International experts foresee collapse of U.S. economy

[George W. Bush]

Read the article at: http://www.intelligencer.ca/ArticleDisplay.aspx?e=918803

Also http://hielema.ca/columns for other reads.

Very interesting indeed.

What is happening in the US - to this extent as of yet - has certainly created a lot of waves around the world, and the problems we have heard and read in the US are just a scratch of the real and perhaps the big problems still awaiting them, and the other economies which will suffer because of it.

Here are a few quotes from the above article, that I found interesting, and worth thinking and doing a little more research about.

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(1) ---------

"...how the losses of the American financial system will grow to more than $1 trillion - that's one million times $1 million. That amount is equal to all the assets of all American banks."

(2) ---------

"With unemployment growing, the next phase will hit commercial real estate making the financial institutions the unwilling owners not only of quickly depreciating houses, but also of empty strip malls and even larger shopping centres."

(3) ---------

"What we will have, instead, is truly a global momentous threat - a true turning point affecting the entire planet and questioning the very foundations of the international system upon which the world was organized in the last decades."

(4) ---------

"It continues to predict that, although this crucial event is global, it will be the beginning of an economic 'decoupling' between the U.S. and the rest of the world. However, non 'decoupled' economies will be dragged down the U.S. negative spiral."

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It will continue to be interesting to see what happens with their economy. Last month, or example they lost about 65 000 jobs, whereas we gained 40 000 or so - even if all part-time, etc.

I personally was suspicious of the US economy as of early 2007 - the more propaganda you hear from the US government of "we have lower unemployment", "better economy", the worse things are... I get a feeling they say good things when in reality the opposite is true...

We will see what happens with their economy - it is very fragile indeed, and it could snap... anyone can see that...

[Valek]

Yay Bush! Look what he's done!

[jcoltage]

I love you - I am doing an essay thats due tomr on this very topic ...

My essay will profile the current declining course of the United States of America in its economic and military global authority, the essay will also examine their current economic policies in the 21st century and other growing nations which may pose a threat to the United States dominance in world order.

Thanks man

[PMech]

This expectation pretty much puts the death sentence on the economy..

Investors are going to start hoarding assets, exports in the US market will fall more so, coupled with the appreciation of all other wolrd wide currency against its already shambled dollar.

Plus more Canadian banks are in the process of re-changing rates again for summer, and π + πe = r, which is gonna bang em based on this article

[George W. Bush]

Plus more Canadian banks are in the process of re-changing rates again for summer, and π + πe = r, which is gonna bang em based on this article

What do you mean by "re-changing" rates - the Canadian rates have gone down a little, and so have mortgage rates (about .10% or so).

I also read that the US Federal Reserve will "pump" $200 BILLION (ie. print more fiat money backed by, well, paper...)... WOW... the idiocity...

http://biz.yahoo.com/ap/080311/wall_street.html

[hugh_da_man]

The problem with these predictions is that they usually look at the worst outcome.

If the American economy falls apart then so does the economy of almost every major exporter. No country consumes as much as the US so bye bye to exports. I think almost every country will do their best to prop up the American economy. It's crucial to the growth of the world economy.

Without anyone doing anything I think the Americans would be in for hard times but I really doubt that will happen.

[alsamman]

**** happens, everyone gets their 10 minutes of fame until someone better comes along to take over.
China anyone?

[JeiJei]

U.S. economy collapse is inevitable in my opinion.

Their debt is too high to even just pay the interest off. The economy has been maintained mainly based on the credit or demand/purchasing power that US has along last couple of decades.

However, if US collapses (as a whole, lead by poor economic), before another great power takes over, the downfall of the US has to happen and expect around 20~50 years for this. During this period, the world economy is likely to shift, from export raw materials (petro, iron.. etc) to increasing efficiency of current tech as demand for raw materials is likely to fall without the big demand from the US (think China won't be able to sell all its production out, hence production level will decrease)

My economic sense somehow tells me the next US-like economic superpower will be a mid-east country or Japan. China is less likely as although demand is increasing, overall purchasing power is still low and without US demand, the economic expansion of China will be slower if not idling.

[alsamman]

U.S. economy collapse is inevitable in my opinion.

Their debt is too high to even just pay the interest off. The economy has been maintained mainly based on the credit or demand/purchasing power that US has along last couple of decades.

However, if US collapses (as a whole, lead by poor economic), before another great power takes over, the downfall of the US has to happen and expect around 20~50 years for this. During this period, the world economy is likely to shift, from export raw materials (petro, iron.. etc) to increasing efficiency of current tech as demand for raw materials is likely to fall without the big demand from the US (think China won't be able to sell all its production out, hence production level will decrease)

My economic sense somehow tells me the next US-like economic superpower will be a mid-east country or Japan. China is less likely as although demand is increasing, overall purchasing power is still low and without US demand, the economic expansion of China will be slower if not idling.
I find that it is unlikely for Japan to become a superpower because of the fact that the most important thing in maintaining superpower status is military strength and area. Japan is too small to defend itself against all other countries in the world because a country that small can be beaten by just numbers because of the limited land that posses.

A superpower in the middle east is very possible but I don't think it will ever be in ONE country. All these countries are predominantly Muslim and that is the only way they can become powerful. A powerful middle east can only be brought if Muslims all united which is unlikely to happen in the near future. If they continue to fight against each other, they will bring each country back down to where they started showing very little progress in a stronger economy, military power, etc.

[gordholio]

The US is heading for disaster and of course it will affect the whole world. The US has such a massive debt and trade deficit and shrinking dollar.

[gei]

oh brother. every kid likes to predict the "collapse" of the us economy these days. apparently it's the chic thing to do.

fact of the matter is the us is and will continue to be the economic powerhouse of the world... by a TREMENDOUSLY huge margin. if you check your history books you will see the us has held much bigger debts then it has currently, and has always been able to recover.

just like they will do this time.

[gordholio]

oh brother. every kid likes to predict the "collapse" of the us economy these days. apparently it's the chic thing to do.

fact of the matter is the us is and will continue to be the economic powerhouse of the world... by a TREMENDOUSLY huge margin. if you check your history books you will see the us has held much bigger debts then it has currently, and has always been able to recover.

just like they will do this time.

Of course the US is the biggest economy in the world, but ignore the signs at your own peril. The US has been living on borrowed time with a very high debt and extremely high trade deficits. This can't keep going on forever. Something has to give. I'm not a kid by the way, I'm almost 45. Things don't just continue on forever; changes happen and countries rise and fall. Just because we haven't seen the fall of the US doesn't mean things will just carry on and the US will be the eminent power it has been for the past 60 or so years.

[JeiJei]

fact of the matter is the us is and will continue to be the economic powerhouse of the world... by a TREMENDOUSLY huge margin. if you check your history books you will see the us has held much bigger debts then it has currently, and has always been able to recover.

just like they will do this time.

Hehe, it's just an economist dream to see such an economic idol as US falls. Much like what's happening to Britney. :p

Back to topic, US will surely recover, it's the basic idea of economic high and lows. Look at Argentina for example, they are doing great after the crisis. This is the nature pattern.

I am simply predicting the downfall of US being the economic superpower in the world, but US will surely remain as one of the major players in this game.

US economy collapse this time will lead to a shift of interest or degree of dependence for US (specially export-oriented country) from other countries. By the time of the shift being completed (20~50 years) US dominance in world market will then be less dominant. And some other countries, given the right execution being made, may be able to become the superpower (economically) as US is now.

[Justin]

**** happens, everyone gets their 10 minutes of fame until someone better comes along to take over.
China anyone?

I hope that never happens. Sure, many people hate the US but most of them probably hate China more.

[Efx]

Won't happen. As long as OIL is traded with US dollar.

[aras]

I wouldn't care about US except that us Canadians are sleeping with that fat elephant. When that body hits the ground, we're in for quite an earthquake.

[soulflare]

Won't happen. As long as OIL is traded with US dollar.

Iran's campaigning hard to switch that over to the Euro, hence the real reason behind all the current war rhetoric.

[moebius]

It is in Chinese interest that US economy don't falter:
"At the end of 2005, China, with $820 billion in such assets, was the second-largest holder of U.S. debt after Japan, which held about $10 billion more."
I couldn't find newer figure, but I am sure it's more. The Chinese have also been stockpiling gold for years.
The Chinese will control US economy (and not only economy!)

[mart242]

It is in Chinese interest that US economy don't falter:
"At the end of 2005, China, with $820 billion in such assets, was the second-largest holder of U.S. debt after Japan, which held about $10 billion more."
I couldn't find newer figure, but I am sure it's more. The Chinese have also been stockpiling gold for years.
The Chinese will control US economy (and not only economy!)

They can pretty much kill the US economy if they start selling the US dollars they have..

[hagbard]

What do you mean by "re-changing" rates - the Canadian rates have gone down a little, and so have mortgage rates (about .10% or so).

I also read that the US Federal Reserve will "pump" $200 BILLION (ie. print more fiat money backed by, well, paper...)... WOW... the idiocity...

http://biz.yahoo.com/ap/080311/wall_street.html

Just listen to any speech Ron Paul has made on the Fed. BTW, when the US economy goes, so does everyone elses.

[st7860]

They can pretty much kill the US economy if they start selling the US dollars they have..

that would be really funny if they do.

[jcoltage]

Iran's campaigning hard to switch that over to the Euro, hence the real reason behind all the current war rhetoric.

Actually Oil is trade in 3 forms

NY- Sweet Crude http://www.nymex.com/lsco_pre_agree.aspx Most Common
Britain Brent North Sea http://www.econstats.com/fut/xnym_ea3.htm Also widely traded very similar to NyMex Crude but offf by 2 dollars at most.
And as of last year - Oman Oil http://omrpublic.iea.org/Prices/Cr_MA_01.pdf Somewhat traded in ME and China

[ZenOps]

China has been stockpiling gold and platinum. Its important to note platinum as it actually has for more uses and value than gold does.

The US and Euro currencies are more tied to gold. The Asian currencies are about equally tied to platinum.

China has always held north america at arms length. Its probably a cultural thing, as most of China before the Chin dynasty was feudal and brutal, and I don't think anyone was willing to do another societal cleansing like that. IE: Leave it up to the Spanairds to cull the native populations.

[dark169]

I love how people claim its china's turn when their current status as up and comer is thanks to the US. China is basically leveraged against the US perforamce, so the US does good china does better, problem is china hasn't seen what happens when their #1 customer (by far) suffers, they will suffer more. The wealth accumulated during the upswing may dampen the downswing but should it be an extended downcycle I wouldn't bet on china as being the one that pulls the world out of the slump.

China is still a second world country and is decades from equaling the EU or US.

Iran can attempt to switch oil to the eruo or gold for that matter, it doesn't change the fact that the US is the number 1 consumer of oil, that will be the driver in how oil is traded.

[ZenOps]

Whoa, I wouldn't say China is behind the US or the UK.

The GDP numbers that is so fondly used in a UK/US wealth system is still greatly real estate based. That being, that most of the world has an intrinsic value of about $5,000 per acre as farmland. Alberta is "rich" because of the per acre rating of natural gas and oil under it, not because the person on top of it is a farmer that has crooked teeth because he cant afford dental insurance.

The housing meltdown is exactly that, overvalued land (half a million for a decent sized home) that many people got in far too over their heads trying to achieve. With excessive pollution its actually possible to have a negative value rating for land, which some of the US is now encountering. IE: Simpsons episode where they pollute the town so badly, they decide to put the town buildings on wheels and move it 5 miles down the road.

You can go to the US right now in nearly any industrial city and buy a multistory factory for $1. It will cost you probably a few million just to bring it up to minimum safety code (which they will require you to do) and on top of that have to pay taxes while you are doing it... It would just be cheaper to build a new factory from scratch in an open field and try again.

Like anywhere else, you have your Idahoan potato farmer who can't afford minimal health care and a New Yorker who doesn't have to lift a finger and still makes money. The US has much wealthier individuals, especially in the three major hubs of Calfornia, New York and Texas, but everywhere else is relatively poor. China has the one big hub, built much like Rome in its roadway system, but also many areas of specialization. And in general does not have as much of a gap between the ultra rich and desperately poor.

There was a time when economic prosperity was measured in the amount of energy used per capita (The amount of fuel you used, whether for actual work or just for the sake of using it) Now I think people actually want to see something tangible for the energy use, instead of just bombing around in cars to and from work (pretending that travel time actually is work.)

[gordholio]

Won't happen. As long as OIL is traded with US dollar.

How long will that continue? Countries are already talking about switching to other currencies such as the Euro.

[jcoltage]

China has been stockpiling gold and platinum. Its important to note platinum as it actually has for more uses and value than gold does.

The US and Euro currencies are more tied to gold. The Asian currencies are about equally tied to platinum.

China has always held north america at arms length. Its probably a cultural thing, as most of China before the Chin dynasty was feudal and brutal, and I don't think anyone was willing to do another societal cleansing like that. IE: Leave it up to the Spanairds to cull the native populations.

Yes you are correct US dollar is tied to the Gold Standard (former FIAT Standard) most people (like myself are getting out of the greenback (massive inflation)) and going to sliver or another metal if you can afford gold go for it. But 1 thing is that if the US fails China will fail too as will Japan but India and Russia will be safe since it is pretty isloated from US markets India has only 5% GDP trade to the US and Russia 3% - Allen Greenspans Book Chapter 14 -22 talks so much about this ... must read..

oh and Canada - might as well change the title to Cdn/US.

[abu_sme]

It's all cyclical. The US is, and will continue to be a world power for a long time. I've read that China won't have an economy as big as the US until 2050. The deliberate devaluation of the US dollar will equalize things and the US will bounce back.

[najibs]

I blame Bush. When he came to office Clinton left a budget SURPLUS of who knows how many hundreds of billions of dollars, but now, there's a trillion dollar defecit? How were Americans so dumb to re-elect this dumb cowboy back in 2004? Now the country is in ruins thanks to an idiot cowboy who just wants war and oil...way to go America!

[Smoked]

1929!

[st7860]

I blame Bush.

george or laura's ?

[najibs]

george or laura's ?

Barbara's

[abu_sme]

I blame Bush. When he came to office Clinton left a budget SURPLUS of who knows how many hundreds of billions of dollars, but now, there's a trillion dollar defecit? How were Americans so dumb to re-elect this dumb cowboy back in 2004? Now the country is in ruins thanks to an idiot cowboy who just wants war and oil...way to go America!

Bush is a small part of it and the deficit has ballooned, but the US has been in worse fiscal shape before. Much of the problems come from the mortgage meltdown in the US. Banks have been forced to write-down much of their assets. The scariest possibility would be a bank run in the US. This would be devastating. It would be a real test to see how well the FDIC handle the situation.

There are many more checks and balances. If worst comes to worst the US government will bail out the banks, print more money, and create some inflation, but we won't have anything like the 1930s.

[nahim.a.a]

If US economy collapses, China would turn into a third world impoverished country overnight. China is rich because it sells and makes stuff for mostly US consumers.

And I would take US any day as world superpower than China... If China becomes the world superpower, then we're all screwed big time. And say goodbye to western civilization and its legacy of democracy and human rights.

[ZenOps]

What surprises me is how in line with Chinas policies the Vatican is at now.

Its now a Catholic sin to be obsenely rich (Just in case you missed the other thread) Which means in no small words that if you don't start giving away your money you are just as bad as a drug dealer - and without mixing words - going straight to hell.

If that doesn't have the right shaking in their boots I don't know what does. At least they are still in line with the concraceptives being a sin, and now genetic modifications.

China has been doing more genetic engineering than the US as of late (The genetically engineered glow in the dark animals, and corn infused with fish genes - Is scary as heck to me)

As for human rights - China has never had a Eugenics program, but it looks like they are ramping up a human genetic engineering program. Which IMO is definitely the wrong way to be doing things. It smacks way too much of Germany late 1930's - which ended up being the worst case of humanity this century.

[AirBosh]

This an interesting read on the Derivative "Ticking Time Bomb"

"Buffett and Gross warn: $516 trillion bubble is a disaster waiting to happen"

http://www.marketwatch.com/news/story/derivatives-new-ticking-time-bomb/story.aspx?guid=%7BB9E54A5D%2D4796%2D4D0D%2DAC9E%2 DD9124B59D436%7D