The U.S. Economy: Stand by for more worse news

Discussion in 'Business & Economics' started by Brian Foley, Nov 28, 2010.

  1. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    You are joining the crowd. Arab oil producers refused to roll 9% of all their US bond about a month ago. China is reducing it holding as rapidly As possible. (Now holds almost only bonds with less than 5 year maturities). Bill Gross, CEO of world's largest bond fund, sold ALL its US bonds last month and is now (yesterday's news) is with a 3% short position in US bonds. For more on their 3% short position see: http://www.topstockportfolios.com/r.../1/0/ecc3640ccbb8353d8b9fc1d11768b0bc8e8f545d where the 2nd sentence states: "PIMCO’s chief, Bill Gross, has been warning that the U.S. is on the verge of a debt default." He then goes on to state the US bonds will always be paid when mature, but that the value of the repayment will be much less than the value of the funds originally paid for them. - I.e. technical default avoided by "monetization of the debt."

    I told people in posts to buy Brazilian and Indian stocks (ADRs, directly with their dollars) more than 5 years ago because the dollar would collapse. I have considerable tax deferred 401b retirement funds, which if sold to get out of dollars, would take a big tax hit, so they were put 100% into TIP like funds more than two years ago and about half were switched about four years ago.

    When I first started with my GWB's "depression is coming" (Following run on dollar before Halloween 2014), "there would be wide spread riots in the US" , etc. most all posters replying effectively said I was crazy but now that POV is so common, that I can stop most of my posts about it. - I'll make a few "I told you so long ago" posts in less than two years, but I will be very sad that I was correct as I have four grandchildren in the US. I just hope I can get them safely to Brazil if their lives are in danger.
     
    Last edited by a moderator: Apr 13, 2011
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  3. joepistole Deacon Blues Valued Senior Member

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    Well let's hope it won't get to that. But the political situation in the US is getting very scary.
     
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  5. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    “… We would also expect to see Samuel Huffington's vision of a 'clash of civilizations' to inform the alliances of the coming period, as those with similar cultures, languages customs, etc. form larger blocs to tackle common interests and problems. It goes without saying that the healthiest societies will be those that live within their means, that are self-reliant and that create a voluntary system of support for those elements of society that are weakest and/or require temporary reprieve from accident, disaster or just plain bad luck.

    {Billy T insert: Bold describes Brazil, but certainly not the US. Brazil's "Bolsa Familia" has lifted millions out of poverty (> 10% of the population in the 8 or so years it has existed), but it is a tax based program, not "voluntary system of support," which requires kids to stay in school until 18, get their vaccinations, etc. Prior to it, most rural kids quit school before age 12 to work on the farm. Now they earn the family more by staying in school. It will more than pay for its self and meet Brazil's only need - educated workers - who will later pay many times its cost via their taxes in urban jobs, etc. A better investment than even the US's post WWII GI bill of rights.}

    Oil will be central to the coming battle – mostly for the role it will play in juicing the military's of the main players. And for that reason we see great potential for Canada, and particularly its oil sand producers,* whom, we believe, will be increasingly relied upon to supply the needs of western states as the world increasingly aligns itself along religio-cultural lines. Canada currently supplies the U.S. with nearly one quarter of its oil. That number will only grow. …”

    From daily Email to me of Bourbon & Bayonets - Oakshire Investment Research by <jaubrey@oxburyresearch.com>
    :
    * Billy T comment: Venezuela’s proven shale oil field is bigger than Canada’s - See third graph below. It is not as well explored as Hugo, drives Western oil companies out of Venezuela, confiscates their drill rigs etc. Only the yet unknown "probably reserves" alone, when explored, are likely exceed Canada's total. China is likely to make huge profits on the billions it is giving Hugo. Read my old post below:
    From: http://www.sciforums.com/showpost.php?p=2731307&postcount=1140

    Please Register or Log in to view the hidden image!

    As next graph shows US is getting less oil (and China already more - soon all that US once got when it is locally refined. Hugo hates the US and owes it to China for the funds received.)

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    Brazil surely has much more, not yet "proven."
     
    Last edited by a moderator: Apr 13, 2011
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  7. Pinwheel Banned Banned

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    Haha thats true.
     
  8. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    “… In the last decade, the bottom 90% of working Americans saw their average income actually decline, meanwhile the top 1% saw their income increase by ¼ million dollars each. …" President Obama at ~22 minutes into13April11 speech. See full video of it at: http://noir.bloomberg.com/avp/avp.h...//media2.bloomberg.com/cache/vLgOZfNClHlE.asf

    Billy T opinion: With these facts / growing trends and “tea party” growing in strength, US is well on the way to becoming a typical South American country of a two or more decades ago: – A few very rich and the masses very poor with tiny or non-existent middle class (It is shirking already). Water cannons and teargas used to control mass protests, child malnutrition common, public schools so bad that closing them is no loss as their average “graduate” can barely read or do math. etc.
     
  9. quadraphonics Bloodthirsty Barbarian Valued Senior Member

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    That particular comparison, in terms of economic inequality, has been more and more common lately. But you've forgotten the most politically-salient feature: the armed revolutionary movements that characterized that phase in South American politics.
     
  10. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    I am not sure to what you refer. I am under the impression that "armed revolutionaries" generally grew up as reactions to the CIA's installed military dictatorships. (Every South American country got one, including Argentina, Brazil and Chile.)

    Chile's case history is best know:

    Salvador Allende (26 June 1908 – 11 September 1973*) was a Chilean physician and is generally considered the first democratically elected Marxist to become president of a country in the Americas.[1]

    His political life spanned a period of nearly forty years. As a member of the Socialist Party, he was a senator, deputy and cabinet minister. He unsuccessfully ran for the presidency in the 1952, 1958, and 1964 elections. In 1970, he won the presidency in a close three-way race. On 9/11 he was killed while still in the presidential palace by Right wing thugs, paid and armed by the CIA. It was the cold war and US was very afraid the wide spread "Yankee go Home" hatred of the US could be exploited by the USSR. Thus, all the semi or emerging democracies were destroyed and replaced by right wing dictatorships.


    Shortly following Allende's ouster, General Augusto Pinochet refrained from returning authority to the civilian government, and Chile became led by a junta, under which hundreds of left wing youths wanting to restore the democracy were drug and dropped live into the sea from US supplied helicopters. All told, ins Pinochet's reign of terror, about 50,000 political oponets were killed - some in armed struggles. The prior president of Chile father, a defender of democracy was tortured to death in one of Pinochet's jails (without any trial of course for any crime). Many young women were repeatedly rapped in jail and when they gave birth their child was taken from them and given to a childless couple who supported the dictatorship. There most, now middle aged adults, do not know their "parents" had nothing to do with their birth. Some discovered this when needing bood transfusion - their type not possible to have come from their "parents."

    10 or so thousand parents of "disappeared childern" have given DNA samples and more than 100 stolen babies now know who was their real mother, how she died, etc.

    Yes, there was "armed resistance" to Pinochet, often trying to organize its self out side of Chile, before striking. The CIA organized "operation condor" - an cross border information exchange system - to keep these efforts from achieving much, certainly not any return to democratic government. It was the US preoccupation with the Vietnamese war, that diverted the CIA's attention / efforts enough, that one by one the countries of South America got back on the path of democracy.

    Again, what armed groups are you referring to?

    * "7/11" is a very well know date in all of South America - symbolic of death and destruction of democracy by the US. (>50,000 killed). That is very likely why another 7/11 occurred in NYC and not on some other day.
     
    Last edited by a moderator: Apr 14, 2011
  11. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    S&P's "warning" about possible loss of AAA bond rating if politicians cannot get growing debt under some control, was a gentle breeze compared to storm foreigner holders of the debt are planning to send to the US:

    "... The world is divesting away from American paper money into tangible wealth. It is still going to take a while for the Chinese and the oil rich Arabs to divest themselves of their dollars, but the process is well under way.

    Once they have the majority of their dollar assets either hedged or safely removed from the paper dollar, you will see a unified effort to abandon the dollar as the world's reserve currency. According to a an article in the well respected British newspaper The Independent, these talks are already well under way:

    "In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar."..."

    From daily Email I get from: The Tycoon Report <TheTycoonReport@tycoonpublishingllc.com>

    Billy T comment: Actually the use of dollars is dropping faster than they indicate. China has between one and two years ago established Yuan credits (swapped for them getting value equivalent same in China) in more than a dozen of their major Asian trading partners (and a few months go was in negotiation for same with eight others). About a month ago, China and India agreed to increase 2011 trade to 100 billion dollar value, but will not use any dollars - each will pay for imports with its own currency. - More of China's efforts to make the Yuan an "international currency." 7% of world trade already uses Yuan! (Effectively, China agreed to import more from India to kill its current favorable trade balance with India.)

    At just concluded BRIC + S. Africa meeting all agreed to establish offsetting lines of credit in the other four's currency in their banks. Brazil already has Yuan line of credit from China worth 14 billion US dollars. These five countries agreed not to use dollars any more for mutual trade. For more than two years, Brazil and Argentina have had almost al of their trade settled in their own currencies, but dollar is still OK to use, and does settle a small fraction of their mutual trade still. All-in-all, nearly 1/3 of world trade is either not using dollars or has agreed to stop using dollars!

    The big news above, is the planned ceasing to use dollar for oil, but a basket of currencies, Yuan and gold included to buy oil with. This comes few months after (7? I forget exact number) of Arab oil exporters in a joint action did not roll 9% of their total holding of US bonds - got cash instead, which mainly was invested in real, rather than paper, assets. Probably part of why gold is above $1500/oz and silver at $44/oz today.

    If oil is no longer paid for in dollar, more than half of world trade will not be using dollars. If Congress fails to get plausible plan for achieving zero deficit in a few years S&P and other important rating agencies will kill US's AAA rating. That with less than half of world trade in dollars will make the dollar a "has been" currency with little value as few will finance the US's still growing debt at interest rates the US can afford to pay. I.e. only the printing presses will pay off maturing bonds.

    Long ago, I predicted the run to get out of dollars will come by Halloween 2014. I see no reason to change that prediction now.
     
    Last edited by a moderator: Apr 20, 2011
  12. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    A PPP projection by International Monetary Fund

    To understand that US's large military export earning are (or will be) falling, see post here:http://www.sciforums.com/showpost.php?p=2742509&postcount=395

    Last half of that post explains why at least 10% of current US oil imports will go to China in about 2 years or less.

    To see how easily China can make the Yuan replace the dollar WHEN IT IS READY TO in about three years as the international reserve currency, see old (Oct 2009) post here: http://www.sciforums.com/showpost.php?p=2394434&postcount=192 part of which follows:
    Note first part of that post, not reproduced here, tells how Russia is moving to destroy the dollar too. The BRICS have just agreed to stop using dollars for their mutual trade and China already has stopped using dollars for trade with more than a dozen other Asian nations.

    The hand writing on the wall is clear to read - just open your mind's eye.
     
    Last edited by a moderator: Apr 29, 2011
  13. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    Related to post 83's news about China getting control of oil sources near the US is this news:

    May 17 (Reuters) - "... The arrival of a unique oil rig off communist Cuba is set to cause waves in Washington, raising questions about U.S. drilling permits and the response to any disaster, a conference heard on Tuesday.

    Spanish giant Repsol YPF is due to bring the Chinese-built Scarabeo 9 {drilling} rig to the Caribbean island later this year to drill at least one well in
    partnership with Norway's Statoil and a unit of India's ONGC . "I think it's going to have a much bigger impact on U.S. domestic policy than it is on Cuba," said Jorge Pinon, visiting research fellow with Florida International University Latin American and Caribbean Center's Cuban Research Institute. ...

    Repsol plans to use the high-tech semi-submersible Scarabeo 9 for a deepwater drilling bid in Cuba's Gulf of Mexico zone, parts of which are within 50 miles (80 km) of the Florida coast. ..."
     
    Last edited by a moderator: May 19, 2011
  14. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    WWII made a tiny debt compared to FED's fight against recession.

    Also note graph only goes to 1990 - now with 1.4 trillion deficits the graph needs to be 5 times larger on the down side!
     
  15. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    “…report that Standard & Poor's published only last week. Here's one of S&P's key conclusions {about potential bank loses via housing}:

    At $70 billion to $80 billion, total losses in a double-dip scenario would equal approximately 30% to 35% of projected pre-tax operating income before any provision for losses. This is a sizable potential risk for the U.S. banking sector, though we note that these losses likely would be spread over several quarters.

    S&P's loss estimates are based on the assumption of a "hypothetical" double-dip in housing, in which prices fall 15% between May and the end of 2012. For reference, this week's release of the S&P Case-Shiller house price index showed a drop of 4.2% in the first quarter of 2011. That decline more than erased any gain off the 2009 low, leaving the index at its lowest level since 2002. …”

    From: http://www.fool.com/investing/general/2011/06/03/banks-blindsided-by-a-housing-double-dip.aspx
    OR read S&P’s report at: http://ow.ly/d/ft7 but a pdf download from there is required
     
    Last edited by a moderator: Jun 4, 2011
  16. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    "... Robert Shiller, the economist who co- founded the S&P/Case-Shiller index of U.S. home prices, said a further decline in property values of 10 percent to 25 percent in the next five years “wouldn’t surprise me at all.” A model for the U.S. may be Japan, where home prices fell for 15 years after that country’s real estate bubble burst in the early 1990s, Shiller said. If we had inflation, it’d be great, because it’d mask a 25 percent {real value} decline.”

    U.S. home prices plunged 33 percent in 20 cities through March from their 2006 peak, reaching their lowest level since 2003, according to a Case-Shiller report on May 31. The decline signaled a “double dip” as the index fell below its previous post-housing-bubble low set in April 2009. Prices more than doubled from 2000 to July 2006. A backlog of foreclosures poised to hit the market means prices may stay depressed, dissuading builders from starting new construction. ..."

    From: http://noir.bloomberg.com/apps/news?pid=20601087&sid=af6VpFSzDE80&pos=3

    BT does some numbers for you: If July 2006 peak is 100 then down the 33% already is 67 and a 25% more drop is 50.25 but those are nominal prices. Inflation from 2006 til 5 years from now (2016) will make home owners lose >2/3 of the value the home had in 2006. As the home was their major asset for many - many will be poor and evicted with banks owning many homes they must sell at a loss or hold and pray for better times. Personally with all the crimes the bankers have committed, I don't think God will even hear their prayers.
     
  17. fedr808 1100101 Valued Senior Member

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    BillyT, I hate to say this, but you need to get a hobby, desperately. You spend way too much time trying to explain in explicit detail (which hardly any of this care about) as to why the US economy is going down the drain.

    The only point you've gotten across is your considerable skill in quote mining, which is not a hobby.
     
  18. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    There is some truth and some misunderstanding in that. I don't consider what you call "quote mining" to be that but more "documentation" of the the steps that are taking US & EU to a dollar run by Halloween 2014 and then depression as I forecast back when GWB still had two years as POTUS.

    Now many are commenting on the economic problems developed countries face so "sad facts" just come to me in Emails I get without any "mining" efforts. (I am on the distribution lists of many financial advisory firms and many early stage drug developers* so I sort of do have a hobby, managing my more than million dollar stock & TIP portfolio.) I also document the rise of China and other developing countries mainly in the thread BRIC+ news. Why I don't exactly know, but I find that un-precedented rise interesting, scary, and amazing too.

    I explain more physics than economics. The first mainly to correct posted errors and the second mainly when asked or needed in the B & E thread I monitor.

    * I love to learn (sort of a hobby too and profitable too.) For more than a decade most of my learning has been on the amazing developments being made by early stage drug companies. They usually have nothing to sell and big expenses so make many conference presentations to potential funding sources which often you can follow via the internet. Fascinating stuff. I once bought shares in the speaker's company before he finished his talk. (It started with an apology - the data the abstract promised was not available - not yet unblinded as fewer had died than was expected. - I concluded his heart failure drug was working from that fact alone, especially as only half the patients in the study were getting it.)
     
    Last edited by a moderator: Jun 9, 2011
  19. nietzschefan Thread Killer Valued Senior Member

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    You should listen to BillyT...I made a little bit of money in Gold because of him. (Should have made a whole lot more if I trusted my instincts as well).
     
  20. nietzschefan Thread Killer Valued Senior Member

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    test please give me a vote : http://borsteodor.com/forum.php?tp=...tically...scary I wonder if I've got a bug...
     
  21. Michael 歌舞伎 Valued Senior Member

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    what is that url link?
     
  22. Michael 歌舞伎 Valued Senior Member

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    I appreciate your posts. I like trying to learn a little about economics. TTYTT until I ventured into the Business & Economics section I had almost zero idea there was an economy out there - like 99.99% of most people. I once said to someone something you posted about the debt (which I found interesting) and their reply was "I couldn't be stuffed". IOWs, they don't want to learn, think or care. And I was a the kook for even suggesting the economy could be in for a serious shake up. Subsequently they bought a pretty average house for nearly $500,000 thinking it's going to "go gang-busters" and be worth 6 or even 7 hundred thousand dollars in a few years (don't you know house prices double every 10 years). They were already spending the money. He finally (after threatening to sue his bank for not wanting to give him the money [I really don't know the details but they had signed on to give him a loan if he met some conditions and he did meet those conditions) anyway, he bought this average house in a popup subdivision along side a bunch of other average houses (that was less than 3 months ago I helped him move in) and it has since dropped 6-8% in value. So, for most people, don't worry about them, they don't want to know anyway. I know I never bring it up to him.
     
  23. Pinwheel Banned Banned

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    I appreciate your posts Billy_T. Keep it up.
     

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