Is the US too big to fail?

The current account deficit is running at $34billion , foreign purchases of the huge US debt are falling rapidly , the US stockmarket is heavily over-valued,and the dollar is uncertain. This War on terror is one last attempt to order the world entirely around the requirements of US monopoly capital, before it can long hope to do so. In other words this is the last throw of the dice before the US economy goes into serious decline - as evidenced in the dramatic falls of the stock markets , the collapses of major corporations , the ballooning cost of prosecuting this war on Terror and other acts of economic vandalism such as the tax cuts for the rich have indicated . This means for America controlling the oil and fossil fuel riches in the Mid East . It means attacking Iraq, installing a replacement Saddam Hussein and taking over the world's second-largest source of oil. It means surrounding a new economic challenger, China, with bases, and intimidating the leaders of its principal economic rival, Europe, by undermining NATO, and setting off a trade war.

 

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hey hey hey, I know the USA economy is a bit odd, and things arent that good, but you underestimate the unreal nature of economics and the stock market. If you can fool as many people as possible into thinking things are going ok, as well as ensure those who have a big say will be well enough looked after, collapses can be managed and staved off.
As for the rest of it, a lot of it is likely possible, but what i would like to know is who actually thinks this up and plans it, if it is correct.

 

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Well Guthrie you should read the latest Buttonwood column, for you see Buttonwood is seeing red in the future of the world economy, something I have been stipulating for a while now:

As do I Mr. Buttonwood, if you are a avid reader of my posts you would note that all the things stated in this column has been stated by myself countless times, and America needs to reform the way it works in order for it to survive, she cannot continue consuming without making any money. America needs another recession to get things right, firstly if (god wiling) Bush were defeated the Kerry administration needs to tame the budget deficit which in the long run will not be able to be supported. The “war on terror” is indeed more harm then good to the US economy as it consumes too much and causes there to be a serious imbalances to occur. America was in very good shape prior to the Bush tax cuts which has not stimulated enough demand or investment to offset the fall in income. Also the American people are not saving anything and so it expects the savers of the world to pay up. America is living a economic lie that will implode, on this day in 1929 the market crashed I wouldn’t be surprised if it were to happen again.

 

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Well, if you say the market is goign to go down, you have a 50% chance each day of being correct, so you'll strike lucky quite a few times.

But broadly I agree that things wont really get any better and we'll end up with at least some kind of depression. Certainly, the company I am now working for is expecting a great year next year, because the high tech silicon crystal production companys we supply are also expecting a good year. However, none of them are at all sure about what will happen after next year.

And on a related note, heres a piece from the Asia times, which looks about correct, though I have a grudge against von mises lovers. (mainly because they worship the market and dont look at the human costs of it.)
http://www.atimes.com/atimes/Global_Economy/FJ30Dj01.html

 

Well now that the US is going to collapse economically eventually because she is pure consumption, the Asian economies now are trying to reallocate her economies to consumption instead of investment, and exportations. Well China is trying to do that, although that does take a long time to accomplish you develop your own domestic markets does take a lot of investment unto itself. With the Chinese economy expected to surpass that of the US within this decade the fortunes of the economic world will shift. My fear is whether or not this Chinese growth will be largely from within or geared to the outside world. My hope is that by the end of this decade China will have a trade deficit but a current account surplus, and as a result be able to substitute the US to a certain degree. If you are to look at China’s trade surpluses they are going down, and that’s a good thing imo:

Trade Surplus
2001: 25.9 billion
2002: 30.3 billion
2003: 38.7 billion
2004: 23.5 billion*

I suspect that it will be getting smaller as a result, so it should be for the good of the world economy. Also the Japanese imports are increasing as well due to higher demand which is due to higher demand in China, which is due (to a large extent) to demand in the US. I suspect that the Chinese will support the US as long as it is dependent on exports to drive economic growth, especially exports to the US. Really China only runs a trade surplus with the US, and the Netherlands the rest mostly are in surplus with China. In order for this capitalist economy to work there has to be a loser and right now it’s the US.

 

Self-evident truths can only appear as convictions within one's self
When another challenges something you know inside yourself to be true your first reaction is to defend yourself. But you are right dixonmassey, a wise person overlooks the insult!

peace

c20

 

So, as long as I believe that I have been abducted by extraterrestials it's REAL and TRUE?

Secondly, the expression "self evident truth" is mostly used to justify some "practical" matters of life (like separation from England), which was hard to justify with logic (who wants to use greed as the reason?), etc.

I feel oppression of USA government. I would gladly separate 50 acres of land from USA to create one family republic. I feel that a right for one family republic is "self evident truth". Too damn bad, I am not "strong" enough to defend that truth.

Thus, any self evident truth without power backing is not true at all. In practice, you will have whatever rights your society by tradition grants you. Also, internal faith (you were refering to) and self-evident truth are somewhat different.

Citation:
Success is the sole earthly judge of right and wrong.

 

nice post Billy T

I think that the other worldplayers know, that if they completely pull the plug on dollar (and the deck of cards), they will find a nuke in their backyard soon....

Reasons will be found, God himselve will justify the war....

When Saddam decided to trade his oil-for-food in euros, this was the exact moment he found Abraham tanks in backyard....

 

Is the US too big to fail? I sure hope not.

But then, let me be totally open here, just for once. I'd rather have the US take over the world (as England sort of did with the colonies), say, than somebody else, like some fanatic-run bumblef*ck society. (Really, I had to squeeze that in somewhere.) If England had colonized South America, I don't think they'd have done to it what the Portuguese did. If it has to be dog-eat-dog, I'll take the more genteel dog any day.

Oops. I'm off topic. Sorry - delirious.

 

im assuming that america will fall within 20 years unless they get a genius who the population would trust to the end of the Earth as their president

once they do fall, im assuming that China or Japan will take over. This will raise a bad situation. It will be the first time ever, that the msot powerful country in the world will have a nuclear arsenal smaller then another country (in this case, much smaller then America and Russia)

i think that America will use the military power that it should retain for a while after its money is gone to gain power, and the newest super power will be unable to help - America can just threaten them with Nukes.

 

Sadam had some well nice palaces. Did his success mean that he had been juded as good? That must mean that he is bad now right?
Success has nothing to do with right or wrong. One could be a successful theif and live the life of luxury, Ronnie Biggs the train robber for example.
Right or wrong depends on who you are offending and more specifically how you are offending them. Trespasses are self-evident to the one being trespassed against, forgiving the repentant is all one can do in the hope that when one trespasses against another, you too will be forgiven. We all cause people to trip up now and again. We all hurt people. Forgiveness is the key and forgiveness is the opposite of judgement. Forgiveness can only take place when the trespasser is repentant though. If the trespasser is not repentant then it is up to the one who has suffered the trespass to decide whether they forgive that person in their heart or not. If they forgive then the person is forgiven, if they do not then the person is not. Simple as.

peace

c20

 

Obviously, Sadam was NOT successful enough or he would be enjoying his palaces right now. When he was indeed in power, significant portion of Iraqi people did respect (at least) him. More than that, children of those people were taught to love Sadam. Children of their children would be taught to love Sadam. Endless repetition until the real historical Sadam would be substituted with a holy idol who did no wrong in people's memories. Mongols love and are proud of Chingis Khan. Large chunk of people living in the former USSR still love Stalin. Uzbeks are proud of Tamerlan, etc.

Sadam is an innocent todler compared to those men. Had he succeeded in wars with Iran&Kuwait&USA, descendants of modern Iraqis would certainly thought of his doings as righteous and necessary. BUT, Sadam is a LOSER, thus, the winner and his puppets will write the new Iraqi history where Sadam will look like a blood thirsty maniac. Yes, Sadam is wrong because he's a loser.

Really? Winners write history. I meant "winners" not in the narrow $acquiring$ sense. Winners teach&brainwash future generations to their liking. You think of the right and wrong as apples growing on a tree, which grow by itself. You think of the right and wrong as of something given from the above (well you are a Christian after all). However, had you been born in a canibal tribe you would have had no problems with hunting and eating human flesh. Examples of the relativity of the right and wrong are countless (starting from the Bible). Society you live in TELLS you what is right and what is wrong. Societies wrap those rules in a religious wrapping, as a rule.

Sure, there are few rebels in every society. However, rebels need to win in order to impose their "truth" on a society. If a rebel keeps rebelion to himself or lose, his "truth" will die with him. the next generations will be taught about the bestiality of the loser. That is why Muslim and Christian countries will remain Muslim or Christian until the next major upheaval. Parents&country one has been born in are the major reasons why one becomes Muslim or Christian. Don't you find it suspicious that religious preferences depend mostly on the blind chance (i.e. birth place)? Where is absolute right and wrong?

Obviously, you are not aware that humans are easily programmed animals. If one is cruel enough, one may easily grow a human robot, which will think that all things master is doing are right, because it's master's will. Just remove a person from society as a child and create whatever your fantasy wishes. More than that, there are/were numerous totalitarian sects which can program grown ups with ease.

Canibals cannot be repentant because eating human flesh is as natural to them as eating animal's flesh is natural to you (I assume you are not vegeterian). Only, after non canibal society will conquer canibal tribe and will impose its will&truths, children of the children of the human flesh eating canibals will detest canibalism (and repent after genetic memories would cause them to eat somebody from time to time). Winner society makes right and wrong. Read history. Examples are abundant. think what would have happened to Brittain's rights&wrong if Hitler would have won.

 

I started this thread about four years ago - long before any one (me included) had heard of "subprime mortgage collapse"etc, but I clearly saw it coming, just as I now foresee an unavoidable depression in US and EU (and did comment on in other posts more than two years ago.) Here is the last paragraph of the OP:

"Another way to easily understand why collapse of the dollar is only a question of when, is to note that the generation in current control of US has been spending 30 to 40 % more than its income for years when borrowing is considered. That is, it has burdened the next generation with a debt they can not pay. They will rebel in some way, not use a significant fraction of their income to pay off the debt and enjoy a disposable income approximately half that that their borrowing parents {had}. Demographics and Social Security problems are widely recognized, but {that} may not be as important as “debt, well above the eyeballs” in people looking for a greater fool to buy their house."

Even Fanny May and Freddie Mack have run out of "greater fools" it now seems (except the US taxpayer, via GWB's Treasury). Oil up the dollar presses, we need them 24/7 now.

 

The sub prime mortgages were high risk loans. The same as giving out high interest credit cards to people who already went into collections on other cards.

As far as investing and the economy- All economies are manipulated anyway. Good or bad really makes no difference because the major players just move their money someplace else.

 

People gotta have homes.

 

A total collapse is not likely, but a slow decline seems almost inevitable. I cannot imagine the US using its nuclear forces to blackmail the rest of the world into supporting it.

It is hard to predict what will happen when Social Security, medicare, & pension benefits cannot be paid without crushing increases in taxes.

• At the national level, Social Security is bankrupt. All of its assets are in US Government bonds, which make it look solvent on paper. Unfortunately, when current FICA deductions are not enough to underwrite the promises, drastic increases in FICA deductions and/or income taxes will be required. The burden on those working would probably be intolerable.
  
  One possible solution would be to cease making cost of living increases in benefits, allowing inflation to make the promised payments not worth anything & capable of being covered without drastic increases in FICA deductions and/or income taxes.
  
  I wonder if there would be some type of tax payer revolt. If intolerable taxes are levied, it would not seem worthwhile to work for a taxable salary. An underground economy might develop or the slow decline might accelerate due to few people working.
  
  
• At the state & local level, pension benefits and salaries promised to unionized civil servants will become difficult (impossible ? ) to finance out of current taxes and it might not be possible to borrow enough to cover the promises. Unlike the federal government, a local government can declare bankruptcy, allowing it to start over with renegotiated pensions & salaries.

BTW: I am astonished at allegedly intelligent people who claim that Sociial Security is solvent, but who ignore the problem of finding the funds. I suppose that the Government could merely print enough money to cover the promised payments, resulting in inflation like that which occurred in Germany after WW1.

Saner people during the FDR reign advocated requiring that Social Security be run llike an insurance company annuity. This would put funds into mortages, stocks, corporate bonds, et cetera. Under such a plan the power of compound interest & increases in the value of stocks would easily result in very generous pension payments to retirees (much higher than the current payments). It would also provide investment capital and/or funds available for mortgages & loans to busineses.

Unfortunately, politicians do not plan farther ahead than the next election, and voters are too dumb to force them to do otherwise.

BTW: If GM or some other large company proposed funding pensions in the same manner as Social Security, it would be called a Ponzi Scheme & declared to be illegal.