Hide and watch

[peternap]

When I was growing up in the mountains, one of the smart hiney comments we used to make when someone would tell you "That can't happen", was
Hide and watch".

I've been following Obama's economic recovery plans shift and squirm, as he realizes it isn't going to happen...at least in his term of office.

I'm still doing some in the stock market, but I'm just playing the volatility, there isn't any real growth that I see and in fact, some of the supposed success stories are now showing up as simple lies about profits.

Now even China is saying "enough of your junk"
U.S. debt is losing its appeal in China
http://www.iht.com/articles/2009/01/07/business/yuan.php

On Tuesday, the U.S. president-elect, Barack Obama, said Americans should get used to the prospect of "trillion-dollar deficits for years to come" as he seeks to finance an $800 billion economic stimulus package.

I don't think we can survive with that kind of debt, or at least survive as we are. I'm sticking to my meltdown theory. Hide and watch!

Finding cheaper gold is looking better to me all the time now.

[harry51]

U.S. passes strict environmental laws and encourages union influence in business, causing severe competitive disadvantage at global level.

Business gives up, goods start coming in from offshore.

U.S. citizens buy tons of cheap offshore produced goods, many more dollars worth than offshore buys from U.S., creating trade deficit.

Offshore money, especially that accumulated in countries with state owned business enterprises, buys U.S. gov't bonds.

U.S. can't pay on bonds. What to do? Stimulate the economy, create money at inflationary speed, pay on bonds with devalued dollars, reducing the real return on bonds to zilch or less.

Offshore decides to quit trading real wealth; i.e. electronics, appliances, cars, clothes, lead-spiked toys and poison dog food, for U.S. paper of unknowable future value.

With reduced customer base, offshore manufacturing slows, causing unemployment. Statist countries conscript excess workers into huge standing army.........

or, ??

[muldoon]

I think harry is on the right track with this.  US sends dollars overseas as consumers, those dollars come back and buy our bonds.  If your watching the retail story you'll notice that were not exactly consuming much and sales are way way down.  As we decrease consumption and prices fall to the floor those dollars never make it overseas, therefore they never come back to buy bonds. 

Harry - one detail - those countries cant have a standing army if they cant feed them.  Our current situation is destroying Russia and China and the middle east.  Kill consumerism and watch those dependent on the export model fall.  Especially those with internal obligations to their people.  (You think our medicare and social security situation is bad, consider the load of full communism).  Consider that when china manufacturing falls off a cliff and Russia and middle east gas/oil prices fall off the same cliff. 

No those dollars wont be buying our treasuries for much longer now, they will be trying to stave off their own problems. 

Consider the 1930s, only England was the financial powerhouse and center of the world at the time.  The US post industrial revolution was the country that could manufacture cheaply compared to the rest of the world and we grew rapidly (roaring 20s).  Once credit dried up and monetary base constricted we entered the depression.   Consider the leadup in China to date and draw some parallels. 

As for the track of the US today, consider 1930s Germany.  Large WWI reparations hung over the country (national debt) they inflated to pay those back.  Or really, they inflated to create currency to buy gold to pay back.  The value of the Mark continued to fall and eventually they entered hyperinflation and crashed (Weimar republic). It led to a dictator situation who targeted the jews as the scapegoat for a broken country.  I am in now way defending the nazis, but even jesus hated the money changers.  I can almost see how one thing led to another in a historical context.

Now - hyperinflation - I am not convinced it really has anything to do with the amount of money actually created.  I think it is more of a result of how other countries react to how much money you print.  Every crash I can find in history always has the same lead up where other nations isolate a country and stop doing business or extending credit.  After that, then they crash.  If the rest of the world is dependent on the US or indeed in worse shape than us then they cannot isolate and refuse us.  We may all devalue together, but in a comparative state - it is not a crash. 

Again, yes the bailout is for foreign banks as well, keeping us all in the same boat ensures that no one can sink us without sinking themselves. 

[harry51]

Also meant to say gold is looking good to me, too, Peter. I'm afraid we're in for something like the Japanese stagflation that started when, in the '80's? Real estate bubble, credit crash, hard times for years there........

[harry51]

 Good morning, Muldoon! 

Harry - one detail - those countries cant have a standing army if they cant feed them.  Our current situation is destroying Russia and China and the middle east.  Kill consumerism and watch those dependent on the export model fall.  Especially those with internal obligations to their people.  (You think our medicare and social security situation is bad, consider the load of full communism).  Consider that when china manufacturing falls off a cliff and Russia and middle east gas/oil prices fall off the same cliff. 

That's what I was trying to imply with the question marks, more or less. If China's exports dry up, there will be huge numbers of people at loose ends, getting hungry and more discontented by the day. Riots and revolution are a real threat. Those in power won't abdicate, they'll try anything to stay in power, even focussing their country's remaining productivity exclusively on supporting a large standing army and military adventures, in the absence of a better plan. The Nazi takeover, as you say, offers many parallels.[/font]

Consider the 1930s, only England was the financial powerhouse and center of the world at the time.  The US post industrial revolution was the country that could manufacture cheaply compared to the rest of the world and we grew rapidly (roaring 20s).  Once credit dried up and monetary base constricted we entered the depression.   Consider the leadup in China to date and draw some parallels.  There's some interesting reading on the Great U.S. Depression vis-a-vis the concurrent British monetary problems in The Case For Gold by Ron Paul and Lewis Lerhman (sic)

Now - hyperinflation - I am not convinced it really has anything to do with the amount of money actually created.  I think it is more of a result of how other countries react to how much money you print.  Every crash I can find in history always has the same lead up where other nations isolate a country and stop doing business or extending credit.  I agree. It's not as simple as how much you print, it's where it goes and when, and how others react at the international level. I do believe, though, that at the individual level, excessive printing of currency can't help but hurt savers and those on fixed incomes sooner or laterAfter that, then they crash.  If the rest of the world is dependent on the US or indeed in worse shape than us then they cannot isolate and refuse us.  We may all devalue together, but in a comparative state - it is not a crash.  Well put. Cooperative devaluations as opposed to competive ones is likely the best we can hope for!

Again, yes the bailout is for foreign banks as well, keeping us all in the same boat ensures that no one can sink us without sinking themselves. 

I'm hoping all the players keep bailing instead of firing their cannons!