John Mauldin's Outside the Box - All Comments

re: Out On A Limb: An Investor’s Guide to X-treme Monetary and Fiscal Conditions

JCHarper — Sat, 09 Mar 2013 02:45:23 GMT

Finally somebody noticed that to consume more, we must produce more.

If Dr. Hussman can climb out of the rabbit hole and get back to the sane side of the looking glass, maybe others will too.

re: What Will Germany Do?

Paul Brown — Wed, 27 Jun 2012 03:52:11 GMT

Does anyone believe that the chess game of the ascent of Germany here is an accident? As has been the objective for centuries, Germany aspires to control all of Europe. I predict that this time it will. But not as peacefully as we might hope.

re: What Will Germany Do?

JCHarper — Wed, 27 Jun 2012 02:11:35 GMT

To read the news and analysis, one would get the idea that the EU exists in splendid isolation at the center of the universe without any external worries. The EU is bankrupt, militarily powerless and completely leaderless.

The financial analysts may overlook this vacuum, but I doubt the Russians have.

re: Greatest Moral Hazard, Says Paul McCulley, Is Austerity Here And Now

bill_ — Wed, 05 Oct 2011 20:36:08 GMT

I couldn’t finish this “ode to liberalism and Paul Krugman”. It strikes me of a man who can’t see the forest for his frozen in concrete ideology. Thank goodness-in my opinion- he wasn’t appointed a Federal Reserve Member.

McCulley: "Gosh, we're talking about someone who is underweight here! Why do we need to be on a diet?”

My response: Aren’t we overweight in debt? Maybe we shouldn’t have more food; we should have less throwing up. Get to the causes; not the symptoms.

McCulley: “I mean, the historical parallel that a lot of us point to would be 1931, when Andrew Mellon said, essentially, liquidate, liquidate, liquidate and assets will be transferred to moral hands, and we'll live a more moral life.

Me: What you seem to be missing here is that we didn’t liquidate in 1931 as Mellon suggested; instead we spent 10 years in that depression. Do you think liquidating would have made it worse? Bernanke once said he would drop money from helicopters if we were ever in such a situation again. Well, he did with QE1 and QE2 without any success.

McCulley: “Mellon was quite the Austrian—Absolutely, that was in 1931. Then in 1937, when it looked like the economy might have been having "a decent" economic recovery, we decided to slap it in the face with monetary and fiscal policy tightening.”

Me: Listen to what you’re saying; it took 7 years between 1929 and 1937 for to have “a decent economic recovery” as you say. Yet, with monetary and fiscal tightening we were out of the 1937-39 recession quickly. That says to me that the tightening had nothing to do with recession or at least a lengthening of one.

McCulley: And it only took World War II to lift us out of that extension of the Depression. “Yes. What I mean is that the war in effect forced the application of the government's balance sheet to a deficiency of aggregate demand — and it worked”.

Me: Then why hasn’t the Iraq and Afghan wars and TARP and QE1 and Qe2 kept us from or out of recession?

McCulley: “…it is interesting that after World War II the biggest concern in economic policy circles was that we would fall back into a depression because we were taking away all of the government demand, for the war machine”.

Me: Nope! I believe austerity, in the form of “tightening” and war had led to unfulfilled demand for the new and improved products. This pentup demand led us out of the depression; not Keynesian methods; and that is what will ultimately lead us out of the current crisis.

McCulley: “But another important ingredient after the war was the GI Bill.

Me: The GI Bill fit the time and certainly helped. You now want to convert it into a sop for not those who fight wars but for those who thrive on entitlements like Cash4Clunkers and Affordable Housing Programs for those who can’t make down payments and can’t or won’t pay their heavily subsidized mortgage premiums-- the latter of which was the real cause of the housing crisis—the housing industry was just the group enabled by government affordable housing programs. The most egregious aspect of this so-called GI Bill for entitlement life-stylers and opportunists who have no ethical or moral commitment to America is that it would make GIs who actually earned a GI Bill appear as fools for risking their lives for such benefits.

McCulley: The GI Bill and the Marshall Plan basically saved the West. And they both used the government's balance sheet, I'll point out.

Me: That was a time when there were few competitors of the USA and when Germany, Japan, Britain, and France were either bankrupt or destroyed unlike American which was far from the destruction and in late on the action. We’re in a lot more competitive situation now and it’s going to take a lot more than a few million communication, fashionista, and liberal arts majors to compete with emerging economies who have a lot more motivation to succeed than our entitlement nation mentality. You can’t necessarily fight WWII and the Great Depression again with WWII and Great Depression methods.

McCulley: “But there are just no jobs out there. There aren't jobs because we had a bubble in housing.

Me: The government created a bubble in housing just as governments helped create the housing and runaway housing and commercial construction bubble during the so-called Asian-Contagion in the late 1990s in places like Thailand and Malaysia. Just as the government (viz a viz Clinton and Gore) did in fanning the fires of the Internet and Tech boom of the late 1990s. The Clinton Administration enabled the housing boom as it passed the bill that eliminated capital gains on home sales and continued tax deductions for mortgage loans and property taxes.

McCulley: “Actually, if housing starts were our only problem, that wouldn't be a big deal. But the house became the magic genie that made up for the fact that we've had stagnant real wages in our country for a long time — and then the genie died.”

Me: Are you saying that because of stagnant wages people were putting no money down and buying houses they couldn’t afford and getting home equity loans? What happened to buying what you can afford. Does the welfare society require such a concept to be outlawed?

Seems ashamed that people can’t see the forest for their ideological trees.

I could go on but it’s tiring.

re: Greatest Moral Hazard, Says Paul McCulley, Is Austerity Here And Now

ctiboy — Tue, 04 Oct 2011 17:06:15 GMT

I could hardly wait to get the end of the Paul McCulley interview so I can make a few remarks. First, let’s turn his “putting an anorexic on a diet” analogy around. I would be more inclined to say that to keep shoveling food down an extremely overweight patience’s mouth as the fire department is cutting out the wall of the building and mobilizing the crane to lift them onto a flat bed truck to transport them to a hospital while the paramedics are trying to figure out how to move him/her and not kill him from over stressing his already obese body is more like what we are seeing than putting an anorexic on a diet. Second, maybe all his ideas work in theory but what we are seeing from this administration is not a straight forward application of his ideas. We have doled out untold billions, or is that now trillions, of dollars and for what? Much of the funds have gone to pay off unions and line the pockets of Obama’s supporters, insert Solyndra here. McCulley says the banks and Wall Street were the recipients of all the bail out. What do you call putting the unions in the driver’s seat at GM? Who benefits other than the President Obama lining up future voters. What McCulley fails to mention or to recognize in his analysis is how big government is corrupting the process he is proposing. Sure if it were only an exercise in economics he might be spot on. This administration has one goal and one goal only and that is to bring down the US and destroy capitalism and in order to do that he needs another term. To assure himself of enough votes he needs as many people feeding at the government trough as possible.

re: Macro E.U. — D.O.A.

jidge — Fri, 27 May 2011 20:21:11 GMT

This was great. There is an expression in my twelve step work which applies to what is happening. No doubt this author is aware of it. "Pain is inevitable. We choose whether or not we will suffer." We have chosen to suffer because we are running from pain.

re: Does Unreal GDP Drive Our Policy Choices?

Tjemme — Sat, 14 May 2011 16:13:28 GMT

"If they borrow an additional 5% of GDP in new additional debt and spend it immediately, this magnificent GDP growth is achieved!" Not necessarily:

- Suppose that the economy is operating at full capacity. The only way in which the government can spend the money is if others no longer spend the money.

- More specifically, when the government uses any resources that were already employed, it has to outbid others for the resources (and inflationary pressures result).

I suggest that there is more. The moment that the government spends money it has borrowed, someone's saving rises correspondingly (income is generated, not yet spent).

re: Does Unreal GDP Drive Our Policy Choices?

Panskeptic — Tue, 10 May 2011 13:31:36 GMT

No, actually the oil industry drives our policy choices, and that's much more toxic to our future than bad GDP numbers.

Say, where were all these deficit hawks when Bush was floating one budget-busting plan after another?

re: The End of QE2: Major Policy Shift Ahead

Panskeptic — Tue, 12 Apr 2011 03:46:24 GMT

P.S. Can we go REALLY Outside The Box next time? Over at Marketwatch,

hardly a left-wing site, Paul Farrell has been doing some interesting work. www.marketwatch.com/.../super-rich-ceos-are-killing-your-retirement-2011-04-05

re: The End of QE2: Major Policy Shift Ahead

Panskeptic — Tue, 12 Apr 2011 02:12:40 GMT

Bullhorns for Austrian Economics always speak with great certainty, which comes from the fact that it's only a theory, and has never been tested in any country, least of all Austria. This makes it more theology than economics.

Libertarianism is intellectually sterile, since the answer to all questions is "the market." The

"Blame Government First" trope ignores the inescapable fact that today Business dictates to Government, not the other way around. As soon as Washington tries anything except stenography, the Koch Brothers open up their wallets and the Flat Earth Caucus rages. The Government didn't give to Wall St., Wall St. extorted from the Government.

However the problem of government deficits and debt are easily managed. All we have to do is get the top brackets to pay their taxes at a just and appropriate level, and our fiscal problems disappear. But as long as the super-rich are in revolt, nothing will be done.

re: The Confidence Game

Panskeptic — Tue, 29 Mar 2011 02:09:30 GMT

Yes, let's discuss confidence games. Let's discuss running two wars and refusing to pay for them, then complaining that we're running the deficits up.

Let's discuss how the top one-tenth of one percent owned 8% of the country's wealth when Bush was elected, and how they owned 20% by the time he left office.

Let's discuss how he gave unearned and unrequested tax breaks to the top tier, and how the Republican Congress threatens to bring down the whole temple if anybody touches them.

In the biggest scam of all, let's lecture the middle class and the poor on how they must sacrifice in hard times, while the top brackets give back exactly nothing.

Let's discuss how everybody who's read the history of the Great Depression knows that austerity measures in 1938 destroyed much of the recovery, yet we are lectured that we need similar measures now (in order to destroy our recovery in time for the next presidential elections).

Marketwatch.com is hardly a left-anything website, yet their most popular article at the moment is entitled "New Civil War erupts, led by super rich, GOP ‘Shock Doctrine,’ Reaganomics trigger explosive class war." If investment sites that cater to an older, right-leaning audience are running stories like this, it's time for the Marie Antoinette Caucus to start paying attention.

Political movements in this great country of ours tend to swing like pendulums. Take care you don't wind up under one.

re: Want a New Cardiovascular System?

dccook99 — Thu, 03 Mar 2011 01:21:37 GMT

www.johnmauldin.com/.../complimentary-investment-presentation-by-patrick-cox

The site offers a second lecture by Mr. Cox but there is no access provided.

Thank you for a fine site.

re: Intelligence Guidance: The Situation in Egypt

donnyork — Fri, 04 Feb 2011 17:22:15 GMT

George said nothing about social internet! Talk about a techno game changer! C'mon, George, how's that factor in here???

re: Hoisington Fourth-Quarter Report

Panskeptic — Tue, 18 Jan 2011 19:21:51 GMT

Thanks for a lovely theological document, but it's not quite as grounded in fact as it pretends to be.

The shortcomings of Keynes are endlessly trumpeted. Yet we never hear about catastrophic Friedmanomics, which include the further concentration of wealth among the already wealthy and the destruction of the middle class, which has happened everywhere it was tried.

And has the Austrian government ever been run according to the Austrian school? Has any government? Hayek and Co. get quoted a lot because of confirmation bias, but it remains wishful thinking and nothing more.

Furthermore, deficit hawkishness was proven the wrong medicine in 1937-8, but nobody wants to remember that. Folks who sat silently during the Reagan-Bush quadrupling of the deficit are suddenly vociferous critics of deficit spending. That's hypocrisy until proven otherwise.

re: Global Aging and the Crisis of the 2020s

Allen R — Sun, 16 Jan 2011 20:52:09 GMT

As economies go into decline so does immigration.

More data on the immigration bust.

Chart: Irish Net migration now subtracting from population growth

www.finfacts.ie/.../Irish-emigration-2009-goodbody_sept222009.jpg

Chart: Spain Net Migration

2.bp.blogspot.com/.../Spain+Net+Migration.png

Article: Phoenix may be losing people

www.azcentral.com/.../20090112phxpopulation0107.html

Article: Nevada sees first drop in population since 1910-20