Thoughts on America's latest...

Discussion in 'The big picture' started by springtide, Jul 31, 2011.

  1. springtide

    springtide Junior Member

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    So America has finally figured out that it spends more than it earns, they have been headed this way for forty plus years so no suprises there. Obama wants to tax the rich as they are the only ones with money, the republicans are rich so they don't want to pay up and they all want to borrow more money to pay the interest on these loans.

    Fourteen and a bit Trillion dollars disappearing from the world economy.:sweat:

    Now that this has come out into the light countries who own America's debt are going to sell it cheap wether the interest is paid or not so things are not looking too good there.
    This means that the American dollar will suffer a lot more, their imports will cost more so China and other countries will produce fewer goods and Australia's iron ore, bauxite, etc will be in much lower demand.
    In the meantime before these effects are felt farmers will be exporting less due to our comparatively high dollar which will also make tourism suffer (and anything else we export because it will be expensive), so there is a good chance mortgage rates will rise to keep our dollar down a bit.

    Does this sound right to everyone? Because it has the potential to make GFC look like a beach party :party:.
     
  2. Grahame

    Grahame Senior Member

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    My thoughts are that... Things that are environmentally unsustainable, soon become economically unsustainable and then ultimately economically unviable. I suspect globally this reality is starting to hit home.

    From a detached historical point of view, it is going to be very interesting to see how this plays out. From a human perspective this may not be a pretty thing to watch. I think the sort of disaster that is playing out in Africa at the moment is probably only a sample of what may come.

    I also can't help but contemplate the thought that if things are starting to get hairy for the rich countries, imagine what is already happening to the poor countries that have been used and abused. The foundations certainly look shaky.

    I trust for the majority of people that things will turn downwards more gently than catastrophically.

    Pretty amazing to think there are fat-cats fighting over trillions of dollars of theoretical money and the 'suffering' of the American Dollar, whilst in Africa, mothers are leaving dying children beside the road in the hope that they can save the strongest one...

    What a strange world we have created for ourselves., and what a world we look like leaving for our children.

    And to finish off my musings on this one, I need to ask myself the question... Would it be so bad if the USA, Australia and others like us were bought down a notch? I mean of course it will be bad, but will it make a difference to the East Africans? Will the peasants of China think it a problem? When you think about it, it is mostly going to be the over-fed rich fat-cats of the world who will think it a bad thing.

    It seems to me sometimes like Rome is already burning and the Western Governments are playing with their fiddles.

    End Rant.
     
  3. ecodharmamark

    ecodharmamark Junior Member

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    G'day All

    Spring's assessment, together with Grahame's musings, add much to the wisdom I see emerging concerning this matter. Personally (and after having listened to Obama on the radiogram this morning), I see no real change occurring anytime soon. The States will shore up their economy the best way they can: cut a trillion here (Defence?), and a trillion there (Medicare?), but in the end (5, 10, 50-years?), one extraordinary 'crunch' must occur. It is simple physics: what goes up, must come down. And, the higher it goes up, the further (and harder) it falls.

    As for China: My guess is they will continue to stockpile (for a 'rainy day'), and when the shit does hit the fan they will be in a pretty good position to emerge as the world's largest economy. And as we all know from reading our history, money is power, and power will override all.

    Am I worried? Nah, it is inevitable. Nothing remains the same, all must change. As Holmgren (2003, p. 84) writes: "The great power and global reach of recently developed organisations, especially the multi-national corporation, tends to delude us into believing these structures are durable, almost permanent features of human society. In fact, the average life expectancy of the great corporations is less than a human lifetime. People alive today will outlive many of the institutions and organisations that currently dominate the world."

    Reference: Holmgren, D. (2003) Permaculture: Principles and Pathways Beyond Sustainability

    Cheerio, Markos
     
  4. eco4560

    eco4560 New Member

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    "scuse me if I have it wrong but aren't they planning on "raising the debt ceiling"? Which I have interpreted as being like getting another credit card and paying off your first one using the second. Economists that can't balance a personal cheque book shouldn't be running the worlds largest economy.

    Like Graham, I'm interested in living through this time to see what happens, but a bit concerned about what happens. I don't want to sit by the mountain as the sheep are herded over the cliff and not be able to do something.
     
  5. springtide

    springtide Junior Member

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    They are planning on raising the "debt ceiling" and are about to get the first of 2 new credit cards to pay off the earlier one. Inbetween these 2 new cards they hope to cut spending and raise taxes, my thought is though that these measures will not fix things long term as unsecured debt rides on it's reputaion to be repayed. So even if the republicans allow the president to tax the rich and cut spending (on the companies that pay for election campaigns) the damage has been done regardless.
    For myself i am looking at changing jobs slightly to something more boring but very secure - i am responsible for a few people and they have to be a primary concern.
    For the Africans there will be less international aid around but what they have will buy more - and in a world that can only support so many people the poor will be the first into the water and the last into the lifeboats.
     
  6. pierre

    pierre Junior Member

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    Simple math

    Folks,

    Let's look at it this way.

    The deal was to cut spending by US$2.4 trillion (some reports say $2.1t) over 10 years, that's about $240 billion per annum. Currently their deficit is in the ball park of $1.3 trillion per annum. So simple maths show that they would still be in deficit by $1 trillion+ after this deal.

    So, everybody let's release a huge sigh of relief, the US did not default... One, two, three, SIGH! OK, on the count of three... Ermmm, sigh, NOW! I mean, can't you see how great this deal was??? :shake:

    OK, I give up you useless bastards. :giggle:

    Ciao,
    Pierre

    PS: and considering they raised the ceiling by $2.4 trillion, how long would it take for them (if they do not raise taxes in the mean time and cut some further spending) to reach that debt ceiling again? So they kicked the can down the road again, let the next government/generation worry about that...
     
  7. pierre

    pierre Junior Member

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    Correction and more musings

    OK let's correct ourselves...

    The debt ceiling was raised by $2.1 trillion over the next two years, and budget cuts of $2.4 trillion over 10 years were approved. So even they recognised that it is a can kicking exercise. Unless of course they stop the three pointless wars they're currently involved in, that would go a long way into getting the budget back into shape. What are the chances of that happening?

    Now fancy this: who's likely to be in the driving seat next term? Obama? Mmmm, wonder about that one. So if the Republicans were in place next term, they would either kick the can down the road yet again. Or they might have to go for austerity. Fancy their chances of re-election after that! :sweat:

    Some interesting strategic thinking must have gone into this deal, on both sides actually. Also interesting how vested interests prevent the pollies from reaching the obvious conclusion: the longer they delay their eventual default, the worse the aftermath (for us all) would be.

    Gold or silver, anyone?

    Adios,
    Pierre
     
  8. springtide

    springtide Junior Member

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    I agree Pierre, i think someone will probably blame Obama for the whole debt crisis and then go on to spend big.
    If their interest rate for their wars is lower than my interest rate for my house im going to be real pissed off especially with the US record for a clear wins.
     
  9. Grahame

    Grahame Senior Member

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    I read in one of the papers yesterday that Apple has more cash that the US government.

    Hey, I have a question...

    What is the point of having a Government in a Capitalist society? Why not just have a group of powerful business leaders running the place?

    Oh wait....
     
  10. Yukkuri_Kame

    Yukkuri_Kame Junior Member

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    The debt is just the tip of the iceberg. The unfunded liabilities of the US are over $100 trillion - over $1million USD per taxpayer. These unfunded liabilities - medicare/medicaid/social security/veterans benefits, etc. are coming due as the baby boomers retire and get cancer. This is what will sink the titanic, the debt ceiling nonsense is just rearranging the deck chairs.

    BTW - government spending is about 40% of the US economy right now. Spend a minute thinking about the absurdity of these numbers and you see how inevitable collapse is. To cut spending means sending the economy off a cliff. The US will revalue the dollar sharply lower. This is a manufactured crisis designed to steer the world towards global monetary union.

    Meanwhile, back in reality, food still grows in a garden and all humans need it to live.
     
  11. eco4560

    eco4560 New Member

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    How supremely insightful of you Grahame.
     
  12. annette

    annette Junior Member

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    There is not enough money in western societies to fund the welfare system. They are still bailing out big corporations and banks to try and stop a collapse. It will all fall sooner or later. You cannot fund continual growth on debt. To pay back debt you need growth which is not going to materialise. As for Australia, we are tied to global liquidity which is drying up. no worries. it is all meant to be. China is in deep shit. Whole cities unoccupied. Europe is on the slow road to destruction. USA is broke. Japan was in trouble before the disasters. The global system as we know it is coming apart. No surprise. it couldn't keep going the way it was. Get rid of debt, become as survivalist as you can and hang on for the ride.
     
  13. Nathan Edwards

    Nathan Edwards Junior Member

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    Global Monetary Union?..... Interesting thought. Don't know if it is a reality but possible.

    Lifeboats anyone?

    Tasmania looks good but I am bunkering down in central victoria for now.

    I think the key strategy for me now is
    1. getting rid of debt (selling half our land now to pay off our loan and become debt free on 5 acres)
    2. Using still amazingly cheap fossil fuels to remineralize our soils with basalt rock dust etc
    3. Stockpiling food like non-perishables and bulk grain just in case of a food shock (unlikely in the near term but gives me a bit of peace)
    4. Eating plenty of chocolate and drinking wine and coffee - Make hay while the sun shines

    Good luck and love to all brave minded people out there thinking this sh#t through coz the times they are a changin'
     
  14. Pakanohida

    Pakanohida Junior Member

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    Reagen and Bush, both republicans spent massive money on the military and gave tax breaks to rich friends. Clinton took office, brought the US more jobs, balanced things, prevented a genocide, and moved on. Bush Jr usurped the American presidency, went the way of his father & gave breaks to friends like the Bin Laden family & screwed up the economy again with reckless spending, now Obama is in charge dealing with over 20 years of mis-spending not to mention a country STILL devastated by Katrina and the Gulf Oil Spill, the repercussions of which are still being felt, not to mention a host of other factors such as the USDA & Dow Chemical w/ Monsanto poisoning the world with its food and chemicals. The infrastructure is shot because of those 2 corporations & other small perspectived special interest groups.

    This isn't a Democrat, or Republican thing. It's just a f'n world wide mess.
     
  15. ShadowWalker

    ShadowWalker Junior Member

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    If the goal of "kicking the can down the road" yet again is global monetary union they must not be watching the European Union and how it's not exactly holding together at the moment. Seems to me there's a whole lot more scrambling to cover asses going on than a well-thought-out plan being executed.
     
  16. springtide

    springtide Junior Member

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    I thought the idea of the European Union was mostly for trade and to cut back on border security, i can see the US and Canada relaxing things one day but the US with Mexico?.... actually it would mean that the rich could import more cheap labour and goods to sell and really screw the general population down - cut the cost of border security, more illegal drugs to dumb down the population and keep them in private prisons. I don't know what would happen when they destroy their local markets (no middle class after a while) but short term i can see the benefits..... bummer about that.

    I guess with Greece they were going down for a while and someone would have known they would be partially bailed out if they were included in the EU - someone somewhere would have made serious dollars.
     
  17. Grahame

    Grahame Senior Member

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    Things seem to have taken a turn for the worst this morning...
     
  18. annette

    annette Junior Member

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    Yep but just wait for the US treasury to drag something similar to QE 3 into the mix. won't do anything but will stave the markets for a while. i noticed the plunge protection team were probably at work in the US. It is said that they step in to prevent falls of more than 500. well the dow fell just a bit more than that so they were probably on the case.

    If one investigates the situation, and not just listens to the so called experts, you can easily figure out that greece has no way of paying even the interest on the debt they have. Let alone pay down the orignal loans. The EU or the europeans banks have about 400 billion in emergency funds and about 4 trillion is required to save Italy and Spain. 4 trillion is the total GDP of Germany. So what are the chances of that. The German people are pissed off already having to bail everyone out. Set aside ireland, portugal, greece, spain and italy you have other countries like Belgium and Austria sliding into trouble.

    If China has no-one to sell to, are they going to want our resources at the same level. Don't think so. Their domestic economy is not that up to scratch to take up the slack.

    Our banks are exposed no matter what they say. heavily into residential mortgages and all it needs is for a fall in house prices and the trouble will start. The banks won't lend to each other and it is on again. Australia is not immune from the global economy but if there is anywhere to live, I'm glad I am here.

    Also nothing has changed since the last gfc. They all got bailed out for taking risks. They have privatised profits and made the debt public so there is no incentive to be prudent or risk adverse.

    It is just a matter of time really before we slid into a what pundits are calling a "Greater Depression". Grow those veges everyone.
     
  19. barefootrim

    barefootrim Junior Member

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    Thoughts on Americas latest -------------- who really cares about those fools, bullies and demons anyway, They are broke- have been for years, still lying to their loyal nationals, and still invading tiny little countries to steal like a school boy bully would knock up a little kid to steal his marbles.

    Dont waste your thoughts on them,,,,its very unbecoming really,,, focus on warmth, and the sun shining bright this day
     
  20. Yukkuri_Kame

    Yukkuri_Kame Junior Member

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    C'mon - there is no doubt globalists want a global currency. Whether they can pull it off is another issue, but it is definitely part of the plan.

    The SDR (special drawing rights) already function as a super-currency between central banks. There are movements towards an asian currency. The Amero has been openly talked about:

    [video=youtube;gYGrn0hZlCQ]https://www.youtube.com/watch?v=gYGrn0hZlCQ[/video]

    The plans have been laid already. The current noise about the dollar losing it's reserve currency status is a part of the plan. You can bet there are plans for a new order that will emerge out of the chaos of the fall of the US empire.
     

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