Toro: your Thoughts?

Discussion in 'Economy' started by Dr Grump, Jul 28, 2010.

  1. Dr Grump
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    Dr Grump Gold Member

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    "Quietly, discreetly, the Chinese are reducing their exposure to US Treasury bonds. Perhaps they have noticed what the rest of the world's investors pretend not to see - that the US is on a completely unsustainable fiscal course, with no apparent political means of self-correcting."

    Decline and fall of the US
     
  2. Toro
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    Toro Diamond Member

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    Total US treasury debt held by foreigners is still rising. Does that mean the Chinese are smarter than the Japanese or the British or the Canadians? I don't know but I don't read too much into it.

    I do agree with Ferguson's premise that debts cannot rise at this rate forever without ramifications. However, I'd be hesitant to say that the end of the American empire is near. It took two world wars and total destruction of the country to pry sterling away as the globe's reserve currency. America is far from that, despite its problems.
     
  3. william the wie
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    william the wie Gold Member

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    A consensus that some sort of reset is coming is building so I would phrase the questions differently than Ferguson:

    Will imperialism work within the context of the different economy and culture that will emerge or maybe is emerging from the reset we are going through?

    The four generational cycle postulated for all living things is cyclical. Each reproducing individual in each generation acting to maximize great grandchildren is the only model found so far that does not produce garbage results when applied to populations as was noted more than 30 years ago in "The Selfish Gene". Strauss & Howe worked up a model based on age related spending and found a good fit between a four generation cycle and Anglo-American history and wrote it up as "Generations". H S Dent developed a much less cumbersome but also less accurate two generation cycle from the same data. So an 80-90 year four generation cycle is a given until a better model is developed.

    However cycles can be and in the case of the US Civil War was cut short. The lack of leaders in the US born in the period 1925-42 indicates that we are in the resolution of another aborted generational cycle and that is at least potentially very bad news indeed. At a minimum it means that predictability is much less than usual so a collapse of empire is quite possible.
     
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  4. Baruch Menachem
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    Baruch Menachem '

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    Back in 1945 there was a better alternative. The british empire was collapsing and Britain was becoming a dependent on its former colonies.

    what is the better alternative now? As bad as things are now, they are better than most anywhere else. You want to trust the Yuan? The Ruble? The Euro looks to be shaking apart.

    Until things get seriously worse, people will still be hoarding dollars.

    But when the music stops, and folks start looking for a different currency, which given the direction the debt is going is not that unlikely, the thumping the US economy will take will make the prophecies of Nuebarth look excessively cheerful and pollyanna=ish.
     
  5. Dr Grump
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    Dr Grump Gold Member

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    I think the US probably needs a tax rise, but on the proviso that monies collected for that rise are paid to service debt. Raising taxes and spending it on crap, will not help matters. Might seem simple, but the world needs the US economy as much as the US economy needs the world.

    I think Ferguson is being pessamistic. Then again, I saw his programme The Ascent of Money, which was pretty good, so he knows his stuff....
     
    Last edited: Jul 29, 2010
  6. Neubarth
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    Neubarth At the Ballpark July 30th

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    We are on the road to recovery. Fearless Leader Obama has weekly unemployment claims down to the 400K range. Remember we are in a new era where all of our debt that is held by the FED can be dismissed. Obama will ask them to dismiss Four Trillion of that Debt in October just to show everybody that HE can solve all of our problems... The FED will then be encouraged to buy as much debt as is available for sale in the open market and dismiss that gradually over the next two years. Obama will be able to cut the debt in half during his first four years in Office. About that time there will be a movement to make Obama President for Life. What a great time is coming.

    We are taking care of unemployment by dismissing millions from the work force. As you can see, Unemployment is going down and along with that the weekly claims numbers are dropping like a stone. Praise Obama from whom all blessings flow!

    Any chronically unemployed people will be put on Social Security at the subsistence rate. They will be able to breed and do fairly normal things, but they will not be able to afford the greater pleasures that come with full employment. Praise Obama. You just got to love this man as he offers a choice of full protection for all Americans from cradle to grave.

    Our Socialist Utopia is almost here!
     

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