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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    23,198
    Following is the heart of Stella Dawson’s (of Reuters) article called: “Insight: West in political crisis has echoes of 1930” (released less than 2 hours ago)

    “… The political malaise is also hastening the shift of world economic power toward developing countries led by China. At worst, it could cause a second global recession bringing with it political upheaval on a scale not seen since the 1930s.

    These unpalatable scenarios are being sketched by a growing number of leading political strategists, academics and economists {& by Billy T nearly six years ago, mentioning wide spread rioting in the US etc. and suggesting buying ADRs of Brazil & India for financial protection when dollar collapses (predicted to be by Halloween 2014.)} after an extraordinary year when the once unthinkable came to pass: the United States had its credit rating downgraded while the developing world enjoys upgrades; Europe went cap in hand to Beijing for a financial bailout; and Brazil overtook Britain within the G7 club of major economies.

    The shifting international economic order toward developing countries is nothing new. But it has been happening at a faster pace than expected, accelerated by what these analysts have begun describing as Western democracy in crisis.

    They see a government credibility problem in the United States and European Union, stemming from a perception that the political elite is too closely tied to the financial elite* in the West, and their collusion caused the financial chaos of 2007 and 2008 and its messy aftermath, leaving the average citizen burdened with higher public debt, higher taxes, unemployment and austerity programs.

    Left to pay for what voters see as the elite's mistakes, public confidence in government has been undermined, and political paralysis has set in as Western leaders struggle to pull governmental levers that are not working effectively.

    In contrast, developing nations have been modernizing their institutions and markets, delivering growth rates in the past decade triple those of the West. By 2020, the Centre for Economics and Business Research in London estimates that India and Russia will have joined China and Brazil in the G7 ranks as the biggest economies in the world based on total GDP output, ousting Britain and France. Only the United States, Japan and Germany will be left from the old G7 that dominated the international order since World War II. …”

    Read her article in full here: http://news.yahoo.com/insight-west-political-crisis-echoes-1930s-130406733.html

    * This part of her text was made bold by Billy T, who notes that fundamentally this firm connection is caused by the huge cost of modern national elections. - I.e. the rich and corporations not only have lobbyist writing the tax laws but also get politicians they like elected by a nation of poorly educated sheep, who vote as the TV tells them too.

    BTW, I think her last quoted sentence is 2/3 wrong. US and Germany in 2020 will just be starting to recover from the world's worst ever depression; Probably under the tight control of military governments / or even Marshall law still. Japan which already has China as its main trading partner probably will still be an industrial power and part of the G-7 (if it still exists), but the suppliers of energy, food stocks, and raw materials, like Brazil, Canada, Australia and oil exporters (except Norway and Russia) will be "economic colonies" of Asia, especially China and not in depression.
     
    Last edited by a moderator: Jan 1, 2012
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  3. Michael 歌舞伎 Valued Senior Member

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    Obama requests another $1.2 trillion to pay US costs

    Wow, that didn't take long. Didn't we just have a big battle over a Trillion dollars just a few months back....

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    When are we estimated to reach $20 Trillion national debt? What's that like, 1.3 times our GDP? Also, how much interests will have to be paid back each year?
     
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  5. joepistole Deacon Blues Valued Senior Member

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    Yeah, we just had that discussion. And this request was a part of that discussion. This is not a surprise. This is part of the recently negotiated deal that raised the debt ceiling.

    In other words, this is only news to the uninformed and the demagogues who want to exploit ignorance.
     
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  7. Michael 歌舞伎 Valued Senior Member

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    What's the point in arguing for half the year to raise the debt ceiling if a few months later it has to be raised again and we have to go through this circus again.

    Interest Expense on the Debt Outstanding

    Interest Expense Fiscal Year 2012
    December $98,652,091,319.29
    November $21,709,460,451.61
    October $27,771,392,426.03
    Fiscal Year Total $148,132,944,196.93
     
  8. wellwisher Banned Banned

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    5,160
    Didn't Obama form a committee to cut $1T off the budget. Now he wants to add even more deficit without making any cuts.

    We need to let the government shut down until they save that amount of money. Too big to fail his taking advantage of the american people. The public servant needs a time out. Then we need to see what is missed and what is not. Then we cut.
     
  9. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    "... The FT reports that S&P will downgrade the sovereign credit ratings of France and Austria. The rating of both countries has been cut toe AA+ from AAA. French government officials have confirmed that they have been notified of the downgrade by S&P. They also confirm that it is a one notch downgrade. ..."

    From: http://www.stateofthemarkets.com/re.../1/0/efd03764d0b12be95707dce7185b94f23553d67d

    Billy T notes: Austria is hurt by the large exposure of its Banks to Hungarian bonds, soon to be only paper. Then the Australian government will need to save it banking system.

    later by edit, after markets closed, S&P down graded seven more!

    Spain, Italy, Cyprus, Malta, Portugal, Slovak Republic*, and the Slovenia Republic.

    * Was cut to ’A’ from ’A+’ so is 6 levels below AAA. I'm not sure as don't deal in bonds, but think that is less than "investment grade" or one more cut will be. Then many banks etc. must sell their bonds as can only hold "investment grade" paper. Italy was cut to BBB+. Fact that I do not comment on new levels of others only means I have no information on them and don't care enough to search.
     
    Last edited by a moderator: Jan 15, 2012
  10. Michael 歌舞伎 Valued Senior Member

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    20,285
    Australian?

    Reply added by Billy T: No, AFAIK, Austria and Australia have been merged only by dyslectic me. (I post 10 times more about Australia than Austria.)
     
    Last edited by a moderator: Jan 14, 2012
  11. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    23,198
    File following in your "easier said than done file"

    "German Chancellor Angela Merkel said on Saturday: "We are now {referring to 9 downgrades by S&P} challenged to implement the fiscal compact even quicker ... and to do it resolutely, not to try to soften it," she said at a meeting of conservatives in the northern city of Kiel. "We will also work particularly to implement the permanent stability mechanism, the ESM, so soon as possible." – From Yahoo news (when my Email page opens)
     
    Last edited by a moderator: Jan 14, 2012
  12. cosmictraveler Be kind to yourself always. Valued Senior Member

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    33,264
    Watch out for the devaluation of the dollar coming soon. It has to devalue because there's more dollars being printed that has nothing to back them up any longer and the more they print the less value they will have....EVENTUALLY. It's all a matter of time as to when they will finally devalue the dollar because it is being artificially propped up today.

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  13. joepistole Deacon Blues Valued Senior Member

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    Republican politics.
     
  14. joepistole Deacon Blues Valued Senior Member

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    22,910
    You would have an argument if you started using legitimate and credible resources to back up you claims. But then you would have to deal with the reality that does not back up your claims. A 1913 dollar would purchase more goods and services than a dollar spent in 2012. However, consumers earn considerably more in 2012 than they did in 1913. So where is the damage? Where is the harm? The harm occurs when a loaf of bread costs more of your income today than it did back in 1913. Coincidentally, that is not the metric you are using.

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    Because if you did use that metric, it would not support your claims. Today American food costs, as a percent of income, are the lowest they have ever been and are lower than costs in any other nation in the world according to the USDA.

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    [/QUOTE]

    Instead of focusing on the pretty piece of glass in the grass perhaps you should worry more about the viper lurking just behind it.
     
    Last edited: Jan 15, 2012
  15. joepistole Deacon Blues Valued Senior Member

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    22,910
    Ah no. President Obama wants to pay the bills the government has already incurred. That means raising the debt ceiling or raising taxes. And since Republicans have ruled out raising taxes, that means raising the debt ceiling.
    Ah wrong again, if government shut down the economy would shut down. And revenues would collapse. Social chaos would follow. And the nation's bills would go unpaid.

    A great example of simple thinking. Great rhetoric for the American right wing, but a really stupid idea.
     
  16. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    23,198
    up date on post 248:

    "... (Reuters) - European leaders promised on Saturday to speed up plans to strengthen spending rules and get a permanent bailout fund up and running as soon as possible, a day after U.S. agency S&P cut the ratings of several euro zone countries' creditworthiness. ..."
     
  17. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    A comment on the purchasing power of dollar graph (in addition to Joe's post 251 post about salaries being larger):

    It is very hard to compare 1913 to 2013 even if for example salaries have increased enough to let a typical factor worker buy a Ford car with the same number of hours worked as one gets a 1913 car and the other a 2013 model.

    The technology advances have made life (by material standards) better for every new generation, except the current one, than their parent's was. That is fundamentally why they (and many of their parents) are "Mad as Hell."

    At some danger to themselves, the rich and powerful have stolen what was long assumed to be an American birth right. When Jacob's birth right was stolen, he was sold into Egyptian bondage. Young Americans have been sold into Chinese bondage. Debt slaves to the Chinese but few of them yet realize it.
     
    Last edited by a moderator: Jan 14, 2012
  18. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    23,198
    Here is a somewhat interesting video designed to be very scarry (Even millionaires will be bagging groceries, etc. to live):
    http://moneymappress.com/video/mmp/...023&s=593200&u=40779324&l=366327&g=147&r=Milo

    He assumes that the FED will not be able to remove any of it's 1.8 trillion "Printing Press" dollars it has created in last three years AND that they will circulate, making each dollar worth ~30% of its current purchasing power. Furthermore, that this errosion of purchasing power will continue for next 5 years, making the millionaire's million worth only ~$90,000 so he can not live on that savings (with the then price of things like food).

    But don't worry. Have no fear: His book will tell you how to prosper instead.

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    One must note however that the FED is not very creditable in just how how it will burn up the dollars it has made and when inflation does begin as they will immediatley go into circulation to avoid further loss of value by buying things (sacks of rice, guns and bullets etc. ) The FED seems to plan (and has gotten Congress to authorize it already) to pay interest on dollars deposited with it. That however only holds the dollars out of circulation for a while - does not destroy them and by the interest paid creates even more. Perhaps I will buy his book after all.

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    No, I don't need to. I briefly forgot that I followed the advice I posted years ago and bought a lot of Brazilian stock ADRs and some TIPs. Hope you did too.
     
    Last edited by a moderator: Jan 16, 2012
  19. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    ".The World Bank slashed its global economic growth forecasts and warned that rich nations' debt problems may yet reap a crisis that would eclipse the tumult of 2008. "The world economy has entered a very difficult phase characterized by significant downside risks and fragility," the twice-yearly Global Economic Prospects report said. ...
    "The world could be thrown in a recession as large or even larger than that of 2008/09."..." From: http://news.yahoo.com/world-bank-cuts-global-economic-forecasts-030214185.html

    Billy T comment: Others are beginning to see what I posted about ~6 years ago, but not the full extent, yet. - I.e. GWB's depression is coming. Run on dollar by/before Halloween 2014 followed quickly by world's worst ever, longest lasting depression with food riots in US stopped by martial law, etc.
     
  20. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    “… The Obama administration today formally rejected a bid by Canadian energy company TransCanada to build a $7 billion oil pipeline linking the tar sands of Alberta to refineries in the Gulf of Mexico. …” From: http://news.yahoo.com/president-obama-rejects-keystone-xl-pipeline-195648398--abc-news.html

    Excerpts from my earlier posts on this:

    Post 176: “… I am nearly sure the Keystone ext pipeline will not get built. ...”

    Post 181: “…China has or soon will have invested nearly 100 billion in development of the world's largest shale oil deposit and the construction of two new heavy oil refineries … China is to be repaid in Venezuelan oil. - Then Venezuela's heavy crude will not be coming to the US Gulf coast refineries. That is why the DoE is so desperate to get the Keystone extension pipeline built. - It will bring Canadian heavy shale oil to these Gulf Coast refineries when they don't have crude from Venezuela. …”

    Post 200: “… Critical times (7Oct11 is last "public" hearing*) are now here for the Keystone Extension pipeline (Bring Canada's oil sand oil to the Gulf State refiners designed for that heavy oil, which may not be coming from Venezuela for much longer) See post 180 thru 184 for my exchange with Quadraphonics on this question.
    ------------
    * I put "public" in quotes as the hearing is in DC and room will be packed by lobists wanting approval and few of the people of seven mid west states that are strongly opposed for valid concerns. …"

    Billy T comment now: Looks like my first post 176 prediction was correct, despite the power of wealth in oil industry and modest US job creation Keystone is dead for now. The backers can appeal, start over from the beginning, but by time Keystone can come up again, it is very likely that the alternative pipeline to Canada’s West Coast ports will be under construction. I.e. China wins again: Gets oil from both of the two world’s largest shale oil fields while US get none or little.

    The US with weakening dollar cannot out bid China for oil, and to even try, would need a loan from China - fat chance of that.

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    But look on the bright side: in a few years, the US will need much less oil when in depression.

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    Last edited by a moderator: Jan 19, 2012
  21. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    "... Nearly one in three Americans who grew up middle-class has slipped down the income ladder as an adult, according to a new report by the Pew Charitable Trusts. … People were deemed downwardly mobile if they fell below the 30th percentile in income, if their income rank was 20 or more percentiles below their parents’ rank, or if they earn at least 20 percent less than their parents. The findings do not cover the difficult times that the nation has endured since 2007. ..."

    From: http://www.washingtonpost.com/busin...-study-finds/2011/09/06/gIQA76ut7J_story.html

    Billy T comment: The last quoted sentence, now bold, is why this is posted in this thread.
     
  22. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    "... Home prices fell more steeply than expected in November, and consumer confidence soured in January, highlighting the hurdles still facing the economic recovery. The S&P/Case-Shiller composite index of single-family home prices in 20 metropolitan areas declined 0.7 percent on a seasonally adjusted basis. ..."

    From: http://news.yahoo.com/home-prices-drop-more-expected-november-p-140253649.html

    Billy T comment: It is even worse with a year on year POV: Home prices dropped in 12 months thru October 2011 was 3.4% but during the 12 months ending with November the one year drop was 3.7%. Prices are not only going down but at a faster rate! (Of course the absolute dollar drop in prices is roughly holding constant as that compared to declining price base is a greater percent drop.)

    Thus even those with ability to get mortgages (now at 40 Year low rate of less than 4%) are wisely waiting months more if they can to buy later cheaper. FED´s money pump is just helping the banks. They get near zero cost deposits from the FED and with little demand for loans just buy 10 year treasury paper for ~2% return. Not much, but a safe risk free profit.

    The FED and the banks love each other. Working together, with the rest of the government in a nearly useless effort to stimulate (Pushing on financial strings) they will send the US more than another trillion dollars into debt this year.

    It will all end soon, when even "smart money" investors realize how stupid it is to buy 2% bond (to get $200 gain on $10,000 invested AFTER 10 YEARS) with inflation greater. Even just buying lumps of coal already gives much greater return. China is not nearly so dumb. It has small mountains of copper ore pilled up, yet is buying more than ever before!* Is the world´s largest gold producer but now is the largest buyer of gold too (bumped India down to second spot.) China is locking up oil etc. in long term (up to 30 years) future delivery contracts, fully paid up front now to get out of dollars. Etc.

    When the "smart money" investors do get smart and cease being so crazy, they will get out of dollars** and into many commodities (gold included) that are increasing much faster than inflation so REAL profits are possible. Once they switch to buying commodities, and appreciating RMBs when China permits that, then their demand will drive price up even faster - With National Banks spending dollars to buy gold***, etc. I expect gold will cost more than $7,000 / oz in less than a decade, even if expressed in buying power of current nominal dollars.**** (It will probably be priced in Yuan (RMBs) by then, however.)

    * "... China’s copper imports surged in December to a record of nearly 407,000 metric tons, an increase of 78% from the year-ago period. ..."
    Quote from: http://www.moneyshow.com/investing/article/29/Global-26416/Raw-Materials-Demand-Is-Growing-Again/ where other commodity surges are also described.

    ** That is the "run on the dollar" I long ago predicted would happen on or before Halloween 2014.

    *** And soon China´s gold backed bonds for their reserves.

    **** Expressed in the nominal dollar of 10 years hence, gold should be well north of $50,000 per oz as dollar will have lost most of its purchasing power in a decade. Ivy league tuition will be at least a million dollars per year, but many will get internet degrees instead.

    Too bad few of you followed my advice to buy ADRs of good Brazilian companies, long ago, when I first told you to.
     
    Last edited by a moderator: Jan 31, 2012
  23. quadraphonics Bloodthirsty Barbarian Valued Senior Member

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    The issue is more that nobody is willing to sell right now, because they're underwater. Almost all of the houses for sale, are foreclosures or short sales. Many buyers may well be waiting (I know I am), but there's still 10 buyers for every seller. The few decent houses that go on the market get listed as "sold" within, literally, hours.
     

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