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Comment by chollida1 | Hacker News Reader

> That is not the consensus.

That's fair as far as I guess there is no consensus. You posted alot of links that don't really point to any definitive conclusion.

Look at your data. It doesn't correlate with the Index in any way. The Index had a very pronounce peak in 2008.

This link > https://research.stlouisfed.org/fred2/series/TCU/

was on a huge downward trend staring in 2007

I agree there is alot of room for interpretation, but I'm very happy to stand behind and put my money behind my assertion that the Baltic Index isn't a useful indicator anymore.

But I do appreciate the opposing view point!

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The BDI's indication is supported by the decline in rail traffic, the decline in imports/exports in/out of China, and corresponding declines for the BRIC nations. Its supported by the recent (and growing) closures of mines and mills globally. From Janet Yellen, Michael Pettis, Zhou Xiaochaun... all acknowledge this decline. You're in a very, very small minority.

What's your take on the Fed raising rates next month? I've seen a lot of consensus that rates are going up next month, but I don't see how they can with various economic indicators showing that the global economy isn't on solid footing.

Perhaps we'll be stuck with ZIRP for a bit longer :/

The Fed is probably deciding primarily on domestic indicators.

I'm starting to wonder if "a bit longer" means "forever." There seems to be a real lack of global growth engines.

If you want to chat over coffee about it, I have a long thesis that agrees with this. Global growth is, for lack of a better way to put it, over.

Central planning interest rates will probably never be over 3-4% again (and that's a bullish outlook).

Question ; Considering the projected growth in world population and the huge amount of poor people in the world. How can growth be over? Or are you thinking mostly about the west?

Population growth has slowed (or even stopped) in most countries except for a few outliers in Africa:

http://data.worldbank.org/indicator/SP.POP.GROW

Also, you're assuming more people = population growth; that's like Snapshat saying they're profitable because they have tons of users, but no revenue. You need a properly functioning economy as well as people to have growth (you need more than that, but that's all I included for simplicity sake).

Totally agree for four reasons:

1. Wealth demography. Wealth is held by older people seeking safety not growth/risk.

2. Capital stagnation. Capital is being stockpiled by central banks and large corporations. The former seeks to rectify structural problems in spending and banking sectors. The latter seeks to avoid tax liability.

3. Small businesses abandoned. Developed nations, the US in particular, have focused resources on the largest institutions and institutions serving the poorest. By comparison small businesses are ignored creating more risk for large institutions, and incrasing the ranks of the poor.

4. Global instability. Declines are almost always preceded by alarming world events causing capital flights that expose imbalances in economies. Yes, the solution is to not have imbalances, but aside from that utopian ideal, restoration of a stable world order opens the door to economic risk taking and then prosperity.

We're in violent agreement!

> Central planning interest rates will probably never be over 3-4% again

Not until we see a large scale war. Nothing raises interest rates like a bond-funded war campaign. A war would also increase aggregate demand, R&D spend, and decrease the domestic labor force.

It's a sad fact that it takes violence/discomfort to galvanize and restore discipline to a nation and its leaders. Not unlike the disruption of old industries by the new. Except in war, you break bones and bodies whereas in startup land you break laws and customs.

Nothing makes them irrelevant like expanding radioactive deserts, huge clouds of fallout, and festering zones of bacterial contamination.

I don't think we want a large scale war. Technology benefited a lot from previous wars - without WWII and the Cold War computing and telecoms would be a few decades behind - but technology has changed the risk/benefit profile to make war unfeasibly destructive.

The irony is there's a lot that could be done. We need clean energy, more support for small businesses of all kinds, desalination, infrastructure replacement, and possibly a hugely increased space program.

But current economic models are fiscally constipated - possibly terminally - and improvements are unlikely until they're replaced.

> The irony is there's a lot that could be done.

We should have been doing all that and more. Unfortunately, the only thing that was politically feasible was QE.

> But current economic models are fiscally constipated

Absolutely.

After hearing Mark Blyth's recent "ha ha only serious" summary[1] of both of these points... it's going to be a rough ride.

[1] https://www.youtube.com/watch?v=iJCcoF5K0SM#t=1160

Thanks for this video!

It appears that the Fed is just in the business of managing perception. As weird as it sounds they want to get the checkmark for saying they raised the rate (e.g. 25 basis points) while at the same time sending a clear message that any other move upward will be a very slow process. I'm not sure you can have it both ways forever.

>Perhaps we'll be stuck with ZIRP for a bit longer :/

Given Japan's experience we'll probably have it for at least another decade possibly more.

There's a big difference between Fed governor's acknowledging something, as they often do (see: biotech valuations, startup valuations), and the Fed governor saying it's something the macroeconomy needs to worry about. Can you link me to where they said it was actually a significant risk, above any of the other plethora of risk factors out there?

I agree that it isn't useful anymore, simply because once an index has been shown to 'lead' it will be made part of future models which well then either 'track' or 'lag' but no longer lead. But that does not mean a very low BDI isn't a problem.

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