Monday, 22 July 2013

b.Megatrend - 16-year Depression

The last part is here:   Land - Distressed Properties

As stated before, the Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in 1930 and lasted until the late 1930s or middle 1940s (a total of 15 years). It was the longest, most widespread, and deepest depression of the 20th century.

In the 21st century, the Great Depression is commonly used as an example of how far the world's economy can decline. The depression originated in the U.S., after the fall in stock prices that began around September 4, 1929, and became worldwide news with the stock market crash of October 29, 1929 (known as Black Tuesday).  The Great Depression had devastating effects in countries rich and poor. Personal income, tax revenue, profits and prices dropped, while international trade plunged by more than 50%. Unemployment in the U.S. rose to 25%, and in some countries rose as high as 33%. Cities all around the world were hit hard, especially those dependent on heavy industry. Construction was virtually halted in many countries. Farming and rural areas suffered as crop prices fell by approximately 60%. Facing plummeting demand with few alternate sources of jobs, areas dependent on primary sector industries such as cash cropping, mining and logging suffered the most. Some economies started to recover by the mid-1930s. In many countries, the negative effects of the Great Depression lasted until the end of World War II.

There are sufficient literature on the causes of the Great Depression, I shall not bother to explain them. If you are interested, you may explore further. But, frankly, a depression is depression for whatever that damn reason. Once the depression gets underway, the world could only solve it by only two things: one, reduce the number of people consuming and two, increase the number of resources. Since, increasing the amount of resources during that time was never possible, the world chose the first option. The world went into another world war.

The result was the world went into one of the best happy eras of our time. The world super-boomed from 1946 to date, a total of 62 years. It was almost abruptly ended in 2008, if not for the intervention of the governments-of-the-day by propping up money supplies. But, this merely kicked the problem ball further down the road, my partner-in-crime always says we will meet the ball soon enough and the ball would be one hack of a big mama. it would be even harder to game the ball. The leaders prayed like hell that the ball would not come during their watch. Meantime, suck the system dry lor.

The super boom brought a huge growth of population - the baby boomers. These baby boomers are now retiring and have been liquidating their full assets in earnest now. I called these baby-boomers, the sin of excesses. There are simply too many of them and so uncountable at any one time. I was fortunately to have met some of them liquidating their land. The drop in price is not for fools. It is very hard and very real. There are simply not enough takers of what they are going to encash. Since these baby boomers have gotten their holdings cheap, it doesn't matter how much they would let go. It is going to be one crazy sale season. The joke is, of course, there would be very few takers.

My estimate is 16-year worth of depression from today. No amount of money-printing or QEs will defer the problem of over-supply caused by these filthy-rich retirees. They are your super-rich uncles and aunts. We are only their very poor nephews.

So don't hope for any price recovery, don't hope for any sale recovery and don't hope for any market expansion. None of these events will happen. The so-called "depression", in my terms, does not implies the usual suggestion by the financial gurus. What I meant is the world will be stuck in this non-performance mode for the next 16 years, just like Japan in her lost 3 decades. So make full use of your current resources to command a better living.

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