Thread: This Is Bloody Different

Serious question; Who thinks that the US might be about to be a third world has been?

Isn't that what passes for modern economic theory these days - privatise the profits and socialise the losses??

I recon the first people they should get money off are the CEO's who have been making an average of $15 million p/a in salary. They want performance pay - well how about paying back for non-performance, not just some wimpy "Sob...I didn't get my extra $5 million performance pay just 'cuz I crashed the economy...it's not fair, sob, sob, choke...! I need a drink - pass the 1787 Chateau Lafite please...."

At the very least, a few dozen senior bank officials should be looking at having their rewards packages hard-limited to say, $50,000 pa for the rest of their lives.

But as they say - "You owe the bank $50,000 - you have a problem; owe the bank $50 million - the bank has a problem."

For the last couple of days I've been pondering the bleetings reported in the media of the hedge fund managers about how unfair the ban on short selling is. To my way of thinking these people are complaining about losing out on the proceeds of gambling that have no real place in a sustainable economic model. Meanwhile at the same time the media also reports the plight of farmers etc who can't secure a wholesale price that is more than .0001% above cost of production, while the retail price includes a 400+% markup.

I don't understand.

I'm sure there is a reason China should bail out the US. It has after all surgically removed most of the production process out of the western economy, albeit because of western greed in cutting costs at the expense of local jobs. We are all also part of the equation, each happily consuming our own quota of cheap imported goods.

This whole issue is however probably just the next (logical) quantum step in entrenching a consistent worldwide economy, which is probably the best thing for future generations.

Originally Posted by 46150

As i see it.Uncle Sam is down the tube economically and wants Congress to bail the banks out to the tune of 720 billion bucks.Where,you might ask is all this dosh coming from?Print more paper? Wrong! They are going to ask China for a little loan.
This must be some sort of a statistic......Communism bailing out Capitalism...or have i got it all wrong................? .........AL

have you got it all wrong? well I don't know ...

but the local news carried a story two days ago about how McDonalds couldn't roll-over a business loan
not because McDonalds was seen as high risk, but because the bank was hoarding cash against it's CDO exposure and had no cash to lend to any business.


a couple weeks of that and it'll be the great depression all over again



ian

Probably confirmation of the theory that "demographics is destiny."

Just look at the numbers. China's population is about four times that of the USA, and they're rushing headlong into first-world prosperity, pretty much by the old tried-and-true methods. In the colonial era, the major powers of Europe all used the slogan, "The sun never sets ..." The late nineteenth and first half of the twentieth centuries belonged to Merrie Olde; second half of the 20th was USA's. The 21st will probably be China's, until they do a fubar.

Joe

I have studied both Economics and Economic History and came to the conclusion that Economics is NOT a science.

Let me put a simple fact before you. A man spends like a drunken sailor and gets into debt. His creditors don't worry because they say, He's buying from us and we are lending him the money to do so. We win both ways. We sell and we collect interest on the money we lend him."
What happens when the debtor gets so far behind that he cannot pay his debts?

I know the story I put is over simplification, but that is the situation with the US at the moment. The lenders won't pull the plug immediately because they have to collect their debts. Same things happen when a company is sliding towards bankruptcy. The creditors try at first to allow the company to trade it's way out of debt.

There is however another factor in the possible demise of the USA. That factor is negative production. The maintenance of a standing army and the pursuit of war is negative production.

Joe says the nineteenth century was England's century, however with the unification of Germany the scales were beginning to alter.

The twentieth century was Europe's massive period of negative production and the US benefited enormously in economic terms from those wars.

America's present decline has one of it's roots in three war's; Vietnam,Iraq and Afghanistan. I am deliberately leaving out the Sub Prime issue. Also in it's total lack of understanding of any war where there are no set battles. The British, at the height of Imperial power tried to conquer Afghanistan. They had colonised the rest of the world so this would be easy. Result? Failure. You cannot fight an idea. Remember the British had a long background and experience of playing one side off against another. The Russians tried and failed. A couple of years ago the American military announced proudly that the Taliban was defeated. No one told the Taliban.
Remember Vietnam? Even now I have heard American politicians say they have never lost a war. Never cut and run. The French Foreign Legion which was a highly trained professional fighting force failed in Vietnam. The Americans didn't fail, they had victory in strategic retreat.

American industry has relied on it's armaments industry to fund it's armed forces, but the production tide is turning. Russian and Chinese weapons are competing .

I could enter the argument of Friedman economics versus Keynes, but this would develop into a full blown discussion that is already being argued.

My argument here was on an area that few are even considering as a contributing factor in America's possible demise as the World Power. It is however one that history has shown to be very important

Jerry

His creditors don't worry because they say, He's buying from us and we are lending him the money to do so. We win both ways. We sell and we collect interest on the money we lend him."

How you get interest Isaac?