IS the US in Recession and whos fault is that? | Page 3 | Forex Factory

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IS the US in Recession and whos fault is that?

  • #41
  • Mar 18, 2008 6:10am Mar 18, 2008 6:10am
Quoting bunton
Well I don't know the guy, but he just talks sense. Or has a different perspective that most find it hard to believe (mainly the highly educated types). Amazing how some have had this shit all mapped out and yet it was shunned in public eye as being way out in left field. Well believe all is well if you wish.
He certainly has some good points.

Can I change my vote?

It's interesting that the poll choices are all short-term when the real reason is a system that was set up long before subprime or the war on terror.

Even the candidate for "change" won't really change anything in the big picture.
  • #42
  • Mar 18, 2008 3:21pm Mar 18, 2008 3:21pm
Last rant. I tried to stay positive but this did not last. Here is my last thoughts on the current economic meltdown.

The FeD cares less about saving the dollar and is only trying to save da banks. He is destroying this country and needs to be investigated. Bernake and sons could care less about America or the people.

Greenspan recently told nations in the Gulf to drop their currency pegs to the U.S. Dollar which encouraged a further drop in the U.S. Dollar.

I view this rate cut as the nail in the coffin as far as the dollar is concerned. You would think they wouls figure out the last cuts did not work. Wall street is having a nice party today as this will fuel a nice sell off. WTF are these people thinking. Our fearless leaders are so out of touch with reality they smell like Sh**.

There are even tent cities popping up in California. Of course the Federal Reserve can spend billions to bailout banks, but they won’t help the average middle class homeowner that might be thrown out into the streets as a result of what they did through their policies. When will people understand that the Federal Reserve is a private central bank that is merely looking to preserve the interests of the banking cartel?

At this point it seems pretty certain that we are facing an inflationary depression...

Peace oUt!!
Check Mate GAME OVER
  • #43
  • Mar 18, 2008 3:31pm Mar 18, 2008 3:31pm
Were you betting against the fed huh?
  • #44
  • Mar 18, 2008 3:33pm Mar 18, 2008 3:33pm
Quoting bunton
YES, and we very well might be at the tip of very negitive things to come. In fact I believe the USD will be replaced with sumfin like the Amero (Mexico,Canada, U.S.). Just another step closer to a new world order!!

HAHA cann't resists that one.

$ will never get replaced. Dream on
  • #45
  • Mar 18, 2008 3:53pm Mar 18, 2008 3:53pm
Quoting SunTrader
Were you betting against the fed huh?
No sir, I new he would please da street today.. Fools think sumfin had changed..hehehe
Check Mate GAME OVER
  • #46
  • Mar 18, 2008 3:54pm Mar 18, 2008 3:54pm
Quoting xxDavidxSxx
HAHA cann't resists that one.

$ will never get replaced. Dream on
It will happen maybe not in my life but it will happen
Check Mate GAME OVER
  • #47
  • Mar 18, 2008 3:56pm Mar 18, 2008 3:56pm
Here is a question


How important is China to the United States?
Check Mate GAME OVER
  • #48
  • Mar 18, 2008 4:09pm Mar 18, 2008 4:09pm
Quoting xxDavidxSxx
HAHA cann't resists that one.

$ will never get replaced. Dream on
Care to explain why.. Hell what will it be worth in a few years?
Check Mate GAME OVER
  • #49
  • Mar 18, 2008 4:31pm Mar 18, 2008 4:31pm
Quoting bunton
Care to explain why.. Hell what will it be worth in a few years?
50 cents....
its just money
  • #50
  • Mar 18, 2008 5:37pm Mar 18, 2008 5:37pm
Quoting Vensik
Hmm... you can vote for 2 choices. I chose yes, subprime and no, but it's getting there. There is no definitive line for a recession, but we are certainly close if not over it.

The disgusting thing is everyone trying to bail out these banks for making high risk loans. Maybe I don't understand something here but let me get this straight. You get to make more high risk loans. You get to charge HUGE interest rates for those loans, because they are high risk. You get to force the borrower to buy insurance for that loan, so you have nothing to lose but still get to make more on principle. When you screw that up, you get bailed out. Huh? Higher Risk = Higher Return. Hasn't that been the rule across most financial vehicles? How can you still get the higher return, but get bailed out when the risk bites you?
Well, it's like jumping from a 50-story building while knowing very well that you won't ever hit the ground dead...When you are so sure that there is always someone out there to rescue you, you will take whatever risk opportunities without having to worry about paying the price when everything is messed up...

Who's responsible for this? This is no question...In Egypt, we have a very famous saying: You brought up the Monster, you are responsible to get it away....So, it's the FEDs....They brought up the Monster of this credit crisis and they are the ones who will have to solve this mess out....The point is to solve it right to keep the integreity of the system....


Thanks,

Nader
  • #51
  • Mar 18, 2008 6:30pm Mar 18, 2008 6:30pm
Quoting bunton
Just The End of Your Way of Life?


It's not going to be over any time soon. The big question in my mind is whether the whole thing is about to go kaput or if we are just going to witness a continuous decay as the wealth shifts into a very small percentage of the population... as the middle class flames out. Again, that is a subject in itself. That is the subject of the Straussian nightmare; a change in the form of government that is pitched as the same thing as the old government.
So on top of this Wall Street genius of loaning money to people who could not pay, you have the cure for all this mess being printing more money (creating more debt). So they're going to fix a problem of too much debt by creating more debt. Perfect. They're even monetizing it by taking nearly worthless debt for brand new money created with the push of a button and an organized media campaign to tell you what they did and why it was good and why it was not monetization or covert nationalization of the banking system. It is what it is, call it what you want.
So the idea is that by pushing buttons you can cure these ills, but the reality is that big pile of new money is diluting the old money and sending the US dollar into the toilet. I mean, they're pitching it as all good, and what's left of the free markets are in sharp disagreement with the party line.

Mar 14, 2008
Craig Harris

Absolutely true....It has always been like this....Printing more money than your economy actually generates of REAL goods and services is totally destructive....I have always been worried about the status of an economy which is running in deficits and having policy makers being worried about funding such deficits with printing new money or raising new debt instead of producing REAL goods and services to turn the -ve into +ve...

Debt is always paid out, today, tomorrow or even in 10 years....The idea behind 30-years bonds is just delaying paying the debt as much as possible, selling a paper bond for a paper currency and paying the interest over the course of 30 years and then returning the principle amount at the end of the 30 years is totally crazy if you actually don't grow economically in a proportion way during those 30 years....

Can you imagine that 30-year bonds issued in the 80s are payable now??? How can you pay the principle right now if you are actually running in deficit except by priniting more money or selling another new 30-year bond to pay for the old one?

And here let me quote Paul Tudor Jones in the Market Wizards Interview about debt:

Q: Do you believe that October 1987 was an early warning signal of more negative times ahead?

A:I think the financial community, particularly Wall Street, was dealt a life-threatening blow on October 19, but they are in shock and don't realize it. I remember the time I got run over by a boat, and my backside was chewed up by the propeller. My first thought was, "Dammit, I just ruined my Sunday afternoon because I have to get stitched up." Because I was in shock, I didn't even realize how badly cut up I was until I saw the faces of my friends.

Everything gets destroyed a hundred times faster than it is built up. It takes one day to tear down something that might have taken ten years to build. If the economy starts to go with the kind of leverage that is in it, it will deteriorate so fast that people's heads will spin. I hate to believe it, but in my gut that is what I think is going to happen.


I know from studying history that credit eventually kills all great societies. We have essentially taken out our American Express card and said we are going to have a great time. Reagan made sure that the economy would be great during his term in office by borrowing our way into prosperity. We borrowed against the future, and soon we will have to pay.


Thanks,

Nader
  • #52
  • Mar 18, 2008 6:43pm Mar 18, 2008 6:43pm
The economy is and has been in recession for years now. The problem is that the standards for measuring economic health are changed almost as often as the Fed injects funny money into it. The whole thing reminds me of the 'find the pea under the shell game'. Now you understand it, now you don't.

So, who's to blame? IMHO, the culprit is a what, not a who. Corporatocracy funds the lobyists who hold Washington DC in a state of petrification. Corporatocracy allows the CEOs and political leaders to do as they wish with little fear of retribution as long as they don't go off on a crime fighting rampage or start standing up for ethical values. Corporatocracy dumps more money into Presidential campains than it does for the Senate or Congress. Why? They are hoping to buy a leader who will use the extrordinary power of veto to block any legislation that threatens corporate profits. Bush may as well change his name to Veto Corlione'. Corporatocracy looks only for quarterly earnings, with little or no regard for the long term effects of their self-serving actions. Of coarse, their close associates at the Fed provide ample protection through buy outs if their risky financial ventures threaten to expose them for the bumbling Keystone Cops they emulate.

Society as a whole should probably bare the brunt of responsibility for this recession. IMHO the best indicator of recession is not the GDP, but the average waist line of American citizens. When that starts to recede substantially, i'll be looking for depression, hyperinflation or stagflation. Only then will Washington really start to take this seriously.
  • #53
  • Mar 18, 2008 7:19pm Mar 18, 2008 7:19pm
People saying that when the Fed bails out Wall Street, the Banks and the S&L's in the 80's it is encouraging risk taking is kind of like those who think the death penalty really discourages murder. The death penalty only works in the case of the person executed. Pretty hard to kill when you are dead.

Killers don't think at the moment of pulling the trigger, gee I better not. And the flip side, banks etc. don't think, yeah I can do this high risk propostion because the Fed might jump in with buckets of money. Bear Stearns was #5 in the country, soon to be a part of JPMorganChase. If they had to do it all over I think they would have done things different so they could survive on their own.

Look up Drexel Burnham, Continental Illinois Bank and others that are no longer around. Chrysler Motors if not for loan guarantees would have been bye bye too. Too big or important to fail is a reality, whether some like it or not. For the overall economic well being to Wall Street and Main Street.
  • #54
  • Mar 18, 2008 7:31pm Mar 18, 2008 7:31pm
Very nicely stated Nader, Micro, and Sun...
Check Mate GAME OVER
  • #55
  • Mar 18, 2008 8:41pm Mar 18, 2008 8:41pm
The Collapse of American Power

By PAUL CRAIG ROBERTS
In his famous book, The Collapse of British Power (1972), Correlli Barnett reports that in the opening days of World War II Great Britain only had enough gold and foreign exchange to finance war expenditures for a few months. The British turned to the Americans to finance their ability to wage war. Barnett writes that this dependency signaled the end of British power.
From their inception, America's 21st century wars against Afghanistan and Iraq have been red ink wars financed by foreigners, principally the Chinese and Japanese, who purchase the US Treasury bonds that the US government issues to finance its red ink budgets.
The Bush administration forecasts a $410 billion federal budget deficit for this year, an indication that, as the US saving rate is approximately zero, the US is not only dependent on foreigners to finance its wars but also dependent on foreigners to finance part of the US government's domestic expenditures. Foreign borrowing is paying US government salaries--perhaps that of the President himself--or funding the expenditures of the various cabinet departments. Financially, the US is not an independent country.
The Bush administration's $410 billion deficit forecast is based on the unrealistic assumption of 2.7% GDP growth in 2008, whereas in actual fact the US economy has fallen into a recession that could be severe. There will be no 2.7% growth, and the actual deficit will be substantially larger than $410 billion.http://www.counterpunch.com/robertstyr.gif
Just as the government's budget is in disarray, so is the US dollar which continues to decline in value in relation to other currencies. The dollar is under pressure not only from budget deficits, but also from very large trade deficits and from inflation expectations resulting from the Federal Reserve's effort to stabilize the very troubled financial system with large injections of liquidity.
A troubled currency and financial system and large budget and trade deficits do not present an attractive face to creditors. Yet Washington in its hubris seems to believe that the US can forever rely on the Chinese, Japanese and Saudis to finance America's life beyond its means. Imagine the shock when the day arrives that a US Treasury auction of new debt instruments is not fully subscribed.
The US has squandered $500 billion dollars on a war that serves no American purpose. Moreover, the $500 billion is only the out-of-pocket costs. It does not include the replacement cost of the destroyed equipment, the future costs of care for veterans, the cost of the interests on the loans that have financed the war, or the lost US GDP from diverting scarce resources to war. Experts who are not part of the government's spin machine estimate the cost of the Iraq war to be as much as $3 trillion.
The Republican candidate for President said he would be content to continue the war for 100 years. With what resources? When America's creditors consider our behavior they see total fiscal irresponsibility. They see a deluded country that acts as if it is a privilege for foreigners to lend to it, and a deluded country that believes that foreigners will continue to accumulate US debt until the end of time.
The fact of the matter is that the US is bankrupt. David M. Walker, Comptroller General of the US and head of the Government Accountability Office, in his December 17, 2007, report to the US Congress on the financial statements of the US government noted that "the federal government did not maintain effective internal control over financial reporting (including safeguarding assets) and compliance with significant laws and regulations as of September 30, 2007." In everyday language, the US government cannot pass an audit.
Moreover, the GAO report pointed out that the accrued liabilities of the federal government "totaled approximately $53 trillion as of September 30, 2007." No funds have been set aside against this mind boggling liability.
Just so the reader understands, $53 trillion is $53,000 billion.
Frustrated by speaking to deaf ears, Walker recently resigned as head of the Government Accountability Office.
As of March 17, 2008, one Swiss franc is worth more than $1 dollar. In 1970, the exchange rate was 4.2 Swiss francs to the dollar. In 1970, $1 purchased 360 Japanese yen. Today $1 dollar purchases less than 100 yen.
If you were a creditor, would you want to hold debt in a currency that has such a poor record against the currency of a small island country that was nuked and defeated in WW II, or against a small landlocked European country that clings to its independence and is not a member of the EU?
Would you want to hold the debt of a country whose imports exceed its industrial production? According to the latest US statistics as reported in the February 28 issue of Manufacturing and Technology News, in 2007 imports were 14 percent of US GDP and US manufacturing comprised 12% of US GDP. A country whose imports exceed its industrial production cannot close its trade deficit by exporting more.
The dollar has even collapsed in value against the euro, the currency of a make-believe country that does not exist: the European Union. France, Germany, Italy, England and the other members of the EU still exist as sovereign nations. England even retains its own currency. Yet the euro hits new highs daily against the dollar.
Noam Chomsky recently wrote that America thinks that it owns the world. That is definitely the view of the neoconized Bush administration. But the fact of the matter is that the US owes the world. The US "superpower" cannot even finance its own domestic operations, much less its gratuitous wars except via the kindness of foreigners to lend it money that cannot be repaid.
The US will never repay the loans. The American economy has been devastated by offshoring, by foreign competition, and by the importation of foreigners on work visas, while it holds to a free trade ideology that benefits corporate fat cats and shareholders at the expense of American labor. The dollar is failing in its role as reserve currency and will soon be abandoned.
When the dollar ceases to be the reserve currency, the US will no longer be able to pay its bills by borrowing more from foreigners.
I sometimes wonder if the bankrupt "superpower" will be able to scrape together the resources to bring home the troops stationed in its hundreds of bases overseas, or whether they will just be abandoned.
Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. He was Associate Editor of the Wall Street Journal editorial page and Contributing Editor of National Review. He is coauthor of The Tyranny of Good Intentions.
Check Mate GAME OVER
  • #56
  • Mar 19, 2008 1:28am Mar 19, 2008 1:28am
Wow... Great discussion.

The only thing I can add is that the Bush administration is preparing for the end of the current financial system, and the world as we know it. Think about it:

(WARNING: conspiracy theory coming)

1. Military spending is through the roof
2. The US military is trying to secure the last available pockets of crude oil in the world before prices soar, shortages rage, and create massive worldwide social unrest that can only be overcome with a well fueled and strong (see #1) military.
3. The US government has no intention of ever paying back any of its debt, so it might as well rack up as much debt as possible while it can, so that it can use that borrowed money to strengthen its military and supporting infrastructure (i.e. oil supply to the military).

This is why the value of the dollar and that huge pile of debt simply DON'T MATTER (as Dick Cheney so eloquently points out) in the long run. The only thing that matters is to hoard as many resources as possible NOW, so that when the day of reckoning comes, America (or what's left of it) will be the last man standing.

New world order indeed.
  • #57
  • Mar 19, 2008 6:55am Mar 19, 2008 6:55am
Quoting bunton
Here is a question


How important is China to the United States?
This sounds like the makings of a new thread. Our relationship is a very complex set of interdependencies and compromises. It's amazing just how interdependent we are on one another. My biggest concern is how long this interdependence will last after the dollars value is roughly that of the Mexican peso. Will American lives lost in the oil rich middle east be enough to compensate for Chinas willingness to buy our debt at that time? Or will China and the rest of the world simply say, "thanks for the venture capital, welcome to our world!"

Great thread BTW
  • #58
  • Edited 8:32am Mar 19, 2008 7:56am | Edited 8:32am
Quote
The dollar has even collapsed in value against the euro, the currency of a make-believe country that does not exist


This is either something very stupid or very pointless to say.

The way I read it it implies that simply because several countries(states) have their own country(state) laws still and are integrated under a higher architecture(one might say UNITED in a union) with generalized ground rules still, it can't be considered a real country or at least considered as an entity qualifying in power and possibilities to a level equal to one.

And, er, this from someone living in...wait for it...the "United States". Phew.

Well done!

Good that at least someone knows where he comes from, huh..*slaps forehead*. I'd rather not voice my thoughts about this kind of thing in more detail


The bit about the "nuked and defeated Island" also is beyond any description.
Trust price. Know yourself.
  • #59
  • Mar 19, 2008 8:06am Mar 19, 2008 8:06am
Quoting fierceman

1. Military spending is through the roof
2. [..] create (massive worldwide) social unrest that can only be overcome with a well fueled and strong (see #1) military.
3. The [..] government has no intention of ever paying back any of its debt, so it might as well rack up as much debt as possible while it can, so that it can use that borrowed money to strengthen its military and supporting infrastructure
This is basically 1:1 a description of what Germany("that Hitler guy") did in the runup to WW II.
Trust price. Know yourself.
  • #60
  • Mar 19, 2008 9:05am Mar 19, 2008 9:05am
Quoting SeekingLight
This is basically 1:1 a description of what Germany("that Hitler guy") did in the runup to WW II.
I am fully aware of the comparison I am making. The big difference being that the threat to the world today is something more fundamental than the causes of WW2, and more importantly, the fact that we now live in the "Nuclear Age" which has the potential of making WW2 seem like a picnic.

(Yes, I realize WW2 was the beginning of the nuclear age, but really any comparisons to present day nuclear arsenals can't seriously be made - plus it was one-sided back then).
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