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[QUOTE=Riverm]1. The national debt of the United States is accelerating rapidly and all forecasts call for increasing acceleration to pay for the retiring baby boomers (the rate of change is more important than the current ratio) Our balance of payments deficit continuously expands as we keep buying things on credit and display a negative rate of savings (a binge, no less) Once again, wars and terrorism are unbelievably expensive: consider Vietnam, which is beginning to look small, and how the stock market and economy reacted in the early 70s (Dow at 700)
2. The financial gamesmanship whereby Social Security and other trust funds have been looted for every available dollar is one of the clearest signs of the national dilemma that anyone could cite. Debt is debt, whether t-bills or IOUs to Social Security.
3. Yes, Japan could be in big trouble. Everyone holding dollars loses, and the more dollars you hold, the more you lose. As for China, it is clear that the Chinese economic policy is lockstep with its military / political strategy: prop up the dollar in the short run so that it is a better target in the long run. To China, the United States is Bozo the Clown.
4. The only reason that the dollar has not corrected itself naturally is that the entire world has been using it as the universal currency. The point is: when they stop using it as the universal currency, everyone will sell dollars just as fast as they can. The longer the game is played, the worse will be the outcome.[/QUOTE]I don't believe that anyone will have cause for mass disposition of the US dollar unless its buying power is greatly undermined at a national level or if its supply spirals out of control. The value of money is tied primarily to the amount of existence and the strength of the economy of its issuing country and therefore its purchasing power there. The US economy is still the most productive, efficient and stable in the world with extremely high quality standards.
A mass selloff of the dollar would actually be of benefit to the economy because the US is largely self sufficient. The likely counter reaction by the Fed to raise interests rates and curtail lending on the other hand which if done to sufficient levels will have a devastating effect on the US economy.
In any case it will be a metidulously orchestrated event long in the making, much like the great depression and designed to fleece the people of their property with all kinds of stage props and scapegoats to blame ensuring that the guilty are never held accountable.
Goblin
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[QUOTE=Moore]Well maybe I will invest some money in a Buenos Aires apartment after all.
And, in a disasterous USA situation, wouldnt some powerful, forward-thinking country invade / liberate the USA and solve its problems - for its own good and for the benefit of mankind?;)
PS I believe that a commentary from Exon would be appropriate here.[/QUOTE]I think the US needs to be liberated from its republican dictatorship right now. Take a look at the patriot act, domestic survailance and the concentration camps program. We're liberating Iraq who's liberating us?
Goblin
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My question for the guys preaching horrible gloom and doom for the US dollar and economy (I know there are a lot):
Assuming you're American, have you moved significant (majority) of your assets to foreign markets or durables?
It seems that many people don't practice what they preach.
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[QUOTE=Moore]My question for the guys preaching horrible gloom and doom for the US dollar and economy (I know there are a lot):
Assuming you're American, have you moved significant (majority) of your assets to foreign markets or durables?
It seems that many people don't practice what they preach.[/QUOTE]Moore,
Good point. I picked up a slice of an international bond fund yesterday that is not hedged, and designed to make hay if the dollar plummets. I got out of most of my tech dinosaur holdings. Most of the doomsayers are screaming gold and commodities in general, but as we know, that group of folks are always talking up commodities regardless of the economic climate. In addition, there has been alot of "momentum" buying in commodities lately. So, if you go there now, at these prices, and you end up being WRONG, you could be waiting a LONG time to recoup your money. Dipping your toe in a little is probably the way to go. All that said, I got savaged in 2001, so what do I know.
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[QUOTE=Goblin]The US economy is still the most productive, efficient and stable in the world with extremely high quality standards.
A mass selloff of the dollar would actually be of benefit to the economy because the US is largely self sufficient. [/QUOTE]The US economy is still one of the most productive ones, but not necessarily one of the most competitive ones. All of the low-added-value manufacturing sectors have been moving to SE Asia, a process almost completed by now (look at any Wal-Mart where do most of the goods come from) That pattern is being imitated now for high-added-value manufacturing and even for high-added-value services.
Because of its cultural and institutional advantages respect to some other countries such as China or India (reliable justice, not-that-stinky public administration, controlled corruption, etc) the US can still overcome its lack of competitiveness. However, how long would it last, given that salaries across the Pacific Ocean command a fraction of those at the States?
There's a book that explains a similar pattern experienced in the hard-disk industry during the 60s, 70s and 80s, written by Harvard professor Clayton Christensen (Technology Dilemma or such) Its parallelism to rich countries macroeconomics is shocking.
As of the US as self sufficient, it doesn't hold for raw material needs, specially energy. The US imports 90% of its oil. If the Euro becomes the oil trading currency and international prices are set for the US, Americans would have to pay €1 per liter (USD 4.50 per gallon) as Europeans do. I cannot imagine the consequences of such increase in oil prices to the US economy.
Andres
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[QUOTE=Andres]
As of the US as self sufficient, it doesn't hold for raw material needs, specially energy. The US imports 90% of its oil. If the Euro becomes the oil trading currency and international prices are set for the US, Americans would have to pay €1 per liter (USD 4.50 per gallon) as Europeans do. I cannot imagine the consequences of such increase in oil prices to the US economy.
Andres[/QUOTE]I have to disagree with my friend Andres here. When it comes to energy, the U.S. really only imports oil. Natural gas and coal are almost 100% domestic in origin, counting Canada, the 51st state, in the mix. of that portion it's mostly gas - 14% of American natural gas comes from Canada.
And the U.S. Doesn't import 90% of its oil, it imports 60%. The largest proportion of imports come from, again, Canada. (Mexico is #2). Which in my book hardly counts as imports, when you consider that the United States, Canada, and Mexico are part of a common market. The U.S. actually [b]exports[/b] almost as much crude oil as it imports from Saudi Arabia (1 million barrels a day exported vs. 1.4 million a day imported from Saudi).
Europeans pay the much higher gasoline prices that they do because of [b]taxes[/b] imposed by socialist governments. The Euro/Dollar relationship has nothing to do with this.
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oil
Andres,
About gas prices in Europe, I have to disagree with you.
First, it would be nice if we would pay 1? Per liter. Unfortunately, it is? 1.25 (in Germany) And, about 80% of that is taxes - mineral oil tax and VAT.
And, Hunt, not every government that is left of George W. Is socialist. European governments of all color have long since discovered the motorist as main contributor to "public" funds, Maggie Thatcher as well as Francois Mitterand.
El Alemán
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[QUOTE=Moore]My question for the guys preaching horrible gloom and doom for the US dollar and economy (I know there are a lot):
Assuming you're American, have you moved significant (majority) of your assets to foreign markets or durables?
It seems that many people don't practice what they preach.[/QUOTE]My modest liquid assets are leveraged to the hilt in gold stocks, mostly Canadian, to avoid political problems. It's not as stupid as it sounds, given a relatively sound retirement plan.
Actually, I'm rather sorry I got into this financial argument. I hang out on this forum to get ideas about having a good time in Argentina. On reflection I got sucked into the argument by Goblin's critique of finance-based critique of what is, for most of us, our favorite avocation: seeking beautiful women who practice the world's oldest profession. So this is my last financial post. What the hell do I know, anyway? I do promise to post concerning my experiences on my upcoming trip to BA and, maybe, Mar del Plata. I play to have a lot of fun with the dollar at 3.07 vs. The peso. That's something I know about.
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[QUOTE=Papa Benito]Particularly, stockbrokers, forum posters, real estate salespeople, etc. Make your own educated decisions.[/QUOTE]I concurr. I personally trust in my financial advisor, and let him make the decisions for the most part.
As far as gold goes, it is a good way to balance your investments against catastrophic doomsday scenarios, and times of crisis, but hasn't been a good investment in general. Unless you are certain of emminent doom, investing more than a few percent of your overall wealth in gold can be very costly.
For example, if you bought gold during the early 1980's it would now be worth approximately 60% of what its now worth. The Dow Jones Industrial average on the other hand is about 1300% of what it was in 1980.
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Doomsday scenarios.
Any crisis can be created or averted it's merely a question of political will. In politics nothing happens by accident but by design be that the plummeting of the dollar or the trading of oil in another currency.
When it happens it will benefit its creators who are taking advantage of a populace as blind to economic and political realities as some are to how unfair and unreasonable it is to treat chicas like dead meat.
Anyway I can not see the international community switching to the Euro except by political design. The Euro has a fraction of the purchasing power of the US dollar. European economies are less efficient bogged down with taxation, heavy bureaucratic overhead and in many cases ideological quality standards that are not cost effective, not to mention that most of the highly industrialized european countries have almost no raw materials.
Small example. In Germany it takes a year to apply for a residential building permit the cost of which is $15,000 EU because of all the municipal control mechanisms. It' is a society obsessed with controlling and examining every detail of economic activity.
I think the value of the Euro is artificially maintained, there is no sound economic basis for it. Most of Europe is in a recession and the people there have a fraction of the US standard of living.
Goblin
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Europe. Recession
I think the value of the Euro is artificially maintained, there is no sound economic basis for it. Most of Europe is in a recession and the people there have a fraction of the US standard of living.
Goblin[/QUOTE]Would it be possible to expand a little on this, which actual countries are in recession and have a fraction of US living standards.
Would they include what I would class as the main countries of Europe ie England, France, Germany, Spain.
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FH,
Good to see you back on the board. I thought you got plunked in the head at the Stones concert!
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[QUOTE=Hunt99]Europeans pay the much higher gasoline prices that they do because of [b]taxes[/b] imposed by socialist governments. The Euro / Dollar relationship has nothing to do with this.[/QUOTE]I acknowledge that. What I meant is that the US may have serious trouble when consumers would have to pay a lot for gas (be it for tax reasons or not)
Andres
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[QUOTE=Flexible Horn]I think the value of the Euro is artificially maintained, there is no sound economic basis for it. Most of Europe is in a recession and the people there have a fraction of the US standard of living.
Goblin Would it be possible to expand a little on this, which actual countries are in recession and have a fraction of US living standards.
Would they include what I would class as the main countries of Europe ie England, France, Germany, Spain.[/QUOTE]It would include the main countries like England, Germany, Italy. I'm not sure about France but I know that Spain is booming right now. There appears to be an effort to equalize the economic performance of these countries by lowering the output of highly productive ones like Germany and stimulating countries that have previously been "lazy" (too many siestas) to harmonize all european nations into an equal economic system.
It would also obviously include European nations that have traditionally been poor and well below the income levels of the United States. Everything in Europe is very expensive and after tax disposal and discretionary incomes are a fraction of what people earn in the US. Business opportunities are limited, unemployment is very high despite of a far more qualified labour force and a much better system of eduction at all schooling levels. I lived in Europe for many years and have many friends there so I know what I'm talking about.
Professional and vocational standards are far more demanding as are required levels of education.
Goblin