Global financial meltdown 'not far-fetched'

[Stuart Mackey]

Why do so many of you seem to be cheering for a global meltdown? Do you really think you won't be affected?

Care to point out where anybody mentioned that? Of course we'll be bloody affected! You can't not be in the loop somewhere down the line, unless you truly live off the grid.

I don't know about cheering, since there is none, but keen interest there is plenty.

Between this thread and past threads on peak oil, there seem to be some people who take a certain amount of glee that the future isn't quite as rosy as it seemed to be (once upon a time). Nobody has ever come out and said "Yay! The future's going to suck!" but the tone of some posts is makes me wonder what some folks are thinking?

Maybe it's just me misinterpreting people's intentions, but usually when predicting a catastrophe, people hope they're wrong, rather than pointing out that their predictions are correct.

My concern is that the article I posted has turned into 'The end is Nigh!' rather than discussion of the article itself.

Mr Soros said during a lecture at the New York University this week that the American economy is "on the verge of a very serious economic correction" after decades of overspending.

"We have borrowed an awful lot of money and now the bill is coming to us and the war on terror has thrown America out of the rails."

I know that there is the peak oil problem and I know that human society is not well placed to meet the implications of that, but if I post an article about economic management and fiscal imprudence, why can we not limit ourselves within the parameters of the article?
There is a tone of Mad Max syndrome here far too regularly, and its getting boring real quick.

[J]

Getting back on the financial topic, it's been evident for some time that the US is living on borrowed money and borrowed time. The first tangible warning sign was the subprime mortgage fiasco which sent investors scrambling for new ways to package and leverage debt. This was followed by the various financial institutions losing a chunk of their money to bad debts, and then the Feds dropping interest rates to try and stave off a mass panic in the markets, which had the side effect of the USD dropping like a stone.

Of course the roots of the problem go much farther back, with Greenspan & friends rolling one bubble market into the next larger bubble. Some people questioned this policy, only to be shouted down and silenced with cries that the economy is doing great and growing at an unprecedented rate, hooray, money for everyone! Unfortunately, as was warned, there comes a time when one bubble on the verge of collapse can no longer be rolled into the next larger bubble, for there is no bigger bubble. That time is right about now.

If you think about it a bit it's common sense, unfortunately there's been a lack of sense in the financial world for quite some time. Once again, I point to the economist joke in my sig.

[Ryan Thunder]

I don't understand...

It seems every country has a national debt; Who do they owe it to? Why doesn't everybody just pay up so we can all get on with our respective economies?

If it would collapse were that to happen, why the hell is that so?

[brianeyci]

If it was that simple it would have been done already. It can't just be "paid off" because it's a massive amount. Even Canada's small debt would take more than a hundred years to pay off assuming continual economic growth. When governments get short on cash for capital projects they borrow.

They owe the money to real people, people like you and me, investors who buy government bonds for an acceptable and safe return. Your parents probably have some Ontario Savings Bonds in their stock portfolio. They also owe the money to foreign governments, in particular China, which buys large amounts of US Treasury bonds. Which the US then goes and prints more money, like retards.

I'm sorry if this is a revelation to you, that the government is run by morons. At least in Canada since the Chretein years every government has to be "in the black" so there will never be a deficit. In the US there is complete disconnect from spending and revenue from what I gather: in short if the government was a business in the US it would've been bankrupt long ago. Which is ironic given conservatives always harp on small efficient business-like government. They talk the talk but never walk, because short-term pork-barrel projects guarantees them reelection.

[Einhander Sn0m4n]

Why doesn't everybody just pay up

The stupidity BURNS!

Enjoy having every American man, woman, and child paying thirty thousand dollars. [/url]

[SirNitram]

Who do they owe it to?

Other countries. China's been buying alot of US debt lately.

[Ryan Thunder]

Alright, but I still don't understand how every country on Earth can simultaneously have a massive national debt to pay...

The money must have gone somewhere...

[SirNitram]

Alright, but I still don't understand how every country on Earth can simultaneously have a massive national debt to pay...

The money must have gone somewhere...

You've alot to learn about economics. There can in fact be holes. And phantom money.

And not every country has a massive debt to pay off.

[J]

Alright, but I still don't understand how every country on Earth can simultaneously have a massive national debt to pay...

The money must have gone somewhere...

You've alot to learn about economics. There can in fact be holes. And phantom money.

And not every country has a massive debt to pay off.

I believe this is can be illustrated with the Cow Model for capitalism:

HONG KONG CAPITALISM: You have two cows. You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt/equity swap with associated general offer so that you get all four cows back, with a tax deduction for keeping five cows. The milk rights of six cows are transferred via a Panamanian intermediary to a Cayman Islands company secretly owned by the majority shareholder, who sells the rights to all seven cows' milk back to the listed company. The annual report says that the company owns eight cows, with an option on one more. Meanwhile, you kill the two cows because the Feng Shui is bad.

[Darth Wong]

Why do so many of you seem to be cheering for a global meltdown?

Hmm, why does this kind of argument sound so familiar ...

Does anybody else remember a few years ago, when the right-wingers, still in denial about the massive failure of the Iraq war policy, started accusing everyone of "hoping the insurgents win"? Yup, that's it. If you don't like an argument but you can't come up with a reasonable rebuttal, just accuse the other people of being evil and hoping for bad things!

[Phantasee]

I always felt this itch in the back of my mind when I read statistics like US baby boomers (?) owing $1.10 for every $1.00 they earned/had. I got the feeling that there was a lot of credit floating around without the real money to back it up. And now this?

Wow.

[Shinova]

Alright, but I still don't understand how every country on Earth can simultaneously have a massive national debt to pay...

The money must have gone somewhere...

It's a desire to believe that there's something solid, something concrete that actually exists that represents money in the global economy, but it's not.

I used to ask the exact same question you did, until I came to the sudden epiphany one day that it's all literally a game. The US dollar is a fiat money, meaning it's worth something because the US government says it does. In the same way, so and so national debt can be that way simply because the game says so.

It's a totally abstract system based on artificial rules of conduct and transaction that rests on nothing but the mere confidence of its players that it's worth something. And like many games, players can cheat, or take overly risky shortcuts, or make up interpretations of the rules that suit their own goals.

Of course, it's not exactly as I describe it, since there are some material standards, but the primary standard currency is the US dollar, I believe. So when you see the global economy as a game supported simply by the players' confidence in the game and its rules, you can see how wacky things like every country having a national debt can happen and, somehow, make sense.

[Admiral Valdemar]

I know that there is the peak oil problem and I know that human society is not well placed to meet the implications of that, but if I post an article about economic management and fiscal imprudence, why can we not limit ourselves within the parameters of the article?
There is a tone of Mad Max syndrome here far too regularly, and its getting boring real quick.

You assume the two are separate problems that should be debated on their own merits. They're really not. The final, root cause of this is all down to population growth and resource exploitation. Whether we deal with the way we manipulate worthless human invented currency or actual useful physical commodities won't change the underlying problem that there are too many people and they all want the same things us in the West take for granted.

How else do you expect to deal with rampant liquidity without telling people they cannot afford to squander the planet's limited resources for their own personal gain and enjoyment? No one will propose population control, not even the most radical Greenpeace activists, so can you really find fault with the Mad Max pessimism regardless of whether you find it entertaining or not?

[Stuart Mackey]

I know that there is the peak oil problem and I know that human society is not well placed to meet the implications of that, but if I post an article about economic management and fiscal imprudence, why can we not limit ourselves within the parameters of the article?
There is a tone of Mad Max syndrome here far too regularly, and its getting boring real quick.

You assume the two are separate problems that should be debated on their own merits. They're really not. The final, root cause of this is all down to population growth and resource exploitation. Whether we deal with the way we manipulate worthless human invented currency or actual useful physical commodities won't change the underlying problem that there are too many people and they all want the same things us in the West take for granted.

How else do you expect to deal with rampant liquidity without telling people they cannot afford to squander the planet's limited resources for their own personal gain and enjoyment? No one will propose population control, not even the most radical Greenpeace activists, so can you really find fault with the Mad Max pessimism regardless of whether you find it entertaining or not?

Ok, just so I get where you are coming from, if I post an article on, say, the price of milk powder and its effect on the farmers debt levels in New Zealand, I can expect from you a dissertion on peak oil?.

[Admiral Valdemar]

Ok, just so I get where you are coming from, if I post an article on, say, the price of milk powder and its effect on the farmers debt levels in New Zealand, I can expect from you a dissertion on peak oil?.

No, in that instance just a recommendation for New Zealand to stop being lame and rejoin the Empire.

Seriously, there's little happening today that isn't the result of high energy prices and you need to take a holistic approach to this problem. Rising energy prices caused by increased consumption via more people, or more people attaining a higher standard of living, will inevitably lead to premiums on basic goods unless an increase in their production and efficiency also occurs.

[Xisiqomelir]

Alright, but I still don't understand how every country on Earth can simultaneously have a massive national debt to pay...

The money must have gone somewhere...

Mandrake Mechanism (ignore the rest of biblebelievers, but they have nice formatting for this chapter so I'm linking them.)

[Ryan Thunder]

Alright, but I still don't understand how every country on Earth can simultaneously have a massive national debt to pay...

The money must have gone somewhere...

You've alot to learn about economics.

Well, yeah. That's why I asked.

There can in fact be holes. And phantom money.

And not every country has a massive debt to pay off.

So shouldn't there then be some country or group of countries that everybody else owes money to?

[Ryan Thunder]

Alright, but I still don't understand how every country on Earth can simultaneously have a massive national debt to pay...

The money must have gone somewhere...

Mandrake Mechanism (ignore the rest of biblebelievers, but they have nice formatting for this chapter so I'm linking them.)

Ok, the way I read this is that value is a completely meaningless concept...

Of course currency is technically worthless. It is a representation of value, and not valuable in and of itself. By transferring around that representation of value, we have a standardized system for determining how much everything else is worth. Because everybody knows how much value they can transfer, and how valuable what they wish to purchase is to them.

So, that said, how can the system be based on debt, and be such that no currency is possible without it? I read the article, it just doesn't make that much sense to me...

Oh, and this just made me laugh:

It is a form of modern serfdom in which the great mass of society works as indentured servants to a ruling class of financial nobility.

[Illuminatus Primus]

Its true enough; the distributions of wealth globally are there as they've always been since we transitioned from a hunter-gatherer culture. We're no fundamentally different - its just the rich are now so ultra uber-rich they can let the proverbial bureaucrats, servants, and prison guards of the system take home more treats for keeping it that way.

There are too many people. Religion is such a dire threat because it opposes this necessary step: coercive population control. Either we will limit and shrink our population by choice on our own terms or most of the population will die from the Horsemen beyond any control of ours. Most people should not be permitted to have more than one child.

[Stuart Mackey]

Ok, just so I get where you are coming from, if I post an article on, say, the price of milk powder and its effect on the farmers debt levels in New Zealand, I can expect from you a dissertion on peak oil?.

No, in that instance just a recommendation for New Zealand to stop being lame and rejoin the Empire.

Only if Britain leaves the EU

Seriously, there's little happening today that isn't the result of high energy prices and you need to take a holistic approach to this problem. Rising energy prices caused by increased consumption via more people, or more people attaining a higher standard of living, will inevitably lead to premiums on basic goods unless an increase in their production and efficiency also occurs.

Yes, oil is through the roof, but how does that have anything to do with a nations fiscal imprudence? Your effectively saying that if I run up a massive credit card debt on quality swords that the reason for that is the price/quantity of oil and not me being a dickhead.

[Repoman]

This is a very serious and very real problem.
Another sword being held over the head of the US is all of the T-bills held by China. Over a trillion dollars. And China doesn't even count them as assets. They have been laughing at us for years while they used a good portion of our trade deficit to buy T-bills - all the while knowing they weren't buying them as an investment.

They were bought for one purpose - to dump on the market when they feel the time is right so they can bankrupt the US when they think the time is right.

And it is the USA's fault. Miserable excuses for politicians that sold out my country one election at a time.

Now that China has stolen enough technology to amazingly send a man into space less than half a century after doing such a thing was already old news, they may be feeling their time is drawing near.

The pathetic thing is that if they would just lose the pathetic communist dictator thing and join the modern world of democratic nations then they wouldn't need to plot and connive and try to figure out a way to "beat" the USA.

[Phantasee]

Repoman

Do you seriously think that a democratic China wouldn't try to fuck the US like a communist China would?

It doesn't matter who's ruling the country, whoever ends up on top there will try to bring their country on top of everyone else. Democracy wouldn't magically stop this competition.

[K. A. Pital]

The pathetic thing is that if they would just lose the pathetic communist dictator thing and join the modern world of democratic nations then they wouldn't need to plot and connive and try to figure out a way to "beat" the USA.

You mean that the European Union, Russia and other countries which are capitalist and democratic do not compete with the US? Pfft. Repoman stuns the world again with his conventional wisdom - "democratic countries don't compete". Bullshit of the highest order. They do compete and since the global nations act like huge market agents, the methods of this competition aren't the same as between businesses, but far more extreme due to both scale and nature of international economic competition.

Thank the nuclear weapon specialists that trade, finance and industrial superiority problems are not as often solved with war now, compared to the past, not "democracy".

[Illuminatus Primus]

This is a very serious and very real problem.
Another sword being held over the head of the US is all of the T-bills held by China. Over a trillion dollars. And China doesn't even count them as assets. They have been laughing at us for years while they used a good portion of our trade deficit to buy T-bills - all the while knowing they weren't buying them as an investment.

They were bought for one purpose - to dump on the market when they feel the time is right so they can bankrupt the US when they think the time is right.

And it is the USA's fault. Miserable excuses for politicians that sold out my country one election at a time.

Now that China has stolen enough technology to amazingly send a man into space less than half a century after doing such a thing was already old news, they may be feeling their time is drawing near.

The pathetic thing is that if they would just lose the pathetic communist dictator thing and join the modern world of democratic nations then they wouldn't need to plot and connive and try to figure out a way to "beat" the USA.

Remember kids, don't get your economics education from Redstate. Instead, go to college. Bought only to fuck the market? Developing economies worldwide invested heavily in the U.S. during the bubble, China was just the largest.