Yoga as Treatment for Rheumatoid Arthritis

Yoga May Improve Symptoms of Rheumatoid Arthritis
People With Rheumatoid Arthritis Feel Better After 6 Weeks of Iyengar-Style Yoga

May 24, 2012 (Honolulu, Hawaii) -- Young patients with rheumatoid arthritis (RA) may feel better after practicing yoga for just six weeks, a new study shows.

Researchers reported their findings here last week at the American Pain Society's annual meeting.

[...]

An Alternative to Drugs

The UCLA researchers say some drugs for RA can pose additional risks for younger patients. So the researchers are looking for alternatives. They decided to try Iyengar yoga.

In Iyengar yoga, practitioners may use blocks, straps, cushions, and other props to stretch and strengthen their muscles.

The UCLA researchers recruited 26 women with RA. The women's ages ranged from 21 to 35. On average they had suffered from RA for 10 and a half years.

The researchers then assigned 11 of these women to classes in Iyengar yoga. They assigned the other 15 to a wait list for yoga classes.

After six weeks, they asked both groups about their condition. The group that practiced yoga said they were happier than when they started. They said they could better accept their pain. They also reported better general health and more energy.

The women on the wait list for yoga classes did not experience these improvements.

Even the women who did yoga did not report less pain or disability. That may be because the study was so short, says Lung. "But six weeks did a world of good for those involved."

Sluka says that physical exercise usually takes about eight weeks to show significant effects. All kinds of exercise can help with RA, she says. "Yoga is just another form of exercise," she says.

By strengthening muscles, exercise prevents joints from moving in uncomfortable ways. And it can activate parts of the nervous system that reduce pain.

The study is not conclusive, she points out, because it is very small. Also, there is a possibility that the people in the yoga group felt better just because they were doing something to help themselves, not specifically because they were doing yoga.

But the study is still worthwhile, Sluka says. It shows people with RA they have another option for getting exercise. "Some people like to run. Some people like to lift weights. Some people like to do yoga," she says. [...]

"blocks, straps, cushions, and other props"? Hmmm. Makes me curious to know more about Iyengar yoga.

Iyengar yoga, from Wikipedia:

Iyengar Yoga, created by B. K. S. Iyengar, is a form of Hatha Yoga known for its use of props, such as belts, blocks, and blankets, as aids in performing asanas (postures). The props enable students to perform the asanas correctly, minimising the risk of injury or strain, and making the postures accessible to both young and old. The development of strength, mobility and stability are emphasized through the asanas.

Iyengar Yoga is firmly on the traditional eight limbs of yoga as expounded by Patanjali in his Yoga Sutras.

A form of Hatha Yoga, it focuses on the structural alignment of the physical body through the development of asanas. Through the practice of a system of asanas, it aims to unite the body, mind and spirit for health and well-being. This discipline is considered a powerful tool to relieve the stresses of modern-day life which in turn can help promote total physical and spiritual well-being.[1]

Iyengar Yoga is characterized by great attention to detail and precise focus on body alignment. Iyengar pioneered the use of "props" such as cushions, benches, blocks, straps and sand bags, which function as aids allowing beginners to experience asanas more easily and fully than might not otherwise be possible without several years of practice. Props also allow elderly, injured, tired or ill students to enjoy the benefits of many asanas via fully "supported" methods requiring less muscular effort.

Standing poses are emphasized in Iyengar Yoga. They are said to build strong legs, increase general vitality, and improve circulation, coordination and balance, ensuring a strong foundation for study of more advanced poses.

[...]

Iyengar also developed extensively ways of applying his practice to various ailments, diseases, and disorders. Many of these sources of suffering, such as chronic backache, immunodeficiency, high blood pressure, insomnia, depression and menopause, have specific programs of Iyengar yoga associated with them. Iyengar himself worked with patients after patients had myocardial infarctions.[2] The asanas can be adjusted based on the patient’s stage of recovery.[3] These programs are formulated in their most advanced form at the centre of Iyengar Yoga: the Ramamani Iyengar Memorial Yoga Institute located in Pune, India. [...]

The wiki page shows some of the straps, blocks and cushions in use, to give it context. Interesting.
     

The thoughts you think, and mental depression

They often go together:

Cognitive Therapy for Depression
Are your thoughts dragging you down?

Almost everyone has dark thoughts when his or her mood is bad. With depression, though, the thoughts can be extremely negative. They can also take over and distort your view of reality.

Cognitive therapy can be an effective way to defuse those thoughts. When used for depression, cognitive therapy provides a mental tool kit that can be used to challenge negative thoughts. Over the long term, cognitive therapy for depression can change the way a depressed person sees the world.

Studies have shown that cognitive therapy works at least as well as antidepressants in helping people with mild to moderate depression. Treatment with medication and/or psychotherapy can shorten depression's course and can help reduce symptoms such as fatigue and poor self-esteem that accompany depression. Read on to see how cognitive therapy or talk therapy might help you start thinking and feeling better if you are depressed.

Cognitive Therapy for Depression: A Thinking Problem

Cognitive therapy was developed in the 1960s as an alternative way to treat depression, says Judith S. Beck, PhD. Beck is director of the Beck Institute for Cognitive Therapy and Research located outside Philadelphia. She tells WebMD that the principle underlying cognitive therapy is "thoughts influence moods."

According to cognitive therapists, depression is maintained by constant negative thoughts. These thoughts are known as automatic thoughts. That means they occur without a conscious effort. For example, a depressed person might have automatic thoughts like these:

"I always fail at everything."
"I'm the world's worst mother."
"I am doomed to be unhappy."

Beck says automatic thoughts "may have a grain of truth. But," she adds, "the depressed person distorts or exaggerates the reality of the situation." This negative distortion helps fuel the depression.

With cognitive therapy, a person learns to recognize and correct negative automatic thoughts. Over time, the depressed person will be able to discover and correct deeply held but false beliefs that contribute to the depression.

"It's not the power of positive thinking," Beck says. "It's the power of realistic thinking. People find that when they think more realistically, they usually feel better."

Cognitive Therapy for Depression: How It Works

Cognitive therapy posits that most problems have several parts. Those parts include:

the problem as the person sees it
the person's thoughts about the problem
the person's emotions surrounding the problem
the person's physical feelings at the time
the person's actions before, during, and after the problem occurs

The way cognitive therapy works is a patient learns to "disassemble" problems into these various parts. Once a person does that, problems that seemed overwhelming become manageable.

During regular cognitive therapy sessions, a trained therapist teaches the tools of cognitive therapy. Then between sessions, the patient often does homework. That homework helps the person learn how to apply the tools to solve specific life problems.

"They make small changes in their thinking and behavior every day," Beck says. "Then over time, these small changes lead to lasting improvement in mood and outlook." [...]

The article continues on, comparing the success of cognitive therapy with other methods of treating depression, and also combined with other methods. It also talks about cognitive therapy used to relieve chronic pain, and reduce reliance on pain medications.

It concludes with how you might consider using cognitive therapy to improve your own depression, and where you might find help.

I did a post a while back, about the 2008 election, called: The Real Winner of the 2008 Election: Optimism.

In that post, I refereed to a book about Cognitive therapy, that I found quite interesting: "Learned Optimism: How to Change Your Mind and Your Life" by Martin E.P. Seligman. A description of the book:

Known as the father of the new science of positive psychology, Martin E.P. Seligman draws on more than twenty years of clinical research to demonstrate how optimism enchances the quality of life, and how anyone can learn to practice it.

Offering many simple techniques, Dr. Seligman explains how to break an “I—give-up” habit, develop a more constructive explanatory style for interpreting your behavior, and experience the benefits of a more positive interior dialogue. These skills can help break up depression, boost your immune system, better develop your potential, and make you happier.

With generous additional advice on how to encourage optimistic behavior at school, at work and in children, Learned Optimism is both profound and practical–and valuable for every phase of life.

The book had a chapter about the "optimism quotant" of political speeches, and how there are heaps of data to show that they can be used to predict the results of elections. Something to consider yet again in this election year, perhaps?

Anyway, I think it's a great book for anyone who wants to use cognitive therapy techniques to improve their own outlook and life. Like the woman in the article above said, "It's not the power of positive thinking, it's the power of realistic thinking. People find that when they think more realistically, they usually feel better." That's an excellent description of cognitive therapy, and a good description of the approach used in Seligman's book, too. A practical, useful approach to an important subject.     

"The psychological pain will be much greater than the Great Depression, even though the physical conditions will be much better."

That's a quote from an author selling a book about the coming burst of the "dollar bubble", and what changes it will bring to life in the USA.

I've posted previously about dangers to US currency, about various scenarios such as a complete collapse of our currency similar to (or even worse than) the hyper inflation of 1920's Germany.

But what if, the actual consequences were not as bad as any of those? Or even as bad as the Great Depression of the 1930s? Authors of a new book make a similar claim, but they also say it's going to SEEM worse to us, because we've gotten so used to easy money and credit for so long.

Their book is called "Aftershock":

Aftershock: Protect Yourself and Profit in the Next Global Financial Meltdown

From the Inside Flap
From the authors who accurately predicted the domino fall of the conjoined real estate, stock, and private debt bubbles that led to the financial crisis of 2008 and 2009, now comes the definitive look at what is still ahead in 2012 and beyond—and what investors can do right now to protect themselves.

Based on the authors' unmatched track record of precise predictions in the two landmark books America's Bubble Economy and Aftershock, this Second Edition of Aftershock updates the original book by more than 35 percent with fresh analysis of the latest economic developments, plus offers new in-depth advice for how readers can prepare now for protection and profits in the next global money meltdown.

The second edition of Aftershock shows readers:

Why the latest actions by the U.S. Federal Reserve will eventually damage the dollar and hurt investors worldwide

How future rising inflation and interest rates will harm your specific investments, and what to do about it

The future fall of China's bubble economy, as well as current and future problems with European debt

Detailed investment advice about real estate, retirement, annuities, life insurance, and much more

What's next for stocks, bonds, currencies, commodities, and other assets

How to buy and own gold and silver before, during, and after the coming Aftershock

O.K. fine, another one of THOSE books. They all seem to say "buy gold", which is fine if you got plenty of spare cash lying around. Sorry, none of mine is spare or lying around, it's all working. Then they usually offer advice about managing your stock portfolio, your 401K, and other things I don't even have.

I haven't read this book, so I don't know if it's like that. I don't even know if I would buy it. So why am I writing about it?

Because, the authors claim that their publishers made them delete a chapter from the book, that talks about what life is going to be like in the USA after the currency bubble bursts, on the grounds that it was "too grim".

Well, that did make me curious. And it turns out, they have made that 20 page chapter available as a free download on their Amazon page:

More to Explore: Bonus Chapter
Read a bonus chapter (PDF)--available exclusively on Amazon.com--which details the authors' predictions and recommendations for a post-dollar-bubble world.

Now of course I know this is a promotional device for selling the book. Duh. But that doesn't mean that some of the ideas expressed aren't interesting. Lets have a look at a few excerpts and see:

[...] When the dollar bubble collapses, the huge government debt bubble will fall, too. That means the falling value of the dollar will have caused enough foreign investors to become concerned enough about the value of their dollar-denominated investments that they will no longer be willing to buy U.S. government bonds at a reasonable price. This means the government will not be able to refinance its debt (just like a company that loses the faith of its creditors) and instead the government will have to resort to inflation, tax increases, and budget cuts to deal with the situation (see Chapter 3).

Like a family without their credit cards, the U.S. government will be forced to live within the constraints of its actual income, which at this point will be a rapidly declining tax base, much like what California is now facing, but far worse because the U.S. government became very comfortable receiving so much income from deficit financing. Inflation would normally be an additional tool for the government to raise money, but inflation can only be raised so far without destroying a modern industrial economy, such as that in the United States. The amount of inflation the government can feasibly run was discussed in Chapter 3 (about 50 to 100 percent).

That means the government will not be able to create any big stimulus packages or tax cuts or anything of the sort. It will have to cut, cut, cut spending so it can live on its income. Some may see this as a refreshing change—a government that lives within its means. But it will not feel very refreshing. Many things we take for granted, like large pensions, will have to be curtailed. We have gotten very comfortable with a government that always has money and never has to worry about running out; a government that never has to raise taxes to fund wars or stimulus packages; a government with unlimited credit. That’s over.

Even during the Great Depression the government’s finances were rock solid and it could certainly borrow money, if needed. But, in the post-dollar-bubble world, the government will be like the rest of us, only worse. It will have its credit cards cut off and a much lower income while still having a massive debt that it can’t possibly make payments on or even pay interest on, and eventually it won’t make principal or interest payments. So, it will have to live within its means.

[...]

Key cuts will hit both the "guns and butter" of the government budget. Cuts in military spending will be much larger than contemplated today and will focus disproportionately on the Navy and Air Force.

On the "butter" side, the most important cut will be to make Social Security means tested, making Social Security essentially a welfare program. For those who have little or no income or assets, Social Security will definitely be there to help. However, for those who have income or assets, forget it.

In addition, Medicare (medical care for older people) reimbursements to doctors and hospitals will be reduced. Since huge numbers of unemployed people and retirees with no more retirement money will qualify for Medicaid (medical care for poor people), Medicaid will explode in size so reimbursements to doctors and hospitals will have to be cut from their already abysmally low levels, and there will be tougher rules on what gets reimbursed. A large percentage of doctors today won’t even accept Medicaid payments because the reimbursements are too low. But Medicaid will grow to be so important that doctors won’t have any choice but to accept its payments. Essentially, in a post-dollar-bubble world, Medicaid will become our national health care program.

High inflation will do much of the dirty work in cutting budgets. Remember, when inflation is high, budget cuts are accomplished simply by not raising budgets to match inflation. So, inflation will be blamed for much of the government budget cutting. [...]

It goes on to describe huge "progressive" tax increases, why they are unavoidable, how they will play out, etc. All important and interesting but too much for me to excerpt here.

There is lots more, but I'm going to skip to a few highlights:

[...] The high unemployment and high bankruptcy rates of the post-dollar-bubble economy, combined with a greatly pared down government will, for a while, create an unusual set of economic conditions. For example, in such a chaotic economic situation, there will be little incentive for people to pay their mortgages or other debts. Many of their creditors will be insolvent and there will be no significant market for selling the properties. Much of the management of these debts will be handed over to an overwhelmed government with little interest in foreclosure. Even if it did foreclose, who would it possibly sell the properties to? And there will be no serious financing available for buyers at that point, anyway. Certainly, the government won’t be able to provide financing.

A good decision for many people will be to simply stop paying their debts. Even rent may not be worth paying as evictions could become increasingly politically difficult for elected sheriffs to carry out. Plus, it will be difficult for landlords to find good tenants to replace the bad ones. Debt repayment will become a bit lawless during this period.

Businesses will follow a similar path as individuals. They will stop paying mortgages and other debts and even limit the rent they pay to what is needed to fund basic utilities and maintenance. They won’t be making much money and if they have to pay rent above basic costs, in many cases, they will go under—something the landlord doesn’t want to see either since there are no good tenants to replace them.

As a result of all this, squatters will be increasingly common for business, and even more common for individuals since it will be politically difficult, and of little economic advantage, to throw tenants out. Local governments will have very tight budgets and won’t have the resources to spend on throwing people (and voters) out of their homes so that the landlord can have a vacant property with no prospects of rental. This situation will not last forever, but in the meantime, people will take advantage of it.

[...]

Pension fund investments in stocks, bonds and real estate will plunge in value. Government contributions to pension funds will also plunge along with falling tax receipts. Government unions may protest, but the reality will be a lack of tax revenue and there will be little ability or interest in raising taxes to fund payments to employees who aren’t working while governments have to massively cut the number of employees who are working.

Yes, there may be lots of legal challenges, but in the end, the bottom line will be the bottom line. Also, since inflation will be high, the easy way to cut pensions will simply be to raise them less than inflation. If pensions are not inflation adjusted, they are easy to eliminate. If they are inflation adjusted, expect the laws to be changed so that they are no longer inflation adjusted.

Yes, there will be court fights, but the money simply won’t be there anymore. Even federal pensions will go the way of state and local pensions. So, clearly there will be will be no federal government bailouts of state and local pensions.

[...]

FDIC insured savings accounts are a bit different. There will likely be some sort of needs based payment for small insured accounts. Clearly, there won’t be full payment, but the government may be able to pay with inflated dollars some portion of FDIC insured savings when banks fail. Since so many banks will be failing, the government can’t possibly pay accounts that are above the insured level, but it could pay some amount of money on accounts under the maximum level of insurance, currently $250,000.

The government will also be able to maintain a payments mechanism so that there will be no problem conducting transactional banking business, such as writing checks or using debit cards. The government will also be able to support banks in making asset- based loans on items such as inventory and receivables. However, the government won’t be able to support banks to make mortgage loans, non-asset based business loans, commercial real estate loans, loans to buy businesses, credit card loans, etc.

[...]

No New “New Deal”

While some people now say they are worried about drifting toward socialism or "sharing the wealth," in fact there won’t be much wealth to share. Instead of the rich funding the poor, the middle class will shoulder most of that burden by paying very high taxes to fund nearly all of the enormous number of people on welfare. Instead of shared wealth we will have "shared poverty".

With the government essentially in default on its loans, it will have no way to raise money for its welfare programs, other than through taxes. And since there will be so few wealthy people left to tax, that leaves only the middle class and the much smaller upper-middle class to carry the load. Still, working and paying very high taxes, perhaps as high as 50 percent, will be better than not working at all.

[...]

The most important difference in the post-dollar bubble world from the pre-dollar bubble world won’t be lower stock or real estate prices, but interestingly, jobs. On a day-to-day level, the lack of jobs will be what affects people the most. Many people lucky enough to have jobs will move down the ladder, not up. For example, a former senior accountant at an accounting firm might have to take a job as a bookkeeper or very junior accountant at a business, and at much lower pay, rather than at an accounting firm Employees will work longer hours for less pay and in less appealing conditions. Benefits will be gone or reduced and competition for jobs will be fierce. Just about everyone will know they could be easily replaced.

However, it won’t be anything like the Great Depression of 1929 because of two important differences:

1. The nation will be much wealthier, so few will suffer like they did in the Great Depression.

2. Paradoxically, because we are much wealthier, unemployment will be much higher, likely in the 40- to 60-percent range, when counting the discouraged unemployed.

Unemployment can be much higher when the nation is wealthier because people don’t have to have jobs. Unemployed people can live with parents, children, relatives, or friends. Plus, there will be a solid safety net of welfare from the government, although people who are used to today’s prosperity will consider the net abysmally low.

In the Depression, if there were a job paying pennies for picking oranges (as in The Grapes of Wrath) you’d take it because you had to. In our much wealthier society, the people who do have jobs will be much better paid and will help support friends and relatives who are unemployed.

[...]

With unemployment in the 40- to 60 percent range, GDP will also drop by a similar amount, but again, even with a 50 percent drop, that would still be a $7 trillion economy in today’s dollars. That’s still pretty big bucks. However, it won’t feel like big bucks. And that is another big difference between the post-dollar-bubble world and the Great Depression: The psychological pain will be much greater for us today.

[...]

As mentioned earlier, This is because expectations were so very high prior to the Bubblequake; much higher than before the Great Depression. Real estate had gone up phenomenally, stock values had gone up phenomenally, and money was easy, not only in the United States but overseas, as well. It seemed like a new billionaire was born every minute. [...]

There is lots, lots more. How small businesses, student loans, education, banks etc. are going to be affected. And of course a pitch to read the whole book.

I'm not saying I think it's all true; but I can see the logic of many of the arguments. Anyway it's food for thought, in the interesting times we live in. Read the whole thing and see what you think.

Whether or not it's a glimpse of the Brave New World ahead of us, remains to be seen. At any rate, we shall see.
     

What the 1930's can teach us about NOW

Guess Who?

Guess who said the following: "We have tried spending money. We are spending more than we have ever spent before and it does not work." Was it Sarah Palin? Rush Limbaugh? Karl Rove?

Not even close. It was Henry Morgenthau, Secretary of the Treasury under Franklin D. Roosevelt and one of FDR's closest advisers. He added, "after eight years of this Administration we have just as much unemployment as when we started. . . And an enormous debt to boot!"

This is just one of the remarkable and eye-opening facts in a must-read book titled "New Deal or Raw Deal?" by Professor Burton W. Folsom, Jr., of Hillsdale College.

Ordinarily, what happened in the 1930s might be something to be left for historians to be concerned about. But the very same kinds of policies that were tried-- and failed-- during the 1930s are being carried out in Washington today, with the advocates of such policies often invoking FDR's New Deal as a model.

Franklin D. Roosevelt blamed the country's woes on the problems he inherited from his predecessor, much as Barack Obama does today. But unemployment was 20 percent in the spring of 1939, six long years after Herbert Hoover had left the White House. [...]

Read the rest to see why, and how we must avoid having history repeat itself. Roosevelt wasn't even following pure Keynesian economics, he was following an obscure economist at the University of Wisconsin, whom most other economists disagreed with. Roosevelt knew little about economics, but a great deal about politics. The combination was devastating.

Another contemporary economist, Amity Shlaes, takes a look at the 1930's:

The Rules of the Game and Economic Recovery

THE MONOPOLY BOARD GAME originated during the Great Depression. At first its inventor, Charles Darrow, could not interest manufacturers. Parker Brothers turned the game down, citing “52 design errors.” But Darrow produced his own copies of the game, and Parker Brothers finally bought Monopoly. By 1935, the New York Times was reporting that “leading all other board games … is the season’s craze, ‘Monopoly,’ the game of real estate.”

Most of us are familiar with the object of Monopoly: the accumulation of property on which one places houses and hotels, and from which one receives revenue. Many of us have a favorite token. Perennially popular is the top hat, which symbolizes the sort of wealth to which Americans who work hard can aspire. The top hat is a token that has remained in the game, even while others have changed over the decades.

One’s willingness to play Monopoly depends on a few conditions—for instance, a predictable number of “Pay Income Tax” cards. These cards are manageable when you know in advance the amount of money printed on them and how many of them are in the deck. It helps, too, that there are a limited and predictable number of “Go to Jail” cards. This is what Frank Knight of the University of Chicago would call a knowable risk, as opposed to an uncertainty. Likewise, there must be a limited and predictable number of “Chance” cards. In other words, there has to be some certainty that property rights are secure and that the risks to property are few in number and can be managed.

The bank must be dependable, too. There is a fixed supply of Monopoly money and the bank is supposed to follow the rules of the game, exercising little or no independent discretion. If players sit down at the Monopoly board only to discover a bank that overreaches or is too unpredictable or discretionary, we all know what happens. They will walk away from the board. There is no game. [...]

She then explains the relevance of the Monopoly analogy to the 1930's. She goes into detail, using specific events to illustrate her premises.

I've often heard that government interference and intervention at the time actually prolonged the depression by eroding confidence and creating instability. Here, Shlaes offers the damning evidence for all to see. After explaining in detail, looking at causes and effects, she then demonstrates their relevance to the events of our times:

[...] It is not hard to see some of today’s troubles as a repeat of the errors of the 1930s. There is arrogance up top. The federal government is dilettantish with money and exhibits disregard and even hostility to all other players. It is only as a result of this that economic recovery seems out of reach.

The key to recovery, now as in the 1930s, is to be found in property rights. These rights suffer under our current politics in several ways. The mortgage crisis, for example, arose out of a long-standing erosion of the property rights concept—first on the part of Fannie Mae and Freddie Mac, but also on that of the Federal Reserve. Broadening FDR’s entitlement theories, Congress taught the country that home ownership was a “right.” This fostered a misunderstanding of what property is. The owners didn’t realize what ownership entailed—that is, they didn’t grasp that they were obligated to deliver on the terms of the contract of their mortgage. In the bipartisan enthusiasm for making everyone an owner, our government debased the concept of home ownership.

Property rights are endangered as well by the ongoing assault on contracts generally. A perfect example of this was the treatment of Chrysler bonds during the company’s bankruptcy, where senior secured creditors were ignored, notwithstanding the status of their bonds under bankruptcy law. The current administration made a political decision to subordinate those contracts to union demands. That sent a dangerous signal for the future that U.S. bonds are not trustworthy.

Three other threats to property loom. One is tax increases, such as the coming expiration of the Bush tax cuts. More taxes mean less private property. A second threat is in the area of infrastructure. Stimulus plans tend to emphasize infrastructure—especially roads and railroads. And after the Supreme Court’s Kelo decision of 2005, the federal government will have enormous license to use eminent domain to claim private property for these purposes. Third and finally, there is the worst kind of confiscation of private property: inflation, which excessive government spending necessarily encourages. Many of us sense that inflation is closer than the country thinks.

If the experience of the Great Depression teaches anything, it is that property rights must be firmly established or else we will not have the kind of economic activity that leads to strong recovery. The Monopoly board game reminds us that economic growth isn’t mysterious and inscrutable. Economic growth depends on the impulse of the small businessman and entrepreneur to get back in the game. In order for this to happen, we don’t need a perfect government. All we need is one that is “not too bad,” whose rules are not constantly changing and snuffing out the willingness of these players to take risks. We need a government under which the money supply doesn’t change unpredictably, there are not too many “Go to Jail” cards, and the top hats are confident in the possibility of seeing significant returns on investment. [...]

It's definitely worth reading the whole thing. If you don't have the time to buy and read here book, this lecture she gave is the next best thing.
     

Can the Dow Jones Industrial Average and Age Demographics foretell Economic Depression?

What do the DJIA and the demographics of people between the age of 45 and 54, and a financial depression all have in common? Quite a bit, according to Daniel A. Arnold, author of:

The Great Bust Ahead: The Greatest Depression in American and UK History is Just Several Short Years Away.
This is your Concise Reference Guide to Understanding Why and How Best to Survive It (Paperback)

Product Description
The Great Bust Ahead is a concise, straight to the point short book laying out in stark terms the case for a coming depression of historically unprecedented magnitude. It will be worse than the 1930s, beginning nominally in 2012, but perhaps as early as 2009-2010 and lasting up to thirteen years.

Centered on hard fact demographics, the book boldly claims that the data presented are so irrefutable, that the outcome predicted by the book is equally as irrefutable. The compelling proof presented accurately accounts for the detailed trend of the economy from 1920 to today (something never before accomplished), and projects out to 2030.

The book is very easy to read and understand, and requires no prior knowledge of economics. Down to earth things the average person can do to prepare for what is coming are covered. A summary of the catastrophic domestic social and international consequences is offered.

January 2009 Update:

1. First, read the 2007 Update below.

2. 2008 was the victim of a self inflicted sub-prime financial crisis. This has nothing to do with the demographics based massive depression that is yet to come, as described in the book. The sub-prime consequences are however very similar though mild so far compared to what is coming our way. The book clearly spelled out that along the way unpredictable short-term (1 to 3 years) disruptive events could happen. The sub-prime crisis is just that. It should be regarded as the warmer upper or hors d'oeuvre for the big one that is now rapidly closing in on us all.

3. The great unknown at this point is whether the sub-prime based crisis will drag on beyond 2009 and then blend into the demographics based massive decline which, per the book, could begin as early as 2009-10. Being short-term by definition, this period is totally unpredictable.

4. There is the strong possibility that we will see an interim recovery manifested as a last hurrah rally in 2009 of perhaps 30% on the Dow after a new low of around 7,000. However, this is very speculative. The only historical certainty is that in the long-term the Dow always returns to the demographic. This lends some credence to such a rally as the immutable demographic, as you can see from the chart, remains in a very strong upswing as it moves toward its 2012 peak before crashing. Also waiting in the wings ready to surge back into the markets are trillions of dollars earning very little in money market funds.

October 2007 Update: In 2002 when this book was published, in addition to the massive depression beginning around the end of the decade, it forecast:

1. The economy, as reflected by the DJIA, would resume its upwards march in late 2002 or 2003. This is exactly what happened.

2. The DJIA would have a snapback to 13,000 to 14,000 and the FTSE to 6,000 to 7,000 by 2004, but delayed possibly by wars/politics/terrorism/scandals. This is exactly what has happened. Although the full snapback has been delayed for the reasons described, the DJIA has now closed over 14,100 and the FTSE over 6,700.

3. The DJIA returns from 2003 to 2012 would average a historically long-term normal of 7% to 8%. So far, with the delayed full snapback for the reasons described, DJIA actual returns have averaged a more modest 5.8%, as would be expected.

4. Interest rates would increase from 2003 onwards. This is exactly what has happened.

From the Publisher
If there ever was a book that should be read by the entire adult population, this is it. The events described in The Great Bust Ahead will be the greatest story of the first quarter of the twenty-first century, if not the century. All of our lives are going to be dramatically affected beginning in just a few years from now.

The depression of epic proportions that is predicted has THIRTY MILLION unemployed and stock market losses of over eighteen TRILLION dollars. The book leaves you with the conviction that for the first time you understand what the economy is all about. Everything presented in the book is so factual, so unchallengeable, it is hard to know what to say other than "go read it" and then start preparing as best you can.

Well, I've had this book for a while, and last night I read the whole thing. It only took an hour and a half to read, because it's only 64 pages long, and printed in large type.

I tend to regard most of these kinds of books with a lot of skepticism. I find reading the customer comments section for such books very helpful. Often, people who have read the book already can give you a very good idea of whether or not the book is even worth bothering with. Some very sharp minds often tear these books to shreds, exposing their bias, bad research and inaccuracies, saving you the time and trouble. But this book got a higher approval rating than similar books; the comments were intriguing, and since it only cost $8.95, I decided to give it a try.

The comments on this book were varied and interesting, and even most of the author's critics didn't completely disagree with the his contention that there is a relationship between the DJIA and the most productive age demographic. The thing they most argued with were about some of the conclusions that Arnold formed based on this data.

I would also question some of those conclusions, for the same reasons others have mentioned in the comments. But the Demographic data is fascinating, and I've yet to see a really effective rebuttal to it.

It was easy to read and follow Arnold's explanation of the data, and his premise takes into account a lot of variables such as immigration, wars, etc. He also shows how there are a number of short term factors that can cause the DJIA to waver temporarily from the demographic, but it always returns to the demographic.

Fascinating stuff, but what it all means for our future financial planning isn't so clear, as the conclusions are open to interpretation, and influenced by short term variables that we can't predict. For instance, Arnold recommends putting your money in U.S. Federal bonds. But with the huge deficit spending we are experiencing now, how safe are those going to be?

He has some interesting ideas about real estate and some other options, but it's late in the game now. The book was written in 2002, and if he's right we may already be on the brink.

The author also has a website, at TheGreatBustAhead.com.


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Obama, the 1930's, and Excise Taxes

Is history repeating itself? Look at the comparison and decide for yourself:

Obama’s Scary Hoover-Style Tax Hikes

The composition of the tax hikes in the 2010 budget is frighteningly similar to the Revenue Act of 1932, the much-maligned Hoover tax hikes that put the “Great” in Great Depression by putting an enormous tax burden on millions of Americans, largely through excise taxes. These taxes, raised even further by FDR, were justified by the promise that the funds would be returned in the form of relief programs, which is to say that some portion of the tax revenue, after administrative costs in Washington, would go back to the states with strings attached, often to further political rather than economic objectives.

As the table below shows, the Obama budget blueprint, like the 1932 act, is split mainly between broad excise taxes and income tax hikes on high income earners. Unfortunately, there were no 10-years projections back then, so I had to use one year numbers, but it’s still an interesting comparison.



[...] Despite President Obama’s promise that “If your family earns less than $250,000 a year, you will not see your taxes increase a single dime. I repeat: not one single dime,” his new budget raises 45 percent of its revenue from energy taxes that will be paid by everyone who fills a gas tank, pays an electric bill, or buys anything that was grown, shipped, or manufactured. [...]

This has all happened before. Do you know what an "excise" tax is? Well you're gonna find out. Read the whole thing to see the parallels with the 1930's. It seems we've learned nothing from that experience.

An important difference is, in the 1930's, the government wasn't already TRILLIONS of dollars in debt, and printing more money to put us in debt for trillions more. We're skating on thin ice.
     

Is Obama compounding Bush's mistakes?

I'm talking about financial mistakes, such as inflating our currency by spending money we do not have. It makes no difference what the money is used for; the end result will be the same: inflation, and all the dangers that entails. From George Melloan at the WSJ:

Why 'Stimulus' Will Mean Inflation
In a global downturn the Fed will have to print money to meet our obligations.

As Congress blithely ushers its trillion dollar "stimulus" package toward law and the U.S. Treasury prepares to begin writing checks on this vast new appropriation, it might be wise to ask a simple question: Who's going to finance it?


That might seem like a no-brainer, which perhaps explains why no one has bothered to ask. Treasury securities are selling at high prices and finding buyers even though yields are low, hovering below 3% for 10-year notes. Congress is able to assure itself that it will finance the stimulus with cheap credit. But how long will credit be cheap? Will it still be when the Treasury is scrounging around in the international credit markets six months or a year from now? That seems highly unlikely.

Let's have a look at the credit market. [...]

He goes into detail about out trade relationships with China and Japan, who hold the majority of U.S. Treasury securities that are held by foreign owners. But our financial relationship with them is changing. The dynamics will not continue as they have, and the results to us will be dramatic.

[...] The Congressional Budget Office is predicting the federal deficit will reach $1.2 trillion this fiscal year. That's more than double the $455 billion deficit posted for fiscal 2008, and some private estimates put the likely outcome even higher. That will drive up interest costs in the federal budget even if Treasury yields stay low. But if a drop in world market demand for Treasurys sends borrowing costs upward, there could be a ballooning of the interest cost line in the budget that will worsen an already frightening outlook. Credit for the rest of the economy will become more dear as well, worsening the recession. Treasury's Wednesday announcement that it will sell a record $67 billion in notes and bonds next week and $493 billion in this quarter weakened Treasury prices, revealing market sensitivity to heavy financing.

So what is the outlook? The stimulus package is rolling through Congress like an express train packed with goodies, so an enormous deficit seems to be a given. Entitlements will go up instead of being brought under better control, auguring big future deficits. Where will the Treasury find all those trillions in a depressed world economy?

There is only one answer. The Obama administration and Congress will call on Ben Bernanke at the Fed to demand that he create more dollars -- lots and lots of them. The Fed already is talking of buying longer-term Treasurys to support the market, so it will be more of the same -- much more.

And what will be the result? Well, the product of this sort of thing is called inflation. The Fed's outpouring of dollar liquidity after the September crash replaced the liquidity lost by the financial sector and has so far caused no significant uptick in consumer prices. But the worry lies in what will happen next. [...]

Remember the late 1970's? Something like that is coming, only potentially even worse. The chickens will come home to roost. Then what? stagflation? Look what we have done already:



And we are going to compound this mistake further? And when that fails, then what? Print up even more money? What goes up must come down. The higher that blue line goes, the sharper it will fall. It's already taken a sharp turn straight upward. Now we are going to push it up even further? Has everyone gone mad?

At the very least, it's making our currency fragile. A large terrorist attack or some other event that disrupts our economy could cause a run on our banks. Because of FDIC, the Feds would be required by law to print up even more money. Then what... Hyper-inflation, like Zimbabwe? What ARE we doing?


Our current National Debt is $10.7 Trillion!

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THE GREAT BUST AHEAD
     

Obama: encouraging or discouraging words?

Could a big part of the dragging stock market be the Obama factor? I mean, when you consider all the anti-capitalist rhetoric from the campaign, and when you consider that what scares investors away is uncertainty about the market's future, I think a great deal is depending on what Obama says and does next. It's not hard to connect the dots, as Neal Boortz does here:

AND YOU THINK OBAMA IS NOT A FACTOR HERE?

The stock market was down another 400 points or so yesterday. People are wondering where in the world this will end. Retirement funds are being devastated. People are losing jobs. The picture certainly isn't rosy right now, and nobody can really explain why. The media, on the other hand, is certain that there is one recent event that is having no effect whatsoever on this economic slide; and that would be the election of Barack Obama.

OK ... why don't you try to put on an investor hat for a moment here. Let's say you're considering getting back in the stock market. You know that some stocks out there are at historic lows, and they're bound to bounce back ... right? So why don't you just take some money out of your savings or out from under your mattress and plow it back into the market?

Let's see if we can find any reasons why you might hesitate.

We have a president-elect who ...

... has promised to raise capital gains taxes, perhaps even double them. So this guy is just waiting for you to jump into the stock market and make some money so he can seize a huge portion of it. Why jump now? Obama has been asked if he plans to go forward with his capital gains tax increase, but he's not saying. Just hold off on your investments for a while until he tips his hand. If he goes the tax increase route you might want to consider trying to move your money offshore to grow until he's out of the picture.

... has promised to sign the so-called "Card Check" bill. Now again, you're smarter than the average voter, and you realize that this unionization-through-intimidation idea is going to have an adverse affect on American business. As soon as the bill is signed union thugs (organizers) will start their petition drives at thousands of businesses across the nation. Large businesses and small businesses. America's largest employer, Wal-Mart, will be one of the first targets. You don't know how far this will spread, but you do know that every business that is unionized will be a poor investment for you. So you wait .. you wait to see what is going to happen with card check.

... has promised to raise income taxes on the largest jobs producing segment of our economy, small businesses. During the campaign you heard him say that he would not raise taxes on 95% of small businesses, but you know that most of the jobs rest with the remaining 5%, and that's where most of the new jobs would be created. The ignorant voters bought his 95% line, but you're not that stupid. You saw through his rhetoric. So, again, why jump into the market now? Wait until we see what Obama is going to do with these tax increases on America's jobs-producing machine.

... has promised more business regulation. Obama is no fan of free enterprise. He loves government. Obama believes America is great because of government. You really think you need to wait before you make your investment moves until you see just what regulatory punishment Obama has in mind for the free market.

So .. think about it. We've only scratched the surface here. We could also talk about expanding the family leave act and many other little federal anti-business goodies. Invest now? Why? Doesn't it make more sense to wait until you get a true measure of our new anti-capitalist president?

(bold emphasis mine) Some people say that Obama will be more of a centrist than a leftist when he assumes command. But there is a lot of uncertainty right now about just what he will do. We only have his campaign statements to go by, which were pretty anti-business. People aren't likely to re-invest in the stock market until they have some clues that will help them to forecast where the market is likely to go. Stability, and certainty of what the rules will be, are required for that. Obama has it within his power to create that stability and certainty, or not. I say it's time for some encouraging word from him... if he has any.
     

Economic Recovery & the Lessons of History

Jonah Goldberg on The Corner posted the following remark from one of his readers, along with an interesting chart. The chart shows how bold experimentation by the government after the crash of 1929 actually destabilized the stock market, and maintained the financial collapse for years afterward, which became known as the "Great Depression". Are we about to repeat this again?

Bold Experimentation

[...] Free market economics involves the application of immutable laws, and it's those laws that allow us to forecast the effect of current events on various companies and the stocks and bonds they've issued. But investors will only play the game if they believe the rules aren't going to change in the middle. When government begins 'experimenting', it makes it harder for investors to generate a long term forecast. This drives long term investors away from the market, or converts them into short term traders. The result is a massive increase in volatility as investors shorten their investment outlook because they can't predict what's going to happen far enough into the future.

Volatility is an indication of instability. It's not a sign of a healthy economy but of an economy which has lost its way. High volatility isn't what you expect from the worlds largest market, but from the emerging economy of a third world country. As you can see from the attached chart, when Roosevelt began his 'bold persistent experimentation' it drove away long term investors and that caused volatility to dramatically increase. It will almost certainly have the same effect when Obama does it. [...]

(bold emphasis mine) The big question is, what will Obama, and our Democrat controlled government, do? Learn from the mistakes of the past, or repeat them? When I hear some Democrats talking about the economic crisis as an "opportunity" that they must not "squander", I'm not hopeful that they are thinking about stabilizing market volatility. We shall see.


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