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Sat Nov 24, 2012, 11:41 AM

If These Two Brilliant Investors Are Right About Future Growth, The World Is Screwed

WHAT distinguishes modern man from his ancestors is the expectation of steady economic and population growth. Since the start of the 19th century, both have taken off in a way that was not seen in ancient times or the middle ages.

As we look forward to the next 20-30 years, we can be pretty sure that population growth is going to slow, and in some countries, there will be a fall. Does the same apply to the economic growth rate?

Two fund management groups have just completed fairly gloomy notes on this subject. At Research Affiliates, Christopher Brightman suggests that US growth will only be 1% a year while Jeremy Grantham of GMO plumps for 1.4%. On their logic, the outlook for Europe, where the demographic trends are even less promising, is even worse.

If they are right, then the effects will be profound. As Mr Brightman points out, fiscal sums are usually calculated on the basis of a return to "normal" growth rates.

The 2.5% long-term potential growth assumptions for the U.S. economy held out by the White House and Congressional Budget Office are wildly optimistic; indeed, the White House forecast centers on 4% real growth during the proposed recovery years of 2014Ė2017.



Read more: http://www.businessinsider.com/slow-growth-will-clobber-government-budget-deficits-2012-11

Things will be rather more grim in the US, which will fall back to mid-pack in the developed countries as developing countries compete for resources.

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Reply If These Two Brilliant Investors Are Right About Future Growth, The World Is Screwed (Original post)
FarCenter Nov 2012 OP
NYC_SKP Nov 2012 #1
villager Nov 2012 #2
OldDem2012 Nov 2012 #3
aletier_v Nov 2012 #13
FarCenter Nov 2012 #15
patrice Nov 2012 #21
dixiegrrrrl Nov 2012 #28
RC Nov 2012 #4
GeorgeGist Nov 2012 #9
RC Nov 2012 #25
Buns_of_Fire Nov 2012 #5
JaneyVee Nov 2012 #6
GeorgeGist Nov 2012 #10
WinkyDink Nov 2012 #12
Kolesar Nov 2012 #7
patrice Nov 2012 #8
GeorgeGist Nov 2012 #14
patrice Nov 2012 #20
ChisolmTrailDem Nov 2012 #11
WinkyDink Nov 2012 #16
ChisolmTrailDem Nov 2012 #22
antigone382 Nov 2012 #26
patrice Nov 2012 #18
aletier_v Nov 2012 #17
patrice Nov 2012 #19
patrice Nov 2012 #24
Tobin S. Nov 2012 #23
BeyondGeography Nov 2012 #27

Response to FarCenter (Original post)

Sat Nov 24, 2012, 11:45 AM

1. If the planet and its resources were growing in size, then this "growth" model might make sense.

But even a child can figure out that population and economic growth are plainly unsustainable.

As long as we associate "growth" with "health" or "quality" we are doomed to implosion.

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Response to NYC_SKP (Reply #1)

Sat Nov 24, 2012, 11:47 AM

2. +1

That always struck me, even as a kid, as well: It's a clearly finite planet -- what fool(s) would require an economic system dependent on infinite growth?

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Response to NYC_SKP (Reply #1)

Sat Nov 24, 2012, 11:58 AM

3. This Pentagon report on dwindling resources was leaked in 2004....

Now the Pentagon tells Bush - climate change will destroy us

QUOTE:

Climate change over the next 20 years could result in a global catastrophe costing millions of lives in wars and natural disasters..

A secret report, suppressed by US defence chiefs and obtained by The Observer, warns that major European cities will be sunk beneath rising seas as Britain is plunged into a 'Siberian' climate by 2020. Nuclear conflict, mega-droughts, famine and widespread rioting will erupt across the world.

The document predicts that abrupt climate change could bring the planet to the edge of anarchy as countries develop a nuclear threat to defend and secure dwindling food, water and energy supplies. The threat to global stability vastly eclipses that of terrorism, say the few experts privy to its contents.

'Disruption and conflict will be endemic features of life,' concludes the Pentagon analysis. 'Once again, warfare would define human life.'

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Response to OldDem2012 (Reply #3)

Sat Nov 24, 2012, 12:45 PM

13. Space - the final frontier

http://en.wikipedia.org/wiki/Space_elevator

"In 2011, Google was revealed to be working on plans for a space elevator at its secretive Google X Lab location"

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Response to OldDem2012 (Reply #3)

Sat Nov 24, 2012, 12:47 PM

15. Climate change presupposes a continued economy capable of extracting and burning hydrocarbons

It's possible that the economics become unfavorable before more than several degrees are baked in.

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Response to OldDem2012 (Reply #3)

Sat Nov 24, 2012, 01:06 PM

21. Both John Kerry AND Lawrence Wilkerson made public statements about the facts that year.

Trying not to be bitter about this, but, good god damned! we just had to have our holy fucking war against Islam/Choice/LGBTQs etc. etc. etc.

I'm a rational person; I WORK at understanding, but I don't believe I will ever forgive those damned End Timers, nor!!! will I forget.

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Response to NYC_SKP (Reply #1)

Sat Nov 24, 2012, 04:52 PM

28. even worse:

the national debt ALSO grows, every year, according to a doubling time of about 7 years.

So, if our national debt is the 48% of GDP than most say it is.....
it doubles in 7 years

Thus pop. growth, debt growth and GDP growth are all unsustainable over time.

Just a race to see which one will reach the max first.
I opt for...debt.

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Response to FarCenter (Original post)

Sat Nov 24, 2012, 12:01 PM

4. There is no reason for continued growth in the first place.

 

Sustainability is all that is required. Lots of businesses prosper on sustainability, instead of growth.
It is mostly greed that demands perpetual growth.

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Response to RC (Reply #4)

Sat Nov 24, 2012, 12:36 PM

9. Some examples would be useful ...

for those not as informed as yourself.

Thanks.

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Response to GeorgeGist (Reply #9)

Sat Nov 24, 2012, 02:08 PM

25. Mom & Pop businesses.

 

In fact, most local businesses. That should be self evident.

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Response to FarCenter (Original post)

Sat Nov 24, 2012, 12:01 PM

5. I was always taught that the only thing that will keep growing indefinitely is an untreated cancer.

So I believe it is with our economic system -- it contains the seeds of its own destruction, as long as Wall Street keeps pushing its "expectations" of 2-3-4-5-whatever% growth each and every friggin' quarter until the sun goes supernova. It can't and won't happen.

You can only fill a balloon so much before it pops -- and then it's of no use to anyone.

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Response to FarCenter (Original post)

Sat Nov 24, 2012, 12:02 PM

6. You can't have infinite growth on a finite planet.

And every now & then I realize we may have hit our techno-evolutionary peak. The only thing left is the singularity, or artificial intelligence.

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Response to JaneyVee (Reply #6)

Sat Nov 24, 2012, 12:41 PM

10. It shouldn't take long for AI ...

to conclude that it's man who is unsustainable unnecessary.

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Response to JaneyVee (Reply #6)

Sat Nov 24, 2012, 12:44 PM

12. Why not? One need not remain stagnant in technology, e.g.

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Response to FarCenter (Original post)

Sat Nov 24, 2012, 12:31 PM

7. The US is in better shape to handle a huge deficit than Europe and Japan...

...if one assumes that the US population will grow and make the national debt seem "relatively smaller" than that of countries with a flat population "growth". This article shows that the assumption is "flawed".

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Response to FarCenter (Original post)

Sat Nov 24, 2012, 12:32 PM

8. Competition for resources affect our economy? I know it's only a small piece, but what about

addressing OTHER resources, such as, hemp?

I know that's no answer on the macro-level, but would NEW resources affect some of the depredations on the grassroots of what is going on up there?

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Response to patrice (Reply #8)

Sat Nov 24, 2012, 12:45 PM

14. OK

What makes hemp new?

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Response to GeorgeGist (Reply #14)

Sat Nov 24, 2012, 12:53 PM

20. Legalizing it would make it a new economic resource for the middle-class & lower.

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Response to FarCenter (Original post)

Sat Nov 24, 2012, 12:42 PM

11. Resources are getting less abundant and more expensive and the middle class

is getting poorer. We are currently running on the momentum of 100 years of growth and that momentum is beginning to slow. Some day soon growth, even at 1% per annum, will go negative and global economic growth will cease. Those who feel otherwise or continue to invest as if growth is a given are fueled by a false optimism that is based either on naivete or on denial or are just plain oblivious.

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Response to ChisolmTrailDem (Reply #11)

Sat Nov 24, 2012, 12:47 PM

16. Which resources? Copper? Bauxite? Iron ore? Gold? Water? Trees?

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Response to WinkyDink (Reply #16)

Sat Nov 24, 2012, 01:07 PM

22. The most obvious is oil. A few years ago a barrel of oil was $10

and now it's been hovering around $90 for years now. Also, they are fracking for oil now which to me means conventional sources are depleted or nearly depleted. Saudi Arabia is ramping up solar energy research.

I don't know much about it, but it would seem to me that, under those circumstances, oil as a resource must be getting more scarce if market fundamentals reflect real-world realities. This same concept applies to all resources

I've also read that lithium and rare earth resources are also in short supply. Even wheat is not able to keep up with demand.

I'm not an expert but it just makes sense on a finite planet with a growing human population that economic growth will eventually succumb to resource scarcity.


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Response to WinkyDink (Reply #16)

Sat Nov 24, 2012, 02:17 PM

26. phosphorus, potassium, helium, cheap and less noxious forms of fossil fuel energy,

top soil, fresh water, fisheries, many species of trees, weather patterns favorable to agricultural production...

off the top of my head...

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Response to ChisolmTrailDem (Reply #11)

Sat Nov 24, 2012, 12:49 PM

18. or - They are evil Santas, trying to break it the way that Reagan supposedly broke the USSR &

betting on whatever "archipelago" they have going on wherever.

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Response to FarCenter (Original post)

Sat Nov 24, 2012, 12:48 PM

17. Plenty of resources off-planet

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Response to aletier_v (Reply #17)

Sat Nov 24, 2012, 12:52 PM

19. an economic prescription for machine wars in space. NO thank you. Some? maybe. but . . .

reliance? economic dependence upon those off-planet resources???

NO. HELL!!! and I do mean, HELL, no!

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Response to aletier_v (Reply #17)

Sat Nov 24, 2012, 01:11 PM

24. IOW, under highly limited, rock-solid, absolute international terms with significant

FINANCIAL CONSEQUENCES.

Sounds like the new world order to me, so, upon re-consideration, just plain NO. HELL no!

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Response to FarCenter (Original post)

Sat Nov 24, 2012, 01:09 PM

23. The Genius Who Invented Economics Blogging Reveals How He Got Everything Right And What's Coming Nex

From the same site:

http://www.businessinsider.com/bill-mcbride-of-calculated-risk-2012-11

In a 30-minute conversation with Business Insider, he explained how charting these numbers every single month for nearly 8 years has allowed him to "let (the data) tell you a story," and accurately track each twist and turn we've seen during this historic period for the U.S. economy.

Because he's been so uncannily good at assessing the state of the economy, we had to get his take on what's coming next. Despite some concerns about the Fiscal Cliff, and the omni-present threat of a Europe blowup he says "Iím not a roaring bull, but looking forward, this is the best shape weíve been in since í97."

Underpinning his optimism is the fact that the State & Local bust will no longer be a drag in 2013, and that the housing turnaround story has a long way to go and is more robust than anyone would have expected, particularly in the hardest-hit areas.

snip

Why do I change my views? I donít know, I just go where the data leads me. I think itís better question for some of the other people is why they didnít change theirs? And I think the answer is they tend to be bearish all the time. Youíve been around long enough to know that thereís a whole industry of gloom and doom, that the ZeroHedge mentality kind of guys. Iím almost 60 years old. All my life thereís been people telling me that the worldís gonna end for this and that reason in the next few years....



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Response to FarCenter (Original post)

Sat Nov 24, 2012, 02:49 PM

27. Americans wanna party and they always find a way

Me, I'm looking forward to community-based economics and the end of growth. The combination of technology, electricity, plumbing and efficient transportation rationally organized and sensibly consumed is more than enough to sustain us for many years to come, if, as Roger Waters once said in another vein, we all pull together as a team. Some deep blue parts of the country will get it and the usual suspects will claim a socialist conspiracy. Me, if I never get on a plane to sleep in a hotel cell room again I will be one happy man.

Then again, the loveliest part of the slowdown (the part when the new reality is not just inescapable but seen as a new sort of opportunity) will happen when I'm retired anyway. So, to you kids out there, embrace your regional/local futures. I think you'll have a better chance at happiness than many of us market-chasing postwar hamsters.

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