Posted on 11/27/2004 1:07:30 AM PST by jb6
You have got to get past this silly idea that Soros can,in real terms, effect the cumulative debt instruments of the U.S.Government which in the aggregate exceeds 35 trillion dollars. Even Bill Gatess worth in excess of 100 billion does not and could not in real terms effect the crescendo of effects this country and the world are about to experience. Remember we borrow 2.6 billion dollars per day. Therefore in about 45 days the 100 billion has bought you 45 days of interest. The vast wealth of this country is held by the middle class and therefore that is who is taxed. The federal government has prespent 35-40 trillion of the middle classes money, and now, understanding that we cannot pay the debt, the loaners are no longer loaning money to the debtor nation. Wake up and see what has happened. You and I cannot change it. The best we can do is protect ourselves from it and if you are astute profit from it. Few will do this because we are paralysed by our incredulity that it can happen in America. Well it is not a matter that it might happen. It is happening, now. Its is like a person who has colon cancer. At first the polyp is small and does not cause any pressure or obstructive signs. Then the polyp causesd dysplasia then anaplasia and therefore cancer, but it is small and there are no outward signs. But the paitient does have cancer. It grows and begins the process of showing a few signs,..a little blood in the stool, a little constipation. The patient still gets up and goes to work and feels relatively well,... but he has cancer. Then after 24-36 months there is a sharp cramping and bloating of the abdomen. X=rays show an obstrutive bowel. CT scan is done and there is metastasis to the regional lymph nodes or it may only show a mass effect in the colon. Now we have the diagnosis which has been present for 2 or 3 years... It has been getting worse when we did not realize it. It was getting worse when the signs of bloody stool and perhaps a few mild cramps occurred but we went on our way. And today we know we have what we have had for years. Now we have to act or all is lost on this earthly plain. Our economy has a very large problem and the medicine men have packed up their wagons and are moving on. The price will be paid in diluted dollars and unimaginable mysery of millions who will loose in real terms their ability to pay the rent,pay the note on the house, pay the note on the car. This is the prodigal son in the hog pen. Remember this.. ALL DEBTS ARE PAID. Not most, but all. Some in money, some in loss, some in devaluation, much in heartache,mysery, and grief.
re: If they pull their money
Where would they put it? Aren't we still just about the only nation on earth with honest assets to back investments? I'm serious, I don't understand all this. Don't we still produce more goods and services than any other people in the world?
It seems to me that if the Fed wants to stop the dollar from falling further then it will have to raise interest rates. There has to be an interest rate that would convince people to hold dollars and loan them out rather than converting to Euros for example. Then again, maybe the Fed doesn't want to keep the dollar from falling until they see some reductions in imports and improvement in exports from the U.S.
My personal interest in all of this is the potential impact on the bond market and the likely timing of any movement. If interest rates are heading up and fast then cash is king. If inflation is heading up then real estate is king. If both are heading up we are going back to the miserable days of Jimmy Carter.
What do you think?
Personally, I'd rather (excuse the word) be long on property, as we are in a world economy. I just acquired a rental condo with an interest only mortgage (no principal payback), in essence, shorting the dollar for the amount of the mortgage. Neat deal because after interest, taxes, maintenance, I have a positive cash flow from the get go. The pre-construction purchase handed me a capital gain already if I so choose. Not bragging, just suggesting an opportunity; every cloud has a silver lining.
An outstanding point. And who has been in power these last 3 years, and what have they done to stem this?
I'm sure you'll have an insightful reply, absent any political bias.
The weak dollar is not a good thing if you are debtor nation either. They boys and girls in Congress are running up massive debt keeping up the status quo of 95% incumbency. Well over a third of the debt is being financed by foreigners. The money they make on their investments is in dollars, if the dollars they make represents less value to them then in order to finance the debt that Americans are unwillingly to finance, interest rates will have to rise. Rising interest rates for our public debt will have a chilling effect. Rising interest rates will also have a stifling effect on the housing market which has been the brightest part of our economy the last few years.
The records lows in the dollar do not necessarily have an immeditate effect. And obviously unforseen world events could cause currencies to do a variety of things. But if the dollar keeping trending the way it has, every American will feel its effect in some way.
Interest rates, in Alan Greenspan's world move in 25 basis point increments. Given todays debt and inflation rates he is peeing into the ocean. That type of dedication to solving the debt problem shows there is no resolve to tackle this problem.I believe in order to demonstrate the the loaner nations we are serious he would need to raise interest rates in the immediate period by 500 basis points. This, he will not do. This would dry up loans to buisnesses, housing, all consumable items in this country and who stop the economy in its tracks. Therefore he will not do this. What he will do and is doing is allowing the debt to be diluted by the effect of a falling dollar. Let me give you an example. The Japanese, about 4 months ago bought 20,000,000,000. This shored up the dollar from about USDX of 88 to 90.5 for about 10 days , then the dollar fell again. Then the Swiss joined in again drove the dollar up by dumping gold. That has stopped. Now Bush met with the G-7 about 2 weeks before the election, where he petitioned them the allow the dollar to fall (most of these currencies are pegged to the dollar so falling dollar would proportionally cause their denominated currency to fall).Now even Greenspan is not trying to talk up the dollar. Secretary Snow last week said he thought the dollar was strong in the face of it falling from 88 to 83 over the past 3 weeks. It is true the government wants a weaker dollar so we can export and put more pressures on foreign imports, but this is high stakes poker. If the slide becomes a freefall, and I think it has, Greenspan,Snow,Bush are not going to be in the drivers seat. It will be bloody and savage and our creditors do not take prisoners. At this time I absolutely fear the bond market. Inflation will destroy their value. YOu may wake up and find your bonds worth 50% of what you were told they would sell for.
The American consumer,in all of his glorious ignorance about the economy and history of monitization of the debt time after time after time, is responsible. I suppose you want me to say President Bush. I shutter to think what Al Gore or John Kerry would do. I do fault the Republican congress substantially, but to think a Democrat house and senate would have been constrained is material for comic books. I would remind those who are smug about the U.S.A being in this fix, even Democrats are in the same lifeboat. You can delegate blame all you want and it will be sound and fury signifying nothing. If you are a democrat and I am a Republican, we debate issues, disagree or agree and formulate policy. I can't help but believe that even a Democrat, in his right mind, would recognize a little thing called 9-11. The war in Iraq is another issue people can debate. But we out here in the hinterland have the luxury of not knowing what President Bush knows. But I do believe we can rely on his fundamental decency. Surely you did the math on the proposals Kerry put forth. Insanity. Even you, as a democrat, need to see what is coming. Please guard yourself.
I assume you were shuddering.
I suppose you want me to say President Bush
He's one of the culprits.
I do fault the Republican congress substantially
You should. People who were elected to get the house in order are supposed to do just that.
Even you, as a democrat
That's hilarious! When you and your relatives were voting Democrat in the "Solid South" my family had been Republicans since the 1850's (well, a lot of the Southerners, and there are a lot of them, were still Democrats). That is beyond funny!
See ya junior. Word to the wise: short the dollar. Now.
That is what I'm afraid of. For a 50% drop to happen, however, I think we would have to have something like a doubling of interest rates. It doesn't seem likely to me that this would be sudden. We should see it coming. Interest rates have remained low for much longer than most of us believed possible. This isn't all just the Fed. The Fed doesn't really control interest rates completely. The market will have it's way and right now it is keeping the rates down. I don't really understand why and how.
It will also kill us when we buy oil. The problem is, not that the dollar is falling, ok that's a problem, but that Bush & Co are spending just like the leftes. At the rate of $2.5 billion in debt each and every day. So, to keep borrowing (gads, imagine the crazy idea of cutting spending!) and to keep borrowing (almost all of which is foreign since we here don't save anything) rates must keep going up and up and that will halt all economic growth. Government is the death of the economy. Something the Russians learned with the soviet economic disaster.
The EUros might be screwed, but the Chinese will simply nationalize US factories there and that's that, those companies who own those factories will go out of business with further ups US unemployment.
Risk isn't, not since Roosvelt "reformed" the banking system by backing all the deposits and credit line with the Federal Bank. The risk was gone and so was the responsability, since the tax payer picks up the tab. Remember the Savings and Loans disaster?
Risk isn't, not since Roosvelt "reformed" the banking system by backing all the deposits and credit line with the Federal Bank. The risk was gone and so was the responsability, since the tax payer picks up the tab. Remember the Savings and Loans disaster?
I can PROMISE you that I have seen many wells drilled and capped in the Gulf of Mexico, and these wells can produce at high volumes. They were capped off (and still are) waiting for the price of crude to get to the point of maximum profit... Natural Gas wells too.
I have fished many times off of these dormant rigs.
Yes, we are indeed producing in the Gulf of Mexico. What we are not doing, unless I missed something, is allowing any drilling near the coast of Florida. I believe that the closest allowed is 100 miles from Florida's Gulf Coast, indicated on this pdf file.
Here is a web page from May 2004 about the current situation.
A truelly brilliant idea except for one problem: the government can't stop its spending and borrow 80% from over seas, thus interest rates must go up to keep credit coming and that in itself topples the whole house of cards.
No, it won't, that's because Levi are made in Russia now not in America.
Iran has already gone there and Russia and Saudi Arabia are under massive EU pressure. There's the West for you, except it's not Our West but Old Europe West. Just like Yuschenko in Ukraine is Old Europe West, he's already said he'll screw us as the first thing in Iraq, just like his French/German masters want.
When oil is to expensive to drive, who is going to get their cars repaired? If there is mass unemployment, who has money to pay you? You are directly dependent upon the salaries of everyone above in the economic pyramid.
I fully agree, the problem is, we sent all our pretty factories over to China and retrained our people is space station management. URG!!!
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