Posted on 12/05/2008 9:29:14 AM PST by mr_hammer
I think what happens, happens outside the US and is communicated by, for us, the value of the paper currencies, the dollar.
If China goes south, they'll be selling everything they can to keep China from going up in flames. This action will be a year out. This winter will be rough, but China has the cash to buy food stuffs, and support 200 million urban poor.( We're talking cook the rat poor. Not American poor ). But by next winter, China will have to sell American financials and Treasuries to get dollars. They won't be buying Treasuries.
Next year is going to be hell. Cash will be king. Big King. The US will have to either print money, or Treasury notes like mad. The US will have to raise Treasury yields, sucking money/credit out of our and other economies. The dollar might continue to climb, making our exports in a world wide economy worse. Or we could lose our credit ratings and the dollar could fall, but against whom? How may Swiss Franks are out there?
China, with support of Paulson, the Democrats, and Republicans, might keep buying our Treasuries, devalue their currency, and keep their people working by more exports to us. (Maybe the money now to Detroit, is a last dinner out with the Uncle that has cancer. Goodbye, old friend. Goodbye Detroit, Ford, GM. Uncle Sam has a brand new bag, CHINA! Last Washington/Wall Street mover and shaker in the great CHINA-USA scam is a loser!)
Karl Denninger is the best online pundit whose commentary will help you make sense of this bleak situation. His logical take is that the problem is excessive debt and that adding more debt is not going to help. He's all for letting all the bad debt default and is convinced that we won't have a functioning economy until that happens. All the actions of Paulson and Bernake will only prolong the pain and make it worse. You can find his website here: http://market-ticker.denninger.net/
Be sure to check the archives for November and December. Lots of good, insightful articles and advice.
Good luck.
How about something that proves the opposite? Friedrich Hayek won a Nobel prize in economics (1974?) for showing that this sort of intervention by a central bank (like the Fed) can't solve these sorts of problems (worse, they actually cause them).
The sort of people who believed that the bailout was necessary (unfortunately including some people on this site who should have known better) are simply ignorant of market economics. The only thing the "bailout" has done is turned what would have probably been a minor recession into a potential economic catastrophe.
Is this now voodoo economics? Are they going to use these metrics after Obama becomes President? Of course not.
I watch the financial and I'd say even on Fox, half or more of the supposed economists and business types think Hoover did nothing, and FDR's programs ‘worked’.
I was a big WW II history nut. Now I am just a nut. Anyways, I read, as a kid, Cornelius Ryan's, The Other Side of The Hill. Basically, what the German Generals were thinking. So, then I started reading more scholarly works on the arguments of how the Reich should fight. The politics and economics outside of rational decision making was immense. Ditto Tojo and the Imperial War Staff.
Basically, they both were in fundamentally loser positions. Since, as an organization, they would not admit it, they took in all sorts of schemes. Right to the end.
That is where the US is. We have been made into an unproductive, anti-manufacturing state that rewards financial engineering and plundering by legal and political means.
Since, both parties are run and lead by elites that have grown up in this ‘system’, they can not, in sufficient numbers, conceive of anything else.
No different than many Germans and Japanese that knew that from the get go their situation was hopeless over time.
...........
We'll see. I hate to be so mechanistic, so Marxist.
We are now kind of like a heroin junkie, borrowed against the trust fund, and thinking that if only we shoot more, borrow more.....then next year is the “I-Get-Clean” year.
We want to believe our Junkie nation will get better. That this is the last time he does the junk. Yeah, sure, his Detroit friend also says he's just needs a fix and he'll get back to work on the cars.
It is kind of like the whole nation has financial Stockholm Syndrome.
...........................
Stockholm syndrome is a psychological response sometimes seen in an abducted hostage, in which the hostage shows signs of loyalty to the hostage-taker, regardless of the danger (or at least risk) in which they have been placed. The syndrome is named after the Norrmalmstorg robbery of Kreditbanken at Norrmalmstorg, Stockholm, Sweden, in which the bank robbers held bank employees hostage from August 23 to August 28 in 1973. In this case, the victims became emotionally attached to their victimizers, and even defended their captors after they were freed from their six-day ordeal. The term Stockholm Syndrome was coined by the criminologist and psychiatrist Nils Bejerot, who assisted the police during the robbery, and referred to the syndrome in a news broadcast.[1]
Denninger and Michael Shedlock are the two best sources for unfiltered stuff. I am short on the major indexes from what they are telling me. Most of the sheep who watch CNBC or the other “hope and pray” types that tell you the market is going to come back “because” are going to get screwed. Once China decides it cannot prop us up any longer the game is up.
Liberalism, self-interest and greed has destroyed this country. We have far too many people who cannot take care of themselves or their families, things cost far too much due to government policies that have jacked the cost of everything from food to housing to automoobiles to education and too many people thought you could get rich from asset appreciation rather than savings, investment in things that produce goods and technological improvement.
LOL, I think you just invented a famous quote.
You think Pelosi, Frank, Dodd have any clue what you are talking about?
They are using what they got. State power.
It is the whole reason they are attracted to Washington. You think they are going to cut people lose? Not going to happen.
We are going to get more intervention, more central control. More push from Washington on outwards.
It is the way they think, feel, believe.
The Clowns are driving the bus.
A recession is when your neighbor loses his job.
A depression is when you lose yours.
Employers are afraid of the card-check law that 0bama promised would be first on his agenda for next year. The law would abolish secret votes for unions and allow unions to take over company after company. The employers are pre-empting 0bamanomics is all.
Yes, it is heading for a DEPRESSION...
But, what’s going to pull us out of it?
WWIII?
I sure hope not.
That attitude is like saying that, if rape is inevitable, lay back and enjoy it. I say we go down kicking, screaming, scratching, and bitching in their faces as loud as we can. How many of you have called or written your representatives about things that piss you off? If you haven’t, then you’re simply laying back and enjoying the ride.
>>just look at how red states are doing versus blue states<<
Yeah, part of my personal fix is to move from a blue state to a red state. ;)
Seattle to central Kentucky.
A depression is not self-correcting.
Keynes was the first to show that sometimes, what goes down does not have to go back up. If another depression occurs, the least of our losses will be money. Obammy and Congress will make FDR look like Adam Smith.
bfl
Your point goes to my question: this matters why?
I admit I am interested in economics and take academic enjoyment in trying to understand technical data. But, except for the old joke about a recession is your neighbor out of work and a depression is you out of work, it escapes me exactly what the practical differences are and why they matter.
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