Economic `Armageddon' predicted

[miketheidiot]

our economic management sucks. Rate increases and tax hikes would at least cure the defecit, and maybe even work on the debt. If we could get china to even slightly up the value of its currency we could cut our trade defict with them quick. Finally if we could make some military cuts and get the military budget back within reason (even 250-300 billion) we could actually make some progress.

 

[dmcowen674]

Originally posted by: miketheidiot
our economic management sucks. Rate increases and tax hikes would at least cure the defecit, and maybe even work on the debt. If we could get china to even slightly up the value of its currency we could cut our trade defict with them quick. Finally if we could make some military cuts and get the military budget back within reason (even 250-300 billion) we could actually make some progress.

You can't cut the Military when your busy trying to take over the planet.

 

[Stunt]

Originally posted by: shinerburke

Originally posted by: Stunt

Originally posted by: shinerburke
I love how some of you keep throwing out the "51% like it" comment. You of course fail to admit that this problem has been brewing for at least the last 10-12 years. Noooooo....that wouldn't fit in with your Bush bashing now would it.

Bottom line....this has zilch to do with who is President....

Raise taxes...It's obvious the cuts are not stimulating the economy. Roll them back then you'll at least get the deficit out of your way. Then maybe people won't pull out as fast. Oh and raise interest rates, it limits personal borrowing, and slows inflation. The US is far behind the curve on that. UK and Canada have consistantly been raising interest rates.

No, the govt needs to cut spending. I work for my money and dammit it's mine. I dont' mind paying for things like defense, NASA, some social programs for those that really need help, but I'm damn tired of funding midnight basketball leagues, etc, etc, etc......the fvkcing budget needs to be cut of all the BS pork.

Raising interet rates will work...but at what point are they high enough? Is it when nobody can afford to buy a house? The problem with consumer debt is the consumer. They need to have more personal responsibilty.

Spending is an area you could consider cutting, but could have to do it in the right places, Bush was wrong in making tax cuts first. The liberal government here was faced with a large deficit, they first cut spending, then they realized the revenue they saved and made moderate tax cuts to still have enough money to pay down the debt, but at the same time give canadians tax relief.

an interesting side note:

Canada:
revenues - 36.3% gdp
spending - 35.8% gdp

US:
revenues - 16.2%
spending - 20.0%

Interesting to see the difference in income relative to gdp between the two countries.

 

[alent1234]

Originally posted by: miketheidiot
our economic management sucks. Rate increases and tax hikes would at least cure the defecit, and maybe even work on the debt. If we could get china to even slightly up the value of its currency we could cut our trade defict with them quick. Finally if we could make some military cuts and get the military budget back within reason (even 250-300 billion) we could actually make some progress.

military is a very small part of total spending and an even smaller part of the GDP. As a percentage of GDP the US is no where near the top of military spending.

do you want to guess what makes up 2/3 of federal spending and is most responsible for the deficit?

 

[Stunt]

Originally posted by: alent1234

Originally posted by: miketheidiot
our economic management sucks. Rate increases and tax hikes would at least cure the defecit, and maybe even work on the debt. If we could get china to even slightly up the value of its currency we could cut our trade defict with them quick. Finally if we could make some military cuts and get the military budget back within reason (even 250-300 billion) we could actually make some progress.

military is a very small part of total spending and an even smaller part of the GDP. As a percentage of GDP the US is no where near the top of military spending.

do you want to guess what makes up 2/3 of federal spending and is most responsible for the deficit?

Agreed that in terms of gdp you guys are in line, but when your gdp is 5-10times the next guy's, it is LIKE them having a military budget 15-30% of gdp...which is just pain insane.

I do believe that there is some fat to be trimmed military wise, at least for the sort term.

I also think there is money to be made in heathcare. Japan, canada, uk, france, italy etc all have publicly funded universal healthcare. They spend 7-9% of gdp. You are up at over 12% of gdp. And that is with a private system. Many studies have been published about how much more efficient a pulic healthcare system is. You are looking at a potenial 3% or more savings on spending.

Of course, public healthcare!...OMG...that isn't the american way!...you'd rather spend more and have the naive perception that it you are spending less because of less government control. Sigh...ah well...have fun spending 3% of gdp more...what is that by the way...$330billion...not a bad chunk of change if you ask me

 

[GrGr]

XZeroII and others:

The difference this time is that the US has simply run out of money. When the central banks of Asia stop lending money to the US, which they will sooner or later, the US economy is in for a real crunch. When that happens large parts of the middle class will be obliterated by debt and inflation. The Mega Banana Republification of the US is all systems go under Pres. Bush.

The dollar is a fiat currency. Half the dollar economy is overseas and half is in the US. The US has been pumping dollars into the world economy for 60 years, fiat dollars since the early 70's. But the US cannot simply keep pumping fiat dollars into the world economy endlessly with economic impunity. At this point in time (largely thanks too Bush's tax cuts) there are too many dollars in the world economy which means that the dollar is overrated. The problem for the US is that at the same time the dollar is overrated the US economy is unbalanced - a massive current account deficit forces the US to borrow enormous sums every day. There is little incentive for foreigners to invest in US when they know that the dollar will fall and they will lose money on their investments. So the US will have to raise interest rates to make the debt instruments attractive to foreign investors. But this will also raise the interest rates for American consumers already heavily in debt and it will spark serious inflation unless Greenspan can launch a new bubble in some other sector to divert the pressure.

Private investors are fleeing the US dollar. It is the Asian central banks that are propping up the dollar atm. (No wonder Bush is calling Koizumi almost daily). They may soon be joined by European central banks looking to save Euroland exports by propping up the dollar. It needs to be pointed out that the EMU is still very young and far from the finished product; it is not certain it could survive a super strong euro. If it does and it becomes the Petro Euro supplanting the Petro Dollar it is estimated that 40 percent of the US economy would disintegrate and 10 million people would become unemployed overnight.

There was no productivity boom in the US in the last two decades of the 20th century. There was an
import boom. Now it looks like the party is over. It is time for the hangover.

The United States has the largest budget, trade, and current account deficits in its history. Historically other nation's have experienced some sort of currency crisis once their current account deficit passes 5% of GDP. The United States surpassed this level almost a year ago.

In effect, we're depending on foreign money to sustain our own economic growth.

Bloated current account deficits lead to a crisis. Once they get too large, investors lose faith that the country will ever be able to completely finance it. In order to protect themselves, the investors begin to sell assets in the currency, an act which snowballs and eventually causes interest rates to spike and the economy of the indebted country to collapse.
...

Secondly, there are precedents for world leading economies to have crisis-level deficits. Great Britain had one in the 1920's which just happened to lead to the collapse of the gold standard and helped spur the Great Depression. In the United States, we reached a current account deficit right under 5% of GDP in the 1970's thanks to a decade of 'guns and butter' deficit spending, which led to a crisis of foreigners selling the dollar and draining the United States of its gold reserve. To escape a full-blown currency crisis, Richard Nixon abandoned the Bretton Woods system and canceled our commitments to redeem dollars for gold, an act that changed the global monetary system and started the imbalances that have grown since.

People who claim that there is no precedent for today's situation simply don't know history. And history shows that a current account deficit that grows like ours has been growing will result in some sort of crisis.
...

According to Stephen Roach, the head economist of Morgan Stanley, the deficits are growing so large that by the end of the year America's indebtedness to other countries will reach 28% of GDP.

That would bring the US indebtedness to a level of 300% of exports. Argentina and Brazil were at 400% right before they collapsed in the 1990's.
...

In reality, the deficits are making the United States a less attractive place for investment. That is why the dollar is dropping and one of the reasons that the stock market is under pressure.

Just a few days ago the US Treasury reported that the net capital inflows from the rest of the world into the United States fell for the 6th month in a row. Private from abroad fell to $34.7 billion in August and from $72.9 billion in July. Asian central banks made up for the shortfall. If they hadn't, the current account deficit would have exploded.

...

crisis level deficits

From 'Weimar and Wall Street'

...

While the monetary madness of the 90s gave us hyperinflation in stocks, during the last few years the effects of money printing have been seen more in the housing market. As the stock bubble deranged relative prices between financial assets and consumption goods, the inflation of housing is driving home prices to unsustainable levels relative to wages and prices. Partly by artifice, partly by luck, the effects of an over heated printing press have not been felt full-on in wages and consumption goods. But Al and his band of counterfeiters at the Fed are rapidly running out of asset classes large enough to soak up the flood of greenbacks without setting off a visible inflation. If the dollars start to flow into goods and wages, then Weimar, not Wall St. will be the next destination.

...
Hyperinflation next?

And a little info about crashes:

BBC: Market crashes through the ages

 

[GrGr]

Krugman: Economic Crisis a Question of When, Not If

It is clear that Bush is deliberately aiming for a financial crisis.

Krugman is naive when he says: "The only bright spot in having Bush in power for another four years, said Krugman, is that further economic mismanagement might trigger some sort of popular outcry.

"I do believe at some point there is going to be a popular tidal wave against what has happened," concluded Krugman. "In the meantime, you keep banging on the drum, you keep telling the truth.

"And then eventually we have the great demonstrations, which I think are important to let the government know that many Americans are not happy with what is happening," he said."

If people take to the streets against the Bush regime they will end up in
*mini Guantanamos'

"Lawsuit: NYC Created 'Guantanamo' at RNC
By LARRY NEUMEISTER Associated Press Writer

NEW YORK (AP) - Saying the city had created its "own little Guantanamo on the Hudson" during the Republican National Convention, a lawyer Monday filed a lawsuit on behalf of nearly 2,000 people arrested at demonstrations.
..."

 

[alent1234]

Originally posted by: Stunt

Originally posted by: alent1234

Originally posted by: miketheidiot
our economic management sucks. Rate increases and tax hikes would at least cure the defecit, and maybe even work on the debt. If we could get china to even slightly up the value of its currency we could cut our trade defict with them quick. Finally if we could make some military cuts and get the military budget back within reason (even 250-300 billion) we could actually make some progress.

military is a very small part of total spending and an even smaller part of the GDP. As a percentage of GDP the US is no where near the top of military spending.

do you want to guess what makes up 2/3 of federal spending and is most responsible for the deficit?

Agreed that in terms of gdp you guys are in line, but when your gdp is 5-10times the next guy's, it is LIKE them having a military budget 15-30% of gdp...which is just pain insane.

I do believe that there is some fat to be trimmed military wise, at least for the sort term.

I also think there is money to be made in heathcare. Japan, canada, uk, france, italy etc all have publicly funded universal healthcare. They spend 7-9% of gdp. You are up at over 12% of gdp. And that is with a private system. Many studies have been published about how much more efficient a pulic healthcare system is. You are looking at a potenial 3% or more savings on spending.

Of course, public healthcare!...OMG...that isn't the american way!...you'd rather spend more and have the naive perception that it you are spending less because of less government control. Sigh...ah well...have fun spending 3% of gdp more...what is that by the way...$330billion...not a bad chunk of change if you ask me

problem with american healthcare isn't that it is private, but people are using too much of it. First because of legal liability doctors are ordering every test they can think of when someone complains of something. Better to be safe than pay out in a lawsuit. Second many people expect someone else to subsidize them on their habit of lifestyle drugs. Third because healthcare is "free", people use it like it's going out of style. last few years companies have raised co-pays and this has caused people to cut down on health care usage. 2004 growth has been half of previous years.

Many people like me are on a PPO plan, which means the employer pays all the bills for what ever care we want. Unlike HMOs there is no getting permission to go to the doctor. If the government paid all the healthcare bills, it wouldn't change. I wouldn't be surprised if it wouldn't be more expensive under the government.

 

[alent1234]

Originally posted by: GrGr

Krugman: Economic Crisis a Question of When, Not If

It is clear that Bush is deliberately aiming for a financial crisis.

Krugman is naive when he says: "The only bright spot in having Bush in power for another four years, said Krugman, is that further economic mismanagement might trigger some sort of popular outcry.

"I do believe at some point there is going to be a popular tidal wave against what has happened," concluded Krugman. "In the meantime, you keep banging on the drum, you keep telling the truth.

"And then eventually we have the great demonstrations, which I think are important to let the government know that many Americans are not happy with what is happening," he said."

If people take to the streets against the Bush regime they will end up in
*mini Guantanamos'

"Lawsuit: NYC Created 'Guantanamo' at RNC
By LARRY NEUMEISTER Associated Press Writer

NEW YORK (AP) - Saying the city had created its "own little Guantanamo on the Hudson" during the Republican National Convention, a lawyer Monday filed a lawsuit on behalf of nearly 2,000 people arrested at demonstrations.
..."

krugman is an idiot. he only writes bush is bad, everything else is good. if we had a strong dollar and a smaller account deficit he would still criticize bush.

 

[Sysbuilder05]

Originally posted by: Tylanner
USATODAY and 58 economists,(not your "Smart people downtown") think the economy will grow over the next year.

Yeah...and by GOD if USA has to print that the economy is growing(even when it isn't) then so be it.

Like FOX and CNN pimping for Bush and touting this "booming economy" nightly for a couple of years. Yeah sure....

 

[GrGr]

Originally posted by: alent1234

Originally posted by: GrGr

Krugman: Economic Crisis a Question of When, Not If

It is clear that Bush is deliberately aiming for a financial crisis.

Krugman is naive when he says: "The only bright spot in having Bush in power for another four years, said Krugman, is that further economic mismanagement might trigger some sort of popular outcry.

"I do believe at some point there is going to be a popular tidal wave against what has happened," concluded Krugman. "In the meantime, you keep banging on the drum, you keep telling the truth.

"And then eventually we have the great demonstrations, which I think are important to let the government know that many Americans are not happy with what is happening," he said."

If people take to the streets against the Bush regime they will end up in
*mini Guantanamos'

"Lawsuit: NYC Created 'Guantanamo' at RNC
By LARRY NEUMEISTER Associated Press Writer

NEW YORK (AP) - Saying the city had created its "own little Guantanamo on the Hudson" during the Republican National Convention, a lawyer Monday filed a lawsuit on behalf of nearly 2,000 people arrested at demonstrations.
..."

krugman is an idiot. he only writes bush is bad, everything else is good. if we had a strong dollar and a smaller account deficit he would still criticize bush.

Krugman is a nobel level idiot. His name was among the 'usual suspects' rumoured this year. It was also stated that his love of publicity might be frowned upon by the committee.

As for the 'Bush is bad' criticism I do think he has a point now and then

 

[XZeroII]

Originally posted by: GrGr
XZeroII and others:

The difference this time is that the US has simply run out of money. When the central banks of Asia stop lending money to the US, which they will sooner or later, the US economy is in for a real crunch. When that happens large parts of the middle class will be obliterated by debt and inflation. The Mega Banana Republification of the US is all systems go under Pres. Bush.

The dollar is a fiat currency. Half the dollar economy is overseas and half is in the US. The US has been pumping dollars into the world economy for 60 years, fiat dollars since the early 70's. But the US cannot simply keep pumping fiat dollars into the world economy endlessly with economic impunity. At this point in time (largely thanks too Bush's tax cuts) there are too many dollars in the world economy which means that the dollar is overrated. The problem for the US is that at the same time the dollar is overrated the US

...

LOL. The US has run out of money? Wow. That's pretty delusional there. You think that the US has simply run out of money right now? (or within the past few years)??? HAHAHAHA. You're in for a rude awakening when you learn the truth that the US has been bankrupt for over 50 years.

 

[GrGr]

Originally posted by: XZeroII

Originally posted by: GrGr
XZeroII and others:

The difference this time is that the US has simply run out of money. When the central banks of Asia stop lending money to the US, which they will sooner or later, the US economy is in for a real crunch. When that happens large parts of the middle class will be obliterated by debt and inflation. The Mega Banana Republification of the US is all systems go under Pres. Bush.

The dollar is a fiat currency. Half the dollar economy is overseas and half is in the US. The US has been pumping dollars into the world economy for 60 years, fiat dollars since the early 70's. But the US cannot simply keep pumping fiat dollars into the world economy endlessly with economic impunity. At this point in time (largely thanks too Bush's tax cuts) there are too many dollars in the world economy which means that the dollar is overrated. The problem for the US is that at the same time the dollar is overrated the US

...

LOL. The US has run out of money? Wow. That's pretty delusional there. You think that the US has simply run out of money right now? (or within the past few years)??? HAHAHAHA. You're in for a rude awakening when you learn the truth that the US has been bankrupt for over 50 years.

You are a worthy follower of your Leader :roll:

 

[ReiAyanami]

$44 trillion net US assets minus $37 trillion total US debt (includes $7.4 trillion govt debt)

= $7 trillion net assets

outflow runs at $600 billion/year in export imbalance (or $6 trillion per decade assuming it doesn't get worse).

plus $2.5 trillion more govt debt in 10 years by conservative CBO estimates. so technically we won't be bankrupt until about 7-8 years from now.

+$7 trillion minus $6 trillion minus $2.5 trillion = bankruptcy

also, saudi arabia has more net assets than the US. DEPENDENCY on FOREIGN OIL SUPREME.

it has been noted by many economists that to prevent this our GDP must grow 6% per year OR cut government spending by 17% practically overnight. both of which are impossible since 6% GDP is unsustainable and it would also trigger substantial inflation. meanwhile if 1 in 5 government dollars were cut, our economy would collapse.

but the truth of the matter is as long as we can grow cotton, we have infinite dollars. just that the dollar might eventually be worth less than the cotton its printed on. (60% / 30% devaluation against the euro / yen so far) and from there it can still be devalued anywhere from 50%, 66% to 84%. worst case scenario 95%

AMERICAN PESO SUPREME
save pennies

 

[gutharius]

Originally posted by: ReiAyanami
$44 trillion net US assets minus $37 trillion total US debt (includes $7.4 trillion govt debt)

What are these "assets" you speak of?

 

[gutharius]

Originally posted by: GrGr

Originally posted by: XZeroII
LOL. The US has run out of money? Wow. That's pretty delusional there. You think that the US has simply run out of money right now? (or within the past few years)??? HAHAHAHA. You're in for a rude awakening when you learn the truth that the US has been bankrupt for over 50 years.

You are a worthy follower of your Leader :roll:

Uhm. I think you misunderstood him. He was not making a comment about Bush. He was simply stating that our nation started it's borrrowing binge over 50 years ago. He then rationalized this as America going bankrupt based on the premise that you are bankrupt if you have to borrow money from other nations.

Which is kinda funny because it evokes a picture of america panhandling to the rest of the world.

 

[0marTheZealot]

I think March 2005 will go down as Black March owing to the fact that Iran, OPEC's number 2 producer, will begin a dual system of exchange for oil. Countries can buy in either euros or dollars. This will be a big blow to the US because we have no physical backing of our currecny EXCEPT for oil. Oil backs our dollar just like other countries are backed with gold. Iran commands a lot of clout (along with Saudi Arabia and Indonesia) in OPEC. If Iran can convince a dual-system of exchange or a wholesale carryover to euros, the US economy will be in shambles. Right now, oil purchases (82 million barrels x 50 dollars) act as if they were part of our economy, even though we ceased exporting oil over 3 decades ago. The loss of a huge revenue like that will cripple the economy.

 

[slyedog]

quote:
I no longer have any sympathy for this Country, it gets what it deserves.
-------------------------------------------------------------------------------------

so what country do you claim as yours? thanks for leaving America. we don't need your kind.

Happy Thanksgiving

 

[Siddhartha]

Originally posted by: conjur
http://business.bostonherald.c...iew.bg?articleid=55356

Stephen Roach, the chief economist at investment banking giant Morgan Stanley, has a public reputation for being bearish.

But you should hear what he's saying in private.

Roach met select groups of fund managers downtown last week, including a group at Fidelity.

His prediction: America has no better than a 10 percent chance of avoiding economic ``armageddon.''

Press were not allowed into the meetings. But the Herald has obtained a copy of Roach's presentation. A stunned source who was at one meeting said, ``it struck me how extreme he was - much more, it seemed to me, than in public.''

Roach sees a 30 percent chance of a slump soon and a 60 percent chance that ``we'll muddle through for a while and delay the eventual armageddon.''

The chance we'll get through OK: one in 10. Maybe.

In a nutshell, Roach's argument is that America's record trade deficit means the dollar will keep falling. To keep foreigners buying T-bills and prevent a resulting rise in inflation, Federal Reserve Chairman Alan Greenspan will be forced to raise interest rates further and faster than he wants.

The result: U.S. consumers, who are in debt up to their eyeballs, will get pounded.

Less a case of ``Armageddon,'' maybe, than of a ``Perfect Storm.''

Roach marshalled alarming facts to support his argument.

To finance its current account deficit with the rest of the world, he said, America has to import $2.6 billion in cash. Every working day.

That is an amazing 80 percent of the entire world's net savings.

Sustainable? Hardly.

Meanwhile, he notes that household debt is at record levels.

Twenty years ago the total debt of U.S. households was equal to half the size of the economy.

Today the figure is 85 percent.

Nearly half of new mortgage borrowing is at flexible interest rates, leaving borrowers much more vulnerable to rate hikes.

Americans are already spending a record share of disposable income paying their interest bills. And interest rates haven't even risen much yet.

You don't have to ask a Wall Street economist to know this, of course. Watch people wielding their credit cards this Christmas.

Roach's analysis isn't entirely new. But recent events give it extra force.

The dollar is hitting fresh lows against currencies from the yen to the euro.

Its parachute failed to open over the weekend, when a meeting of the world's top finance ministers produced no promise of concerted intervention.

It has farther to fall, especially against Asian currencies, analysts agree.

The Fed chairman was drawn to warn on the dollar, and interest rates, on Friday.

Roach could not be reached for comment yesterday. A source who heard the presentation concluded that a ``spectacular wave of bankruptcies'' is possible.

Smart people downtown agree with much of the analysis. It is undeniable that America is living in a ``debt bubble'' of record proportions.

But they argue there may be an alternative scenario to Roach's. Greenspan might instead deliberately allow the dollar to slump and inflation to rise, whittling away at the value of today's consumer debts in real terms.

Inflation of 7 percent a year halves ``real'' values in a decade.

It may be the only way out of the trap.

Higher interest rates, or higher inflation: Either way, the biggest losers will be long-term lenders at fixed interest rates.

You wouldn't want to hold 30-year Treasuries, which today yield just 4.83 percent.

Time to lock in those adjustable mortgages. Either that or start socking cash into the mattress.

These predictions of economic doom and gloom are not new but during the Clinton years they were not credible.

The time is ripe for someone to publish a "The Great Market Crash of 2005" book which will sell a million copies.

 

[GrGr]

Gold and crude reserves to end in Russia in 15 years - 11/11/2004 16:51

The Russian government considers the long-term program on the domestic mineral wealth

Russia's gold and oil economic efficiency will be exhausted in 2011, Yury Trutnev, the Minister for Natural Resources stated at a recent session of the Russian government. The minister noted that the time when the reserves of certain kinds of mineral wealth would be exhausted in Russia was drawing near. Trutnev specified that the resources of crude, uranium, copper and gold would end in the country already in 2015.

¦These terms do not raise big concerns at first sight. Yet, in the event the reproduction of mineral resources pauses due to peculiarities of geological preparations for deposits, it will be impossible to solve the problem of the mineral wealth deficit in Russia,¦ the minister said.

The Cabinet of Ministers currently considers the long-term program pertaining to the Russian mineral wealth and the reproduction of the Russian mineral base for the period up to 2012. The spending on the implementation of the program during the forthcoming 15 years will make up 1 trillion 784 billion rubles.

The investment includes exploration and estimation works, as well as scientific and methodical activities. Mining tax payments in the field of the raw materials extraction are expected to grow from 330 million to 400 million rubles a year. It is expected that the geological exploration efficiency on every invested ruble will make up 70-100 rubles.

The goal of the state program is to guarantee balance between the mined and the explored mineral wealth reserves. Experts believe that Russian gas-condensate fields will be exhausted by 2025 (crude reserves will end by 2015). The present share of distributed oil reserves makes up 92 percent and 83 percent on gas reserves.


Pravda.Ru

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