Is economic growth slowing down permanently?

[eyeball]

No, a doomsdayer that thinks that some sort of break down in government/capitalism will lead to food and other shortages. I'm wondering if that's what you think?

No, I think it will likelier be the other way around.

Are you storing food for when some sort of system collapse happens?

Do you have survival strategies?

Trying to avert the collapse I suppose. Like I said there's still lots of food swimming and running around where I live and I do have a garden too. Distance and isolation will likely confer an advantage, in the short term at least. Refugees and migrants have washed ashore here too.

[sharkman]

No, I think it will likelier be the other way around.

Trying to avert the collapse I suppose. Like I said there's still lots of food swimming and running around where I live and I do have a garden too. Distance and isolation will likely confer an advantage, in the short term at least. Refugees and migrants have washed ashore here too.

Okay, so you think that a collapse is coming, and there will be food shortages, among other types of shortages, I suppose. So when is this going to happen? Are we close?

Edited February 27, 2016 by sharkman

[msj]

Trying to avert the collapse I suppose. Like I said there's still lots of food swimming and running around where I live and I do have a garden too. Distance and isolation will likely confer an advantage, in the short term at least. Refugees and migrants have washed ashore here too.

This comment reminds me of Kurt Vonnegut's "Galapagos" - have you read it?

Great book and I think you would appreciate the humour in it.

[msj]

To get back on topic, I have noticed in Warren Buffet's letter to shareholders, released today, the following:

It’s an election year, and candidates can’t stop speaking about our country’s problems (which, of course, only they can solve). As a result of this negative drumbeat, many Americans now believe that their children will not live as well as they themselves do.

That view is dead wrong: The babies being born in America today are the luckiest crop in history.

American GDP per capita is now about $56,000. As I mentioned last year that – in real terms – is a staggering six times the amount in 1930, the year I was born, a leap far beyond the wildest dreams of my parents or their contemporaries. U.S. citizens are not intrinsically more intelligent today, nor do they work harder than did Americans in 1930. Rather, they work far more efficiently and thereby produce far more. This all-powerful trend is certain to continue: America’s economic magic remains alive and well.

Some commentators bemoan our current 2% per year growth in real GDP – and, yes, we would all like to see a higher rate. But let’s do some simple math using the much-lamented 2% figure. That rate, we will see, delivers astounding gains.

America’s population is growing about .8% per year (.5% from births minus deaths and .3% from net migration). Thus 2% of overall growth produces about 1.2% of per capita growth. That may not sound impressive. But in a single generation of, say, 25 years, that rate of growth leads to a gain of 34.4% in real GDP per capita. (Compounding’s effects produce the excess over the percentage that would result by simply multiplying 25 x 1.2%.) In turn, that 34.4% gain will produce a staggering $19,000 increase in real GDP per capita for the next generation. Were that to be distributed equally, the gain would be $76,000 annually for a family of four. Today’s politicians need not shed tears for tomorrow’s children.

Even small amounts of growth can lead to nice standards of living over long periods of time thanks to the power of compounding.

Then he puts some of this in perspective:

Indeed, most of today’s children are doing well. All families in my upper middle-class neighborhood regularly enjoy a living standard better than that achieved by John D. Rockefeller Sr. at the time of my birth. His unparalleled fortune couldn’t buy what we now take for granted, whether the field is – to name just a few – transportation, entertainment, communication or medical services. Rockefeller certainly had power and fame; he could not, however, live as well as my neighbors now do.

Though the pie to be shared by the next generation will be far larger than today’s, how it will be divided will remain fiercely contentious. Just as is now the case, there will be struggles for the increased output of goods and services between those people in their productive years and retirees, between the healthy and the infirm, between the inheritors and the Horatio Algers, between investors and workers and, in particular, between those with talents that are valued highly by the marketplace and the equally decent hard-working Americans who lack the skills the market prizes. Clashes of that sort have forever been with us – and will forever continue. Congress will be the battlefield; money and votes will be the weapons. Lobbying will remain a growth industry.

The good news, however, is that even members of the “losing” sides will almost certainly enjoy – as they should – far more goods and services in the future than they have in the past. The quality of their increased bounty will also dramatically improve. Nothing rivals the market system in producing what people want – nor, even more so, in delivering what people don’t yet know they want. My parents, when young, could not envision a television set, nor did I, in my 50s, think I needed a personal computer. Both products, once people saw what they could do, quickly revolutionized their lives. I now spend ten hours a week playing bridge online. And, as I write this letter, “search” is invaluable to me. (I’m not ready for Tinder, however.)

For 240 years it’s been a terrible mistake to bet against America, and now is no time to start. America’s golden goose of commerce and innovation will continue to lay more and larger eggs. America’s social security promises will be honored and perhaps made more generous. And, yes, America’s kids will live far better than their parents did.

Of course, past performance is not indicative of future returns.....

And I expect eyeball to take strong exception to what I have bolded above.

I'm an optimist which surprises me because I used to be on the other side....

[eyeball]

Okay, so you think that a collapse is coming, and there will be food shortages, among other types of shortages, I suppose. So when is this going to happen? Are we close?

It's happening as we speak. Food shortages are mounting, and millions that weren't at risk of starvation a few yeas ago will be facing severe shortages within a few months.

[eyeball]

And I expect eyeball to take strong exception to what I have bolded above.

Actually it was what you said that caught my eye;

Even small amounts of growth can lead to nice standards of living over long periods of time thanks to the power of compounding.

How much has natural capital grown in that time? I'm betting there's a closer correlation between growth of the human economy and the liquidation of natural capital (which includes not just animals and plants but their habitats and the ecological processes that created and sustained them). I likewise notice that the OP's point that real growth has stalled is trending along with the rate of extinction and habitat loss.

I'm an optimist which surprises me because I used to be on the other side....

Like I've said, I'd probably feel much the same way of I had a couple blocks of halibut quota and a dozen taxi licences to lease out.

Of course, past performance is not indicative of future returns.....

No, I'd say the current realities are better indicators.

To get back on topic, I have noticed in Warren Buffet's letter to shareholders, released today, the following:

I've noticed Warren Buffet's letter doesn't contain a whiff of awareness of the reality that our economy is as bound up in our planet's ecosystems ability to perform as our investments are and I ask again where is the growth in natural capital? Given how many dollars we account for everyday and how they enrich our lives a ledger that accounts for the balance between our economy and ecosystems should be a fairly simple thing to come up with.

Edited February 27, 2016 by eyeball

[msj]

It's happening as we speak. Food shortages are mounting, and millions that weren't at risk of starvation a few yeas ago will be facing severe shortages within a few months.

Food shortages?

Is the cause lack of supply or distribution?

[WestCoastRunner]

Okay, so you think that a collapse is coming, and there will be food shortages, among other types of shortages, I suppose. So when is this going to happen? Are we close?

According to the worldbank: "The world needs to produce at least 50% more food to feed 9 billion people by 2050. But climate change could cut crop yields by more than 25%. The land, biodiversity, oceans, forests, and other forms of natural capital are being depleted at unprecedented rates. Unless we change how we grow our food and manage our natural capital, food securityespecially for the worlds poorestwill be at risk"

World bank.org

[msj]

Oh, so it's not so much a shortage of food as it is an over abundance of projected people.....

[WestCoastRunner]

Oh, so it's not so much a shortage of food as it is an over abundance of projected people.....

Does this make a difference?

[msj]

To the extent it is projected rather than real, living, breathing people, yes I think it does.

[WestCoastRunner]

To the extent it is projected rather than real, living, breathing people, yes I think it does.

Why? I'm sure you would agree that financial projections are important for a business. Why would population projections not be just as important for future planning. Cities all over the world use these stats for urban planning.

[sharkman]

It's happening as we speak. Food shortages are mounting, and millions that weren't at risk of starvation a few yeas ago will be facing severe shortages within a few months.

So you're not talking about a sudden collapse. I thought you were saying the West was going to have some kind of sudden collapse. But then on the other hand, you refer to some kind of "extinction". It appears as though you are not comfortable in talking about what you think except in broad generic terms.

[eyeball]

Severe droughts and floods have ruined harvests, and left nearly 100 million people in southern Africa, Asia and Latin America facing food and water shortages.

Story

Sobeys struggling with produce shortage from California, Mexico

Story

The poorest and the wealthiest are starting to feel the collapse. People's perceptions about what constitutes a collapse is conveniently subjective. You and others seem to expect a prediction of some sort of global Katrina-like event where we wake up tomorrow with everything smashed and chaos reigning around the planet which I guess explains goofy references to zombies.

The extinction event unfolding now is on par with the 5 other mass extinction events that we're aware of and as rapid a one on a geological scale. I'd say its rate of unfolding is probably speeding up and on par with the catastrophe that's been unfolding throughout the ME the last hundred years. That's a catastrophe that's only really been perceptible (barely) to most people for about 15 years now. I suspect it will take a hundred million or so humans to die before the usual suspects deign to notice and up to a billion before they wonder if something might be wrong.

Edited February 28, 2016 by eyeball

[eyeball]

Food shortages?

Is the cause lack of supply or distribution?

The ecological capacity for people to produce enough for themselves.

[69cat]

I always get a chuckle out of "climate change" talk, but lets call it what it really is, human caused global warming. Because anyone who lives on planet earth knows the climate is always changing therefore applying a term "climate change" has no value what so ever, except to generate more tax revenue. If one is concerned with AGW causing droughts or floods simply research average rainfall for the area in question for a 100 years or so and see if indeed AGW is affecting rainfall. A hint is that SW US (California and Texas) go through many drought cycles and can be found with a little searching, you may even find an interesting pattern.

But i do beleive people still do not get enough food but not from lack of food grown elsewhere. Perhaps populations will eventually adapt to finite resources however government increasingly helping those who can not help themselves does not let that priciple take effect.

The Warren Buffet comments do point to a beleif but fundamentally i beleive there is only so much a consumer can aspire to obtain. At some point the average consumer is going to say "i have enough, i do not need anymore". That is true for me anyway. Is it acceptable that the new goal should be for everyone to own a second vacation home and all that comes with just to keep gdp growing? 1% growth per year and when my kids are 50 (40 years from now) is it necessary they own their dream home plus vacation home be the standard simply to continue gdp growth? I think not. I expect my kids at some point to say they have a good life and not pursue further material possessions. Perhaps travel more though, or not, it will be their choice. But the government should not pencil in a yearly rise in gdp indefinitely just because it is mandatory to service debt and spending.

[-1=e^ipi]

According to the worldbank: "The world needs to produce at least 50% more food to feed 9 billion people by 2050. But climate change could cut crop yields by more than 25%.

And a flying spaghetti monster could appear and turn you into a banana. Doesn't make it realistic.

Yes, somehow crop yields will decrease by 25% due to magic. It's not like there is a CO2 fertilization effect or anything.

[ReeferMadness]

The extinction event unfolding now is on par with the 5 other mass extinction events that we're aware of and as rapid a one on a geological scale. I'd say its rate of unfolding is probably speeding up and on par with the catastrophe that's been unfolding throughout the ME the last hundred years. That's a catastrophe that's only really been perceptible (barely) to most people for about 15 years now. I suspect it will take a hundred million or so humans to die before the usual suspects deign to notice and up to a billion before they wonder if something might be wrong.

Welcome to the Anthropocene epoch, a disaster in the making.

Most experts agree that human activities have accelerated the rate of species extinction. The exact rate remains controversial – perhaps 100 to 1000 times the normal background rate of extinction.[30] In 2010 a study published in Nature found that "marine phytoplankton – the vast range of tiny algae species accounting for roughly half of Earth's total photosynthetic biomass – had declined substantially in the world's oceans over the past century. From 1950 alone, algal biomass decreased by around 40%, probably in response to ocean warming – and that the decline had gathered pace in recent years.

The only question is whether anyone will be left to make the movie.

The issue, IMHO, is the dichotomy between natural systems (collectively referred to as the environment) and systems of human creation (collectively referred to as the economy). Natural systems are enormously complex, largely beyond our control and the consequences of changes can take decades to manifest themselves (and centuries to return to equilibrium). Human systems, by contrast, react much more quickly and are by definition completely under our control. Yet, the same people who vociferously insist that the environment can be toyed with right up to the point of where they can visually see someone getting hurt will insist with equal zeal that the economy is sacrosanct and should be left to "market forces".

It can be thought of as a struggle between greed and fear. The problem is that the forces of greed are primarily the wealthy who believe they have little to fear; whereas the forces of fear are the desperately poor who are mostly powerless. So, until the wealthy and powerful (and their vast minions who they have co-opted into the religious pursuit of free-market capitalism) feel the fear, governments will continue to pay lip service to the environment while enacting policies that favor profits.

[sharkman]

Wow, quite a lot of fear creation from all of these left wing organizations.

[bush_cheney2004]

Wow, quite a lot of fear creation from all of these left wing organizations.

True...they are not happy unless very afraid of...everything ! Tax their fears...make a bundle.

[msj]

Another week so another listing: oooooohhhhh this time we have 9 negatives versus 7 positives.

Doom doom doom!

Or maybe not so much: http://feedproxy.google.com/~r/TheBigPicture/~3/zSr5qenXugw/

Question: oil is up big the past few weeks. Is this good or bad?

As a consumer it's bad for me.

As a producer, it's good for some of my clients ( the ones who live BC but work in Vietnam, Alberta, etc).

So, as in real life, mixed.

[msj]

So Barron's has come out with an article asking who's better for investors: Clinton or Trump?

Not going to link to it because it's stupid. If you are so inclined go find it yourself.

Instead, it brings up one of my favourite points about ideology and investing (which also applies to how we view the health of the economy and future economic growth).

Here's a look back at some stupidity about Obama and Bush Jr:

The fund manager, active in New York Democratic politics, couldn't see past the policy issues involved. As long as George W. Bush was the U.S. president, this manager's bias was against long positions. But as an astute market observer noted at the time, "Give me a trillion dollars, and I'll throw you one hell of a party."

How did missing that party work out for him? From the pre-Iraq war lows, U.S. markets rallied 96 percent during the next four years. Chalk up another bad investment decision to political bias, emotional involvement and lack of objectivity.

Before Republicans chuckle too hard, the exact same conversations played out six years later. In March 2009, I kept hearing how the newly elected, Kenyan-born, Marxist President Barack Obama was going to be bad for investors. Some 10,000 Dow points ago -- literally, the very day of the lows -- Michael Boskin, chairman of the Council of Economic Advisors under President George H. W. Bush, penned a Wall Street Journal op-ed titled, "Obama's Radicalism Is Killing the Dow."

That was 160 percent ago [article is from 2014 but point still stands]

The entire article and links within it are worth reading especially if you are so inclined as to fall into this ideological trap:

http://www.bloombergview.com/articles/2014-02-10/ideology-is-killing-your-investment-returns-

[sharkman]

True...they are not happy unless very afraid of...everything ! Tax their fears...make a bundle.

Yeah, now they've moved onto Trump fear, I wonder how they sleep at night!

[dre]

And a flying spaghetti monster could appear and turn you into a banana. Doesn't make it realistic.

Yes, somehow crop yields will decrease by 25% due to magic. It's not like there is a CO2 fertilization effect or anything.

We are headed for a food crisis but the problem isn't global warming its soil erosion. We are losing 30 soccer fields worth of soil per minute, and it takes about 1000 years for the earth to generate 3 cm. If current rates continue, estimates I've seen say we only have about 60 years of farming left.

And soil plays a key role in absorbing carbon so one problem will fuel another.

Generating three centimeters of top soil takes 1,000 years, and if current rates of degradation continue all of the world's top soil could be gone within 60 years, a senior UN official said on Friday.

About a third of the world's soil has already been degraded, Maria-Helena Semedo of the Food and Agriculture Organization (FAO) told a forum marking World Soil Day.

The causes of soil destruction include chemical-heavy farming techniques, deforestation which increases erosion, and global warming. The earth under our feet is too often ignored by policymakers, experts said.

"Soils are the basis of life," said Semedo, FAO's deputy director general of natural resources. "Ninety five percent of our food comes from the soil."

Unless new approaches are adopted, the global amount of arable and productive land per person in 2050 will be only a quarter of the level in 1960, the FAO reported, due to growing populations and soil degradation.

Soil erosion is a way bigger threat than climate change.

Oh well... a partial extinction will probably be the best thing that ever happened to the human race. Knock us back down to a comfy 2 billion. Its just nature at work. When you dominate and abuse an ecosystem beyond a certain point that ecosystem will deal with you.

Edited March 5, 2016 by dre

[msj]

We are headed for a food crisis but the problem isn't global warming its soil erosion.

So, I guess you are heavily invested in Potash? ($POT)

Or maybe the ETF version $SOIL ?