one quarter, the credit markets will thaw, and I can
see the stock market at 8500 by end of year.

I also see large tax increases for all of us by 2011.

[Kurt_and_Hunter]

8. Most of the world relies on 1st world demand.

To say bad economies feature lower demand and extrapolate less contest for resources is ahistorical.

If all nations had the same resources it might be an interesting theory but they are not.

Low demand for oil pauperizes Russia. Is pauperizing Russia a calming effect or a destabilizing effect?

If the US had no demand for certain heavy metals the economies of some sub-saharan African states would collapse entirely. When people are starving that is destabilizing and often leads to violent outcomes.

The point being, a drop in global demand for chromium does not affect the daily caloric demands of Africans in an economy dependent on heavy-metal mining.

[billyoc]

6. Show your work.

:eyes:

[incapsulated]

7. There is a near 100 percent certainty of Environmental Suicide

In the next 100-200 years if we do not change RADICALLY.

Do you see radical change?

You can survive a Depression, hell you can survive the Dark Ages, you can't survive without a planet to live on.

Do you see the panic in the streets and in the halls of government?

No.

Denial.