19 Facts About the American Economic Collapse.

[antagon]

I dunno how long this will all take...

ETA: 40-50 years. probability: 60%. if they're on track, they'll be the dominant economic power on the planet in less than half that time -- well before their economy behaves as you describe.

 

[rdean]

The US has a sustainable economy?

If China goes belly up the majority of our retailers will have nothing to sell.

Many of our auto makers would not have needed parts to build cars.

around 1/4 of our materials for making prescription medicines would vanish.

We allowed our leaders to put us into this position.

FREE TRADE is anything but free, folks.

It has cost the American people, and the governments upon which we depend trillions in lost wages and tax revenue.

And FWIW, both party leaderships bought into this goofy notion that we didn't need an industrial base, too.

They're either very stupid people, or they've been lying to the American people for decades.

I'll leave it to ya'll to decide what you think their motives really were.

Yes we allowed our corporate leaders to do this.
Our govt was paid well by those corporate leaders to allow it as well.

We? 95% Republicans, 5% Democrats is hardly "we".

Subsidies, tax breaks, giving corporations citizens rights, 2.4 million jobs moving to China from 2001 to 2008? How is this "we"? This is "republicans". And, if they get the chance, and it's apparent they probably will, they will do worse. They've already told us.

 

[loosecannon]

I dunno how long this will all take...

ETA: 40-50 years. probability: 60%. if they're on track, they'll be the dominant economic power on the planet in less than half that time -- well before their economy behaves as you describe.

I just wanna be sure I understand you.

Are you saying that:

A) it will take 40-50 years for them to achieve complete vertical organization

B) that they are already about half way toward achieving that goal

C) that their economy will be the world's largest before they realize that goal?

the probability of it happening is very up in the air, we still have a say in the outcome. But we are losing our grip and we aren't trying anymore. We are acting like a junkie.

I would love to see us stand up to china now before we lose all power to prevent them from succeeding us.

I think that as a world's super power they will be brutal, like they were to one another during their last revolution and the early years of Mao. I anticipate China will treat the world with the same authoritarian precision with which they treat their own, and their own dissidents.

Of course the rest of the world may take a toll on China.

20 years ago when Britain was losing their lease on Hong Kong a good friend predicted that Hong Kong would overwhelm China, not the inverse. He was right, and the same could happen again with different actors.

 

[loosecannon]

We? 95% Republicans, 5% Democrats is hardly "we".

Subsidies, tax breaks, giving corporations citizens rights, 2.4 million jobs moving to China from 2001 to 2008? How is this "we"? This is "republicans". And, if they get the chance, and it's apparent they probably will, they will do worse. They've already told us.

correction: 100% of republicans and 100% of democrats

and you are correct that isn't "we".

Combined the democrats and republicans represent less than half the nation.

 

[antagon]

I dunno how long this will all take...

ETA: 40-50 years. probability: 60%. if they're on track, they'll be the dominant economic power on the planet in less than half that time -- well before their economy behaves as you describe.

I just wanna be sure I understand you.

Are you saying that:

A) it will take 40-50 years for them to achieve complete vertical organization

B) that they are already about half way toward achieving that goal

C) that their economy will be the world's largest before they realize that goal?

the probability of it happening is very up in the air, we still have a say in the outcome. But we are losing our grip and we aren't trying anymore. We are acting like a junkie.

I would love to see us stand up to china now before we lose all power to prevent them from succeeding us.

I think that as a world's super power they will be brutal, like they were to one another during their last revolution and the early years of Mao. I anticipate China will treat the world with the same authoritarian precision with which they treat their own, and their own dissidents.

Of course the rest of the world may take a toll on China.

20 years ago when Britain was losing their lease on Hong Kong a good friend predicted that Hong Kong would overwhelm China, not the inverse. He was right, and the same could happen again with different actors.

that's a fair understanding of what i think about china. its not as dependent on your idea of supply/distibution chain domination as it is your concept of a middle-class-based china.

their economic factors are bigger to start with and their population could be an asset for them once they have it ignited. this is the basis of my thinking that as their efficiency crests the $15-20k/head/year point, that they will be the largest economy on the planet.

i have some doubts as to if they could sustain the growth and political stability required to be such a power or transition to a middle class basis economically. this transition makes their population a liability. i think one of china's best recourse is to continue colonization on africa to relieve the pressure which population inflicts on this transition. at the same time, they could dominate an emerging raw materials and manufacture/distribution point for global markets and their own. they will have to get some decisions like this right if they stand a chance.

as i've been saying, i dont think that there is a hostile relationship between the US and china. i'm not sure what informs your belief that there is a trade war or that the US is not effectively coping with china's attempts to corner supply. i also dont follow the premise that china will be a draconian extrovert in their geopolitical policy. in the past, this has not been the case. the challenge which i outline above will be one they would have to rise to out of their introverted comfort zone to complete.

china is heavily corralled militarily and economically. in this way i see your perspective that they have the run of these angles against the will of the US to be incredible. i see the tastiest target in their domain to be north korea, which would sooner capitulate than taiwan or mongolia, while offering the most advantage and the least international objection. they could take NK with leaflets.

china is conservative, not aggressive. i think the speed which they are growing makes people think otherwise, but that's a credit to modern consumer economies, not their backward mercantile system. this conservatism will stretch their progress over the time frame i see plausible, but has afforded them as high a probability as 50%+ in my estimation.

what would you have the US do? curious.

 

[loosecannon]

Force them to depeg from the dollar.

I have been hearing a lotta commentary about how adversely China would be effected if they depeg, untold millions unemployed, severe civil unrest etc.

Not my problem. My problem is that I live in the "developed" world where all hope of short term recovery is crushed by the peg.

If we don't have the strength collectively between the IMF, the US, Japan, the EU and nations like Brazil that have allowed their currencies to float, then we aren't a superpower anymore, military strength notwithstanding.

In any case events are moving toward some kind of impasse and paradigm shift. I happen to think mercantilism will never be obsolete until the nation state is replaced with some kind of world order. China needs to join the world community, but I doubt they really ever will, unless they rule the world community.

OK I am rambling...

 

[loosecannon]

i also dont follow the premise that china will be a draconian extrovert in their geopolitical policy. in the past, this has not been the case.

No China has tended toward isolation for 1000's of years. But their population explosion changes everything. So does the cold war. Because it designates that you would be a subscriber nation or a dominating nation.

100,000,000 Chinese men who can't find Chinese brides changes everything too. They have little choice but to adopt some kind of colonial culture.

And globalization is new. New to all of us, including China. Everything is a game changer anymore.

 

[antagon]

Force them to depeg from the dollar.

I have been hearing a lotta commentary about how adversely China would be effected if they depeg, untold millions unemployed, severe civil unrest etc.

Not my problem. My problem is that I live in the "developed" world where all hope of short term recovery is crushed by the peg.

If we don't have the strength collectively between the IMF, the US, Japan, the EU and nations like Brazil that have allowed their currencies to float, then we aren't a superpower anymore, military strength notwithstanding.

In any case events are moving toward some kind of impasse and paradigm shift. I happen to think mercantilism will never be obsolete until the nation state is replaced with some kind of world order. China needs to join the world community, but I doubt they really ever will, unless they rule the world community.

OK I am rambling...

this persists along the lines of america seeing a clear benefit from ruin in china. i dont think that's the case. i see china's solvency and their ability to be our trade partner as they are to be a crucial component in our economy. there is a lot of pressure on them to break the peg, specifically through QE. i described this earlier as a staring match, but head to head freediving is just as good an analogy. the peg must be maintained through heavy handed investment... in the US economy. china has financed our fiscal policy through their monetary policy. their fiscal policy suffers while their exports help to keep inflation at the CPI down to palatable levels. happy family the way i see it. if china wants to wear floaties in the pool, they do so at their own expense, when they're ready to swim with the big boys, or they grow exhausted with competing with the worlds richest country and its most liquid currency, then they can break free.

this will not be a massive shake-up for them. they know that their economy will benefit from their natural conservative disposition, and will accordingly take their time transitioning their monetary policy.

 

[loosecannon]

Antagon, is the US too big to fail?

 

[william the wie]

Antagon, is the US too big to fail?

No but Chinese leverage vs. US leverage is not known other than the fact that China has more leverage than the US economy. Because of internal financing China appears to be less prone to external shock but with its inflation allergy it cannot let the US, EU or
Africa falter nor with its raised expectations can the regime let go of the peg. It does not seem possible that China can have both of its must haves for very much longer at all. The question then becomes what are the economic consequences of its collapse.

 

[antagon]

Antagon, is the US too big to fail?

i think 'too big to fail' is a reference to the consequences of a collapse more than it is to invincibility. from that perspective, i think the whole world does have an interest in the US remaining solvent, as without it, there isn't nearly as much 'energy' in the global economy.

on a relative basis and in terms of invincibility, i get the impression that the US' failure would pull others down with it, arguably to a worse position than our own. this was demo'd in the financial crisis when states leaning on the proceeds of our economy -- in the least our debt futures -- found themselves belly up (iceland) or seriously ailing (greece), whereas the US has stumbled along to a slow recovery.

china's demonstrated that they can be insulated from international woes. although the last few years has seen many doors close in china's industrial sector, the rate of growth there and their go-to-guy domination of the production market has opened them back up again.

the answer to this question is what the meaning of 'fail' or 'collapse' really is. can a country with the infrastructure, land mass, coastlines, military, population and factors as the US really be ruled out of the picture entirely? does fail mean down for the count, or does it mean 2008?

 

[Douger]

It means this.
[ame]http://www.youtube.com/watch?v=rH6_i8zuffs[/ame]

 

[loosecannon]

Antagon, is the US too big to fail?

i think 'too big to fail' is a reference to the consequences of a collapse more than it is to invincibility. from that perspective, i think the whole world does have an interest in the US remaining solvent, as without it, there isn't nearly as much 'energy' in the global economy.

on a relative basis and in terms of invincibility, i get the impression that the US' failure would pull others down with it, arguably to a worse position than our own. this was demo'd in the financial crisis when states leaning on the proceeds of our economy -- in the least our debt futures -- found themselves belly up (iceland) or seriously ailing (greece), whereas the US has stumbled along to a slow recovery.

china's demonstrated that they can be insulated from international woes. although the last few years has seen many doors close in china's industrial sector, the rate of growth there and their go-to-guy domination of the production market has opened them back up again.

the answer to this question is what the meaning of 'fail' or 'collapse' really is. can a country with the infrastructure, land mass, coastlines, military, population and factors as the US really be ruled out of the picture entirely? does fail mean down for the count, or does it mean 2008?

The reason I asked the question, Antagon, is because I definitely do not view the world as we know it as one in which a rising tide raises all boats.

Resources, land and quality of life are all so scarce as to make them supportable for some but not all people. And even if that wasn't the case our business model thrives on monopoly and engineered scarcity.

So when you use an analogy like a staring match, or head to head free diving, I see an image a lot more like at risk swimmers trying to save themselves by climbing on each other for bouyancy.

During periods of economic prosperity the global economy may be a "happy family". But once deflationary traps and chronic unemployment and debt begin to threaten even institutions like the EU and US global hegemony that is anything but true, imo.

An example is that fact that China is clawing a recovery at the direct expense of the rest of the developed world.

Either we can have a recovery or they can, but not both. Or we can all share a period of extended economic malaise, or some similar combination of less than robust prosperity.

And frankly I don't see this condition ever changing since most of the world has suffered deeply for the last century while only a small % of the developed world realized immense material wealth.

I see this situation getting worse, and worse. Population bomb.

I also see no possible way that China can realize the objectives they seem intent upon (continuing to raise the standard of living of their third world population) and sustaining our way of life. You can pick one or the other but not both.

Which is why I see the relationship as inherently conflict oriented. Globalization is as much about sharing poverty as it is about sharing wealth.

Maybe it is their turn, we have certainly been aggressive in pursuing global privilege. The Chinese will be as well.

If we cross a tipping point the US will be powerless to determine our own fate. And imo we are very, very close to that tipping point. As evidenced by China's refusal to stop manipulating OUR Currency.

 

[antagon]

the staring match analogy was a reference to the amount of liquidity required to match that which the fed would introduce during QE.

your argument is an attempt to cast a zero-sum disposition on economics, and i don't think that glove fits at all. instead, when one economy is hit with a recession, others are indicated to follow suit. when one economy thrives, others can gain from their prosperity. governments like china attempt to capture economic activity in a way which impedes this natural reciprocity, however, as i've argued, they are moving money from fiscal investments with preferred yields for their constituents and higher efficiency to monetary investment in a peg. in turn, china's monetary policy directly finances US fiscal policy. the reciprocity of global economics is maintained, albeit inefficiently. to be fair to lumbering government interventionists, efficient globalization could overwhelm less-flexible labor and commodity markets dependent on stability, and it is stability that governments pursue, generally.

 

[loosecannon]

the economy is a zero sum game in every given moment, Antagon.

Part of my point is that there really are and always have been significant limitations on future growth.

And supporting America's fiscal borrowing isn't a benefit to the USA, it is a detriment. It erodes the very future growth that you were referring to. While enriching China long term.

China is doing to us exactly what the IMF has always done to third world nations regarding market liberalization.

 

[antagon]

the economy is a zero sum game in every given moment, Antagon.

i've heard this before, but i dont follow. how does this work?

Part of my point is that there really are and always have been significant limitations on future growth.

And supporting America's fiscal borrowing isn't a benefit to the USA, it is a detriment. It erodes the very future growth that you were referring to. While enriching China long term.

China is doing to us exactly what the IMF has always done to third world nations regarding market liberalization.

there are limitations to growth given a consistent methodology. this is how economics has evolved from feudalism to where we are now: at a turning point, hopefully, of another economic evolution.

i'd argue fiscal financing is well-timed in a recovery, and that the rates on treasuries in the face of a declining dollar are no buy for china's future. not with the opportunity cost in their own fiscal agenda in comparison. their loosening of their monetary policy will likely involve this realization -- why i feel that they are under more pressure to break the peg than many credit the US for applying.

there are economies like haiti which are bottomless pits for investment, and there's the US. our private sector makes vast returns on american fiscal investment, where the IMF's victims suffer from the reality that throwing money at an un- or under-developed economy isn't the same as throwing it at a developed one poised to make a return.

 

[loosecannon]

the economy is a zero sum game in every given moment, Antagon.

i've heard this before, but i dont follow. how does this work?

It is pretty simple. Economics or rather econ growth is not Newtonian Physics. The trajectory of today's economy is no guarantee of tomorrow's economy.

The zero sum argument asserts that in any moment the economy is static and future growth or future anything isn't. The future simply does not exist yet. Does it ever exist?

So when you look at the economy statically you can't assume benefits and growth(or anything else not in evidence), you have to look at what is today. If 1% has all the money they have all the money. Period. No promise of "equal opportunity for all" or that "a rising tide will float all boats" matters. Yet. It has to materialize before it deserves any consideration.

But as long as 1% have all the money, that's reality. That is what you need to confront.

There is a place for the opposite pov btw, risk assessment being one of them. Planning for the future another. Investing certainly. But always with keen appreciation for the fact that all of those are based on speculation, not reality.

But when measuring the success of past policies etc you really have to confine your pov to what is real and present, or past, not what might be.

 

[antagon]

is this what is proposed by zero-sum? i've always assumed it was a judgment on the win-win disposition of transactions. in a perfect market or one which thrives for it, when you charge $5 for your widget and i buy it, i have traded up, and you have traded up. because we each got what we wanted for what we were willing to offer, this is sum-positive.

examining your slice of the economy, we've got to account for debt, credit and earning potential, assets and liabilities. with this look, the relationships between the 1% and the 99% is clearer. the 1% has all the loot, but are they obligated to make payroll on friday? granted that, are the 99% creditors? this can go on in granular detail, but it would entail a number of sum-positive relationships between the stark demographics in your slice. the interdependence is what leaves the ultimate character of the economy as win-win. even if there are parties who don't win as much, through their participation, they come out ahead in a given slice.

 

[SmarterThanHick]

so Dell computers are going to be cheaper now? awesome!

What's the exact complaint here? That labor is cheaper oversees? That manufacturing workers here "deserve" a higher salary without higher skill? You want money, and so do the people running these companies. So why should one group get it over another?

 

[loosecannon]

your definition also exists, this is what I was referring to:

Ask the Harvard MBA Is global economics a zero-sum game?

and esp this:

Promethean Capitalism Part Thirteen: The Economic Zero-Sum Fallacy

Of course I disagree with both pov expressed, but this is the argument of which I speak