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Is a USA Economic Collapse Due in 2005?


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#21 Eric

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Posted 27 September 2004 - 08:40 PM

What coconut01 said. What do you have to say about that...huh? :P
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#22 Pliny

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Posted 27 September 2004 - 10:38 PM

Originally posted by coconut01
Hello..

It is a historical fact that the US$ is based on land, and not publicly held land, privately held land it always has been. The economy is defined by Gross Domestic Output. The tax system that supports the government is based on income, but many of the systems are supported by user fees. Like the highway system is based on fuel volume, as fuel use goes up more revenue is produced more roads are built land values go up the US$ goes up.

The business cycle is and has always been based on agriculture. That is why the global recessions occur at the time of the solar maximum. It is because when the sun expands it doesn-t rain as much and crop failures increase.

The efficiency of road construction is in the reduction of crop loss to market.



I note a lot of private land has been mortgaged and re-mortgaged of late. Also the instability of Fannie Mae and Freddie Mac has been the subject of some talk in economic circles of late. Could affect ownership of privately owned land.

We'll see how high mortgage rates go in the next year?

As for the rest, you could say the business cycle was based on the seasons and not particularly agriculture. Are you a farmer?
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#23 Shilka

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Posted 28 September 2004 - 12:02 AM

"Private Land" is a bit of a myth. Forget to pay your landtax and see how long "your land" remains yours.
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#24 coconut01

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Posted 28 September 2004 - 01:51 AM

Originally posted by Shilka
"Private Land" is a bit of a myth. Forget to pay your landtax and see how long "your land" remains yours.



(7) seven years, Then it goes to auction the owner has the first right to bid. If not a tax deed is issued that can be bought for fair value for a period of (7) years. After that the deed becomes fee simple.
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#25 coconut01

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Posted 28 September 2004 - 02:07 AM

Originally posted by Pliny
I note a lot of private land has been mortgaged and re-mortgaged of late. Also the instability of Fannie Mae and Freddie Mac has been the subject of some talk in economic circles of late. Could affect ownership of privately owned land.

We'll see how high mortgage rates go in the next year?

As for the rest, you could say the business cycle was based on the seasons and not particularly agriculture. Are you a farmer?




Humans are creatures that respond to change. Interest rates can go down that stimulates buying. Interest rates can go up that also stimulates buying. When interest rates don-t move buyers hesitate in anticipation. Mortgage Rates are a function of transfer volumn as is equity value.


The solar maximum cycle is between 10 and 12 years. I am not a farmer, but I know that alot of farm product can be lost on the way to market because of bumpy roads, in Russia it is about 30 percent. That is all profit.
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#26 seanus

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Posted 28 September 2004 - 02:12 AM

One thing is for certain. Europe has enough to feed it's people.
And they will stick it out together if push comes to shove They have experience enduring difficult times . Russia and Asia have to same characteristics. In contrast,
the US citizens are spoiled and will not tolerate to see their standard of living shrink drastically. This country does not not have the same social fabric it once had, and civil unrest is to be expeted. Look for finger pointing towards Mexican workers and so on...
Just wait it'll next season when it comes time to buy milk, orange juice for the kids..
Prices will are going to go through the roof . That coupled with uncertain gas prices, and folks are not going to smile very long.
How many more hurricanes do you think the US can sustain?
Money does not grow on trees , even in America.
Somehow, somewhere, people are going to feel a serious pinch.
Look for the US to invade another country to steal their resources, in order to avoid social chaos at home...
Irak will prove to costly to pump oil out, and Iran will get their nukes just in time (hopefully) to make an invasion impossible.
Tough times ahead America...
Remember the "grapes of wrath" anyone?
Seanus
PS LOL
well perhaps America will not sink as low as the great depression era anytime soon, but do not discount countries binding together and boycotting american goods , and this effect on the economy here.
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#27 Pliny

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Posted 28 September 2004 - 03:14 AM

Originally posted by coconut01
(7) seven years, Then it goes to auction the owner has the first right to bid. If not a tax deed is issued that can be bought for fair value for a period of (7) years. After that the deed becomes fee simple.


Ever see "The House of Sand and Fog". I don't recommend it. It is very depressing. Well acted and produced but a depressing story.
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#28 ganapati

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Posted 28 September 2004 - 10:11 AM

Originally posted by Eric
Only the morons of which there are many here.


Whatever makes you feel better :)

Originally posted by coconut01
It is a historical fact that the US$ is based on land, and not publicly held land, privately held land it always has been. The economy is defined by Gross Domestic Output.

Every stable currency is based on the volume of commerce in the country, also called the GDP. There are two parts to GDP, goods and services. A stable economy is one in which the demand and availability of any commodity or service never decreases unless there is a replacement commodity or service for it. But all of that is internal business.

If a country imports from others and exports to other countries, the stability of its economy is also dependent on the balance of trade. As long as the US$ remains the international reserve currency the US can pile up huge debt (free goods and services)without fearing any problem. This helped a boom in the economy while its manufcaturing base kept going down steadily. When Japan accumulated trillions of dollars as trade surplus, the US forced them to use up their trade surplus through a threat of punitive trade sanctions. Since there was little that Japan could buy from the US, they decided to invest the money in the US economy by moving some of the manufacturing to US as well as buying up some of the US companies.

This time round the situation is slightly different. The country that is piling up huge trade surplus is China and unlike Japan, China has a lot of room for increasing internal consumption. They are not in a hurry to invest their savings in the US market. But the catch is that US no longer has anything to export that China is interested in. This means China has to turn to other countries to use these US$ to buy things they need. This will in turn push up the prices of those commodities. This will mean China will try to rid itself of its trade surplus even faster for other useful raw materials. This cycle will mean no one will be interested in trading in US$ anymore which also means end of free lunch for US. The US can no longer pile up any debt, it has to pay for its imports from its export revenue. Since there is a huge gap between its imports and exports, it can no longer import at the same rate it did so far.

There are two ways the US can handle that situation. It can cut the demand for imported items by pushing up the prices of those commodities, which will in turn lead to an overall increase in inflation and an economic crash or create a crash of the economy by bursting the real estate bubble and hence reduced demand for all things including imported items. Either way, an economic collapse is inevitable.

The stage was set for this when the US moved from a manufacturing economy to a service economy, supported by the OPEC selling crude for US$. Yes, US is a robust economy with each guy doing the other's laundry and getting paid for it. But when you need something from those outside US, just showing how rich you are exchanging money in this fashion doesn't help. Since the others don't care for you to do their laundry either, you can't get what you want, not any longer. How you adjust to this new reality is entirely your business. But if the recent actions of your government are any indication, you are in for a very rough ride in the future.

The tax system that supports the government is based on income, but many of the systems are supported by user fees. Like the highway system is based on fuel volume, as fuel use goes up more revenue is produced more roads are built land values go up the US$ goes up.

Yup, you can push up the value of US$ even by inventing new "services" like paying each other for internet discussions, but that doesn't count when you want things others have.

The business cycle is and has always been based on agriculture. That is why the global recessions occur at the time of the solar maximum. It is because when the sun expands it doesn-t rain as much and crop failures increase.

The efficiency of road construction is in the reduction of crop loss to market.

I guess then you don't need Chinese goods or OPEC oil or even care what the international reserve currency is!

I like the attitude :) Since there is nothing you can do about it anyway, why not imagine that everything is rosy and is going to be so forever! Your leaders are showing by example!
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#29 Eric

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Posted 28 September 2004 - 12:54 PM

the US citizens are spoiled

You know that is popular to say but I never see evidence of it. I think because of the materialism Americans may be thought of as spoiled but spoiled is an attitude not a thing.

Gas prices are record high but Americans seem to be taking it in stride.

Remember the power outtage in New York City when all those people had to walk miles to get home? Some countries laughed at their temporary misfortune but New Yorkers plodded home without any problems in a very congenial and civilized way.

I see plenty of greedy and materialistic Americans but not necessarily so many spoiled Americans.
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#30 seanus

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Posted 28 September 2004 - 05:29 PM

Originally posted by Eric
the US citizens are spoiled

You know that is popular to say but I never see evidence of it. I think because of the materialism Americans may be thought of as spoiled but spoiled is an attitude not a thing.

Gas prices are record high but Americans seem to be taking it in stride.

Remember the power outtage in New York City when all those people had to walk miles to get home? Some countries laughed at their temporary misfortune but New Yorkers plodded home without any problems in a very congenial and civilized way.

I see plenty of greedy and materialistic Americans but not necessarily so many spoiled Americans.



I am making observations based on my experience . Writting things that are popular is not my agenda. Who knows what's popular and what is not , anyhow ?
Of course one can refute anything that is printed here but denial is also one of the main American shortcomings.
Hypocrisy would be in the top three alongside arrogance.
As far as the NY city incident, it lasted what? a couple of days? Big deal. (please name the countries that made fun of NYorkers)
Everyone can act civil for that short period of time.
I am sure that this does not reflect on what would happened if the situation would worsen, and last much longer.
I do recall the last outage, and the reaction was completely different. with stores being louted...etc.
If and when prices go through the roof, as they will for food next year, Americans will not be so patient.
Gas prices are being absorbed because citizens are making due or a bad situation ,
( BTW, I also stand by my opinion that the majority of Americans think Bush was right for invading Iraq because they do realize that oil prices should go down eventually ) while not spending of other goods.
Sooner or later, this economy will come to a halt .
My main point was that America NEEDS outside markets to survive, more than other blocks such as he EU for example.
When times are hard, what counts is how much cash you have on hand, to pull you throught , Americans have more debts per capita than anyone on earth, therefore, no moneys to buy goods.
That is why the US NEEDS foreign investments to keep afloat . What happens if other countries refuse to play ball any longer?
tough times ahead, regarding what anyone thinks
Seanus
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#31 ahmad

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Posted 28 September 2004 - 09:33 PM

I posted this on the Main Board. Read it and become educated.

____
The only foreign investors exiting U.S. equities and bonds are hedge funds and private investors. And these entities tend to trade their portfolios, moving in and out of the dollar. The central banks, however, remain invested in the United States, the reason being that there is no alternative in other economies. Political instabilities do not cause central governments to exit their investments unless that political instability is home-based i.e. in Washington. Damascus and Tehran are not players.

The other important factor for continued investment is the declining dollar. Investments are cheap in the U.S. and a turnaround in the dollar is more than likely within the next five years. This means that investors pouring currency into the U.S. now are in a prime position to capitalize on their investment five to ten years from now.

The dollar may be losing value relative to, say, the yen, but dollar bonds still give a better overall return than their yen-denominated alternatives because they have a higher yield. If the yield on dollar assets rises to persuade international money managers to keep them, dollar assets will remain worthwhile investments even in a weak-dollar environment.

Transitioning to Euro denominated investments is unlikely because of two fundamental weaknesses in the Euro as a reserve currency. The first is that it is a most unusual construct, the currency of an area with 12 national governments. Unless a fully-fledged political union emerges in Europe -- the euro will be handicapped in its competition with the dollar. The dollar would have to be extremely weak over a long period for the euro to overcome the unattractiveness inherent in the circumstances of its birth.

The euro's second weakness is more deep-seated. The nations of the Eurozone face an unprecedented economic and social challenge in the early 21st century from demographic trends. Not only will the number of old people be rising relative to the working-age population, but the working-age population will be falling in most of the eurozone's members. From the late 2010s the fall will exceed 1% a year in some countries, severely restricting economic growth. The contrast with the USA, where immigration seems likely to cause labour force expansion more or less indefinitely, is marked. Their different demographic patterns imply that the USA will increase in economic importance compared with the Eurozone in the opening decades of the 21st century.

In sum, investment monies move in and out of the U.S. economy, but the moving average, or trend indicator, has remained stable and is not expected to change.


__________________
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#32 Auld Nick

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Posted 28 September 2004 - 11:15 PM

The Chinese, sadly, may not share your confidence. Two economists = three theories?


(Copied from a Glooscap contribution on News board. Attribution at end of extract)



The dominance of United States dollars in the mainland's foreign exchange reserves poses a serious financial risk to the country, the China Daily warned.

A likely continuing fall in the dollar's value will cause substantial financial losses for the mainland unless policy makers reduce the high proportion of dollars in the country's foreign reserves, the editorial, by Jiang Ruiping, director of China Foreign Affairs University's Department of International Economics, said.

The editorial recommended that policy makers trim the ratio of US dollars in the foreign reserves in favour of the euro and the Japanese yen to avert the impact of a possible "US dollar crisis'' on China's economy.

"It is becoming more and more evident that the possibility of a further slump of the US dollar is increasing,'' the editorial said.

"To ward off foreign exchange risks, China needs to readjust the current structure, increasing the proportion of the euro in its foreign exchange reserves.''

The recent weakness of the dollar had wiped out more than US$10 billion (HK$78 billion) from the mainland's foreign exchange reserves, the editorial said, adding that more losses are likely unless the current reserve currency configuration is altered.

At the moment, US dollars make up two-thirds of the reserves.

The mainland had total foreign exchange reserves of US$483 billion at the end of July.

While Jiang's editorial portrays the dollar's slide as a threat to China's foreign reserves, it overlooks the role played by the weaker dollar in fuelling growth due to the de facto yuan peg.

The yuan is fully convertible only on the trade account, and even then is kept within a tight band of around 8.2777 to the dollar.

Trade partners including the US and Japan have criticised the yuan peg for giving China an unfair trade advantage by making its exports cheaper, as the yuan's value slid in tandem with that of the dollar over the past year.

That has helped power a 35.8 per cent year-on-year rise in exports to US$360.59 billion in the first eight months of this year.



The editorial warned that the investment of most of China's foreign exchange reserves in US treasury bonds also posed "great political risks''.

But it did not elaborate further on this._
http://www.thestanda...a/FI29Ad05.html
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#33 coconut01

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Posted 29 September 2004 - 02:33 AM

Your economics book is older than mine Ganapati.

I guess then you don't need Chinese goods or OPEC oil or even care what the international reserve currency is!


The US government spends 8 billion dollars a year on environmental protection. The trade deficit is twice that. I think that you are having trouble scaling the size of this economy. Before the last recession there was 30 trillion dollars in the stock market. When that market tanked the money didn-t vaporize a third of it is still in the market, but a lot of it is still in cash.

The cost efficiency of oil as a fuel starts to dwindle as the cost of gas (fuel for cars) reaches $2.20 in the US. At that point there are technologies on the shelf that have pre-production cost in that neighborhood. The US is seeking a global economy not because it can-t be self sustaining, but because it is attractive. No one lives a Spartan existence in the US not even the military. The people of the world have oil and they want to sell it. It is bought because it is cheep. The US has just shelved it-s third generation of rechargeable batteries. Think about it.
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#34 seanus

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Posted 29 September 2004 - 02:33 AM

The dollar would have to be extremely weak over a long period for the euro to overcome the unattractiveness inherent in the circumstances of its birth.]quote


I am sorry to say that this souds like gibberish to me.
You speak the language of the bankers and would be world famous economist . This may sound good on paper, but the fact is that you just cannot ignore the human factor in all of this .
When enought people have no jobs. and cannot afford a gallon of milk to feed their little ones, they do not care one iota if the yen is stronger that the US dollar, or that something inherently wrong happened at the Euro's birth?
Give me a brake...
Seanus
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#35 Pliny

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Posted 29 September 2004 - 03:36 AM

Originally posted by Seanus:
Who knows what's popular and what is not , anyhow ?


Ask any lib-left socialist do-gooder! Make sure you have lots of time.

The dollar would have to be extremely weak over a long period for the euro to overcome the unattractiveness inherent in the circumstances of its birth.

Spoken like a true central banker. Deserves a star from Alan Greenspan.

The "unattractiveness inherent in the circumstances of it's birth" are currently being handled.
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#36 ganapati

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Posted 29 September 2004 - 10:06 AM

Originally posted by coconut01
Your economics book is older than mine Ganapati.

It is. Its a few thousand years old and called 'common sense'. Looks like yours needs a revision.

The US government spends 8 billion dollars a year on environmental protection. The trade deficit is twice that. I think that you are having trouble scaling the size of this economy. Before the last recession there was 30 trillion dollars in the stock market. When that market tanked the money didn-t vaporize a third of it is still in the market, but a lot of it is still in cash.

The volume of cash you want to generate and feel "rich" is your business. When you have a presistent trade deficit, you need to convince the others that you can return something that they value at least in future. If you don't need those things that is fine. But going by your adventures in the Middle East, looks like you need them and need them pretty bad. Also looking at how well the same adventures are going, doesn't look like you are succeeding.

The cost efficiency of oil as a fuel starts to dwindle as the cost of gas (fuel for cars) reaches $2.20 in the US. At that point there are technologies on the shelf that have pre-production cost in that neighborhood.

Have you heard of "peak oil"? Take a look at this site. I wonder why I don't see these wonderful technologies in action in any significant manner. You can also take a look at this site to see what the status of these other worderful technologies is and what the impact of "peak oil" would be.

The US is seeking a global economy not because it can-t be self sustaining, but because it is attractive.

Yeah, right! You'll know very soon, how a "self-sufficient" US looks like.

No one lives a Spartan existence in the US not even the military.

I noticed that. I lived there for a while.

The people of the world have oil and they want to sell it.

They want to sell it in US$? Considering the efforts spent to maintain the hegemony of the US$ as the reserve currency, that sounds convincing.

It is bought because it is cheep.

Also because it costs nothing. Just a few US$ bills, that can be generated at will.

The US has just shelved it-s third generation of rechargeable batteries. Think about it.


Now, you think about it!
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#37 coconut01

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Posted 01 October 2004 - 12:37 AM

The US GDP is about $10 trillion compared to that the trade deficit is lunch money.

Regulation of the US lunch money can be done at the expense of free trade, but free trade will bring global per capita income up and make our high tech manufacturing affordable for export assuming that global development makes the block on overseas shipping of high end technology nonsequitur.

Product life cycle add that to your lexicon. Oil is going the way of the Twinkie. I hope you like plastic. You can
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#38 Pliny

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Posted 01 October 2004 - 03:41 AM

Sounds like Coconut 01 went to the same school as Stilicho!
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#39 coconut01

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Posted 01 October 2004 - 10:16 AM

I SAID: The US GDP is about $10 trillion compared to that the trade deficit is lunch money.



I meant that the trade deficit is more like the tax on my lunch money.
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#40 raffphi

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Posted 01 October 2004 - 10:57 AM

No , not before 2008 , if Bush is reelected............!

It will be at the same time at the world Oil crisis!
;)
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