So I can only assume they lay in ambush for me in a different thread of the blogoshere, enticing me to commit the error of off topic posting.

So in response to this strategic lack of response, I reply:

…Aye, but I take my orders from Captain Brad, an’a if he say banks dinae, nor canea cause a problem, traveling at Warp Speed ahead of us lads, lassies, zeenty-teenty,even snoofmadrune, like a rigwiddie-nag… ahead the of rest us at our implulse speed, lasting only ’till tinkle-sweetie time then doz’n off to dreamland.

An’ if Captain Brad say the speed’n bankers a drop’n kacky, elf-girse, idioticals, quinkins, verter water, and other merry-begotten financial waste, with a beacon a Poot-poot-poot’ing to attract a Netty, the Yamph, the non-japanese Hizzie-fallow, an’ other idiots of our crew… dinea, nor canea, cause an arse-cockle in his view…

Then it is my duty to obey, but waesuck, would resign my post and find another Enterprise out of this space.

Translation dictionary:
http://www.mcsweeneys.net/links/lists/scottish.html

There is Indian Economics(IE). IE of course has been working swimmingly in India, and over the centuries has transformed this country into the Nirvana we see today.

But can the rest of the world benefit from similar advances in bookkeeping?

I think not. If it were the case, the concept of “deflation” would be nonsensical and could not happen. The CBs would constantly be fighting “inflation”.

Since we do have KMSSFSDCCCPM(coined Dinosaur Economics for short), there are some real world bookkeeping constraints holding us back from stellar growth in GDP reporting, corporate profit reporting, and gains in the personal net worth statement. Some think this can be solved going to a global currency(The Tulip), but for now lets see what we’ve got.

The credit crunch is very real, because the banking system made this boo-boo about real estate prices, securitized the high prices, then insured them, and the knock-on effect of seemingly impossible falls in real estate prices(the surprising negative effect on the corresponding securities, and nervousness among the security insurers) has resulted in the “money multiplier” acting like a “money divider” with bad effects on those in fractional banking, and even worse effects on those in 30:1 fractal banking, hedgekeeping and bookkeeping insurance businesses.

If anyone is wondering why this is a problem now all of a sudden, it’s because the rulebook says we have “mark to market” accounting, and the really big spoiler is:

Assets = Liabilities !!!!!!!!!!!!!

So of course the world CBs and governments are doing what they do to combat this problem; borrow from the future. We must save our wealth creators.

So in theory this should return the money multiplier back to it’s boomtime value and resort the health of all our wabbits. Er, I mean net worth, balance sheets, income statements, etc… valued in dollars, or whatever is used as currency in the country of your choice.

The one hitch is liabilities(our money) need to vastly increase at our wealth creators(banks).

This is to come from ideally from the US worker/consumer/taxpayer/saver/investor(WCTSI), but others may help if they want.

In the US case, the consumer has been helped by roughly 3% of GDP home equity withdrawal a year for almost this entire decade.

The consumer looks like they are borrowing out, the savings rate is still zero, and distaste for the “wage-price spiral” among our policy makers has kept wages flat or possibly falling. But we may need a tax cut, or tax hike if the IMF gets their way.

S&P has now slashed corporate profit projections in half for 2009.

Unemployment data is creeping up steadily.

The USG appears to need to borrow more money than all global CBs combined actually have. Worse yet, Assets = Liabilities could be a local problem for them as well.

The above view puts me firmly in the recession camp.

Right, but I do not see where the corporate profit growth to compensate for a pretty poor financial sector (plus the other ones mentioned) would come from. That is, nominal. And I do not think the employment portion is going to rise rapidly either. Of the rest of the world, only China seems like it will show measurable growth, but that will go to the 20-25 mm new participants in the modern economy who are unlikely to develop spending patterns of much use to the rest of the world. Per worker real growth will be about 2-3%, at best against perhaps 5% over the past three years . We will have to see what effect rural reform might have (possibly a lot, once the surplus people have gone, productivity is up and the remaining farmers rise above subsistence, but that is beyond our time horizon. In fact any early effects would be to increase the supply of rurals to the cities. And for China (taking into account the 1 for 1 principle (1% US GDP change results in the same size change in China), I personally would say with a 6 month lag)), my very reasonable (not a meltdown, just a good trim) scenario would result in 7-8% growth there in 2009 and the same for 2010, Europe and Japan remaining flat throughout). Not good news for laobaixing’s custodians. Their mandate might be questioned…

The good news for politicians is perhaps that the bulk of these effects may not hurt the employed middle class that much. The fairly rich and the very poor seem to be the most affected and they are far from the median voter. Also, there is quite a bit to play with all of a sudden: state owned industries should bring a shine to the face of anyone with deserving friends and causes.

why be in such a hurry ?

Btw can t remember if that post of me got erased or not. Does any one know how much of wall street the chinese will be able to buy with 2 trillions when the dow will be at 7000 ?
Is that 10% 20% ? How many companies can you buy with 2 trillions ? THose numbers are so big that I can’t figure it out.

and I would note that a global recession is defined generally as global growth below 2%, so outright falls in real GDP would imply a very serious recession. obviously this is an unusual time — but the forecast you consider optimistic is still very dark

If it remains just a one-time shock caused by consumer budget constraints this may be OK. But I suspect the US, UK and a few other Western consumers will return to real consumption levels of the early 2000s, with residential construction, autos and consumer durables (in combination) possibly below that level. Not hard to figure out: just take a five years average of net household debt growth that will not occur during the next two years, and to be sure double that amount to take account of voluntary repayment and additional saving (assuming that tax refunds etc and effect of lower gas prices will be saved.

Only when people are comfortable with their net asset position, debt service capacity under new lending standards and employment prospects would you see them consuming at 2005-2007 levels again. Europeans, Japanese and most Asian countries (except Korea) have ben less enthusiatically consuming (housing in Spain perhaps excepted) (sorry, I consider housing expenditure above a basic level consumption..). Given the enormous weight of household consumption in the anglosaxon economies, a 1 to 2% GDP decline there sems pretty bullish to me. If you look at the income composition in those countries, it becomes even more laughable: wages will stagnate, employment shrink and profits (with the demise of the financial sector and whole industries without easy sales, such as autos and appliances, plus the effect of declining commodity prices on agriculture and ming profits) will decline substantially… I think we will be lucky to see worldwide annual NOMINAL GDP growth (due to the effect of oil, commodities etc and discounting, little or no inflation) at better than minus 2%. between now and the end of 2009 and a return to 2008 levels perhaps in 2011. The Japanese were not that incompetent in the 1990, they just could not make people borrow to spend…