Financial Crisis

[Naam]

As for the biggest debtor nation...sure...in regards to overall total debt. But as you know, the debt to GDP ratio is a more relevant number:

I know many use that reason but I have never really understood it or considered it relevant

GDP = private consumption + gross investment + government spending + (exports − imports)

The reason I do not consider it relevant & especially so in the USA is the inclusion of Government spending.

How can we count what is putting us in the hole as anything positive?

nice example: every shot, grenade, hellfire rocket, smart bomb, cruise missile 'donated' to the Afghan or Iraqi people counts as GDP.

[craigt3365]

View Postcraigt3365, on 2011-07-26 08:27:49, said:

As for the biggest debtor nation...sure...in regards to overall total debt. But as you know, the debt to GDP ratio is a more relevant number:

for the record: Debt/GDP ratio is for actual debt evaluation as irrelevant as the uterus of a nun who vowed eternal celibacy. what counts are the ratios revenue/debt and revenue/debt service (no matter what some learned eggheads teach in famous universities).

as far as the Greatest Nation on Earth™ is concerned that ratio is...

Aside from your very unusual comparison, I agree. I'm not as concerned about the debt as I am about getting people back to work. Good example is China. They've got some big issues to deal with, but have the revenues to deal with them. The US does not.

[cloudhopper]

Interesting interview

http://www.nakedcapitalism.com/2011/07/ecri-expects-double-dip-scare.html

[Naam]

OH!

Well what does that mean?

The world's biggest debtor claims to be a resident economic power in Asia.

Come on then, what's the address?

the various addresses are the vaults of more than a dozen Asian central banks. being the biggest debtor also means being an economic power.

[craigt3365]

Interesting interview

http://www.nakedcapitalism.com/2011/07/ecri-expects-double-dip-scare.html

Excellent interview. The guy seems really sharp. Thanks for sharing!

But sure makes me worry about the future....

[Naam]

Interesting interview

Excellent interview. The guy seems really sharp. Thanks for sharing! But sure makes me worry about the future...

where is the sharp guy who gives sound advice how we little people protect our hard-earned savings from a "worrying future"? i don't mean the "sharp" guys who are advising us to sniff golddust for breakfast, eat an 18 ounce silver steak for lunch and swallow some KrügerRands or Eagles for dinner.

[craigt3365]

Interesting interview

Excellent interview. The guy seems really sharp. Thanks for sharing! But sure makes me worry about the future...

where is the sharp guy who gives sound advice how we little people protect our hard-earned savings from a "worrying future"? i don't mean the "sharp" guys who are advising us to sniff golddust for breakfast, eat an 18 ounce silver steak for lunch and swallow some KrügerRands or Eagles for dinner.

If you find that guy, please let me know!!!!! :jap:

[cloudhopper]

Another f-word sighting

http://maxkeiser.com/2011/07/28/kr168-keiser-report-ghettofication-of-america/

[cloudhopper]

oops wrong thread again moved to default

Edited July 30, 2011 by cloudhopper

[midas]

Another f-word sighting

http://maxkeiser.com/2011/07/28/kr168-keiser-report-ghettofication-of-america/

It makes me wonder how many other people there are like “Christophe “in the comments section? Here is a guy with exactly the skills that are needed in USA but who has simply dropped out of society in disgust.

[flying]

Another f-word sighting

http://maxkeiser.com/2011/07/28/kr168-keiser-report-ghettofication-of-america/

It makes me wonder how many other people there are like “Christophe “in the comments section? Here is a guy with exactly the skills that are needed in USA but who has simply dropped out of society in disgust.

There are many of us who after the original bailout said ....Ok that is it.

No Taxation Without Representation !

That day that the representatives voted our will which was NO BAILOUT

then later at the urgings of Bush,Obama,Paulson et al' went back & changed their vote...OUR VOTE to yes

is the day I said ok I see.

I am following through on my end of the deal.

[midas]

Another f-word sighting

http://maxkeiser.com/2011/07/28/kr168-keiser-report-ghettofication-of-america/

It makes me wonder how many other people there are like “Christophe “in the comments section? Here is a guy with exactly the skills that are needed in USA but who has simply dropped out of society in disgust.

There are many of us who after the original bailout said ....Ok that is it.

No Taxation Without Representation !

That day that the representatives voted our will which was NO BAILOUT

then later at the urgings of Bush,Obama,Paulson et al' went back & changed their vote...OUR VOTE to yes

is the day I said ok I see.

I am following through on my end of the deal.

well I hope everywhere doesn't turn into California where 0.5 percent of the people pay 50 percent of the taxes.

http://www.wnd.com/index.php?pageId=283033

[cloudhopper]

A view from the UK

http://news.bbc.co.uk/today/hi/today/newsid_9550000/9550990.stm

[craigt3365]

A view from the UK

http://news.bbc.co.uk/today/hi/today/newsid_9550000/9550990.stm

Thanks...but scary!

Another interesting article:

http://www.nytimes.com/2011/07/31/business/economy/sure-cure-for-debt-problems-is-economic-growth.html?nl=todaysheadlines&emc=globasasa24

[BlackJack]

A view from the UK

http://news.bbc.co.uk/today/hi/today/newsid_9550000/9550990.stm

Thanks...but scary!

Another interesting article:

http://www.nytimes.com/2011/07/31/business/economy/sure-cure-for-debt-problems-is-economic-growth.html?nl=todaysheadlines&emc=globasasa24

[craigt3365]

Looks like they may be getting close:

http://edition.cnn.com/2011/POLITICS/07/30/debt.talks/index.html?hpt=hp_t1

The framework of a tentative deal to raise the nation's debt ceiling calls for up to $2.8 trillion in total deficit reduction over the next decade, two sources familiar with the negotiations told CNN late Saturday night.

The agreement, still being negotiated by the White House and bipartisan congressional leaders, would allow the debt ceiling to be raised by enough to last at least through the end of 2012.

[cloudhopper]

Oh good news indeed - only 30 trillion in debt instead of 32.8 trillion by 2021.

Of course it will never turn out even that "well" but how sad that's the best future they could hope for.

[craigt3365]

Another interesting way to spin this...but makes sense:

http://moneyland.time.com/2011/07/15/the-u-s-is-not-drowning-in-debt/

What neither side seems to recognize — or at least acknowledge — is that what matters about the debt isn’t the dollar amount per se, but how much it costs us to service it. And by that measure, the debt isn’t nearly as big a problem as it’s being made out to be.

Yes, the federal debt has grown by nearly $3 trillion dollars in the past three years. And yes, the dollar amount of that debt is quite large (in excess of $14 trillion and headed toward $15 trillion should the ceiling be raised). But large numbers are not the problem. The U.S. has a large economy (slightly larger than that debt number). And, crucially, we have very low interest rates.

Because of those low rates, the amount the U.S. government pays to service its debt is, relative to the size of the economy, less than it was paying throughout the boom years of the 1980s and 1990s and for most of the last decade. The Congressional Budget Office estimates that net interest on the debt (which is what the government pays to service it) would be $225 billion for fiscal year 2011. The latest figures put that a bit higher, so let’s call it $250 billion. That’s about 1.6% of American output, which is lower than at any point since the 1970s – except for 2003 through 2005, when it was closer to 1.4%.

Under Ronald Reagan, the first George Bush, and Bill Clinton, payments on federal debt often got above 3% of GDP. Under Bush the second, payments were about where they are now. Yet suddenly, we are in a near collective hysteria.

[cloudhopper]

The U.S. has a large economy (slightly larger than that debt number). And, crucially, we have very low interest rates.

And, crucially, that remainder is contracting and interest rates have nowhere to go but up.

Here's how ZH sees the latest trial balloon deal.

"In other words, virtually the same as the Boehner deal in the actual cuts, which will likely be back-end loaded (we expect about $10-20 billion in 2012 cuts), but the Democrats get what they want in that it will not require a second debt ceiling hike before Obama's re-elecetion as $2.8 trillion should last well into 2013. As for "future cuts", well, that's easily what Congress is so very good at. Indefinite future cuts that is."

[midas]

Another interesting way to spin this...but makes sense:

http://moneyland.time.com/2011/07/15/the-u-s-is-not-drowning-in-debt/

What neither side seems to recognize — or at least acknowledge — is that what matters about the debt isn’t the dollar amount per se, but how much it costs us to service it. And by that measure, the debt isn’t nearly as big a problem as it’s being made out to be.

Yes, the federal debt has grown by nearly $3 trillion dollars in the past three years. And yes, the dollar amount of that debt is quite large (in excess of $14 trillion and headed toward $15 trillion should the ceiling be raised). But large numbers are not the problem. The U.S. has a large economy (slightly larger than that debt number). And, crucially, we have very low interest rates.

Because of those low rates, the amount the U.S. government pays to service its debt is, relative to the size of the economy, less than it was paying throughout the boom years of the 1980s and 1990s and for most of the last decade. The Congressional Budget Office estimates that net interest on the debt (which is what the government pays to service it) would be $225 billion for fiscal year 2011. The latest figures put that a bit higher, so let’s call it $250 billion. That’s about 1.6% of American output, which is lower than at any point since the 1970s – except for 2003 through 2005, when it was closer to 1.4%.

Under Ronald Reagan, the first George Bush, and Bill Clinton, payments on federal debt often got above 3% of GDP. Under Bush the second, payments were about where they are now. Yet suddenly, we are in a near collective hysteria.

" The U.S. has a large economy (slightly larger than that debt number). And, crucially, we have very low interest rates."

but this is hardly on a very solid footing when you consider US economy is 70% dependent on consumer spending ?in fact

I'd say the alarm bells should be well and truly ringing

[12DrinkMore]

At last, the number of foreclosed houses is being reduced....

http://www.bloomberg.com/video/73253562/

...by demolishing them.

The quality of the construction doesn't seem that great, what to they build them out of? Balsa wood?

[12DrinkMore]

Another interesting way to spin this...but makes sense:

http://moneyland.tim...owning-in-debt/

What neither side seems to recognize — or at least acknowledge — is that what matters about the debt isn't the dollar amount per se, but how much it costs us to service it. And by that measure, the debt isn't nearly as big a problem as it's being made out to be.

Yes, the federal debt has grown by nearly $3 trillion dollars in the past three years. And yes, the dollar amount of that debt is quite large (in excess of $14 trillion and headed toward $15 trillion should the ceiling be raised). But large numbers are not the problem. The U.S. has a large economy (slightly larger than that debt number). And, crucially, we have very low interest rates.

Because of those low rates, the amount the U.S. government pays to service its debt is, relative to the size of the economy, less than it was paying throughout the boom years of the 1980s and 1990s and for most of the last decade. The Congressional Budget Office estimates that net interest on the debt (which is what the government pays to service it) would be $225 billion for fiscal year 2011. The latest figures put that a bit higher, so let's call it $250 billion. That's about 1.6% of American output, which is lower than at any point since the 1970s – except for 2003 through 2005, when it was closer to 1.4%.

Under Ronald Reagan, the first George Bush, and Bill Clinton, payments on federal debt often got above 3% of GDP. Under Bush the second, payments were about where they are now. Yet suddenly, we are in a near collective hysteria.

Yep, the Bernank has driven down the interest rates by buying the debt.

The question is, once the kids have finished squabbling and more debt is to be issued, who will buy it up and at what price? Or will the Bernank move relentlessly onward with the so-called QE-3?

But in the end there is, of course, no problem in paying off the debt, as the US can print off its own USD's. But then there is the small problem of all the exporters to the US, who will possibly want something a bit more solid in return for their labour and goods.

Edited July 31, 2011 by 12DrinkMore

[12DrinkMore]

OH!

Well what does that mean?

The world's biggest debtor claims to be a resident economic power in Asia.

Come on then, what's the address?

the various addresses are the vaults of more than a dozen Asian central banks. being the biggest debtor also means being an economic power.

Yep, I realise that the US as massive consumer and Asia as producer puts them into an inseparable embrace. I would really like to know just where the balance currently is.

The Asians need to sell their stuff, but I suspect the biggest profits from selling that stuff end up in the US through the transport and sales margins, so who gains the most?

The US needs to sell their UST's, but for how much longer will they be bought up as a store of the Asians' productivity?

I would also like to how the losses incurred by central banks when holding a depreciating forex asset are reflected through into the economy of that country.

[craigt3365]

Some talking head on CNN was saying short term treasuries have gone up a tad, but that the longer term US investments have actually fallen. Is that true???

Problems in the US for sure, but the alternatives are not great either.

[midas]

But in the end there is, of course, no problem in paying off the debt, as the US can print off its own USD's. But then there is the small problem of all the exporters to the US, who will possibly want something a bit more solid in return for their labour and goods.

just listening to Neil Cavuto on Fox business News and his opinion is that based on the latest negotiations

he doesn't think it will " cut it " with the markets " because so many of the supposed cuts are far into the future.

Kick the can down the road again a bit longer

[12DrinkMore]

Great News!

http://www.telegraph...ax-revenue.html

Based on sources and other estimates, The Telegraph believes that as many as 16,000 jobs could be cut by investment banks across the Square Mile by the end of the calendar year

Estimates vary, but a 5pc reduction by the end of the year in the total number of "City-type" jobs is thought likely. This would equal a loss of about 16,000 jobs in the next five months.Based on an average salary of £150,000 and income tax of 50pc, employer national insurance of 2pc and employee national insurance of 2pc, this works out an average lost tax income per lost City job of £81,000, or a total loss of about £1.3bn in tax revenue.

The loss in terms of tax is very dubious. And the question has to be asked, who has been paying for their bloated salaries in the past? Surely not the 12% of the economy that actually produces stuff or the tax payers in bailing out the bastards?

If the leeches reckoned they could continue to pay ridiculous amounts for sucking out the cash from the rest of the economy, they would do so. Obviously this particular stone, namely the UK economy, is drying up. I would rather suggest that the UK will be far better off when it starts to produce stuff and not believe that the parasitic finance industry will continue to prop up the figures.

However 5% is NOT enough, how on earth can bond dealing result in so many jobsworthies?

A City analyst, who asked not to be named, said: "Bond trading since the beginning of the year has been tough but in the last two months volumes have collapsed. My guess is job cuts will begin in September".

Get rid of 80% and maybe the UK could make some progress.

The message is finally arriving

http://www.telegraph...dman-Sachs.html

Lansdowne Partners, Europe's biggest hedge fund, has sold its entire $850m (£517m) position in Goldman Sachs in a move that underlines growing concerns about the prospects for the global banking sector.

Something is surely afoot.

Edited July 31, 2011 by 12DrinkMore

[muchogra]

It's a good read here with many knowledgeable people.

There are cynics, theorists, and doers. I'm apparently out of my league here for I don't know many jargon. The only investment book that I have ever read is by Soro and the only things I remember are: 1. staying ahead of the curve 2. read just enough to make a decision - means execute.

I don't know if he's right. The first time I read that the hedge funds are ramming up on silver, the spot price was 18.5. Before you know it, in 2 months it went up to 40+. Then it mentioned the historical high was 50 something and then people were talking about going to 150. Hey, right, 49, got rid of it, a nice round number like 50 is no good for the first push.

Anyway, I want to ask if anyone here plays the derivative market in Thailand. If you do, what do your think?

[Naam]

The only investment book that I have ever read is by Soro...

and who, pray tell, is "Soro"?

[garrfeild]

After the Riots and Lynchings have subdued we'll have to start minding our own F***ing Business and develop some self interest and realise we are not a World Power anymore. A Bit of protectionism not unlike the Thais use wouldn't go a miss too.

Angry ? Me ? Too ******* Right.

Isolationism, appeasement and navel gazing didn't serve England too well when Chamberlain tried that route. Maybe the UK isn't a world power but it is in its economic and social interests to ensure that lunatics do not operate terrorist bases in Afghanistan and that it's energy suppliers in the middle east are not interfered with. As well, moral values are worth something. I wouldn't be too hard on the UK because it did the right thing at the time.

Protectionism? Bit too late for that. The house isn't just on fire, it burnt down in the 70's under Labour rule and the embers are cold. The British people gave up on their manufacturing industries years ago when they like everyone else in the west embraced the crappy but cheap goods that flowed out of asian and latin american sweatshops. I remember when I was a kid, my grandfather getting me a pair of oxfords and telling me that when he was a boy he had them and that the British made the best shoes in the world. Are there any shoe manufacturers left to protect now? I still have a woolen RAF scarf one of my family members used in WWII. Little bit worn and shrunk, but I doubt a chinese manufactured scarf would have lasted 65 years or so.

Chamberlain screwed up when he went to war too early against Germany, but isolationism did work prior to getting pally with the UN in Victoria's day. Britains gone downhill ever since.

Anybody who says Britain can't stand on its own two feet without Europe is either a traitor or misguided.

The Nowegians have managed it, so can Britain. It just takes a politician / leader with iron balls and vision. Which seems lacking in both parties.

The Thais can do it, and they have hardly any fuel reserves (gas aside)!!!

Britain can restart its manufacturing industry, its not like the switch stays turned off. One thing that we could start looking into is the hi-tech manufacturing industry - Medical equipment, precision parts etc.

There is a lot of opportunity but it needs bold deeds and actions. Not the bs same-old from the PTB.

We don't need Europe or the Euro, look what a fiasco that has turned out to be. Thank god the politicians are not stupid enough to join that. The UK can do without Europe for all the good it's done to be in it, there are plenty of other countries and regions we could do business with.

[12DrinkMore]

After the Riots and Lynchings have subdued we'll have to start minding our own F***ing Business and develop some self interest and realise we are not a World Power anymore. A Bit of protectionism not unlike the Thais use wouldn't go a miss too.

Angry ? Me ? Too ******* Right.

Isolationism, appeasement and navel gazing didn't serve England too well when Chamberlain tried that route. Maybe the UK isn't a world power but it is in its economic and social interests to ensure that lunatics do not operate terrorist bases in Afghanistan and that it's energy suppliers in the middle east are not interfered with. As well, moral values are worth something. I wouldn't be too hard on the UK because it did the right thing at the time.

Protectionism? Bit too late for that. The house isn't just on fire, it burnt down in the 70's under Labour rule and the embers are cold. The British people gave up on their manufacturing industries years ago when they like everyone else in the west embraced the crappy but cheap goods that flowed out of asian and latin american sweatshops. I remember when I was a kid, my grandfather getting me a pair of oxfords and telling me that when he was a boy he had them and that the British made the best shoes in the world. Are there any shoe manufacturers left to protect now? I still have a woolen RAF scarf one of my family members used in WWII. Little bit worn and shrunk, but I doubt a chinese manufactured scarf would have lasted 65 years or so.

Chamberlain screwed up when he went to war too early against Germany, but isolationism did work prior to getting pally with the UN in Victoria's day. Britains gone downhill ever since.

Anybody who says Britain can't stand on its own two feet without Europe is either a traitor or misguided.

The Nowegians have managed it, so can Britain. It just takes a politician / leader with iron balls and vision. Which seems lacking in both parties.

The Thais can do it, and they have hardly any fuel reserves (gas aside)!!!

Britain can restart its manufacturing industry, its not like the switch stays turned off. One thing that we could start looking into is the hi-tech manufacturing industry - Medical equipment, precision parts etc.

There is a lot of opportunity but it needs bold deeds and actions. Not the bs same-old from the PTB.

We don't need Europe or the Euro, look what a fiasco that has turned out to be. Thank god the politicians are not stupid enough to join that. The UK can do without Europe for all the good it's done to be in it, there are plenty of other countries and regions we could do business with.

Blimey, still a bit of pepper left in a few old Brits.... Thought it had all been extinguished.

I think you'll find that the UK politicians are well and truly involved in the Euro-Band wagon. Lots of expenses to be earned over there, you see.

And I think you'll find that Europe is the UK's biggest trading partner, so I wouldn't block off the Channel Tunnel just yet

The UK has dug itself into an almighty hole. Read this

http://www.tullettpr..._Report_007.pdf

and tell me which bit is inaccurate. (It is VERY depressing reading)

And, when you get to the end, please let me know if the title is apt?

I see this week that the financial services lot are now cutting jobs, was it not Brown who reckoned that the financial services was going to replace manufacturing as the main pillar of the UK economy? When that goes, what on earth, I mean in the UK, is left?

"oh, Jane, fink I'll go arrt an get binged ternite, naffin on tv agin".

"yeah luv, passus de fags, an bring me a bottle and take-away back will ya?"

"an doan fergitt ye hav ter be at the social termorer"

"urrrr"

Edited August 1, 2011 by 12DrinkMore