There was a very interesting article in USA Today Wednesday which is a must-read, since global warming is going fast and furious with July being the hottest month every on record.
What makes the drought records so interesting, from the perspective of longwave economics, is that the last time a drought (and heat) were this bad in some parts of the country was in 1936.
We need to pay very close attention to economic history, here. The Crash of 1929 and the Crash of 2008, we both “first step down into Depression” events. It was the climate change/extreme variances of ’36 that continued the Great Depression and exacerbated the already emergent Dust Bowl.
Remember last year (and the year before) in Texas? Herds being trimmed dramatically and grasslands and range dying? Very similar to what was going on in the early Dust Bowl period of the ugly 30′s.
Now, as we look at the latest Drought monitor report, we see exceptional drought, those darkest colors on the map, getting into the breadbasket region. As Robin Landry observed here a long while back: Drought is what flips a recession into a depression. Which has been our view of events here, ever since the market peaked (on an inflation-adjusted, aggregate basis) in 2000.
More and more things are falling into line: 2000′s decline into 2001/2003 was analogous to the market break in 1920-1922. The 2008 collapse was approximately in line with 1929 and we’ve been clawing back since.
But now with drought, expect America to sink back into a secondary depression next year (2013) which will be analogous to the secondary depression digging in during 1937 and that led to WW II.
And since, as any good student of history knows, wars tend to cluster at peaks and valleys of longwave economics, the coming low in the 2015-2018 area should be marked with global war.
Oh, and the next Hitler-type should be out there percolating and gathering followers right now so in the next 1-4 years his modern analog should roll out a blitzkrieg into a neighboring country which would be the analog of Germany’s 1939 invasion of Poland.
Swap Hitler’s call for lebensraum for food, or oil, and the whole (cyclical) historical rhyme falls into place. No wonder most schools of economics detest students of economic cycle theory.
Ain’t that a cheery outlook?
Number and Numbers
All of which makes the [minor] daily perturbations in economic data somewhat predictable at the macro level.
Latest unemployment figures are as expected, for example:
“In the week ending August 4, the advance figure for seasonally adjusted initial claims was 361,000, a decrease of 6,000 from the previous week’s revised figure of 367,000. The 4-week moving average was 368,250, an increase of 2,250 from the previous week’s revised average of 366,000. The advance seasonally adjusted insured unemployment rate was 2.6 percent for the week ending July 28, unchanged from the prior week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending July 28 was 3,332,000, an increase of 53,000 from the preceding week’s revised level of 3,279,000. The 4-week moving average was 3,304,750, an increase of 4,500 from the preceding week’s revised average of 3,300,250. “
And this morning’s Balance of Trade Report was definitely and upside surprise:
“Goods and Services The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total June exports of $185.0 billion and imports of $227.9 billion resulted in a goods and services deficit of $42.9 billion, down from $48.0 billion in May, revised. June exports were $1.7 billion more than May exports of $183.3 billion. June imports were $3.5 billion less than May imports of $231.4 billion. “
So how did that happen?
“The May to June decrease in imports of goods reflected decreases in industrial supplies and materials ($2.3 billion); capital goods ($1.3 billion); consumer goods ($0.6 billion); and foods, feeds, and beverages ($0.2 billion). Increases occurred in automotive vehicles, parts, and engines ($0.6 billion) and other goods ($0.1 billion).
The June 2011 to June 2012 increase in exports of goods reflected increases in capital goods ($3.8 billion); industrial supplies and materials ($2.8 billion); automotive vehicles, parts, and engines ($2.0 billion); consumer goods ($0.9 billion); other goods ($0.9 billion); and foods, feeds, and beverages ($0.8 billion).”
Markets have already discounted much of this. And, the Baltic Dry Index has dropped something like 20% in the last month which means 90-days from now, markets could be down dramatically.
Gotta read the Yahoo story on how the “Obama camp denies knowledge of cancer tale it told in May.“ Don’t'cha just love how politics is getting down and dirty.
Why, a few more presidential elections like this one and we ought to be able to completely scrub any discussion of substantive issues like the fiscal cliff ahead in Q1 2013. But hey! No worries…we’re in the Land of the Free, home of the mud.
AARP Studies Political Economics
Speaking of politics, this AARP press release caught our eye:
“– In the coming November elections, a key group of voters – non-retired baby boomers ages 50-64 – are driven by economic anxieties that extend well beyond the single issue of jobs, according to the results of a new series of surveys by AARP. All voters age 50+ want the candidates to better explain their plans for Social Security and Medicare, which will help them determine their votes.
50+ Voters’ Financial Outlook: Dissatisfied and Anxious
The particular pressures facing boomer voters – across party lines – are reflected in a new “Anxiety Index,” which measures their worries on issues including prices rising faster than incomes (75% worry somewhat or very often about this), health expenses (62%), not having financial security in retirement (73%) and paying too much in taxes (71%).
By comparison, 32% of these boomer voters regularly worry about being able to find a full-time job with benefits or keep up with their mortgage or rent (30%), issues that are more widely discussed as leading economic issues for voters in the coming election.
“We know the issue of jobs is very important to voters age 50-plus, but any meaningful discussion of the economy and this year’s election has to include the future of Social Security and Medicare,” said Nancy LeaMond, AARP Executive Vice President. “For these voters, ‘retirement security’ and ‘economic security’ are largely the same thing.”
Except of course, divide and conquer using coalitions of narrow single-interest groups still seems to be how politics if played in reality. Damn shame it’s not more holistic, though, since it really is all part of a single system….
Agent Orange Clean-up
50-years after the Vietnam War got rolling in a serious way, the US is starting to clean up Agent Orange left behind.
American still have not learned the lessons here: The PTB still use the same domino theory, and variants. Yet the fact is that the rabid right got Vietnam mostly wrong: It was a failed colonial war, yet I’ve never heard it admitted by the war-mongers. I’m not claiming that those “radicals on the left” get much of foreign policy right, either.
But the truth usually lays somewhere in the middle. Vietnam’s relation to China will likely evolve as Canada’s relation to the US has. Wasn’t it Pierre Trudeau who said being in Canada was living next to a sleeping elephant you hope never turns over in its sleep? Gotta be a similar vibe in Vietnam.
I have still not heard a legit reason for us being in Afghanistan…for other than colonial reasons (“Let’s contain China this way, maybe?”) and poppies. And who is pulling the strings of the terrorists?
Can we please get refocused on fixing America instead of everything but?
I just find it a damn interesting coincidence of history (if there is such a thing, right?) that Aleppo – a city which has key historical importance – is where such savage fighting is going on in present times. Not exactly 6 o’clock news, but an interesting angle to view events from in that vicinity.
A Welcomed War
Not often you see rockets going off and both sides of a border applauding, but that’s the version of events along the Sinai portrayed in this BBC report.
Al Jazeera reports Egypt has fired its intelligence chief over bungled events in the region.
More after this…