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  • Tidal Report – 6 Sep 2009 – The bulls have it? : third wave group
    Warren Buffet describes the US dollar because the US current account deficit is falling rapidly And yet the consensus is still for more dollar devaluation and more asset price inflation i e for more of the last ten years This confuses me greatly He muses over the plot of the movie The Day of the Triffids where a sailor awakes in hospital after an eye operation to find that the populace of London has been blinded by radiation from a freak meteorite and are being terrorised by carnivorous plants I wonder if something sinister is not afflicting my fellow investors Perhaps I have just been in a slumber for too long But can someone please explain how we can have more of the same price movements when economic circumstances have changed so much Hugh Hendry s confusion is supported by an interesting study being done by Barry Eichengreen and Kevin O Rourke A Tale of Two Depressions This study was first published in April 2009 with the third instalment released this week A Tale of Two Depressions is a study that collates data from a number of countries and compares it to the same information in the 1930s The study uses June 1929 as the starting point for the Great Depression and April 2008 as the start of our current Great Recession The initial publication of the study concluded that globally we are tracking or doing even worse than the Great Depression whether the metric is industrial production exports or equity valuations Focusing on the US causes one to minimise this alarming fact The Great Recession label may turn out to be too optimistic This is a Depression sized event That said we are only one year into the current crisis whereas after 1929 the world economy continued to shrink for three successive years The latest update of A Tale of Two Depressions published on 1 September still reaches the conclusion that today s crisis remains dramatic by the standards of the Great Depression The key improvement they see in the current data compared to the 1930s is in world industrial production They express the concern however that this reflects the unprecedented government stimuli and if consumer spending especially in the US remains weak the increase in production will go into inventories subsequently leading firms to cut back The result would be a double dip recession Figure 1 World industrial production now vs then The study also looks at global stock markets which have mounted a sharp recovery since the beginning of the year They note however that the proportionate decline in stock market wealth remains even greater than at the comparable stage of the Great Depression Figure 2 World stock markets now vs then The world trade figure is the most alarming The downward spiral in global trade volumes has abated and the most recent month shows a modest 1 per cent rise Nonetheless the collapse of global trade even now remains dramatic by the standards of the Great

    Original URL path: http://www.thirdwavegroup.com.au/tidal-report/tidal-report-6-sep-2009-the-bulls-have-it/ (2013-02-03)
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  • eichengreen and o’rourke : third wave group
    the recession is over Posted by Tracey Watts on July 12 2009 Leave a Comment Issue 34 Gentleman you have come sixty days too late The depression is over said Herbert Hoover to a delegation requesting a public works program to help speed the recovery in June 1930 How wrong he was The US stock market did not bottom until nearly two years later in June 1932 and the economy Filed under tidal reports Tagged with debt eichengreen and o rourke great depression market history oecd steve keen stockmarket subscribe Have our blog posts delivered straight to your inbox categories general posts tidal reports latest posts The story silver tells Is the end game in sight for Greece Descending the Slope of Hope Australia s sugar daddy stalling What housing undersupply Australian banks vulnerable still Chicken or egg the unemployment effect The recovery that isn t McKibbin you ve done it again What does this chart tell you tag cloud alan kohler australia banks ben bernanke britain china commodities currency debt deflation deleveraging demographia report economy employment europe first home owners global financial crisis great depression greece interest rates international monetary fund ireland japan jim chanos karl denninger kevin rudd

    Original URL path: http://www.thirdwavegroup.com.au/tag/eichengreen-and-orourke/ (2013-02-03)
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  • hugh hendry : third wave group
    was in a bull or bear market the bulls would have it by a good margin What puzzles us here at Third Wave is what Filed under tidal reports Tagged with economy eichengreen and o rourke great depression hugh hendry subscribe Have our blog posts delivered straight to your inbox categories general posts tidal reports latest posts The story silver tells Is the end game in sight for Greece Descending the Slope of Hope Australia s sugar daddy stalling What housing undersupply Australian banks vulnerable still Chicken or egg the unemployment effect The recovery that isn t McKibbin you ve done it again What does this chart tell you tag cloud alan kohler australia banks ben bernanke britain china commodities currency debt deflation deleveraging demographia report economy employment europe first home owners global financial crisis great depression greece interest rates international monetary fund ireland japan jim chanos karl denninger kevin rudd leith van onselen louis christopher market history mike shedlock oecd psychology real estate recession robert prechter sentiment sovereign debt steve keen stimulus stockmarket super profits tax technical analysis terry mccrann undersupply united states archives November 2011 September 2011 August 2011 July 2011 June 2011 May 2011 April 2011 March

    Original URL path: http://www.thirdwavegroup.com.au/tag/hugh-hendry/ (2013-02-03)
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  • Tidal Report – 23 Aug 2009 – It’s getting to the funny stage : third wave group
    of a deflationary downturn as part of the deleveraging process following the collapse of the largest credit bubble of all time It might be interesting for our readers to again refer to the last deflationary downturn of 1929 to 1932 As demonstrated that bear market lasted nearly three years during which time there were a series of rallies and busts eventually resulting in a total fall of 89 per cent In fact the first major leg up was a substantial rise of 52 per cent in 22 weeks The similarity of this move to the current rally is pronounced The ASX S P 200 has risen 45 per cent in 23 weeks still within the historic precedents of previous bear market rallies Many similarities exist between the current economic situation and the Great Depression and while there are also complex differences it is not a stretch to consider that the path of our deleveraging may mimic that of 1929 In this context our bear market is still young and a rise of 45 per cent does not a bull market make Remaining in cash and sitting on the sidelines can seem like a very lonely place when markets are running strongly but as they quickly giveth so they can quickly taketh away China s stockmarket for example has been running hot since October last year rising approximately 100 per cent In the last two weeks alone however it has retraced an eye watering 20 per cent which would have wiped out almost a third of an investor s profits if they had entered the market on the absolute low The strength being seen in the Chinese market is due amongst other things to China s recent policy of stimulatory easy credit China the Great Hope Now however the Chinese government

    Original URL path: http://www.thirdwavegroup.com.au/tidal-report/tidal-report-23-aug-2009-its-getting-to-the-funny-stage/ (2013-02-03)
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  • hitler : third wave group
    ended on November 1 2007 Regular readers will know we consider extremes of sentiment to be indicators that a reversal in trend is at hand At the March Filed under tidal reports Tagged with great depression hitler market history stockmarket subscribe Have our blog posts delivered straight to your inbox categories general posts tidal reports latest posts The story silver tells Is the end game in sight for Greece Descending the Slope of Hope Australia s sugar daddy stalling What housing undersupply Australian banks vulnerable still Chicken or egg the unemployment effect The recovery that isn t McKibbin you ve done it again What does this chart tell you tag cloud alan kohler australia banks ben bernanke britain china commodities currency debt deflation deleveraging demographia report economy employment europe first home owners global financial crisis great depression greece interest rates international monetary fund ireland japan jim chanos karl denninger kevin rudd leith van onselen louis christopher market history mike shedlock oecd psychology real estate recession robert prechter sentiment sovereign debt steve keen stimulus stockmarket super profits tax technical analysis terry mccrann undersupply united states archives November 2011 September 2011 August 2011 July 2011 June 2011 May 2011 April 2011 March

    Original URL path: http://www.thirdwavegroup.com.au/tag/hitler/ (2013-02-03)
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  • Tidal Report – 12 Jul 2009 – You have come too late, the recession is over : third wave group
    from an economic crisis that it obviously completely failed to foresee OECD activity now looks to be approaching its nadir following the deepest decline in post war history The ensuing recovery is likely to be both weak and fragile for some time And the negative economic and social consequences of the crisis will be long lasting Yet it could have been worse Thanks to a strong economic policy effort an even darker scenario seems to have been avoided But this is no reason for complacency the need for determined policy action remains across a wide field of policies In summary it looks as if the worst scenario has been avoided and that OECD economies are now nearing the bottom Even if the subsequent recovery may be slow such an outcome is a major achievement of economic policy But this is no time to relax ensuring that the recovery stays on track and leads towards a long term sustainable growth path will call for major policy efforts going forward It is the blind acceptance of forecasts from bodies such as the OECD that are providing false confidence in the economic recovery As an economist Professor Keen s opinion is interesting The reason most economists continue to underestimate this downturn is because a the downturn is being driven by deleveraging from literally unprecedented levels of private debt and b the neoclassical theory of economics which dominates academic and market economics alike and is the basis for the economic forecasting done by government bodies ignores the role of private debt in the economy He goes on to say that government policy has actually encouraged private sector borrowing to indulge in two giant Ponzi Schemes the stock market and the housing market It has gambled with borrowed money that share and house prices would always rise faster than consumer prices This gamble worked for some decades until 1987 89 Instead of the recession that was experienced at that time the US would have experienced a mild depression had the Federal Reserve under the leadership of Alan Greenspan not intervened mild because the level of debt was lower then that at the time of the Great Depression 165 per cent in 1989 versus 175 per cent in 1929 and crucially because the rate of inflation then was high 5 per cent in 1989 versus 0 5 per cent in 1929 However the problem was only delayed by the Federal Reserves actions and in fact has been made worse Professor Keen argues that what we face now will be far worse than it would have been in the 1980 s because deleveraging from the now unprecedented debt level of almost 300 of GDP will drive America into a Depression that could easily be deeper than that of the 1930s This is already becoming apparent in the data as economic historians Barry Eichengreen and Kevin O Rourke point out in A Tale of Two Depressions To sum up globally we are tracking or doing even worse than

    Original URL path: http://www.thirdwavegroup.com.au/tidal-report/tidal-report-12-jul-2009-you-have-come-too-late-the-recession-is-over/ (2013-02-03)
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  • Tidal Report – 17 May 2009 – Economic Forecasting Alchemy : third wave group
    be repaid The deficit of 57 6 billion in 2009 10 will be the largest deficit in Australia s post war period exceeding 4 5 per cent of GDP In the past half century the previous cash deficit record was the 4 1 per cent of GDP reached in 1993 94 when unemployment was running in double digits While these deficits are progressing Australia s net debt is currently forecast to peak at 188 billion in 2013 approximately 13 8 per cent of GDP This forecast parallels the 1995 96 record that followed the six straight years of deficits run to fight high unemployment Our unemployment rate so far is only half of what it was in the early 1990s and forecast currently to only increase to 8 5 per cent The Government cites nations like the US as having bigger relative deficits and net debt Despite forecasters including the IMF and OECD projecting a less severe downturn here our fiscal response has been one of the biggest The OECD estimates that of all member countries discretionary fiscal stimulus clearly exceeds 1 per cent of GDP in both 2009 and 2010 only in the US and Australia this compares to an OECD average of 0 5 per cent each year However historic these deficits and debt appear to be they are estimates predicated on the treasury s forecasts Treasury estimates it seems are not much better than a stab in the dark that unfortunately governments of the day are forced to rely upon Of greater concern perhaps are the assumptions upon which Treasury forecasts have been made Treasury s forecasts for the future are based on the assumption that the economy will always return to 3 percent growth after any short term disturbance Normally they assume that the short term disturbance only lasts for the current year and that the long run trend will reassert itself the following year In this Budget however Treasury has added an additional year where growth is expected to be below average assuming growth of 2 5 per cent for the financial year 2010 11 instead of 3 per cent It has however then assumed above trend growth of 4 5 per cent for the next two years So to put those growth forecasts into context Treasury is assuming that its stated deepest global recession since the Great Depression will reduce growth over the four year forecast period by only 0 25 percent a year and then uses the 1990s experience an altogether more modest recession as the basis for its current projections How is it possible to trust such forecasts Looking at growth during the Great Depression for example demonstrates four years of contraction with the economy experiencing negative growth of 10 per cent in 1930 alone Even the 1990s did not perform as well as Treasury s assumptions for the current period During the 1990s recession the economy contracted by more than 1 per cent in 1992 and then had three years of

    Original URL path: http://www.thirdwavegroup.com.au/tidal-report/tidal-report-17-may-2009-economic-forecasting-alchemy/ (2013-02-03)
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  • deficit : third wave group
    into deficit It seems silly that anybody would bother to argue that proposition Will you accept going into deficit if you have Filed under tidal reports Tagged with australia budget debt deficit economy europe great depression intergenerational report kerry o brien recession stockmarket treasury wayne swan subscribe Have our blog posts delivered straight to your inbox categories general posts tidal reports latest posts The story silver tells Is the end game in sight for Greece Descending the Slope of Hope Australia s sugar daddy stalling What housing undersupply Australian banks vulnerable still Chicken or egg the unemployment effect The recovery that isn t McKibbin you ve done it again What does this chart tell you tag cloud alan kohler australia banks ben bernanke britain china commodities currency debt deflation deleveraging demographia report economy employment europe first home owners global financial crisis great depression greece interest rates international monetary fund ireland japan jim chanos karl denninger kevin rudd leith van onselen louis christopher market history mike shedlock oecd psychology real estate recession robert prechter sentiment sovereign debt steve keen stimulus stockmarket super profits tax technical analysis terry mccrann undersupply united states archives November 2011 September 2011 August 2011 July 2011 June

    Original URL path: http://www.thirdwavegroup.com.au/tag/deficit/ (2013-02-03)
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