First, although it may be tempting to toss a heap of politics in here, let's try to avoid that. Playing the blame game won't help us. The question is whether we've reached the point of no return or not.
An economist (I don't know him from Adam) claims we've already hit the point where the US economy cannot support its dept and is destined for economic collapse.
Quote
Richard Duncan, formerly of the World Bank and chief economist at Blackhorse Asset Mgmt., says America's $16 trillion federal debt has escalated into a "death spiral, "as he told CNBC.
And it could result in a depression so severe that he doesn't "think our civilization could survive it."
OK, that's sobering. Generally speaking forecasts of doom and gloom don't typically come true. However, he's looking at more than just the economy.
Quote"We found an identical pattern in our debt, total credit market, and money supply that guarantees they're going to fail. This pattern is nearly the same as in any pyramid scheme, one that escalates exponentially fast before it collapses. Governments around the globe are chiefly responsible.
This presentation shows how banks are escalating the collapse...
"And what's really disturbing about these findings is that the pattern isn't limited to our economy. We found the same catastrophic pattern in our energy, food, and water systems as well."
However, the article may be slightly misleading. Though the above quotes say we've already reached a point of no return, at another point in the article it hedges its bets a little.
QuoteA team of scientists, economists, and geopolitical analysts believes they have proof that the threat is indeed real - and the danger imminent.
Imminent, but still possibly avoidable.
Thoughts?
Source: http://moneymorning.com/ob/economist-richard-duncan-civilization-may-not-survive-death-spiral/
Life is a pyramid scheme. You/we/they need to bring in people at the bottom to exploit. First the native Americans, then Africans, then Irish, on and on till post WWII refugees. Now we have the illegal immigrants that the govt doesn't want to do anything about. Wonder why?
All the bs about tax cuts and less rules creating jobs is bs. Demand for goods and services creates jobs. No money, no demand. What has had the largest effect on the world economy is automation. You will never need as many auto workers to build autos like they did in the 1950s. Same with appliances and electronics. So where are the non govt jobs going to come from? Not everyone is cut out to be a rocket scientist. Oh wait, those guys got laid off too...
Quote from: junk2drive on September 09, 2012, 02:43:33 PM
Same with appliances and electronics. So where are the non govt jobs going to come from? Not everyone is cut out to be a rocket scientist. Oh wait, those guys got laid off too...
Yes, but they can become lab technicians, plumbers, and so forth.
We do not want to be the nation that produces the best loom weavers or buggy whip makers.
Mayan scientists, aren't they?
Quote from: junk2drive on September 09, 2012, 02:43:33 PM
Life is a pyramid scheme. You/we/they need to bring in people at the bottom to exploit. First the native Americans, then Africans, then Irish, on and on till post WWII refugees. Now we have the illegal immigrants that the govt doesn't want to do anything about. Wonder why?
All the bs about tax cuts and less rules creating jobs is bs. Demand for goods and services creates jobs. No money, no demand. What has had the largest effect on the world economy is automation. You will never need as many auto workers to build autos like they did in the 1950s. Same with appliances and electronics. So where are the non govt jobs going to come from? Not everyone is cut out to be a rocket scientist. Oh wait, those guys got laid off too...
Where do the jobs come from to make the demand? Service industry? Middle managers? Agriculture? I work in a service industry. As long as enough people keep making money to afford my service, I get to remain employed. That makes one more person to help drive demand.
Who provides the capital for the new jobs? The government? We all want less government and more freedom, but human beings as a whole don't always do better without rules.
Well, first, we need to determine if we have a spending problem or a revenue problem. If it's a spending problem, then there are a lot of cuts that are going to have to be made, including to programs like welfare, medicare/medicaid, social security and defense. If we have a revenue problem, then there are going to need to be tax hikes for everyone, not just a few.
Whether you think we have a spending or revenue problem, there are a lot of rules and regulations that need to be eliminated. J2D, doesn't think it will help the economy, but if billions are being wasted on those regulations that do nothing but employ government workers, then they will help. Just greatly simplifing the tax code would help.
If you go out to US Debt Clock, you'll see that the Federal deficit is coming down, but it is still over $1.1T. Five of the top six budget items are decreasing in their spending (Medicare/Medicaid, Defense/Wars, Income Security, Debt Interest, and Federal Pensions). Social Security is the only one still going up. Another bright spot is that both State and Local debt is dropping. The total for both is over $1.8T.
Quote from: OJsDad on September 09, 2012, 06:49:48 PM
Well, first, we need to determine if we have a spending problem or a revenue problem.
Given the position we're in it's probably both.
The problem, of course, is that a tax hike would be a break on the already anemic economy - effectively taking in less revenue until the economy turned around.
We're in a real bind. Having spent without a budget for four years and seeing negligible change there is no more borrowing to do. The only two courses of action are tax cuts or inflation. Tax cuts will increase the deficit unless they are done adroitly (possible since Romney is quite savvy in financial matters) or inflation, which effectively taxes everyone; the danger of which is that it can easily get out of control and then we've got a new problem.
We're in trouble. If we're not over the edge, I suspect we're darned close.
I'm not saying that changing taxes and regs won't help, I'm saying the politicians make it sound like they can work miracles if the other side would just let them.
I remember the recession after the troops started coming home from Vietnam, the one after the 73-74 gas crisis, the one after the 79 gas crisis, the one after Clinton cut defense and aerospace spending combined with the troops coming home from the mid east.
There is a lot of waste in govt agency jobs but it is a form of social programs. The military is too. If you cut both of those, you add to the unemployment problem.
What would Sim City do, lol
Quote from: junk2drive on September 09, 2012, 07:01:32 PM
I'm not saying that changing taxes and regs won't help, I'm saying the politicians make it sound like they can work miracles if the other side would just let them.
I remember the recession after the troops started coming home from Vietnam, the one after the 73-74 gas crisis, the one after the 79 gas crisis, the one after Clinton cut defense and aerospace spending combined with the troops coming home from the mid east.
There is a lot of waste in govt agency jobs but it is a form of social programs. The military is too. If you cut both of those, you add to the unemployment problem.
What would Sim City do, lol
Good points. We can quibble about how the money is spent and on what, but what's most important is we get this debt under control. It won't be easy, but if both sides work together we will have a better chance than if we don't.
QuoteHaving spent without a budget for four years and seeing negligible change there is no more borrowing to do.
theres a term for that which is somewhat rascist.
I did see that the US fell from 5th to 7th place on economic competiveness
Quote from: OJsDad on September 11, 2012, 09:33:44 PM
I did see that the US fell from 5th to 7th place on economic competiveness
We've got a problem and not much time left to solve it.
Our situation is very similar to that of the British Empire in 1945...on the verge of becoming a bankrupt, exhausted, second tier power. We can control the speed of descent if we stop pussyfooting around the real economic problems but I don't think we can stop it altogether. As mentioned in another thread, US competitiveness has been on the decline for a few years. We need a sea change of collective attitude and an end to entitlement thinking if this is going to change.
The whole concept of free trade should be reevaluated.. It was one thing when we exported to the rest of the world.. Now our trade deficit with China is so unbalanced - place a 5% across the board tariff and use the revenue to pay down the national debt.
Quote from: eyebiter on September 12, 2012, 07:18:28 PM
The whole concept of free trade should be reevaluated.. It was one thing when we exported to the rest of the world.. Now our trade deficit with China is so unbalanced - place a 5% across the board tariff and use the revenue to pay down the national debt.
It's not free trade, per se. The problem is that trade isn't equal with China. They manipulate their currency, they subsidize industry, in generally it is because we *don't* have free trade going into China that we have such a trade deficit.
Quote from: eyebiter on September 12, 2012, 07:18:28 PM
The whole concept of free trade should be reevaluated.. It was one thing when we exported to the rest of the world.. Now our trade deficit with China is so unbalanced - place a 5% across the board tariff and use the revenue to pay down the national debt.
I have no problem with free trade, but China does not practice it. If an American company opens a factory in China, then they have to export 100% of the product from it for x number of years. They keep the value on their currency artificially low for to help their exports. They out right steal intellectual property. No to mention they are at least 60 years behind on enviromental abuses. India isn't much better either.
i have to show the competitive list Action Jack. it will make him break down and admit his sins
^Never happen.
You could easily get him to cut and paste it and accept it as gospel if you posted it as an article on some whack job Libertarian site.
The Federal Government borrows about $41 for every $100 spent. This cannot continue long term when annual deficits are > $1 Trillion annually.
Under Obama, Federal spending has gone up to about 25% of Gross Domestic Product compared to the average of 18-20% over the last 20 years.
But the Dems are correct that the total Federal Tax burden is lower than it has been since the 1950s. But.... the reason for this is primarily how many people have been removed from the tax rolls. Currently less than 50% of US households pay any federal taxes outside of taxes on booze, smokes & gasoline.
It is a fantasy that either cutting military spending or only taxing the "rich" can close the budget deficit. The savings are not big enough and the revenues are not great enough.
Part of this is demographic. Social Security, Medicare and other transfer payments to the old were set up to work when there were many, many working people and relatively few retired or old people. Just look at increasing life spans and the failure to adjust when benefits kick in (or the amount paid to support them).
The Federal Reserve is printing amazing amounts of money. The amount of worthless assets they have on their balance sheet is equally alarming.
All of this can be fixed - but it requires real pain. Increased taxes for everyone. Spending cuts for everyone. Stop accumulating even more debt. Don't print outrageous amounts of money. But all of this requires actual painful decisions by politicians. Or they can keep kicking the can down the road until or creditors cut us off - think Greece, Spain, Imperial Spain, Imperial Russia, Weimer Republic.....
People can point fingers - but nobody can run this level of fiscal deficits long term.
Quote from: airboy on September 13, 2012, 01:45:27 PMPeople can point fingers - but nobody can run this level of fiscal deficits long term.
(https://www.grogheads.com/forums/proxy.php?request=http%3A%2F%2Fi1145.photobucket.com%2Falbums%2Fo513%2FOJsDad%2Ffingersinearman.png&hash=befd9dce150e0720b41e3cbae2b578007ec5cf50)
Ok, here is a better one;
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Quote from: OJsDad on September 13, 2012, 02:13:52 PM
Ok, here is a better one;
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Doesn't help.
Quote from: airboy on September 13, 2012, 01:45:27 PM
The Federal Government borrows about $41 for every $100 spent. This cannot continue long term when annual deficits are > $1 Trillion annually.
Under Obama, Federal spending has gone up to about 25% of Gross Domestic Product compared to the average of 18-20% over the last 20 years.
But the Dems are correct that the total Federal Tax burden is lower than it has been since the 1950s. But.... the reason for this is primarily how many people have been removed from the tax rolls. Currently less than 50% of US households pay any federal taxes outside of taxes on booze, smokes & gasoline.
It is a fantasy that either cutting military spending or only taxing the "rich" can close the budget deficit. The savings are not big enough and the revenues are not great enough.
Part of this is demographic. Social Security, Medicare and other transfer payments to the old were set up to work when there were many, many working people and relatively few retired or old people. Just look at increasing life spans and the failure to adjust when benefits kick in (or the amount paid to support them).
The Federal Reserve is printing amazing amounts of money. The amount of worthless assets they have on their balance sheet is equally alarming.
All of this can be fixed - but it requires real pain. Increased taxes for everyone. Spending cuts for everyone. Stop accumulating even more debt. Don't print outrageous amounts of money. But all of this requires actual painful decisions by politicians. Or they can keep kicking the can down the road until or creditors cut us off - think Greece, Spain, Imperial Spain, Imperial Russia, Weimer Republic.....
People can point fingers - but nobody can run this level of fiscal deficits long term.
How much has revenue been hurt by unemployment? Sorry if it's a dumb question but there have got to be a fair number of folks who have dropped off the rolls due to being unemployed.
Quote from: DoctorQuest on September 13, 2012, 04:16:33 PMHow much has revenue been hurt by unemployment? Sorry if it's a dumb question but there have got to be a fair number of folks who have dropped off the rolls due to being unemployed.
Look at the top right hand side. The first is from 2004, second from 2008, last is current. Revenues today are higher than 2008
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(https://www.grogheads.com/forums/proxy.php?request=http%3A%2F%2Fi1145.photobucket.com%2Falbums%2Fo513%2FOJsDad%2F2008DebtClock.jpg&hash=140f158c52692fb85789f02be1835b9de59e7167)
(https://www.grogheads.com/forums/proxy.php?request=http%3A%2F%2Fi1145.photobucket.com%2Falbums%2Fo513%2FOJsDad%2FCurrentDebtClock.jpg&hash=b7a3ad4bc59f80114be1fbfb3ee59082c96d2213)
Is the middle one the current one?
Quote from: Staggerwing on September 13, 2012, 05:52:43 PM
Is the middle one the current one?
It was, I just fixed it.
More great news today. The 2nd quarter GDP numbers have been revised down to 1.3% from 1.7%. The 1st qtr GDP grew at 2%. Durable goods orders dropped by 13.2% from July to August. New jobless claims dropped by 26,000. However, as has been happening over a year and a half, the previous weeks were reviced up.
Quote from: OJsDad on September 27, 2012, 11:38:36 AM
More great news today. The 2nd quarter GDP numbers have been revised down to 1.3% from 1.7%. The 1st qtr GDP grew at 2%. Durable goods orders dropped by 13.2% from July to August. New jobless claims dropped by 26,000. However, as has been happening over a year and a half, the previous weeks were reviced up.
Let me add a bit to this.
The US housing market is finally starting to clear. House prices were up 6% in the recent period. The foreclosure overhang is finally starting to end due to conversions to rental units and (unfortunately) destruction of non-maintained housing stock. It has a way to go, and this took way longer than it should have due to some inept meddling in the foreclosure market by the Obama Administration - but the overall US housing market signs are much better.
On the down side, Europe is tanking, India is tanking, and China's growth rate is rapidly slowing. The general signs are that the world-wide recession is going to get worse again for the next 12 months or longer. This is in addition to the slowing of the US economy noted by OJsDad.
Quote from: airboy on September 27, 2012, 06:46:27 PM
House prices were up 6% in the recent period. The foreclosure overhang is finally starting to end due to conversions to rental units and (unfortunately) destruction of non-maintained housing stock. It has a way to go, and this took way longer than it should have due to some inept meddling in the foreclosure market by the Obama Administration - but the overall US housing market signs are much better.
I kind of understand your point about the destruction of non-maintained housing stock, but cities like Detroit cannot afford to leave them anymore. They no longer have the population to support them. They are being used to hide crime. It is not unusual to hear about half a dozen or more building being burned in a single night. Or for bodies to be found that have been there for weeks, months or longer. These force the city to respond, at a time when the city needs to down size its police and fire departments. You also have the streets, water, sewage, and stormdrains that need to maintained to some level.
Detroit is on track to demolise over 4500 buildings in the last two years. These are all owned by the city, that have been guttered by looters, and are deteriorating from neglect.
On the plus side, I think developers will be more interested in these vacant lands in the future.
I agree with what Detroit is doing. But Detroit had its peak population in the mid-1950s.
What is irksome is perfectly useful housing that got tied up in an Alice-in-Wonderland regulatory web spun by the Obama adminstration. Lenders could not get their money, could not evict, and could not sell foreclosed property. Homes stayed vacant for years and were damaged or destroyed by vandals or simple entropy.
If you contrast that with the last big US housing crisis (S&L meltdown of the late 1980s) it is shocking how Obama did not let the housing market clear which eventually led to the unintended destruction of a large amount of otherwise useful housing stock.
Hey Airboy,
Any chance this is on your radar? http://www.zerohedge.com/news/how-chinas-rehypothecated-ghost-steel-just-vaporized-and-what-means-world-economy
Thoughts?
European workers stage austerity protests
General strikes in Spain and Portugal halted transport, businesses and schools and led to clashes between police and protesters in Madrid.
Smaller strikes were reported in Greece, Italy and Belgium, and rallies were planned in other countries.
http://www.bbc.co.uk/news/world-europe-20320993 (http://www.bbc.co.uk/news/world-europe-20320993)
What exactly is a strike against austerity supposed to achieve? "Give me Liberty Credit or give me death." is the new stupid.
Quote from: Mr. Bigglesworth on November 14, 2012, 08:47:52 AM
What exactly is a strike against austerity supposed to achieve? "Give me Liberty Credit or give me death." is the new stupid.
Agreed. Those cuts are painful. TANSTAAFL, as Heinlein would say.