US$53 Thousand-Thousand-Million deficit

[Nesti (Mark)]

"A billion here and a billion there, and pretty soon you're talking real money"

US$53 Thousand-Thousand-Million deficit - to me, that's just insane.

There's so much in the news about the US economy lately, and you're all probably sick of it, but if you're up to a good read and a great watch, check the news article (below), and then if you're not light headed enough, the 1hr 16min presentation by Schiff at the annual Austrian Scholars Conference (bottom); this one blew my mind.

It's a little disturbing, but before looking at the two below, have a look at this gentleman's face at 1min 05sec. As an economist, he's obviously run all the permutations. Thank god Paul Keating put in safeguards years ago...he put sound economics before popularity...we do owe him a big thank you.
http://www.youtube.com/watch?v=OEfYY3cANqE

http://www.businesstimes.com.sg/sub/...338320,00.html

http://www.youtube.com/watch?v=EgMclXX5msc

I don't consider myself an 'alarmist', but what were they thinking?

Planning to go back to the moon are we...must be the one in Washington's new financial universe.

[multiweb (Marc)]

Same old story - Sounds familiar . Bailing out and stimulus packages are a recipe for disaster. Let free maket work the way it should coz it's always going to catch up eventually. Wanna make a buck? Produce a buck worth - then save it - don't spend a buck.

[dpastern (Dave Pastern)]

Originally Posted by multiweb

Same old story - Sounds familiar . Bailing out and stimulus packages are a recipe for disaster. Let free maket work the way it should coz it's always going to catch up eventually. Wanna make a buck? Produce a buck worth - then save it - don't spend a buck.

Unfortunately, we have the pro business people who demand that businesses get bailed out due to them employing people, and said unemployment causing more problems than the bailing out costs. I'm a firm believer in responsibility. If I have a mortgage, and decide to drink, smoke, gamble and do some whoring and don't pay the mortgage, will the government bail me out? No. It's plain discrimination. You screw up, then you shouldn't get bailed out. As you said, let the free market play.

I find it interesting that some people don't want a free market in this respect, but demand a free market when it comes to retailers screwing their customers. Hypocrisy? Yes.

Dave

[multiweb (Marc)]

Businesses shouldn't be bailed out plain and simple. What I find distressing about bailouts is that it kills competition and gives a false sense of security. Then as you say they don't care anymore because they have a safety net. When a big fish falls, it's an opportunity for other small ones to thrive. Bailouts rig the game big time regarless of "legitimate honest/fair businesses" or "consumer screwy" types.

Originally Posted by dpastern

Unfortunately, we have the pro business people who demand that businesses get bailed out due to them employing people, and said unemployment causing more problems than the bailing out costs. I'm a firm believer in responsibility. If I have a mortgage, and decide to drink, smoke, gamble and do some whoring and don't pay the mortgage, will the government bail me out? No. It's plain discrimination. You screw up, then you shouldn't get bailed out. As you said, let the free market play.

I find it interesting that some people don't want a free market in this respect, but demand a free market when it comes to retailers screwing their customers. Hypocrisy? Yes.

Dave

[dpastern (Dave Pastern)]

Originally Posted by multiweb

Businesses shouldn't be bailed out plain and simple. What I find distressing about bailouts is that it kills competition and gives a false sense of security. Then as you say they don't care anymore because they have a safety net. When a big fish falls, it's an opportunity for other small ones to thrive. Bailouts rig the game big time regarless of "legitimate honest/fair businesses" or "consumer screwy" types.

Agreed, but alas, government, which no doubt accepts nice bribes, oops, I mean contributions from big business differs. Funny, I don't remember businesses being allowed to vote, and I do remember that politicians are voted in by the people, and are meant to represent the people (not business entities).

America will eventually collapse due to debts, it's only a matter of time. What it'll do to the global economy, I don't know, but it serves ourselves right for relying on a single economy to such a large extent.

Dave

[multiweb (Marc)]

It is pretty scary though for the future. Putting aside that they're not going to pay the money back and it's gone I wonder what China's going to do. I mean I'd be pretty pissed off if I was them. ... and they don't really have a good track record when it comes to human rights and democracy. Wrong guys to play that kind of games with. I'd say there's a storm coming.

[casstony]

Karl Denninger offers the best economic roadmap that I've seen. In December each year he writes a prediction for the following year and has been generally accurate in the 2 years I've been following him.

http://market-ticker.org/archives/68...ding-2009.html

[xelasnave]

Originally Posted by multiweb

It is pretty scary though for the future. Putting aside that they're not going to pay the money back and it's gone I wonder what China's going to do. I mean I'd be pretty pissed off if I was them. ... and they don't really have a good track record when it comes to human rights and democracy. Wrong guys to play that kind of games with. I'd say there's a storm coming.

They are building a "blue water navy" (check it out) so apart from shooting down a harmless weather sat they will seek more control than a certain world power will give up... that is when things will get interesting and remember it is always about the money....
alex

[dpastern (Dave Pastern)]

The US economy is exceptionally weak and volatile. China's economy, at least at the present, is vibrant and strong. It'll remain so due to the style of government, which will forceably keep wages and working conditions low. As the US's welfare, education and medical systems continue to fall apart, the needy will slip through the cracks, and drug, alcohol and crime abuse will rocket. It's not if, it's when. The wealthy in the US will never give up their power, and would rather go down and take the rest of the nation with them, than give it up.

I'm not a fan of capitalism, it encourages greed, it encourages a lack of sharing, and it encourages a lack of empathy for your fellow humans. Money becomes such an all central, important goal that many other things get elbowed out of the way. Worse, those with money fail to realise how much damage they do to others.

Dave

[ian (Ian)]

without wanting to be melodramatic, some of the affects of the recession over here in the USA do not make the media, but include:
- public parks, libraries and swimming pools are closing
- unemployment is now hitting 10% with little job creation
- unemployment + the huge number of house foreclosure means many, many thousands of people, and families now homeless, living with relatives or living in their cars. and these are regular, honest people.
- there is virtually no major manufacturing left in the USA. not only from the recession, but because of the way health insurance is structured (oppressively unfair), insurance is paid for by employers. so no job, no health insurance and no public health system. and because of this additional cost to employers, jobs are not only disappearing to cheap labour countries, job are also disappearing to Canada and Europe mostly due to their having a public health system.
- in my area where we can get 10 feet of snow over winter, the number of council payed snow plows has been halved which means more roads left covered in snow which only results in more accidents - and if you have no health insurance you're screwed.
- and because of the insurance fiasco, over 2 million americans go bankrupt each year just because of health costs. over 10% have no insurance and over 60% are under insured.
- towns that were built around major manufacturing, particularly the car manufacturers are becoming ghost towns.
- tent cities are appearing in all major cities
- crime is on the increase as people become desperate.
- there are virtually no government education scholarships left which used to allow the poor and minorities to go to Uni. and a 1/2 decent Uni over here starts at $10k a year. a Uni comparable to the major Uni's in Australia (most of which are currently classed in the top 50 in the world) would start at $30k per year.
- the social security system, largely for old age pension and old age MediCare, is over a billion dollars - projected to hit the trillions in the decades to come - in short fall and the gap is widening. people retiring over the next few decades will receive next to nothing in terms government sponsored support.

i could go on and on about the human costs.

[multiweb (Marc)]

Gee... sounds really bad. I don't know how you guys manage. Luckily for us the climate and the cold is something less we have to deal with here. People get broke but it's still broke "at the beach". What you're saying sounds like what's happening in Europe too now last time I talked to my brother there.

[dpastern (Dave Pastern)]

yes, but apparently, the US is the land of the free. My rear end it is.

Dave

Originally Posted by ian

without wanting to be melodramatic, some of the affects of the recession over here in the USA do not make the media, but include:
- public parks, libraries and swimming pools are closing
- unemployment is now hitting 10% with little job creation
- unemployment + the huge number of house foreclosure means many, many thousands of people, and families now homeless, living with relatives or living in their cars. and these are regular, honest people.
- there is virtually no major manufacturing left in the USA. not only from the recession, but because of the way health insurance is structured (oppressively unfair), insurance is paid for by employers. so no job, no health insurance and no public health system. and because of this additional cost to employers, jobs are not only disappearing to cheap labour countries, job are also disappearing to Canada and Europe mostly due to their having a public health system.
- in my area where we can get 10 feet of snow over winter, the number of council payed snow plows has been halved which means more roads left covered in snow which only results in more accidents - and if you have no health insurance you're screwed.
- and because of the insurance fiasco, over 2 million americans go bankrupt each year just because of health costs. over 10% have no insurance and over 60% are under insured.
- towns that were built around major manufacturing, particularly the car manufacturers are becoming ghost towns.
- tent cities are appearing in all major cities
- crime is on the increase as people become desperate.
- there are virtually no government education scholarships left which used to allow the poor and minorities to go to Uni. and a 1/2 decent Uni over here starts at $10k a year. a Uni comparable to the major Uni's in Australia (most of which are currently classed in the top 50 in the world) would start at $30k per year.
- the social security system, largely for old age pension and old age MediCare, is over a billion dollars - projected to hit the trillions in the decades to come - in short fall and the gap is widening. people retiring over the next few decades will receive next to nothing in terms government sponsored support.

i could go on and on about the human costs.

[Nesti (Mark)]

Holy cow Ian - it sounds like it is getting desperate. The Option Arm and Alt-A mortgages are yet to come...geez!

Saw a doc on south Florida and California...might pay to buy a log cabin in Alaska for decade or so. Write a murder mystery or something!

Not being negative, and I know the suffering will be severe, but perhaps in 10-15 years time the economics of the US might be very different. Perhaps in light of what has, is, and will happen, niche manufacturing may arise?! Something non-wage driven.

I know here in Australia we will be hit by cascading effects of whatever happens over there. Two major advantage we have though, is that once housing prices have contracted and plateau-off, Asian investors will start buying, and, primary industries will kick-off again in 5-10 years time (once the dust settles). This will boost our economy and the housing market will climb again.

In these times, it often pays to look toward future opportunities while dealing with daily issues. For all those who are investment minded; every region has its 'French Riviera'. Where will the Asian Riviera be? A central district 2-3 hrs flighing time from China, Singapore, hong Kong, India, etc. Food for thought, but, Phuket's housing market (through correct Thai governance) is still very strong. It has an international airport, is moderately westernised, close to Bangkok (another future player), and the international investment housing systems are already well established. Something for those on the look-out to consider in 10 years.

We've always been called "the lucky country"...we may yet be faced with the true realization of that statement in the years to come.

Cheers
Mark

[dpastern (Dave Pastern)]

Australia is not that lucky - we're far too reliant in primary resources, with almost no secondary industry. Australian manufactured products are generally expensive and poorly made when compared to overseas competitors. We have a good technology sector but unfortunately we don't really make the most of it like the US does.

Since we're so tightly knit with the US, we'll almost certainly go down very badly if the US economy collapses as I suspect it will. China must be laughing all the way to the bank now - they have US businesses established there in China, they almost certainly have work spies placed as well, who pretty much know all of the trade and manufacturing secrets from many industries (meaning China can always move to clones etc at any time it wants, and given their size and economy, who's going to dare argue with them?). US companies are already moving staff offshore to save a buck, and if wasn't for that, there'd be an even worse US economic scene. The wealthy are trying to return their wealth, but at the expense of the US economy and US people. These rich mongrels have no compatriotism to the US, they'll move wherever the tax is lowest and they can keep the most profits, especially if they see the US economy going irreversibly South.

Dave

[Nesti (Mark)]

Originally Posted by dpastern

China must be laughing all the way to the bank now

The wealthy are trying to return their wealth, but at the expense of the US economy and US people.

These rich mongrels have no compatriotism to the US, they'll move wherever the tax is lowest and they can keep the most profits, especially if they see the US economy going irreversibly South.

Dave

I agree with you other comments Dave, but the ones I've left above, I don't.

I certainly don't think China's laughing...financially, they're very committed and although not in the same boat, are certainly going to suffer to a fair degree if a collapse situation arises.

Yes, the wealth certainly is trying get their investments back...wouldn't you? Hell I would, and fast. Without these investing entities, the would be no start-up in years to come. One could easily say that they need us and we need them.

Rich mongrels?! Yes there are more than just a few out there, however, there are many which are very considerate human beings. Many give generously, you (we) just don't see it. It all depends upon the individual. I believe that groups of people behave badly, individually, people are mostly wonderful.

The problem with our society is that it's so big...in that you don't have to see someone again if you've ripped them off. In a small village, you do, every day perhaps. So conscionable conduct is more prevalent.

Cheers
Mark

[dpastern (Dave Pastern)]

Mark - this is why I firmly believe that nature did not intend humans to live in such large, global societies. Big is not always better. Or as Master Yoda would say:

“Size matters not, ... Look at me. Judge me by size, do you?”

Dave

PS Couldn't help the Star Wars reference ;-)

[ian (Ian)]

i can't help thinking we are seeing the beginning of the end of the USA being the economic superpower. at the end of the day this may not mean a whole lot. its not as if the UK slipped into the third-world when the British Empire collapsed. if history teaches us anything it is that super-powers come and go.

in the 5 years i've lived here (i'm an Aussie married to a yank) i've seen a lot of the double-standard of the USA. what they preach in terms of freedom, freedom of speech, anyone being able to make good is simply untrue, the pressure to 'keep up with the jones', the untalked about censorship, and government spying on its people under the guise of the patriot act, the unimaginable level of white collar corruption. the gap between fantasy and reality is really astounding.

in Australia we are given the tools to succeed and if you work hard and do right you will succeed. in the USA you are given the tools of failure and you are working hard not to fail - there is a big difference. in Australia if you do slip through the net, there is a hand to keep you falling to far in terms of public health, you can live on the dole, if you're on the dole you can go to TAFE, etc, etc. none of this exists in the USA. if you slip through the net, you keep falling til you hit the gutter.

recession aside, as soon as we had our first kid last year we decided to return to Australia permanently. of course there are problems, we are a small country with limited economic power and reliance on other larger economies, but when your basic needs are so accessible, the way of life and average standard of living are much better, a government who feels obliged to support its populous (i say this in comparison to the USA governments complete lack of support) the country still so natural and beautiful and the peoples attitudes so realistic - its a formula, if not for success, then at least for getting by in a dignified manner.

[multiweb (Marc)]

Originally Posted by ian

... the way of life and average standard of living are much better ...

Hear hear. Oz land is the place to be. When my wife dragged me here on holiday back in 1994 to visit her family I went back home straight away and filled in to migrate. Was too good to be true and still is Got my house, my business and I still pinch myself in the morning thinking "wake up"

[Nesti (Mark)]

Originally Posted by dpastern

Mark - this is why I firmly believe that nature did not intend humans to live in such large, global societies. Big is not always better. Or as Master Yoda would say:

“Size matters not, ... Look at me. Judge me by size, do you?”

Dave

PS Couldn't help the Star Wars reference ;-)

I concur, 100%!

We need smaller communities, I feel we have exceeded type of natural order, density or something like that.

As for Yoda...oh my?! ***burring face in hands***

[dpastern (Dave Pastern)]

hee hee!

Love Yoda quotes you must.

Dave