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Gopher
Joined: 04 Jun 2005
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 Posted: Sun Sep 28, 2008 7:49 pm Post subject: |
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| Kuros wrote: |
| I want him to man up and show some leadership. So far he hasn't. |
I will run with your "President B. Obama" assumption for the moment.
You seem to presuppose he is not an ambitious politician but rather truly the harbinger of change and Great Things.
I submit to you that he will not "man up" before November 2012, not until he confirms his second term, if ever. By that time, given his movements toward a more centrist position over the last year or so to win sufficient political support to win national leadership, former-supporters-turned-bitter-critics will be calling him "a Republican" and waiting for the next messiah, just as they did with B. Clinton, whom they now, apparently, strongly dislike (as evinced by their treatment of him and his wife during the primaries). |
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Jandar
Joined: 11 Jun 2008
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| Posted: Sun Sep 28, 2008 7:56 pm Post subject: |
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| mises wrote: |
| Kuros wrote: |
| In the case of a debt default, the UK will be in BAD shape. Its the third largest holder of our debt. As you can see here. Actually, the UK has increased its piece of US debt by $100billion in the last year alone. |
Now, that is really scary.
Private demand for American debt has evaporated.
http://blogs.cfr.org/setser/files/2008/09/bop-q2-graph-3.JPG
And governments are trying to prop up a market that the market has rejected. That will not end well. |
It will not end well for some.
There is enough of an economic base that is not tied up in this mess for the economy to not only survive but to thrive. I remember the savings and loan collapse where 747 banks failed at a direct taxpayer cost of 160 billion not a loan, a complete write of off 160 Billion dollars gone from the economy forever, we recovered from that we will recover from this, the sky is not falling, it will be painful for some, double digit inflation may be around the corner along with double digit interest prime rates, and it won't be just in the US.
Canada is about this close tho having similar problems, Australia may be able to act soon to stop the cycle, but for the most part the writing is on the wall, there isn't an economy in the world that will not feel the impact of these problems.
The next president will be facing stringent efforts by congress to bring the economy under control higher taxes, more regulation in banking and other industries, including wage and price freezing efforts.
A sort of socialist rebound effect will be felt around the world.
I do not think total nationalizing is in the future but watch out.
The airlines will be the first victims once the new credit crunch arises.
Oversees so called lean manufacturing will not function without some fat to fall back on the time is now to start looking for some capital and true cash clientele. The money cycle (Velocity) is about to slow to a crawl.
(I can't believe I typed all that and passed the spell check) |
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Jandar
Joined: 11 Jun 2008
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| Posted: Sun Sep 28, 2008 8:01 pm Post subject: |
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| Gopher wrote: |
| Ya-ta Boy wrote: |
| ...remarkably peaceful. |
Right. Just ask M. Gorbachev. Or the Chechens or Georgians, for that matter. The dissolution processes did not simply start and stop in one year. |
...and it isn't quite over. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Sun Sep 28, 2008 8:04 pm Post subject: |
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America isn't an empire in the way the Soviets were. Guam won't be crushed.
What we are talking about is the end of American exceptionalism. America will be integrated into the political economy of the globe, rather than leading and directing the political economy of the globe. I think this is a significantly more healthy position for her. |
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Big_Bird
Joined: 31 Jan 2003
Location: Sometimes here sometimes there...
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| Posted: Sun Sep 28, 2008 8:45 pm Post subject: |
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| mises wrote: |
| What we are talking about is the end of American exceptionalism. America will be integrated into the political economy of the globe, rather than leading and directing the political economy of the globe. |
Yeah, this is more in line with what I am thinking - and the article isn't predicting the apocalypse, despite the sensational title. And this is pretty much what everyone expects to happen somewhere down the line anyway. My worry is that it is about to happen too fast - but as I said in the OP, hopefully not. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Sun Sep 28, 2008 9:03 pm Post subject: |
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The psychological shock will be severe.
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| The US can no longer tell the world what to do and when. The sooner Congress, the next president, and even US citizens figure this out, the better off we will be. We need to start living within our means. Sadly, neither McCain nor Obama has figured this out as evidenced but the pathetic debate on economic issues. |
http://globaleconomicanalysis.blogspot.com/2008/09/us-treasury-to-rely-on-china-and-middle_28.html
I can imagine the US having imposed upon it aggressive fiscal austerity and others (restriction on military action/spending?) by those foreign governments who will eventually bail her out, if that is indeed what will happen. The president who accepts this reality will be forever labeled as the man who sold America out and destined to one term.
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The U.S. is turning to foreign governments and other overseas investors to buy a good chunk of what could total $700 billion in Treasury debt expected to finance the bailout. Foreign investors also are needed to shore up the depleted capital of the nation's financial institutions, seen in the plan by Japan's Mitsubishi UFJ Financial Group to buy a large stake in Morgan Stanley, which is weighed down by bad debt and market distrust.
This is a bittersweet moment in U.S. economic history. In one sense, the growing importance of foreign cash represents the triumph of a half-century of U.S. proselytizing for a global financial system in which money flows from those who have it to those who need it. But it is also an unmistakable sign of U.S. economic decline. The global financial system the U.S. designed had anticipated that American banks and financial firms would be the world's financial lifeguards; now those institutions are like exhausted swimmers a stroke or two away from drowning.
The financial crisis makes clear how much the interests of foreign lenders have become a top concern in Washington. A big reason the Fed and Treasury stepped in to rescue mortgage giants Fannie Mae and Freddie Mac, say U.S. financial officials, was to reassure foreign leaders including China, which holds roughly $1 trillion in U.S. debt, that U.S. securities were safe. "Superpowers do not normally ask their diplomats to reassure other nations on questions of credit-worthiness," says former U.S. Treasury Secretary Lawrence Summers.
Foreign lenders have a great deal of sway. If they were to dump U.S. government debt -- or be unwilling to buy more -- the interest rates needed to attract buyers of Treasurys would soar. The already fragile U.S. economy would absorb yet another hit.
China, Saudi Arabia and other big foreign holders are unlikely to take antidollar measures precisely because they own so much U.S. debt. To the extent the dollar declines, so does the value of those nations' holdings. Mr. Summers calls this situation "the financial balance of terror."
But it is naive to assume that this so-called balance will protect U.S. interests indefinitely. Senior Chinese economists have voiced growing dismay about the outlook for the dollar, and the introduction of an additional $700 billion in debt might drive the currency's value down further, at least in the short term. "I think foreigners are being taken for a ride by the U.S. government," says Andy Xie, an independent economist in Shanghai.
Sovereign-wealth funds -- huge government investment funds -- have largely sat on their hands rather than buy additional stakes in U.S. financial firms. China Investment Corp., for instance, has been wary of increasing its investment in Morgan Stanley after it was criticized sharply at home for taking equity stakes in U.S. financial companies that have nose-dived.
Domestically, the reliance on foreign money means a loss of autonomy that Americans are simply going to have to get used to. Part of the accommodation is already occurring. The controversy over investments by sovereign-wealth funds has been reversed. Last year, lawmakers worried the funds would gain political influence by investments in U.S. companies; now U.S. policy makers are worried that they won't buy new stakes. Efforts to erect restrictions against foreign trade may also lose momentum. The U.S. needs the world's money more than it thought it would and won't want to rile potential lenders.
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From the WSJ. |
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Jandar
Joined: 11 Jun 2008
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| Posted: Sun Sep 28, 2008 10:11 pm Post subject: |
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From Newsweek:
Default Swaps.
Read about the magic of smoke and mirrors.
This is what happens when you ensure credit with credit
instead of with cash or substantial equity.
http://www.newsweek.com/id/161199 |
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bangbayed
Joined: 01 Dec 2005
Location: Seoul
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| Posted: Mon Sep 29, 2008 12:24 am Post subject: Re: China |
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| Bigfeet wrote: |
| China had the 2nd largest economy in the world at one time before Mao Zedong ruined it |
More like the 4th largest. But at that time, just like during most of its history it was a feudal society that could barely feed its own people. Hence, the revolution. Mao's priority wasn't to dominate the world stage. You may not agree with it politically but through redistribution of resources famines virtually ended and that was not a small feat in China. It's the reason he is remembered so fondly over there. Not so much for the Cultural Revolution.
I think a lot of Chinese justify their current capitalist economy by looking at the Revolution as a base on which their current economy was built. Historically speaking, it's food for thought. |
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Gopher
Joined: 04 Jun 2005
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| Posted: Mon Sep 29, 2008 12:31 am Post subject: |
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| bangbayed wrote: |
| Mao's priority wasn't to dominate the world stage... |
Mao contested Moscow for leadership of international Communism. He also supported "wars of national liberation" all over the Third World. And he argued that Revolutionary China ought to inherit Nationalist China's permanent seat at the UN Security Council.
People on this messageboard err when they choose to see nation-states as either harmless and inert or pursuing global domination. Positions between this occur. And Mao and his successors certainly occupied them, seeking, as they did, to reach out into world affairs and influence them -- including but not limited to their invading Southeast Asia "to teach Hanoi a lesson" in the late-1970s... |
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Nowhere Man
Joined: 08 Feb 2004
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| Posted: Mon Sep 29, 2008 12:36 am Post subject: ... |
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| Quote: |
| I think a lot of Chinese justify their current capitalist economy by looking at the Revolution as a base on which their current economy was built. Historically speaking, it's food for thought. |
CapCom. |
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Ya-ta Boy
Joined: 16 Jan 2003
Location: Established in 1994
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| Posted: Mon Sep 29, 2008 1:38 am Post subject: |
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Peaceful Soviet withdrawal: Estonia, Latvia, Lithuania, Poland, Germany, Czechoslovakia, Hungary, Romania, Bulgaria, Ukraine, Kazahkstan, Uzbekistan, Tadzikistan, Georgia...with a bump here lately.
Russian resistance: Chechnya.
1991-2008 Hmmm...17 years.
As I said, remarkably peaceful. If you want to see the glass half full that's your business. |
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Big_Bird
Joined: 31 Jan 2003
Location: Sometimes here sometimes there...
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| Posted: Mon Sep 29, 2008 1:51 am Post subject: Re: China |
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| bangbayed wrote: |
| More like the 4th largest. But at that time, just like during most of its history it was a feudal society that could barely feed its own people. Hence, the revolution. Mao's priority wasn't to dominate the world stage. You may not agree with it politically but through redistribution of resources famines virtually ended and that was not a small feat in China. It's the reason he is remembered so fondly over there. Not so much for the Cultural Revolution. |
Not really disagreeing with the general thrust of what you're saying. But I just thought I might point out, though, that some of Mao's ill-thought out policies caused dreadful famine - killing scores of millions. They're not even sure how many - could be the current population of the UK, could be less, could be more!
That seemed largely unknown to the Chinese though. I once got really sick of a Chinese acquaintance banging on and on about how great Mao was everytime he inflicted his company on me - and I pointed out that he'd let tens of millions starve to death (as a result of his poor policy), rather than lose face asking for international aid. He and his wife didn't believe a word of it, of course!
| Quote: |
| I think a lot of Chinese justify their current capitalist economy by looking at the Revolution as a base on which their current economy was built. Historically speaking, it's food for thought. |
When I was there, the CCP really pushed that line of thought. Kind of: "Yeah, we're kind of doing the capitalist thing now, but non of it would have been possible without Mao and Communism, folks!"
I was always surprised that Deng Xiaoping wasn't more of a national hero than Mao. |
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aka Dave
Joined: 02 May 2008
Location: Down by the river
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| Posted: Mon Sep 29, 2008 1:55 am Post subject: |
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What exactly does it mean "fall from power"? Both Obama and McCain are proposing more military spending, or at least sustaining current levels of military spending.
Currenly the U.S. spends more on it's military than the rest of the world combined.
Now, the U.S. could have a major depression. That would *gut* China. There the ones holding our dollars, and we're a huge export market. E.U. would probably get off better, but who knows? If the Great Depression is any indicator, they would suffer a depression as well.
Russia is authoritarian country reliant upon petro dollars with serious social problems (alcoholism, lack or transparency and the rule of law, and dwindling freepress).
China, Japan, Korea, and the E.U. all have demographic challenges in aging populations. Thanks to immigration, the U.S. lacks this serious problem (or at least it isn't as severe there).
I'm old enough to remember in the 80s when Japan was going to replace America as the hegemonic power. They bought the Rockefeller center, some other famous buildings/companies, beat up our auto makers, and America was finished. Then Japan went into a decade long recession in the 90s and America was fueled by the internet and dot.com craze.
I'm not saying America isn't in a lot of trouble right now. But saying "The American Empire is over" is idiotic. America has no empire to speak of, just an occupation of a failed invasion and bunch of bases around the world.
If we have to scale down military spending and close some bases, that's probably a good thing. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Mon Sep 29, 2008 6:09 am Post subject: |
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From the FT:
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| Stephen Roach, chairman of Morgan Stanley Asia, said: �The asset bubble binge is over and that means a multi-year adjustment for the US economy as the excesses are unwound. The US will have its version of Japan�s lost decade.� |
If the economy is worth about 14trillion bucks and we shave 1-2% off GDP growth for 6-8 years, how much wealth is missing? |
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bangbayed
Joined: 01 Dec 2005
Location: Seoul
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| Posted: Mon Sep 29, 2008 7:24 am Post subject: Re: China |
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| Big_Bird wrote: |
When I was there, the CCP really pushed that line of thought. Kind of: "Yeah, we're kind of doing the capitalist thing now, but non of it would have been possible without Mao and Communism, folks!"
I was always surprised that Deng Xiaoping wasn't more of a national hero than Mao. |
Yeah funny thing about being the "middle kingdom", your citizens couldn't care less about what some German guy predicted you should do! |
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