Free Republic
Browse · Search
General/Chat
Topics · Post Article

Skip to comments.

Is this finally the economic collapse?
Fortune ^ | august 11, 2010 | Keith R. McCullough

Posted on 08/12/2010 5:26:02 AM PDT by mark_interrupted

Is this finally the economic collapse? By Keith R. McCullough, contributorAugust 11, 2010: 2:07 PM ET

FORTUNE -- The Great Depression. Wall Street in 1987. Japan in 1997. Points of economic collapse are generally crystal clear in the rear-view mirror. Professional politicians in Japan have been telling stories for 20 years as to why they can prevent economic stagnation. In the US, the storytelling started in 2007. All the while, stock market and real-estate prices have repeatedly rallied to lower-highs, then collapsed again, to lower-lows.

Despite the many differences between Japan and the US, there is one similarity that continues to matter most in the risk management model my colleagues and I use at Hedgeye, our research firm -- debt as a percentage of GDP. Now that the US can't cut interest rates any lower, the only option left on the table is what the Fed just announced it would start doing -- buying Treasury debt. And that could lead the country to the brink of collapse: According to economists Carmen Reinhart & Ken Rogoff, whose views we share, crossing the 90% debt/GDP threshold is the equivalent of crossing the proverbial Rubicon of economic growth. It's a point from which it's almost impossible to return.

(Excerpt) Read more at money.cnn.com ...


TOPICS: Business/Economy
KEYWORDS: economiccollapse
Food for thought. Just thought i'd bring this to everybody's attention.
1 posted on 08/12/2010 5:26:04 AM PDT by mark_interrupted
[ Post Reply | Private Reply | View Replies]

To: mark_interrupted

I believe, in spite of the government and this administration’s ineptness, we underestimate the resiliency of the American people. Now if we can just muddle through ‘til November...


2 posted on 08/12/2010 5:32:37 AM PDT by Russ (Repeal the 17th amendment)
[ Post Reply | Private Reply | To 1 | View Replies]

To: mark_interrupted

Alexis De Tocqueville, author of Democracy in America, which was published that year, seemed to warn of this day when he wrote: “The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.”


3 posted on 08/12/2010 5:33:59 AM PDT by kabar
[ Post Reply | Private Reply | To 1 | View Replies]

To: Russ

“Now if we can just muddle through ‘til November.”

I hope your optimism is well founded but I’ve seen rats steal election after election and I expect this one will be no different. Republicans are too sissified to beat down the bastard dems.


4 posted on 08/12/2010 5:37:20 AM PDT by rj45mis
[ Post Reply | Private Reply | To 2 | View Replies]

To: mark_interrupted

5 posted on 08/12/2010 5:37:39 AM PDT by Yo-Yo (Is the /sarc tag really necessary?)
[ Post Reply | Private Reply | To 1 | View Replies]

To: mark_interrupted
That's why I'm flummoxed why the Federal Reserve hasn't considered this idea: fix the income tax system.

When the current income tax system costs around US$304 BILLION per year in compliance costs and drove almost US$16 TRILLION in American-owned liquid assets into the illegal underground economy or to offshore financial centers to keep these assets out of the hands of the IRS, no wonder why we have such a bad economy.

If we can clean up our national taxation system, we could cut that US$304 billion in compliance cost substantially, and bring back most of that US$16 trillion in liquid assets back to the US financial system--the world's largest "private bailout." That much liquidity returning to the US financial system would easily kick off the next American economic boom.

6 posted on 08/12/2010 5:38:38 AM PDT by RayChuang88 (FairTax: America's economic cure)
[ Post Reply | Private Reply | To 1 | View Replies]

To: mark_interrupted

I’d have unlimited hope for the future if we had some decent leaders and a public that cared about something other than victimology and gimme. Unfortunately we have neither.


7 posted on 08/12/2010 5:43:00 AM PDT by 2 Kool 2 Be 4-Gotten
[ Post Reply | Private Reply | To 1 | View Replies]

To: mark_interrupted

Someone brought it to our attention yesterday.

:p


8 posted on 08/12/2010 5:45:46 AM PDT by Psycho_Bunny (Hail To The Fail-In-Chief)
[ Post Reply | Private Reply | To 1 | View Replies]

To: mark_interrupted

Don’t know if it is, but the imposter in the White House sure hopes it is.


9 posted on 08/12/2010 5:48:16 AM PDT by Leftism is Mentally Deranged (Annoying liberals is my goal. I will not be silenced.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: RayChuang88
Here's a "fun fact" for you: The first income tax, although rudimentary because income data-gathering was too, saw its day arrive in Bourbon France; it was called the capitation tax. It was sold as a tax-reform measure to eliminate the overhead of the taxes it was supposed to replace. (!)

Sadly but predictably, the capitation tax didn't replace anything. It ended up being imposed on top of the taxes it was supposed to replace.

10 posted on 08/12/2010 5:54:46 AM PDT by danielmryan
[ Post Reply | Private Reply | To 6 | View Replies]

To: mark_interrupted

“Could this be the end of ‘Little Rico’?”

Hold on...things are going to get better.

Make sure you vote on November 2nd!

The most money is made in dangerous times...the most money is lost in certain times.

Viva America!


11 posted on 08/12/2010 5:55:00 AM PDT by RexBeach ("Duty is ours; consequences are God's." Thomas "Stonewall" Jackson)
[ Post Reply | Private Reply | To 1 | View Replies]

To: rj45mis
DC is overrun with RATS who, if they remain unchecked, will kill us all with the plague. Are there any true conservative exterminators available? Time grows short.
12 posted on 08/12/2010 5:56:53 AM PDT by JPG (How much taxpayer $ did Mookie blow today?)
[ Post Reply | Private Reply | To 4 | View Replies]

To: Russ

The problem is that we need to “muddle through” until January, when we can seat a new Congress. Until then there is plenty more damage this crew can do before they are tossed out by the voters.


13 posted on 08/12/2010 5:57:43 AM PDT by Bean Counter (Now what kind of a geroo are you anyway?)
[ Post Reply | Private Reply | To 2 | View Replies]

To: RayChuang88
Fixing the income tax system in any meaningful way would entail reforms that almost no one in Congress, as presently constituted, will abide. Why? Because the Federal income tax code is not designed to raise taxes. It is designed to control behavior by alternatively rewarding and punishing billions of minute decisions made by taxpayers every day.

All of the rules, regulations, requirements, exemptions, deductions, and schedules that go into those 65,000+ pages of the IRS Code are the result of lobbying efforts on behalf of business, agricultural, labor and legal interests. Once again: it's not about income: it's about influence and power. And Congress today craves those things more than anything, even at the expense of our nation's economic health and productivity.

14 posted on 08/12/2010 6:01:53 AM PDT by andy58-in-nh (America does not need to be organized: it needs to be liberated.)
[ Post Reply | Private Reply | To 6 | View Replies]

To: Psycho_Bunny

I’ve been watching the DOW trends over the last two years and I’ve been astounded at how the market does NOT reflect reality. From what I’ve seen, the market is an eternal optimist. It takes a LOT for it to start dropping. I believe that the only reason that it’s stayed this high for this long is that most trades are controlled by computers and not people.

I predict that it’ll eventually make a correction soon. If it’s overvalued by 20%, it’ll correct by twice that much, then rebound to a more realistic number. It’s overvalued and people can only be fooled for so long. There will be no “winners and losers” over the next two years - only losers. At some point, the computer programmers will make that realization.


15 posted on 08/12/2010 6:04:24 AM PDT by Marie (Obama seems to think that Jerusalem has been the capital of Israel since Camp David, not King David)
[ Post Reply | Private Reply | To 8 | View Replies]

To: PetroniusMaximus

ping


16 posted on 08/12/2010 6:06:35 AM PDT by AngieGal
[ Post Reply | Private Reply | To 1 | View Replies]

To: RayChuang88
"That's why I'm flummoxed why the Federal Reserve hasn't considered this idea: fix the income tax system."

You sir are under the false impression that the politicians think the income taxation system is to be used for the purpose of raising revenues to run the government. Au contraire my good friend. They look at the income system as a way to re-distribute wealth for the benefit of consolidating their own power. The Federal Reserve can't do anything about the income tax system. Look at article 1 section 8 of the constitution. This is the purview of the Congress.
17 posted on 08/12/2010 6:07:47 AM PDT by Old Teufel Hunden
[ Post Reply | Private Reply | To 6 | View Replies]

To: Marie
"I’ve been watching the DOW trends over the last two years and I’ve been astounded at how the market does NOT reflect reality."

You are quite correct. Some folks have said there is very little relationship between Wall street and Main street.

18 posted on 08/12/2010 6:09:25 AM PDT by verity
[ Post Reply | Private Reply | To 15 | View Replies]

To: Marie

“I’ve been watching the DOW trends over the last two years and I’ve been astounded at how the market does NOT reflect reality.”

I got a call from a representative of an online brokerage I use asking why there had been so little activity on my account. I told him that I thought the market was acting irrationally, and being driven by sentiment rather than reality. He didnt disagree, but I think he wouldnt have disagreed no matter what I said. I’m pretty much staying out of it until market behavior makes sense.


19 posted on 08/12/2010 6:22:40 AM PDT by Hacklehead (Liberalism is the art of taking what works, breaking it, and then blaming conservatives.)
[ Post Reply | Private Reply | To 15 | View Replies]

To: mark_interrupted

>>...that could lead the country to the brink of collapse: According to economists Carmen Reinhart & Ken Rogoff, whose views we share, crossing the 90% debt/GDP threshold is the equivalent of crossing the proverbial Rubicon of economic growth. It’s a point from which it’s almost impossible to return.

And we are sitting at 94% [external] debt to GDP (not even counting off-the-books debt or unfunded entitlements)

http://www.usdebtclock.org/


20 posted on 08/12/2010 6:27:38 AM PDT by Future Useless Eater (Chicago politics = corrupted capitalism = takeover by COMMUNity-ISM)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Russ

January, you forget the damage they can do during a lame duck session, and it will be BAD, because they know they’ve lost control and will seek to do as much damage as possible before they go.


21 posted on 08/12/2010 6:29:11 AM PDT by GailA (obamacare paid for by cuts & taxes on most vulnerable Veterans, retired Military, disabled & Seniors)
[ Post Reply | Private Reply | To 2 | View Replies]

To: Bean Counter

“The problem is that we need to muddle through until January, when we can seat a new Congress. Until then there is plenty more damage this crew can do before they are tossed out by the voters.”

We have a bigger problem than that! Even if there is the BIGGEST turnover in history this November the Obama/Pelosi/Reid gang will come back during the ‘lame duck’ session and pass the most far left agenda ever seen in the free world! They will assuredly leave everything in shambles. It will be total ‘slash and burn’ and ‘scorched earth’ politics. If you think or anyone thinks that a big loss in November will make one iota of difference in Obama and the ‘Demonrats’ present leftist agenda you need to seek professional help immediately, because I assure you that the sounds you hear are not the ‘wailing and nashing of teeth’ of the ‘Obamies’ it is the notes of El Degüello.

http://www.youtube.com/watch?v=QKD5TgHWyxM


22 posted on 08/12/2010 6:29:16 AM PDT by Kartographer (".. we mutually pledge to each other our lives, our fortunes, and our sacred honor.")
[ Post Reply | Private Reply | To 13 | View Replies]

To: Hacklehead

We follow DEave Ramsey and we’re starting Baby Step 3 in Two months. (Saving 6 months living expences).

After that we’re supposed to start investing, putting toward retirement and paying off the house early. My friend (the wonderful woman who got us started with DR) is encouraging me to invest, but I’m not feeling it. I keep telling her that we can’t loose by paying off the house early, but we can loose in the stock market right now if we take that road.

Hubby and I have decided that we’re just paying off the house and land next. If we invest in anything, it’ll be “hard” investments, like a well or a good fence line... things that will save us money in the long run. The economy is just too shaky for us to jump in now.

We’ll have the house paid off in three or four years. By then, things will (hopefully) have settled down and it’ll be time to take the plunge.


23 posted on 08/12/2010 6:35:36 AM PDT by Marie (Obama seems to think that Jerusalem has been the capital of Israel since Camp David, not King David)
[ Post Reply | Private Reply | To 19 | View Replies]

To: kabar

That is why so many fought the creation of a central bank. They didn’t want Congress to have control of the creation of money. It was to be in private hands.

They knew what would happen. And, it has. We are all hostage to Congress and the Federal Reserve and the private fortunes of an elite in the form of elite banks and even large corporations like GM.

We used to in America, as late as the 1900’s have hundreds of banks of all types, printing their own money. If one went down, or got corrupt, the others would survive. Just like a grocery chain, or a car company or like as if any particular business went down, others would take it’s place.

Now? With the mono culture, central planning, common unionism of the Federal Reserve? How do you escape it’s clutches?

It has us and the whole world hostage.


24 posted on 08/12/2010 6:37:07 AM PDT by Leisler ("Over time they create a legal system that plunders and a moral code that glorifies it." F. Bastiat)
[ Post Reply | Private Reply | To 3 | View Replies]

To: Russ

It’s hard to be resilient when there’s a boot on your neck.


25 posted on 08/12/2010 6:40:16 AM PDT by DManA
[ Post Reply | Private Reply | To 2 | View Replies]

To: Yo-Yo

Never see that graph in the stock broker ads.


26 posted on 08/12/2010 6:40:59 AM PDT by DManA
[ Post Reply | Private Reply | To 5 | View Replies]

To: RayChuang88

Federal Tax Code is exhibit 1 in the evidence that we are no longer a self governed republic.


27 posted on 08/12/2010 6:42:43 AM PDT by DManA
[ Post Reply | Private Reply | To 6 | View Replies]

To: Marie

“We’ll have the house paid off in three or four years. By then, things will (hopefully) have settled down and it’ll be time to take the plunge.”

Don’t say “plunge” when talking about the stock market. :-)

Last week my wife asked me if we should pay off the house, but we’re about half way through a 5% 15 year mortgage we can easily afford, I dont see the need to do so.


28 posted on 08/12/2010 6:46:51 AM PDT by Hacklehead (Liberalism is the art of taking what works, breaking it, and then blaming conservatives.)
[ Post Reply | Private Reply | To 23 | View Replies]

To: DManA
"It's hard to be resilient when there's a boot on your neck"

I agree but I'll be damned if I will let these bunch of Socialist sociopaths bring me down. We need to grab that boot and shove it up their... well, you know where...

29 posted on 08/12/2010 6:47:28 AM PDT by Russ (Repeal the 17th amendment)
[ Post Reply | Private Reply | To 25 | View Replies]

To: Russ

Go get ‘em tiger.


30 posted on 08/12/2010 6:54:30 AM PDT by DManA
[ Post Reply | Private Reply | To 29 | View Replies]

To: DManA

Overheard from Stuart Varney I think...suppose the GOP does take both houses in Nov. Then they save the Bush tax cuts. And the economy rallies so that by 2012, obozo has something good to run on and he’s re-elected....wouldn’t that stink??


31 posted on 08/12/2010 7:08:23 AM PDT by GRRRRR (He'll NEVER be my President, FUBO!)
[ Post Reply | Private Reply | To 30 | View Replies]

To: rj45mis
“Now if we can just muddle through ‘til November.”
I hope your optimism is well founded but I’ve seen rats steal election after election and I expect this one will be no different. Republicans are too sissified to beat down the bastard dems.

I think the coming bloodbath will be too great for the Democrats to steal - definitely no hanging chads. IMO, the market, will explode in relief and hiring might begin to increase - and a year or so later it will be seen as a flash in the pan. The debt load is too great. Rather than "Double Dips", I believe we are into "Stairstep" (as in on the way down) recessions until debt is flushed from the system. What America will look like then will not re recognizable to us here.

32 posted on 08/12/2010 7:23:24 AM PDT by Oatka ("A society of sheep must in time beget a government of wolves." –Bertrand de Jouvenel)
[ Post Reply | Private Reply | To 4 | View Replies]

To: mark_interrupted

....cloward and piven....


33 posted on 08/12/2010 7:42:19 AM PDT by cranked
[ Post Reply | Private Reply | To 1 | View Replies]

To: Oatka

“What America will look like then will not re recognizable to us here”

This is certainly by design because nobody can be that economically blind and/or illiterate. Soros has his puppets in place to wreck our economy and he will bank billions in doing so.


34 posted on 08/12/2010 8:05:34 AM PDT by rj45mis
[ Post Reply | Private Reply | To 32 | View Replies]

To: RayChuang88
That's why I'm flummoxed why the Federal Reserve hasn't considered this idea: fix the income tax system.

It's not up to the Federal Reserve -- the tax system is the responsibility of Congress. Need I say anything more?

35 posted on 08/12/2010 11:00:45 AM PDT by BfloGuy (It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect . . .)
[ Post Reply | Private Reply | To 6 | View Replies]

To: GRRRRR

I can personally guarantee the economy will NOT rally by 2012. There is way too much debt overhand and Obama is adding to it. I don’t see the economy rallying at all, ever. I see only 2 outcomes on the horizon.

The most likely outcome is a long, grinding deflationary depression.

The dark horse outcome is a brief deflationary depression snapped back to something approaching a hyperinflation by government printing presses.


36 posted on 08/12/2010 6:05:01 PM PDT by Freedom_Is_Not_Free (California Bankruptcy in 4... 3... 2...)
[ Post Reply | Private Reply | To 31 | View Replies]

To: Oatka

Great post. I agree with you.


37 posted on 08/12/2010 6:05:53 PM PDT by Freedom_Is_Not_Free (California Bankruptcy in 4... 3... 2...)
[ Post Reply | Private Reply | To 32 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
General/Chat
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson