The Financial Crisis Will Make America Relatively Stronger

[Toro]

A lot has been written lately about the decline of America's relative standing in the world due to the financial crisis. I am not convinced of this argument.

Here is an article that argues the financial crisis will make America more powerful relative to the rest of the world.

Asia Times Online :: Asian news and current affairs

 

[Epsilon Delta]

That was pretty interesting. The analysis of the competitors was pretty spot on, too...

Good luck.

EDIT:

On second though, I'll wish myself good luck.

To overpay unionized construction workers to build bridges, and bail out the bloated budgets of American states, the Obama administration will flood the world with so much Treasury debt that capital will flow out of the poorest countries to buy it. Rather than protest this outrageously unilateralist action, the rest of the world encourages him to do so, hoping that somehow the Obama stimulus package will get American consumers to buy their goods once again.

= /

 

[wimpy77]

i agree toro. i think we will be fine.

 

[Zoomie1980]

i agree toro. i think we will be fine.

It's like being a kid in the candy store if you have investment capital. What to buy? Dirt cheap houses? Stocks? Commodities? Everything is so damned cheap it's hard to pick....

 

[editec]

i agree toro. i think we will be fine.

It's like being a kid in the candy store if you have investment capital. What to buy? Dirt cheap houses? Stocks? Commodities? Everything is so damned cheap it's hard to pick....

More evidence that the meltdown was contrived, actually.

 

[Toro]

I don't believe the meltdown was contrived. It is very real, borne out of policy mistakes and faulty assumptions.

 

[editec]

I don't believe the meltdown was contrived. It is very real, borne out of policy mistakes and faulty assumptions.

It may well have been.

All you have to believe is that the smartest people in the world of economics didn't understand that deindustrializing the United States was a good idea for the economy, and that they actually thought that allowing NINA loans to be taken into the Fannie Mae system would be fine too.

All you have to believe is that the bonds rating agencies didn't know that these NINA loans had enormous risk of defaulting, too.

All you've got to believe is that this was all just a series of truly bad ideas.

It's possible, I suppose.

I have long though that our master class was dumber than a post.

And then I cannot help but note that despite how apparently stupid they are, they somehow keep falling in shit and coming out smelling like roses.

Amazingly lucky these enormously wealthy people, aren't they?

They keep doing things that hurt America, but somehow they end up getting richer even as they do that.

What an amazing set of coincidences.

 

[Toro]

I don't believe the meltdown was contrived. It is very real, borne out of policy mistakes and faulty assumptions.

It may well have been.

All you have to believe is that the smartest people in the world of economics didn't understand that deindustrializing the United States was a good idea for the economy, and that they actually thought that allowing NINA loans to be taken into the Fannie Mae system would be fine too.

All you have to believe is that the bonds rating agencies didn't know that these NINA loans had enormous risk of defaulting, too.

All you've got to believe is that this was all just a series of truly bad ideas.

It's possible, I suppose.

I have long though that our master class was dumber than a post.

And then I cannot help but note that despite how apparently stupid they are, they somehow keep falling in shit and coming out smelling like roses.

Amazingly lucky these enormously wealthy people, aren't they?

They keep doing things that hurt America, but somehow they end up getting richer even as they do that.

What an amazing set of coincidences.

The economy hasn't been de-industrialized, as I noted here.

http://www.usmessageboard.com/economy/69917-there-is-still-manufacturing-in-america.html

And this is a graph of industrial production.

St. Louis Fed: Series: INDPRO, Industrial Production Index

The problems are enormously complex but a few assumptions underlied the build-up in the excesses in the economy. First, that markets are always efficient. If you believe that markets are always efficient, then you believe that the price of homes accurately reflects the underlying fundamentals in the economy. This is a faulty assumption. Markets are usually efficient but occasionally go off the rails.

The second assumption was that home prices do not fall. They might fall regionally, but they do not fall nationally. This was true since the Great Depression. Home prices nationally had not fallen for 70 consecutive years. Creators of the mortgage derivatives made this assumption. I know, I saw it in the presentations. Those who modeled made the fatal of error of extrapolating trends into the future. This is quite common, actually, in forecasting.

Then, on top of that, consider all the money that was being made. One year, the average bonus paid at Goldman Sachs was $3 million. There was a tremendous vested interest in keeping the party going.

It may seem to outsiders that this is a strange event, but to those who study financial history, and have an understanding of asset valuation, this was no surprise at all. The speed and severity of the decline has been surprising, but the collapse has not.

 

[editec]

The percentage of industrial workers has declined relative to the population.

The percentage of industry in comparison to the GDP likewise declined.

The average salary of the working class in terms of purchasing power declined.

So while you right that American still makes stuff?

You are missing the fact that we make less and less of the stuff AMERICANS actually use.

I am thrilled that GE gets to sell jet engines to China.

I am not so thrilled that not a single energy effieient light bulb is now made in the USA.

It ain't about numbers in the absolute, it's about numbers relative to the population and economy overall, amigo.

 

[Truthmatters]

It was caused by deregulation.

We allowed to much consolidating of our industries and deregulated too many industries and to top it off Bush and team did not pay nay attention to the laws that remained in place.

It was a corporate free for all that revolved arround profit NOW and no thought of the health of any industry after the people who were running the corps left with their BIG golden parachutes.

It proved that libertarian ideas and republicans only two ideas ( tax cuts and deregulation) create complete disastor for an economy.

 

[Charles_Main]

It was caused by deregulation.

Blanket statements like this show massive ignorance. This was not caused by any one thing. Rather than lack of Regulation the real problem was lack of over site. There is a difference between watching what an industry is doing, and telling them what to do.

There is another thread about how much the CRA had to do with this, and I say it played a part along with many other things, and the CRA my friend, was government Regulation with out proper over site.

 

[B94]

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