It's been months since I revisited this post, but I figured it was time to take another look.
If you've read my past post you'll know that there are 10 variables I look at to gauge the recovery from the 2008 crash.
The previous posts can be found here:
Top 10 Reasons This Recession Will Never End
Update 1
Update 2
Update 3
Update 4
Update 5
Update 6
Update 7
So without further delay, let's take a look at where these variables are at today.
1) Crashes hurt for a long time - unchanged
Well interest rates are still rock bottom (meaning savers are getting nothing on their savings). Housing has flatlined and shows little to no sign of growth. Unemployment is still in the high seven per cent range.
Overall the pain has not eased in anyway. The only 'reprieve' has come in the form of slack monetary policies which have lead to low-interest rate loans, which in turn has allowed people to borrow more than they normally could afford to.
But all that is doing is racking up debts on top of debts and compounding the problem. Instead of fixing the things that caused the crash we've been using a wide assortment of 'kicking the can' strategies which have not been working (they've prevented utter disaster, for now, but have not created a recovery).
2) Until Debt do us Part - worse -
Instead of getting the debt under control the politicians keep spending and spending. The US is about to increase its debt ceiling yet again, which will probably lead to another downgrade of the US.
Students continue to graduate with massive amounts of debt and no good job prospects.
It seems as though the world has embraced the notion of debt as far as the eye can see.
Can a system stay afloat awash in debt? Hard to say.
How long can you keep 10 credit cards maxed out paying off only the minimum interest every month?
The one thing we know is that once recoveries take hold you start paying DOWN debt, not increasing it, which we currently continue to do.
3) Eroded Trust - unchanged
Nothing has happened to encourage increased trust of any sort. In fact, the cycle of not trusting the government continues.
Whether it's the gun debate, the Aaron Swartz suicide or Benghazi debacle, the news continues to be filled with examples of the government acting dysfunctionally.
4) Anxiety - unchanged
Anxiety levels seem to have levelled off. Who knows why this has happened, most likely 'crisis fatigue'. The public has become desensitized to the various crises that come up on a regular basis. It's not that people are positive about the present or the future, but they are simply disengaged from the things going on in the world now.
I have to admit, even myself, when I hear about some tragedy on the news my response is becoming more 'what's new' as opposed to being shocked.
Is it better or worse that people are becoming apathetic to world events? Hard to say, generally speaking it's a bad sign.
5) Growth versus Replacement Cycle - unchanged
Innovation remains in a coma. Companies continue to sell based on replacement cycles of older products. Can you name one thing you own today that you didn't own in some form a year ago?
I bet most people can't and the reason is because there are no 'new' things to own. You might have had an iPhone 3 and now you have an iPhone 5, but that's not 'new', but rather simply a replacement purchase.
6) Shareholder model breakdown - unchanged
Dow Jones:
October 2007: 14,066
January 2013: 13,647
Five year return on investment? Negative returns.
Is the stock market broken? Not only is it broken, it's dead. It's no longer an investment vehicle, rather it's a trading vehicle.
The notion of investing in stocks and getting seven per cent annualized returns is over. If you want to make money in the markets now you have to be a trader... which means you have to gamble that you know which way a stock is going in the short term and if you make a profit, sell it and bet on the next stock you think is going up or down.
The buy and hold model, which the vast majority of retail investors follow on advice of their financial advisor, has become a suckers game of zero per cent returns.
7) Lowest Common Denominator (LCD) Thinking - better
With Obama raising taxes on rich folks, I have to say this category is better than before. Instead of turning the screws more and more on average folks, the system went after the affluent, which is the opposite of LCD thinking.
Having said that, people in the US still saw payroll taxes go up, so they did get screwed a bit. And the US continues to pile on debt, which is a form of taxation in itself (just against future generations).
But the mentality of 'dragging' down the upper middle class to the standards of the lower middle class, or even the poor, has not gotten worse and in fact has gotten better (the ants fighting over scraps at the picnic are attacking each other less than before if you will).
8) Globalization - unchanged
World was a mess six months ago, it's still a mess today. Not much else to say really. International relations are no better today than six months ago. Greece is still a mess. Spain is still a mess. China's air quality is now toxic.
9) Baby Boomer Costs - unchanged
The issues surrounding the baby boomers getting older and retiring are the same today as they were six months ago. Basically, this issue is being ignored until it becomes a crisis of epic proportions.
10) Extremism - worse
A mass shooting of elementary-age school kids is perhaps the most extreme thing we've seen since 9/11.
While one incident shouldn't be enough to say the world-at-large is getting more extreme, in this case I think we have to say things are worse not better than say six months ago. This kind of violence - against innocent young children - is something new and disturbing.
These extreme acts of violence reflect an underlying deterioration of society. While they may be committed by 'one lone nut' the fact is that 20 years ago you didn't see this type of violence or the regularity of it.
Bonus: Inflation - unchanged
We haven't entered a hyper inflationary period yet, which is good. The prices continue to creep up at the grocery story, but very slowly.
So there you have, nothing has really changed since my last update. We had one variable get better, two get worse, and the other eight remain unchanged.
Pretty sad that five years into a 'recovery' and nothing has really gotten better. The economy is more like a car rusting out than the hustle and bustle of millions of people fueling an engine of growth and prosperity.
If you've read my past post you'll know that there are 10 variables I look at to gauge the recovery from the 2008 crash.
The previous posts can be found here:
Top 10 Reasons This Recession Will Never End
Update 1
Update 2
Update 3
Update 4
Update 5
Update 6
Update 7
So without further delay, let's take a look at where these variables are at today.
1) Crashes hurt for a long time - unchanged
Well interest rates are still rock bottom (meaning savers are getting nothing on their savings). Housing has flatlined and shows little to no sign of growth. Unemployment is still in the high seven per cent range.Overall the pain has not eased in anyway. The only 'reprieve' has come in the form of slack monetary policies which have lead to low-interest rate loans, which in turn has allowed people to borrow more than they normally could afford to.
But all that is doing is racking up debts on top of debts and compounding the problem. Instead of fixing the things that caused the crash we've been using a wide assortment of 'kicking the can' strategies which have not been working (they've prevented utter disaster, for now, but have not created a recovery).
2) Until Debt do us Part - worse -
Instead of getting the debt under control the politicians keep spending and spending. The US is about to increase its debt ceiling yet again, which will probably lead to another downgrade of the US.Students continue to graduate with massive amounts of debt and no good job prospects.
It seems as though the world has embraced the notion of debt as far as the eye can see.
Can a system stay afloat awash in debt? Hard to say.
How long can you keep 10 credit cards maxed out paying off only the minimum interest every month?
The one thing we know is that once recoveries take hold you start paying DOWN debt, not increasing it, which we currently continue to do.
3) Eroded Trust - unchanged
Nothing has happened to encourage increased trust of any sort. In fact, the cycle of not trusting the government continues.Whether it's the gun debate, the Aaron Swartz suicide or Benghazi debacle, the news continues to be filled with examples of the government acting dysfunctionally.
4) Anxiety - unchanged
Anxiety levels seem to have levelled off. Who knows why this has happened, most likely 'crisis fatigue'. The public has become desensitized to the various crises that come up on a regular basis. It's not that people are positive about the present or the future, but they are simply disengaged from the things going on in the world now.
I have to admit, even myself, when I hear about some tragedy on the news my response is becoming more 'what's new' as opposed to being shocked.
Is it better or worse that people are becoming apathetic to world events? Hard to say, generally speaking it's a bad sign.
5) Growth versus Replacement Cycle - unchanged
Innovation remains in a coma. Companies continue to sell based on replacement cycles of older products. Can you name one thing you own today that you didn't own in some form a year ago?
I bet most people can't and the reason is because there are no 'new' things to own. You might have had an iPhone 3 and now you have an iPhone 5, but that's not 'new', but rather simply a replacement purchase.
6) Shareholder model breakdown - unchanged
Dow Jones:
October 2007: 14,066
January 2013: 13,647
Five year return on investment? Negative returns.
Is the stock market broken? Not only is it broken, it's dead. It's no longer an investment vehicle, rather it's a trading vehicle.
The notion of investing in stocks and getting seven per cent annualized returns is over. If you want to make money in the markets now you have to be a trader... which means you have to gamble that you know which way a stock is going in the short term and if you make a profit, sell it and bet on the next stock you think is going up or down.
The buy and hold model, which the vast majority of retail investors follow on advice of their financial advisor, has become a suckers game of zero per cent returns.
7) Lowest Common Denominator (LCD) Thinking - better
With Obama raising taxes on rich folks, I have to say this category is better than before. Instead of turning the screws more and more on average folks, the system went after the affluent, which is the opposite of LCD thinking.
Having said that, people in the US still saw payroll taxes go up, so they did get screwed a bit. And the US continues to pile on debt, which is a form of taxation in itself (just against future generations).
But the mentality of 'dragging' down the upper middle class to the standards of the lower middle class, or even the poor, has not gotten worse and in fact has gotten better (the ants fighting over scraps at the picnic are attacking each other less than before if you will).
8) Globalization - unchanged
World was a mess six months ago, it's still a mess today. Not much else to say really. International relations are no better today than six months ago. Greece is still a mess. Spain is still a mess. China's air quality is now toxic.
9) Baby Boomer Costs - unchanged
The issues surrounding the baby boomers getting older and retiring are the same today as they were six months ago. Basically, this issue is being ignored until it becomes a crisis of epic proportions.
10) Extremism - worse
A mass shooting of elementary-age school kids is perhaps the most extreme thing we've seen since 9/11.
While one incident shouldn't be enough to say the world-at-large is getting more extreme, in this case I think we have to say things are worse not better than say six months ago. This kind of violence - against innocent young children - is something new and disturbing.
These extreme acts of violence reflect an underlying deterioration of society. While they may be committed by 'one lone nut' the fact is that 20 years ago you didn't see this type of violence or the regularity of it.
Bonus: Inflation - unchanged
We haven't entered a hyper inflationary period yet, which is good. The prices continue to creep up at the grocery story, but very slowly.
Pretty sad that five years into a 'recovery' and nothing has really gotten better. The economy is more like a car rusting out than the hustle and bustle of millions of people fueling an engine of growth and prosperity.
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