While the political elite obsesses over the rise in public debt, the US is on the cusp of an era of deleveraging — or more bluntly, a massive liquidation of private debt — the ramifications of which, in the best of times would be colossal, but could well be disastrous the irrational obsessions of our political elites work their magic.
The real policy question that will determine the future well-being of the vast majority of Americans is how liquidation of their private debts unfold — rapidly via rising waves of bankruptcies, foreclosures, and repudiations, as happened in the 1930s, or more gradually, which will require some kind of active intervention by government, and for which there is no real precedent, and clearly no acumen among the elites in Versailles on the Potomac.
Either evolutionary pathway will be painful, because the liquidation of private debt will require cutbacks that reduce aggregate demand and investment, thereby slowing growth and pushing the economy into a period of sluggish growth over the long term or into a depression (some economist argue we are already in a depression).
I gave a little talk at a financial conference (Casey Research) that included the following very simple economic scenario:
Oil prices are going up (inexorably). China + Peak Oil + Financial diversification. Oil doesn't stop going up until GDP goes down. It's an inexorable force until then.
The US middle class is broken. A hollow husk unable to withstand the slightest gust. Regardless, it's the ultimate source of demand for the global economy. It's an immovable barrier.
When oil hits ~$150 a barrel the impact occurs between inexorable force and immovable barrier. The combo of higher prices at the pump and for everything else (food and other essentials) starts to crush middle class budgets and force defaults. The economy shrinks until the price of oil goes down enough to be affordable again (for those still left in the middle class).
We keep repeat the pattern above until we're in the second depression (D2). Long term low demand.
Phi Beta Iota: This is precisely why the BRICS (now including South Africa) and a new coalition, perhaps led by Cuba and Venezuela since Chile is refusing to lead, should focus on the immediate challenge of creating infinite free renewable energy–the foundation for global non-zero advances. Such a strategy would be inherently ethical, legal, citizen-centered, and non-violent as well as non-intrusive on any conceivable concept of sovereignty or indigenous privilege.
Governments across the globe are headed for a disaster entirely of their own making.
Though capital markets remain strong, the global economic backdrop continues to deteriorate as fiscal retrenchment takes hold. Commodity markets have rallied in tandem with the fall in the dollar even though there are signs that growth in the emerging world is slowing. Japan’s economy is in the soup, the U.S. economy has failed to pick up as many thought (with a mere 2% growth rate expected to be released for Q1 shortly), and the European economy is overdue for its own slowdown. The U.S. stock market has also rallied despite the threat of a very high gasoline price, disappointing economic growth data, and a fairly mixed earnings picture.
From BSA listserve: Excellent article on integration of 3G, LTE, Wifi and land lines i.e.- 5G networking. The only thing missing is this article is the 5th “G” – green networking. With so much overlapping coverage from the different wireless and wired nodes you don’t need five nines reliability for each node. Individual nodes can therefore be powered with small solar panels and micro wind mills. This is also great opportunity for R&E networks to partner with carriers like Vodafone and others who are building integrated Wifi/LTE networks and use Eduroam to extend reach of their networks for personal health research applications, sensor networks built around smart phone etc. For more details please see http://goo.gl/W9mla and http://goo.gl/a1Lpz – BSA]
21st Century Triple Networks: Ubiquitous 4G, WiFi, & Wires
The best engineers on the planet are coming to the same conclusion: a hybrid 4G/WiFi/landline network is the way to meet mobile demand. Folks like John Donovan of AT&T and Masayoshi Son of Softbank in Japan
had this vision around 2007-2008. As the iPhone/iPad/Android made the coming demand clear, networks planners around the world evolved similar strategies.
• 4G gives wide coverage but is limited in capacity.
• WiFi actually provides far more capacity, because the range of perhaps 100 meters means the spectrum can be reused thousands of times in a major city. (China Mobile is putting 20,000 WiFi hotspots across
Beijing.) A network builder tells me “WiFi is a solution to off load ‘portable' traffic where possible and rely on 3G/4G for ‘mobile' traffic.” Femtos and perhaps small cells will play a significant part.
• Landlines effectively have 10x the capacity of a similar wireless network and are already ubiquitous from both telco and cable. A top engineer tells me “The general rule is the quicker you can get the byte of information onto a hard facility (copper, fiber) the cheaper it is to operate the network.” Randall Stephenson of AT&T explains “You're always going to have to have a fixed line capability to offload this traffic.”
[…]
So cell tower 3G/4G ideally is supplemented with local WiFi/femto. Cell towers cover large areas, allowing comprehensive coverage except for a few dead spots. They offer limited bandwidth over that entire
area, with a network like Verizon's LTE offering perhaps 35 megabits to share. WiFi is much lower power, limiting range to a typical 100 meters or so, less with obstructions. Within that range, the capacity is high; 3×3 MIMO 802.11N can carry 100's of megabits in a small area. Locally, 802.11 uses spectrum more efficiently, incorporated a limited set of “spread-spectrum” type features.
WiFi was in few phones two years ago because it ran down batteries too quickly and cost too much. Moore's Law now enables low power, low cost WiFi. The latest chips from RALINK/Trendchip, for example, cost
less than $5. Off mode power consumption is 0.012 mw, transmit power is 19dBm, and the chips are 5 to 7 mm square. Easily 3/4ths of the phones sold by a carrier like Verizon will soon have WiFi as do just
about all tablets. As Qualcomm, Broadcom and others include WiFi on their primary cellphones chips it will become ubiquitous.
[…]
Carriers are choosing different strategies to get from where they are today to triple networks. Vodafone, Europe's largest wireless company, is adding millions of DSL customers through unbundling and giving them
femto+WiFi gateways. Sky in Britain is buying a WiFi network named “The Cloud.” Free.fr enables WiFi on their millions of DSL connections and bought a wireless license. AT&T is putting WiFi hotspots from Times Square NY to San Francisco with expansion plans. China Mobile is adding 1,000,000 hotspots.
——
Tip of the Hat to original poster Bill St. Arnaud.
Phi Beta Iota:Gordon Cook thinks very highly of Bill St. Arnaud, and observes that Mr. Arnaud is a consultant for Surfnet in the Netherlands working out their wireless cloud for the research and education community in that country of some 1,000,000 out of 16,000,000 people. He is describing some of what he is building that is based on the Netherlands national fiber backplane.
Last Saturday's issue of Barron's ran a cover story on the deficit and their own take on how to address it. In contrast to the recent recommendations from President Obama and the House Republicans, defense was actually “on the table,” not “at” it. In the absence of any adult thinking on the deficit since the Deficit Commission in December, Barron's addresses a void that remains vast and empty in Congress and the Executive branch. The article puts on the table a defense recommendation — which I urged to them — that goes significantly deeper than even the Deficit Commission's — in truth fuzzy — recommendation on “security” spending.
Almost immediately, Forbes published at its website a related piece on defense spending and The Pentagon Labyrinth that contains some interesting private sector views on how the public might be beginning to perceive the current size of the defense budget and condition of our armed forces: note the references to “defense entitlement,” “defense bubble,” and “parade ground military.” It would seem that the paradigm is changing, at least outside Washington DC. (If you think that the recent killing of bin Laden proves the “parade ground” moniker wrong, I urge you to read the introduction essay in The Pentagon Labyrinth: “Why Is This Handbook Necessay?“.
Grow Up, Guys!
By GENE EPSTEIN
Barron's Cover SATURDAY, APRIL 30, 2011
While the President and GOP sling mud at each other, the debt crisis is growing. Barron's offers some tough-but necessary-ways to alleviate it.
Phi Beta Iota: It is possible to eliminate the deficit by making Medicare prices honest and stopping the borrowing of money for corporate pork that feeds political pork. It is possible to eliminate personal income taxes by adopting the Automated Payment Transaction (APT) Tax, which actually produces a great deal more revenue which is desperately needed to bail out the equally irresponsible state governments and pension funds (both government and corporate). America is hosed. It is not possible to “reset” until Washington can combine intelligence and integrity, and that may require a public revolt on both taxes and the fraudulent corrupt Electoral System that keeps the two-party tyranny in a position to continue looting the Commonwealth.
Roy Presson, with his daughters Catherine, left, and Amanda, looking out at their flooded 2,400-acre farm on Tuesday in Wyatt, Mo
SIKESTON, MO. — With a rapid series of explosions late Monday that could be felt for miles through the Missouri soil, the Army Corps of Engineers successfully blew out some 11,000 feet of Mississippi River levee, taking dangerous pressure off the river above.
. . . . . .
For the people responsible for trying to manage the unmanageable river, each success is replaced by new worries.
“We’re just at the beginning of the beginning,” said Maj. Gen. Michael J. Walsh of the Army Corps of Engineers and president of the Mississippi River Commission.
Phi Beta Iota: Severe weather is an act of man, not God. Between paving over the wetlands and the many contributing factors to environmental degradation, the Earth's natural systems have been distorted to yield increasingly “unmanageable” conditions.
On Thursday, Gallup reported that “More than half of Americans say the U.S. economy is in a recession or a depression despite official data that show a moderate recovery…..The April 20-23 Gallup survey… found that only 27 percent said the economy is growing. 29 per cent said the economy is in a depression and 26 per cent said it is in a recession, with another 16 per cent saying it is “slowing down,” Gallup said.”
55 percent of Americans believe we are in a depression or a recession a full 5 years after the housing bubble burst (2006) and 3 years after Lehman Brothers collapsed. (2008) Gallup's findings jibe with other surveys that indicate growing desperation among the public. For example, Globescan found that a large number of Americans have given up on free-market capitalism altogether, while other polls show dwindling confidence in government institutions, the Federal Reserve, the Congress, the judicial system and the media.
. . . . . . .
Do you have any idea how bad unemployment really is? Take a look at this from Calculated Risk:
“There are currently 130,738 million payroll jobs in the U.S. (as of March 2011). There were 130,781 million payroll jobs in January 2000. So that is over eleven years with no increase in total payroll jobs.
“And the median household income in constant dollars was $49,777 in 2009. That is barely above the $49,309 in 1997, and below the $51,100 in 1998……
