How close is the US economy to collapse?

The fiscal deficit issue seems to be a more recent one, though.

You, on the other hand, will be fighting rabid dogs in the street over a half-eaten buffalo wing. Also, watch out for replicants.

The dollar is going to suffer and I don't see any painless way out. That will bring much higher inflation than we've seen since 1983, but with no corresponding improvement in employment numbers. When it happened in the post-Vietnam era it was called stagflation. I look for a reprise.

Since most of the Social Security trust fund is in US Treasury bonds, Bush's wild deficit-growing policy will soon ensure that the trust fund will take an enoromous hit, as those securities lose a large part of their value in the open market.

Basically the Us economy is fucked unless it tightens it's belt, reigs in is demand for oil and other commodities, drops ridiculous trade tariffs. Us paper is no longer as gilt edged as it used to be wich will encourgae flows to Europe and Asia. At some point in the near future i can see a chinese or an indian government bond being more secure than a US one.

An interesting book, if a touch repetative and overbearing. The concern for the US has to be that with oil increasing, a recession again, now would be disasterous, as it would take the US into deflation.

Well, it is Options and Futures trading, pretty much. But that does mean that the uninitiated normally are those that get the worst end of things.

Depends on how you see it. You can't really use Black & Scholes on horse racing, or any such model. Currency markets are efficient, you just have to know how they work and why (which itself asks a lot).

I believe (but might just have dreamt up) that currency trading is illegal in most places, and the US is an exception - is this correct?

I would never view markets and trading per-se as gambling. Futures floors scare me, and trading of options is ridiculously technical, especially exotics. Most people are in the market for a reason though, and everyone takes their spread and has to check positions so regularly it is scary, and a lot more educated than horse-racing (these people have huge mathematical models, and currency's are pretty much stable, rather than "new horses" or whatever). There are rules for people moving markets as well, so there is little opportunity for abuse.

All the financial markets are is a very liquid version of anything else you can buy and sell, but with an opportunity to make/lose a lot of money if you know what to do (or don't). Dependent on knowledge and facilities available decides for me whether it is gambling or not.

(x-post)

I might add that a national sales tax would have some of the same implications and benefits as a Tobin tax, without looking so protectionist.

Till about then, apparently!

Has anyone in Bush-land been heard talking about a VAT, since they seem to like consumption taxes so much? Or is a value-added tax too "French"?

And Ed, why aren't investors demanding a higher premium right now to hold their dollars? Since interest rates are so low, shouldn't the dollar have tanked already?

FWIW, Stephen Roach's note today said that Chinese planners have told him that the U.S. press may have gotten ahead of itself in saying the yuan peg is near its end. How does that change the dollar dynamic?

truth be told, i'd sooner buy bonds backed by subprime mortgages than any spoon record.

everyone happy now?!? even ben bernanke agrees with me!

do Spoon still get Pixies heckles when they play live? I guess they don't sound as much like them anymore...

if you guys want to stop seeing banners just dload some fukkin pluginz yo

https://addons.mozilla.org/en-US/firefox/addon/10

https://addons.mozilla.org/en-US/firefox/addon/1136

and the US economy has about 5-10 years to go before an immobilizing stroke, give or take some geniuses and a few million young immigrants

i'm a little confused about some of the comments upthread made by british ILXors. i've read, and heard, anecdotally that the U.K. has a real estate bubble of its own that is at least as bloated as the one here in the U.S. it's also the excuse of every flipper/donald trump-wannabe realtor over here in manhattan as to why manhattan real estate prices are so absurdly obscene -- i.e., that a $1.5M generic condo is a bargain to euros (there's also the weakness of the dollar compared to the pound and the euro to take into account with that, though). maybe the U.K. mortgage market doesn't have the ridiculous, fiscally-unsound mortgage products that we have over here -- or you do, they aren't as prevalent (?) -- but if there IS a U.K. bubble then something has to be inflating it no?!?

also nick -- isn't kind of risky to put your real estate purchase money in equities?!?

I think i'm going to start a thread about how much shit we all know how to repair, and how much we know how to grow.

Not that things will necessarily go full-on post-apoc, but my jedi/spice-addled/wine-powered senses get the vibe that handyman skills will become increasingly more useful.

there's a reason I carry an eyeglasses repair kit, a multi-head screwdriver, adjustable wrench and leatherman in my man-purse every day. Used to have a maglite and an umbrella too but one's batteries ran out and the other got left in Tallinn. Need to work on that.

that reason is the same reason I listen to the Doobie Brothers every day

Not that things will necessarily go full-on post-apoc

Quit trying to scare the young 'uns. This is not going anywhere near post-apoc anything. Reading this thread you'd think there had never been a recession before.

a jewish dude told me that i should carry a leatherman for SELF DEFENSE

those stupid jews. I bet they also like spoon.

leathermans are awesome! especially when you get them for free from your in-lawz

isn't kind of risky to put your real estate purchase money in equities?!?

It's only about 25% of it, and it's been in it for years.

eisbar, the uk certainly has its own ridiculuous bubble, its not quite the same bubble, but its a huge bubble all right, cheap credit, amateur speculators. i believe its called a pyramid scheme

the crisis is being overdone. there are companies already picking up bargains at half the value of subprime portfolios. most of these people who are in trouble got loans with no down payment so there isn't a lot of risk of financial loss even if they lose their homes. the worst thing in the world would be a bailout that would justify the idiocy of lenders who made bad loans collected their fees and then packaged these loans and sold them off to someone else. that is the risk in that no one really knows who is exposed but it is also a positive in that the risk appears to be spread more widely and so will have less of an impact than say the s&l crisis. i am amazed at the 'sky is falling' people. perhaps it is only here but the economy is very strong, our business is growing by leaps and bounds and unemployent is 3.6%. hardly the stuff of calamity. but then i suppose this is the generation who believed that two quarters of contraction in 1991 was the worst economy of 50 years and economics education is sadly lacking. schumer's ready to shut off the credit spigot to low income households completely, not smart, but then he's not. scary talk of increasing gas taxes by 50 cents and not extending tax cuts, how exactly are these things a benefit to the economy, not to mention his idiotic 20% tariff on chinese imports.

These folks don't exactly sound very blithe.

"If you buy that $700 purse, it really cuts into your budget.""

well...sherlocks woken from slumbers on that one

Style is all. It's Southern California!

keyth's analysis seems fairly accurate in the short term, I don't think the subprime/re crash is that big a deal either - the long-term, though, is less free money for the echo boomers as they have to compete in a global economy and pay their parents' medical bills, which is DOOM AND A HALF

http://www.voxeu.org/index.php?q=node/466 is a good read on this.

riddle me this, economy-nerds: how come nobody's using the word 'inflation' even though gas, milk, and eggs are noticably more expensive than they were a year ago?

Because that means you dare question the wonderful job the Bush Administration has done with the economy.

i do not understand finance at all

you might want to start here remy

http://en.wikipedia.org/wiki/Consumer_price_index

So who's emigrating to Australia then? We could use some culture.

That sounds kind of fun. Are there good jobs in the sciences?

ie like zoology

OMG maybe I could achieve my lifetime dream of meeting a PLATYPUS!!!

an econo-nerd blog if you really wanna shit yer pants over the american economy

remy: http://bigpicture.typepad.com/comments/2005/09/the_history_of_.html

ritholtz has been caning this issue - what he calls inflation ex inflation - for as long as I've been reading him.

greenspan still insist on fuel and expendable proceeds for corn-on-cow action?

670 pounds of heroin for great justice

http://www.avclub.com/content/feature/whither_clarabelle_cow_11_semi

OMG maybe I could achieve my lifetime dream of meeting a PLATYPUS!!!

-- Abbott, Tuesday, November 27, 2007 6:13 AM (3 hours ago) Bookmark Link

watch out they are poisonous!

only bits of them.

massive unsubstantiated hearsay rumour alert: my friend knows some economist at UC Berkeley and he has taken all his money out of the bank and gotten rid of all of his stocks and claims that everything will continue to get worse for the next five years and then complete collapse ala Argentina in 2000/2001. Since I have no stocks or money in the bank, I should be free and clear!
― kyle (akmonday), Sunday, November 7, 2004 7:31 PM (4 years ago)

so we got one year left, huh?

I don't even remember posting that. i wonder who I was talking about?

that friend of a friend, the same one who came home to find his dog choking and took it to the vet and the dog was choking on FINGERS and the police came and found a RAPING MURDERIST HIDING IN THE CLOSET MISSING TWO FINGERS!@

oh yeah that guy. i don't trust him anymore

I don't even remember posting that. i wonder who I was talking about?

― akm, Sunday, November 9, 2008 1:46 AM (9 hours ago) Bookmark Suggest Ban Permalink

ha!

times were so much simpler in the '04

yeah, bet those fuckers wish they'd voted for larouche right about now

times were so much simpler in the '07 too!

ahh... August '07. Those were the good times.

Even when I was 25 and superdepressed things seemed to be better then. I had like unsubstantiated fears. WOO

Don't look now, but I think you're superdepressed in 2009.

No economic system ever remains unchanged, of course, and certainly not after a deep financial collapse and a broad global recession. But over the past few months, even though we've had an imperfect stimulus package, nationalized no banks and undergone no grand reinvention of capitalism, the sense of panic seems to be easing.
http://www.newsweek.com/id/201935?from=rss
(zakaria's "capitalist manifesto")

don't trust it

we're so a third world country at this point
http://trueslant.com/matttaibbi/2010/04/08/jefferson-county-keiser-report-2/
or at least, second world

Canada’s Only Bullion Bank Gold Vault Is Practically Empty

During the interview, Lenny Organ states that he was in the ScotiaMocatta vault in 2008. What’s the situation now??? Anyone dealing with precious metals, especially precious metals certificates, should listen to this.

Central Fund of Canada investors, who aren’t just using that thing as a blinking number that updates in realtime, also need to listen to this.

Via: ZeroHedge:

Continuing on the trail of exposing what is rapidly becoming one of the largest frauds in commodity markets history is the most recent interview by Eric King with GATA’s Adrian Douglas, Harvey Orgen (who recently testified before the CFTC hearing) and his son, Lenny, in which the two discuss their visit to the only bullion bank vault in Canada, that of ScotiaMocatta, located at 40 King Street West in Toronto, and find the vault is practically empty. This is a relevant segue to a class action lawsuit filed against Morgan Stanley, which was settled out of court, in which it was alleged that Morgan Stanley told clients it was selling them precious metals that they would own in full and that the company would store, yet even despite charging storage fees was not in actual possession of the bullion. It appears that this kind of lack of physical holdings by all who claim to have gold in storage, is pervasive as the actual gold globally is held primarily in paper or electronic form. Lenny Organ who was the person to enter the vault of ScotiaMocatta, says “What shocked me was how little gold and silver they actually had.” Lenny describes exactly how much (or little as the case may be) silver was available – roughly 60,000 ounces. As for gold – 210 400 oz bars, 4,000 maples, 500 eagles, 10 kilo bars, 10 one kilogram pieces of gold nugget form, which Adrian Douglas calculates as being $100 million worth, which is just one tenth of what the Royal Mint of Canada sold in 2008, or over $1 billion worth of gold. As Orgen concludes: “The game ends when the people who own all these paper obligations say enough and take physical delivery, and that’s when the mess will occur.”

Also note the interesting detour into what Stephan Spicer of the Central Fund Of Canada, said regarding his friend at a major bank, who wanted access to his 15,000 oz of silver, and had to wait 6-8 weeks for its to be flown in from Hong Kong.

It is funny that central bankers thought they could take the ponzi mentality of infinite dilution of all assets coupled with infinite debt issuance, as they have done to fiat money, and apply it to gold, in essence piling leverage upon leverage. They underestimated gold holders’ willingness to be diluted into perpetuity – when the realization that gold owned is just 1% of what is physically deliverable, you will see the biggest bank run in history.

when the realization that gold owned is just 1% of what is physically deliverable, you will see the biggest bank run in history

This is a non-sequitor. Even if all the gold speculators in the world got burned for a return of one cent on the dollar, neither commercial banks nor central banks rely on gold assets for their stability. So, why run the bank?

Even with as much as gold has been bubbling since mid-2008, it still represents a minimal percentage of all investment assets. It would probably be a good thing for that bubble to deflate.

guillotine time

http://www.newrepublic.com/article/112397/one-percent-gobbles-economic-recovery