If the current economic environment continues, will

[Tim Nugent]

What's left of my 2 cents worth (Illinois taxed it down to 1.9 cents) is that money needs to be spent on infrastructure. From my point of view, a vast majority of those under or unemployed are directly or indirectly related to the building industries.  Sure, many were related to housing but commercial, industrial, and public infratructure were hit hard as well as all the jobs (professional, materials and manufacturing that supported those sectors).  The "shovel-ready" spending was a waste.  Who was foolish enough to believe that such a thing existed.  Governments don't contract for expensive planning up to the point of construction and then just file those plans and permits away for another day. So, around here, what we got for all that money was alot of asphalt roads re-surfaced.  Now, even those guys (pavers, stripers and asphalt supply companies) will be looking for work for a long time to come - as municipal backlogs got pulled into the Now from the the future.  Poof, now it's all gone. No staying power.

The wise thing to do would be to fund the design of much needed infrastructure projects - roads, bridges, water and sewer systems, Nuke plants, etc.  This would restart the engineering and planning sectors - high paying jobs, and provide the need to build out these projects - which would take years and restart the construction industry - one industry that can't be outsourced t the 3rd world.  Then those workers could buy some of the foreclosed houses they were kicked out of and actually have enough money to maybe fix them up - which would help those other sectors/trades.  Who knows, maybe they buy a new Ford or Chevy truck too!

[David_Tepper]

"If Golf Is An Economic Indicator, We're On Our Way To Recovery"

Business is very good at Golfsmith!

http://www.cnbc.com/id/41062581?__source=yahoo

[mike_malone]

 Meredith Whitney was way off in her bank failure number ; it was only 157---the most since 1992.

      David Rosenberg is an economist. My opinion is that economists can be valuable in interpreting what is going on now and laying out the risks in the economy but not predicting things. DR nailed the risks of the real estate bubbble like few did. He simply factored in the massive debt bubble into his equation. SOMETHING NEITHER GREENSPAN OR BERNANKE DID!

     He continues to provide valuable insight on a daily basis and I believe he manages money so the comment that he has no skin in the game is off the mark. His recommendation of both treasuries and gold was certainly not a conventional call.

      Meredith Whitney gained recognition for the clarity of her call on banks. She straigtforwardly said they were insolvent. That takes guts and she was right.

    Nouriel Roubini made a shocking call that the investment banking business would disappear and it would have if not for government intervention.

      The great majority of economists don't care about whether gdp comes from income or debt. This causes me to dismiss their analysis. Economists and market commentators generally keep their views right around consensus to keep their jobs.

    Investors are better served by those people who make well thought out nonconsensus recommendations.

[Bill_McBride]

Cold war was a fiction created to stimulate two major world economies.

That's straight out of the Orwell "1984" playbook.  Endless war to keep the military-industrial complexes humming.

Now just a cotton-pickin' minute, that's getting uncomfortably close to home!

[Jud_T]

Mike,
Congrats.  You've identified the trifecta of doom.  There's nothing inherently wrong with debt as long as you don't subscribe to Sharia law.  It's like fine wine and Cuban cigars.  Everything in moderation, including calls for the end of the world.

[Jim Nugent]

Mike,
Congrats.  You've identified the trifecta of doom.  There's nothing inherently wrong with debt as long as you don't subscribe to Sharia law.  It's like fine wine and Cuban cigars.  Everything in moderation...

Do you think the U.S. and/or global economy has a moderate amount of debt? 

[Jud_T]

Clearly the US, and particularly parts of Europe, have too much debt as a percentage of GDP.  But not an insurmountable amount that will necessarily crush the economy if dealt with in a mature fashion, at least in our case.  Greece, Ireland and Portugal have serious problems.  But their combined share of the global economy is like a pimple on an elephant's ass...

[Jim Nugent]

Jud, last September a Boston U. professor put real U.S. government debt at $200 trillion.  The $14 trillion figure government claims does not count "off balance sheet" obligations such as Social Security, Medicare and federal pensions.  Sort of like not counting discouraged workers in the unemployment rate.  Accounting tricks that cover up how bad the numbers really are. 

How can anyone deal with $200 trillion of debt in a mature fashion? 

[Jud_T]

He claimed that was all unfunded?  I'd love to see his assumptions.  My guess is he projected out well into the distant future and assumed we make no changes.  Obviously, we have to raise the age folks get social security and cut defense spending in addition to all the pork that's in the budget.  But we are just beginning to get the economy going again.  It's the longer term planning that needs to be addressed more than the current stimulus which is working.  If you look at these things cyclically, we've probably got about 5 more years of limping along while the market clears for real estate and everyone repairs their balance sheets and gets beyond the bunker mentality.  As long as we begin to make the tough choices about the long range budgeting in the next few years and support growth we should be fine.  When the economy's sputtering along everyone takes today's numbers and projects them out.  When growth eventually returns to 3-4% on a sustainable basis, and granted that may take a while, the cash will be rolling in.  If we can just convince these clowns to manage their finances like the rest of us we'll muddle through.  I believe the debt burden and the need for belt tightening will shave about 1% off GDP.  So maybe we only grow 2% instead of 3 for the next 5 years.  But it's still growth.  It's not a black hole.  When you start seeing 2-300,000 jobs consistently in the unemployment numbers, which is a lagging indicator by the way, things will start feeling a lot better and fear will begin to turn back to greed.  It's already happening...You might as well invest and do whatever you can to spur growth, because if that yahoo's right your money won't be worth the paper it's printed on anyway...Or you can put all your money in gold at $1400 an ounce, buy food rations and hunker down for the coming armageddon. 

[Rob Bice]

Meredith Whitney was way off in her bank failure number ; it was only 157---the most since 1992.

      David Rosenberg is an economist. My opinion is that economists can be valuable in interpreting what is going on now and laying out the risks in the economy but not predicting things. DR nailed the risks of the real estate bubbble like few did. He simply factored in the massive debt bubble into his equation. SOMETHING NEITHER GREENSPAN OR BERNANKE DID!

     He continues to provide valuable insight on a daily basis and I believe he manages money so the comment that he has no skin in the game is off the mark. His recommendation of both treasuries and gold was certainly not a conventional call.

      Meredith Whitney gained recognition for the clarity of her call on banks. She straigtforwardly said they were insolvent. That takes guts and she was right.

    Nouriel Roubini made a shocking call that the investment banking business would disappear and it would have if not for government intervention.

      The great majority of economists don't care about whether gdp comes from income or debt. This causes me to dismiss their analysis. Economists and market commentators generally keep their views right around consensus to keep their jobs.

    Investors are better served by those people who make well thought out nonconsensus recommendations.

At least we have some common ground - we both agree that Meredith Whitney was way off on her bank failure estimate.  I will also take the under on the number of municipal failures compared with her estimates, if you are one to wager.

My primary point is that for the most part analysts who make a "name" for themselves tend to be either bullish or bearish, with little chance of ever changing their tune.  In hindsight we will always be able to find analysts who "predicted" the course of events.  Unfortunately those same bullish analysts probably predicted 20 of the last 10 bull markets while those same bearish analysts probably predicted 20 of the last 10 beart markets.

If Rosenberg, Whitney, Roubini et al. float your boat than who am I to argue.  Best of luck.

[Jud_T]

Rob,

There are a handful of guys out there, Joe Lavorgna at Deutsche and Goldman's Jan Hatzius for starters, who don't have an axe to grind.  They take what the data is telling them, analyze it in an unbiased manor, and make their forecasts accordingly.  For the record Lavorgna has been positive on the economy for a while, and Hatzius, who had been one of the more bearish guys, has recently become much more upbeat...

[Chris Johnston]

Rob,

There are a handful of guys out there, Joe Lavorgna at Deutsche and Goldman's Jan Hatzius for starters, who don't have an axe to grind.  They take what the data is telling them, analyze it in an unbiased manor, and make their forecasts accordingly.  For the record Lavorgna has been positive on the economy for a while, and Hatzius, who had been one of the more bearish guys, has recently become much more upbeat...

Jud

I'm curious, do you believe the economy recovering will save the highly leveraged golf club binge built over the last 5-6 years, some of which are quite highly regarded?  This is the 800Lb gorilla affecting the forum, no?  How do these places service their debt, let alone retire it? 

My, $0.02, Whitney couldn't estimate impacts from the change in bank accounting nor the scope of fed assistance.  If mark to market was re-instituted, bank failures would escalate, especially with the overhang of real estate keeping prices depressed.

I agree things are getting better but the cost for this is and was material.

[Patrick_Mucci]

Is Alan Greenspan to blame for perpetuating cheap money for so long ?

[Bradley Anderson]

Getting back on topic, will the current environment foster a "collective" approach to maintainance costs in terms of equipment purchases and sharing ?

Will golf return to a more rugged look, or will the demand for immaculate grooming continue ?

Most of the private club golf course maintenance budgets are only 18% of their club's overall budget. In the public sector it is probably closer to 35%. You could eliminate the maintenance budget and it won't save a club that is in trouble.

[Chris Johnston]

Is Alan Greenspan to blame for perpetuating cheap money for so long ?

Pat

In Part, yes.  Wall Street securitizing residential mortgages had a big part.  The ratings agencies giving junk traunches AAA rating had a big part. Consumers borrowing and home equity loans had a big part Flippers and people who thought homes were current investments had a big part, Lack of oversight had big part. Banks chasing fees had a big part.  Governments worldwide borrowing beyond well their means had a big part.  Myths about Boomer wealth had a big part.  GREED had a very BIG part.  "You can have it all" had a very big part.

[Patrick_Mucci]

Getting back on topic, will the current environment foster a "collective" approach to maintainance costs in terms of equipment purchases and sharing ?

Will golf return to a more rugged look, or will the demand for immaculate grooming continue ?

Most of the private club golf course maintenance budgets are only 18% of their club's overall budget. In the public sector it is probably closer to 35%. You could eliminate the maintenance budget and it won't save a club that is in trouble.

Bradley,

But, the problem is that the Green Budget is the LARGEST single department budget, and as such, it has a higher profile and draws more attention (read flak and criticism)

One of the things I tried to do was segment the green budget.
The green budget was responsible for all landscaping around the clubhouse.  I broke that out.
The green budget was responsible for maintaining the tennis courts.            I broke that out.

I also broke out employee benefits, meals and other items to try to have the green budget viewed with a more enlightened perspective.

It's a tough battle when all the other department chairman are trying to protect their budgets by telling everyone to focus on the club's largest budget and their expenses.

[Jud_T]

Jud

I'm curious, do you believe the economy recovering will save the highly leveraged golf club binge built over the last 5-6 years, some of which are quite highly regarded?  This is the 800Lb gorilla affecting the forum, no?  How do these places service their debt, let alone retire it? 

Chris,

Obviously anyone who did any highly leveraged real estate deal in 06/07 is wearing it bigtime, golf or otherwise.  I'm not saying were not working through a very difficult situation.  We are.  Frankly I'd wager that my income has fallen farther from the peak than most here.  In the fall of 2008 the financial system came to a grinding halt.  All I'm saying is it's now 2011 and many have yet to come out of the bomb shelter.  I'm not signaling the all-clear, I'm merely suggesting to crack the hatch and take a peak around.

[mike_malone]

 I was kidding about Meredith Whitney. I  think 154 is pretty close to 200. As for her muni call I doubt it as well.

     The economists who factored  the debt bubble into their analysis won't change their tune until it isn't a major factor anymore. Conventional economists will continue to think we are on a normal trajectory. I thought job growth was supposed to be at 2 to 300,000 a month more than a year ago! The weak recovery from a sharp decline is typical of a balance sheet recession not a garden variety business cycle.


    Alan Greenspan is integral to the credit bubble. He's like the coach of the team. By constantly believing the Fed could intervene in the economy without negative consequences he put the country at risk. After it was all done he decided his thinking was incorrect. When I chose the wrong club it has insignificant consequences. When the Fed introduces itself so dramatically into the economy when  it was missing the main cause of the problem it's dangerous. Who recommended homeowners buy ARM's ? Who suggested that house prices don't go down?


    

      

[John Kirk]

And, to finish your last thought, Mike, who was the first to suggest that houses were an investment?

[Chris Johnston]

Jud

I'm curious, do you believe the economy recovering will save the highly leveraged golf club binge built over the last 5-6 years, some of which are quite highly regarded?  This is the 800Lb gorilla affecting the forum, no?  How do these places service their debt, let alone retire it? 

Chris,

Obviously anyone who did any highly leveraged real estate deal in 06/07 is wearing it bigtime, golf or otherwise.  I'm not saying were not working through a very difficult situation.  We are.  Frankly I'd wager that my income has fallen farther from the peak than most here.  In the fall of 2008 the financial system came to a grinding halt.  All I'm saying is it's now 2011 and many have yet to come out of the bomb shelter.  I'm not signaling the all-clear, I'm merely suggesting to crack the hatch and take a peak around.

+1  We think alike.

[Malcolm Mckinnon]

Talk about OT. Lets all go over to Zerohedge.com or Nakedcapitalism.com  or Market-Ticker.com or even Mish's globaleconicanalysis.blogspot.com websites for this discussion.

I have been and continue to be hugely bearish regarding the prospects of the USA and Eurozone. Debt to GDP ratios have skyrocketed to the point where it is clearly unsustainable and defaults are inevitable. The Ponzi Pyramid will collapse despite the Cenrtral Banks efforts. It is a balance sheet debacle on every level.

However, my personal seat of the pants have lift under the wings for the first time in over a decade. We own a Textile manufacturing plant in the US and have suffered a miserable last 13 years going back to the great Asian devaluation of 1997. In the meantime hundreds of companies that have been around since the late 1800's have folded. Yet, suddenly the tide seems to be turning. What little Textile manufacturing, finishing, etc that is left in this country is all at maximum capacity. Goods out of Asia are now more expensive than the US with inflation running rampant over there, even with the ramp in commodity costs worldwide. We have been forced to raise prices up to 20%, yet we are oversold.

I am told that China now has a small middle class and they are beginning to buy stuff.  However that middle class is larger than the entire population of the US.

Weird.

[Doug Siebert]

I'm curious, do you believe the economy recovering will save the highly leveraged golf club binge built over the last 5-6 years, some of which are quite highly regarded?  This is the 800Lb gorilla affecting the forum, no?  How do these places service their debt, let alone retire it?

With all due respect to those here whose fortunes or jobs involve these clubs, who cares?  If you take on too much debt and you can't pay it you go bankrupt.  That's how capitalism is supposed to work.  After the bank repossesses and sells it, it is now leveraged in a more manageable fashion and should be able to survive (or will go through the same thing again and be sold at an even lower price)

A few years back there would be concern that such courses might be turned into housing developments, but in most markets that is probably not a large concern at this time.  If a course really is worth more as land than as a golf course, it is probably not a course that will be missed from a GCA perspective.

The excesses of the golf boom may prove to be worse than the excesses of the housing boom.  The golf boom went hand in hand with the housing boom - it was easy to fund a new course as part of a housing development as it automatically made the surrounding development more valuable.  But the golf boom was also fed by Tigermania, and people making crazy projections about the growth in the number of golfers in the future.

[David_Tepper]

"More Hiring Expected As Gloom Starts To Lift"

http://online.wsj.com/article/SB10001424052748704754304576096570812993778.html?mod=ITP_pageone_1

[mike_malone]

 David,

    What took you so long to post that article; I expected it at by ten this morning?



       If I'm on the right track then we should see these types of things happening in the economy and the markets accept them as the usual course of events only to be broadsided by the reality that all is fragile now-----markets, confidence, the economy, and the financial system.

    The relative calm is the perfect background for the next test we face.

[Craig Van Egmond]

Housing double dip.....

http://finance.yahoo.com/news/US-Home-Prices-Slump-Again-nytimes-179536324.html?x=0&.v=2


However consumer confidence is up..

http://money.cnn.com/2011/01/25/news/economy/consumer_confidence/index.htm?hpt=Sbin