When the US economy collapses, how will this affect the world economy?

[Deja Q]

Will they crash?

Will they survive?

Will they survive and help us?

Will they survive and ignore us?

Will subsequent events lead to thermonuclear annihilation?

???

[B Calm]

1. The US is in paradigm shift, the US is an over developed country

and the easy money's been made. As far as Global industries are concerned, there are cheaper and more plentiful natural resources elsewhere to exploit, cheaper labor and younger developing consumer markets outside the US that present more attractive investment opportunities. Industry would prefer not to make any further investments into the US, thus capital flight is inevitable (in spite of tax policies), ... the US is a Cash Cow to be milked and harvested to funnel our investment funds internationally. The good times have come to an end, and no one dares tell you this, because it might cause a panic.

[Greyhound]

98. OMG the truth at last! You are my god!

I have tried about a thousand ways to get this point across. They are leaving and taking all our $ with them. We are simply financing their relocation expenses.

[texpatriot2004]

2. There was an article w/in this last week Re: China expects it.

China is preparing for it sometime b/w now and 2007. They don't want to be adversely affected by our problems so they are planning ahead.

[Deja Q]

3. Yes, but have they thought about our problems rebounding on them?

I can see it happening... and tensions behind China and the US are still increasing...

[hogwyld]

60. The only reason they haven't wiped us out

Is because we continue to buy their cheap goods. Once that gravy train ends, they will have no objection to taking us out. The rest of the world would heartily cheer them on.

[Nordmadr]

4. WHEN, not if the U.S. economy crashes.

It will have a tremendous ripple affect throughout the world. I say this because our Nation has a tremendous international debt and because a large number of foreign economies rely on the U.S. to buy goods from them. The amount of energy that we consume alone from foreign nations could do this. We are the great wasters. We are modern day Rome. We don't even need to discuss the shell our economy has become and the inflated stock and housing markets. We are in for a world of hurt. It will take a true leader to guide us to some semblance of balance (my personal hope is for Gore, but that's just me).

I highly doubt that once our economic collapse is fully eminent (sp?) that we will receive any largely significant aid. We have burned far too many bridges. Other economies will struggle mightily but will survive for a time. Energy is the biggest concern in my mind globally, and that will greatly impact the vast majority of nations sooner rather than later. You will see a shift to local economies as long as the powers that be don't decide to blow us all to hell first. Why are we in the Middle East? Energy stabilty, and China is too strong. Look, we can't even deal with Iraq...a war we are destined to lose in the traditional sense. I am a veteran and in my mind this was a war of aggression. Plain and simple. You can not win a war in a foreign country with a conventional army without public support unless you annihilate the vast majority of the population. Since this would be insane, this is destined for civil war. I see Iraq splitting eventually into 2 or 3 separate countries...but not until after many, many more have died....and for what?

What goes up, must come down, and we are headed down, and likely taking capitalism as we know it with us. You can not have unlimited growth in a limited world. We are seeing the evidence of our folly every day in the environment.

Mother Earth is fighting a cold. We are the virus. Hopefully we will become aware of our folly before it is completely too late.

Olaf

[shraby]

5. There is an old saying..when the United States

sneezes, the whole world catches cold.

[Canadian Socialist]

6. If Canada is given enough time, say 1-2 years

we can move our economy from U.S. based trade to Euro/Asian. We are already doing this with our resources (China is getting our oil/gas). Check out Canadian Business or the Globe and Mail. We (meaning the Canadian economy) have to move our trading partners to ones that actually have money i.e. China, India, Europe, and to a certain extent, South America.

[hogwyld]

66. Time to come on up

I can do your yardwork cheap! Or maybe you will pick me up for some work at your Home Depot?

[MazeRat7]

7. The US economy is NOT going to "collapse".....

First off, they are basically one (us & world)

Second, for the economy to collapse would require massive number of corporations to quit generating profits. Specifically, they would have to have "hugh" (*grin) revenue losses.

Third, the US equity to debt ratio would have to be several orders of magnitude higher then it is today.

That being said, we "have" had a recent correction in the markets with the typical bunch of street ninnies all freaked out by energy and tech. I personally believe we have seen the bottom (todays gains were a solid sign that this is the bottom), which is typical in Q3 but nothing to cry the "sky is falling".

No, our economy is not collapsing, I see solid (albeit slow) growth in Q4 and beyond. I am personally making money in the markets and all signs indicate I will continue to do so.

So if you don't mind my asking, how are you invested and what signs do you see that indicate another "crash" ? (which the worst on recent record was today in '82 I believe... when DOW dropped over 500 pts.)

MZr7

[sendero]

9. Define "collapse".

I disagree with you. I don't believe the growth numbers are "real", many are based on creeping and underreported inflation.

Americans are overloaded with debt at every level, Federal, state, and personal. Just like when a company takes a 5% hit on their sales and it causes layoffs and a huge reduction in profit, it is only going to take a little nudge to hobble this economy, which has basically been limping along since 2000 with the aid of Federal Reserve printing presses running at warp speed.

"Collapse" is a difficult word. What does it really mean. Here is what I think is absolutely inevitable. High inflation. Negative real growth. High unemployment, all feeding on each other.

Sure, it might not happen. But IMHO, the chances of this economy taking a great fall far outweigh the chances of it improving significantly.

[MazeRat7]

12. Ask the OP since he used the word "collapse"...

I guess we have to agree to disagree. I am more bullish on the market after this recent downturn. BTW, the more "debt" the average american takes, the more revenue for the banking industry. I listened to Intel's conference call yesterday and see no reason to see disappointments in the tech sector for the seasonal Q4. The energy sectors pulled back in recent weeks but natural gas is ultimately a gainer.

Yes, I believe the OP's use of the word "collapse" was extreme and basically uninformed. However, I also agree with you that we are on a dangerous perch relative to basic economic direction. However, my "speculative" side tells me to expect "slow" and "protracted" growth going forward.

If I saw no chance for growth, I would have to agree with you. But I just don't see the kind of downturn that could ultimately be interpreted as a "crash"...whatever that means. BTW... I sure hope I am right. *grin.

MZr7

[sendero]

14. Debt...

... is only good for lenders when the debtor can repay.

There are going to be defaults at every level. People have leveraged themselves to the hilt trying to maintain their standard of living in the face of job losses due to outsourcing and automation.

There is no rosy scenario in this economy for the long term. Maybe a few more years, but that's it.

[Nordmadr]

11. Unfortunately my personal finances prevent my

investing in the stock market, despite the fact that both my wife and I are B.S. degree or better educated and working in our fields, teacher and information systems (was better three years ago).

Profits in many corporations continue to date in many corporations due to outsourcing and benefit reduction for employees. Just look at how benefits keep getting slashed and pensions keep getting tossed aside. This can only continue for so long. As the American public continues to lose any ability for discretionary spending the economy worsens. You may be one of the fortunate few, but from threads regarding personal finances here, and from people I know in the really real world, things keep tightening. Without American spending, as you say, it is really one economy...as we go, to an extent, they go.

As far as the ninnies comment regarding energy...in my opinion this ride has just begun. Let's chat again in the spring after heating season, or optimistically in another two or three years. Natural gas and oil.

Olaf

P.S. No disrespect, just disagree. Happy to hear your investments are doing well for you. Many of us wish we were so lucky.

[MazeRat7]

15. Not sure what we are disagreeing about.....

You are right, corps are raiding pensions and off shoring all in an effort to reduce opex (operational expenses). The real crime is the tax dodges. Many of the fortune 100's are setting up offshore "principals" to realize revenue in no-tax countries thus avoiding paying US taxes on their profits (as if they don't get enough breaks as it is).

All that aside, many of these "fortune 100's" are only generating 30%+ of their gross revenues from the US. Translation, 2/3rds of their revenues are from overseas (europe and china)

So you see... it really doesn't matter (in terms of profits) what they do to the US worker. As a company they will continue to be profitable even if joe six-pack is broke.

It makes me angry, crazy, and causes thoughts of retribution. However, I don't have the $$$ now to be significant in making a difference. So... I plan to play their game, grab their money, and then use it against them however I can.

I doubt that cryptic post makes much sense... but maybe you get the idea.

MZr7

[raccoon]

34. ""many of these "fortune 100's"

are only generating 30%+ of their gross revenues from the US. Translation, 2/3rds of their revenues are from overseas (europe and china)"

That may be so. What's the source of this info?

[Deja Q]

Well, YOU sound educated at least.

True, the crash is not imminent, but what is happening to real people is. Real people, BTW, are the ones who live under the control of others.

My own finances are nil and one paycheck missing will exterminate me, BTW.

[B Calm]

29. Are you making money in world wide investments or in US investments?

Someday Americans will have to realize that their stock investment portfolios are not going to do any thing for the US economy. Not while big companies like Microsoft are taking their profits to invest in China, India, Brazil and Eastern Europe.

[MadHound]

39. You are whistling past the graveyard while wearing rose colored glasses

First off, the markets aren't the be all and end all of our economy. In fact, since the markets are a lagging economic indicator of our economy, they are probably one of the worst ways to guage how our economy is doing. In addition, if you look at the past year in the markets, they have been relatively flat, with the Dow hovering around the 10200 mark, and the NASDAQ hovering around the 2000 slot. Not a sign of growth.

But getting away from markets, take a look around at the rest of the economic indicators friend. Wholesale inflation has risen, as has the CPI. Growing energy prices are the driving force behind this, and they're not going to go down, now that another large growing energy consumer is on the seen, China. And over the past ten years, we have scrapped virtually all of our manufacturing base, outsourcing it overseas, meaning that the working class is being paid less, for service industry jobs generally pay 1/3-1/2 less than manufacturing sector jobs.

We also have large swaths of our economic base teetering on the brink of disaster. There is only one domestic airline that is making a profit, most are in bankruptcy, some for the second or third time. The nation's largest manufacturing component, automobile production, is also about ready to go over the cliff, having invested heavily(again) in large gas guzzling vehicles that are now sitting in droves on the lots, and the Big Three are facing massive retooling costs. Meanwhile, foreign owned brands are already making smaller, fuel efficient cars that people are snapping up like hotcakes.

The housing bubble is already deflating a bit, and will burst this winter as those high heating costs make those swathes of McMansions completely untenentable. And when the housing bubble does burst, it is going to take a large portion of our economy down with it. Many people have moved out of the no growth markets five years ago when the tech bubble burst, and put their money into land. And while the priveleged view are going to get out while the getting is good(Toll Homes is already starting to sell off its stock), many many of the suckers are going to be left holding the bag.

Meanwhile, the average American's real world wages continue to shrink at an ever increasing rate, while the defecit continues to soar to new heights and the gap between the rich and the rest of us continues to widen to record breaking chasms. And while nominally the unemployment rate is holding relatively steady, you have got to consider the fact that unemployment numbers are some of the least reliable economic indicators around, ever since the Reagan administration started tinkering around with them in order to make himself look good in the mid eighties. Most knowledgable economists put the true unemployment rate at least fifty to one hundred percent higher than those monthly numbers that are published.

Sorry friend, but you really need to look around at other things besides just the markets in order to judge how our economy is doing. For the markets have always been catered to, in order to keep investments propped up. Right now we are in a situation similar to that of the twenties before the Great Depression. Markets were booming, but the rest of the economy was showing extreme amounts of stress, just as we're experiencing now. And much like the Great Depression, it won't be the markets that take the economy down, it will be the rest of the economy that crashes the markets.

[DemocratSinceBirth]

42. I Think You Contradict ed Yourself...

"In addition, if you look at the past year in the markets, they have been relatively flat, with the Dow hovering around the 10200 mark, and the NASDAQ hovering around the 2000 slot. Not a sign of growth."


"Right now we are in a situation similar to that of the twenties before the Great Depression. Markets were booming, but the rest of the economy was showing extreme amounts of stress, just as we're experiencing now...


Oh, if a 1929 collapse is imminent can you cite one tenured economics professor at an accredited university who says that's the case....

[MadHound]

58. No contradictions here friend

If you will read carefully, in the second sentence you quoted of mine, I made the statement "Right now we are in a situation similar to that of the twenties before the Great Depression." Please notice that A) I used the qualifier "similar" and B) That there are markets, investment markets that are indeed still booming, namely the housing market. Granted, this bubble is deflating a bit, and going to burst soon, but again, this is SIMILAR to what occured to the investment markets right before the Great Depression.

Now then, your request for citing a "tenured economics professor at an accredited university" is patentently ludicrous, for most such professors, if they do publish their work, do so in pretty obscure professional journals that are not published online, thus my ability to quote from them right now is extrememly limited. I could cite my wife, who fill your ardorous requirements, but I'm not in the habit of giving out such personal information.

So instead, I will cite well know, award winning economists and economic writers. And quite frankly if you don't find them acceptable, then I think that you simply want to keep your head comfortably in the sand. For these are people who have not only taught, but who indeed help shape the US economy. Who better to be in the know about what shape our economy is in?

<http://www.infowars.com/articles/economy/greenspan_warn... >
<http://www.truthout.org/docs_04/112804K.shtml >
<http://www.ameinfo.com/45122.html >
<http://neweconomist.blogs.com/new_economist/2005/09/bra... >
<http://www.thenation.com/doc/20051024/real_estate_bubbl... >
<http://www.smirkingchimp.com/article.php?sid=22856 >
<http://alternet.org/story/26406 />
<http://www.truthout.org/docs_2005/101705M.shtml >
<http://www.boston.com/news/globe/editorial_opinion/oped... />
<http://counterpunch.org/roberts08092005.html >

Now then, I have a question for you. What can you point to that actually signals, ie a leading indicator, that the US economy is going to continue to rise? That economically the US is doing well and will continue to do well? I won't even ask for you to cite a "tenured economics professor at an accredited university". Just give something from a recognized economics expert would be fine.

[paula777]

71. Excellent posts Madhound. n/t

[DemocratSinceBirth]

73. How About Mainstream Liberal Economists

like Paul Krugman

Paul Samuelson

Lester Thurow


Joseph Stiglitz


Kenneth Arrow?

If they say a 1929 style depression is imminent I'll take it serious....

I'll give you the benefit of the doubt because maybe we are arguing on parallel tracks...

Here's my take... Is a nasty recession possible because of the froth in the economy mostly in housing possible?

Maybe, but there is nothing in the current record to suggest that we are going to see a repeat of the Great Depression which includes a nearly halfing of the GNP, a forty percent decline in industrial output, and a twenty five percent plus unemployment rate...

I'll spear the pejoratives like "patently ludicrous" because I don't want to weaken my case...


Give me a link to a published paper for the American Economic Association and you have my attention...

[MadHound]

77. LOL friend, you obviously didn't thoroughly look at my links

Otherwise you would have seen names like Krugman, Oliphant, Holhut and other liberal economists and economic writers. And somehow, I think that publications like the Boston Herald and the New York times hardly qualify as "highly charged and highly ideological sights". Yes, Truthout would qualify as such, but again, if you would read THOROUGHLY, you would see that these sites are merely REPRINTING these articles that originally appeared elsewhere.

But not suprisingly, you keep shifting your requirments for what you find acceptable. Now, it isn't enough that I have liberal economists warning us of an impending economic collapse, but you want a paper published by the AEA. Sorry friend, but I don't have my current or back issues of the American Economic Review right here with me, and again, they aren't published online.

But I will leave you with a couple of tidbits, one from Joseph Stiglitz<http://www.vheadline.com/readnews.asp?id=24155 > and one quoting Paul Samuelson, who, by the by, is hardly considered a "liberal" economist friend, much more of a centerist, free trade proponent. But even he is warning of the impending calamity that free trade will bring about here<http://www.atimes.com/atimes/Global_Economy/GH20Dj01.ht... >

And please, don't spare the perjoratives friend, your case could hardly be weaker. I'm still waiting for your answers concerning my other questions, namely: What can you point to that actually signals, ie a leading indicator, that the US economy is going to continue to rise? That economically the US is doing well and will continue to do well?

Instead of answering these, you continue to shift the goal posts for what you do and don't find acceptable, a sure sign of somebody who knows that they're on shaky ground. But please answer them anyway, I'm really curious about what your answers are.

[DemocratSinceBirth]

81. This Debate Is Getting Boring...

The original poster implied we were heading for a collapse.... To most economists a collapse is not a bursting of a bubble in housing or equities but a widespread breakdown of the American economy, i.e. a depression...


During the Great Depression unemployment rose to over twenty five percent, the gross national product was nearly cut in half, and manufacturing output declined by over forty percent.....


If you are arguing that is in the forseeable future than I have almost eighty years of history to say it isn't so....

If you read the thread closely you wil see this was the definition of collapse I chose....


If this is your definition of a collapse I'm willing to bet $1.000.00 this isn't so... Think I'm jokiing private message me and I'll give you my e-mail... I'm a man of honor and we can work out the logistics...


The ball is in your court...


Peace


Brian

[MadHound]

84. No, I realize what you're talking about, we're on the same page

And no, I'm not betting you on whether or not this happens, I'm trying to raise your(and others) awareness of just exactly what we are facing. You say otherwise, but you are very lacking in proof, hmmm.

I think that you need to go reread you history too friend, specifically read about the Gilded Age. And how it ended in that big crash called the Great Depression. And after you have finished boning up on that, go check out the stats on comparable issues today, like the record breaking gulf between the rich and the rest of us, and how small a group holds the wealth in this country. And then maybe, just maybe you will realize that we have and are breaking one hundred plus year old records in these statistics, ie we're in the Second Gilded Age, bigger and badder than the age of robber barons. And you know what that means now don't you? Yep, the fall is going to be that much harder. Do you understand now? If not, I would suggest that you go read Kevin Phillips fine book "Wealth and Democracy" for a great analysis on this issue.

This is not a joke friend, I'm not trying to win money or score points here. I am trying to warn you and others that we're headed for a major fall, have been for thirty years now. And right now, quite frankly it is looming close. You know what they say about people who don't learn the lessons of history? Well sadly, it does seem like we're going to be doing that repeat thing here shortly.

So keep your money. While I would be more than happy to pay you off if we all stayed fat and happy, I would find absolutely no joy in taking a thousand dollars off of a person when they are in dire need of it.

By the by, just as way of further proof of my thesis, go check out just how many of the post Depression laws, you know, the ones that were supposed to protect us from another Great Depression, have been bent or outright repealed. You can start with Glass-Steagle. Scary scary reading friend.

[DemocratSinceBirth]

85. I Am Aware Of The Inequities And The Concentration Of Wealth...

I am not denying them...


I am also aware of the speculative bubble in real estate, the negative savings rate, and how leveraged some individuals are...


I'm just saying the Great Depression was a cataclysmic event that I don't see being repeated....


I just don't see twenty five percent plus unemployment and a GNP being cutting in half in the offings...


A couple of posters said a depression in the US could be contained... If the US was to go into a depression we would take the whole world with us....

[hogwyld]

87. All it would take

Is for China and Japan to think we are going down. Once they stop financing our deficits, interest rates and inflation skyrocket. All manufacturing collapses, the equities plummet to nil, and bingo, 50% unemployment. What's so difficult to believe?

[DemocratSinceBirth]

88. Why Would The Japanese And China Commit Suicide?

Why would they destroy their largest market?


And the bonds they bought have call dates...



A holder just can't cash a bond whenever they want without taking a significant financial hit...

[hogwyld]

92. I'm not saying that they would start the collapse

But if their "tea leaves" indicate things are amiss, which they are, why keep throwing good money after bad? It's sort of like buying Enron when the stock price keeps tanking.

[MadHound]

100. Are you also aware of some other things

Like the fact that real world wages have been declining for the past thirty plus years? Like the gap between the wealthy and the rest of us reached a record breaking chasm under Clinton, and has been climbing ever since? Like the fact that we have record breaking defecits, which in and of themselves can slow growth significantly, or even reverse it? Like the fact that there has been a quiet but systematic destruction of the legal framework put in place after the Great Depression, to prevent another Great Depression, and that this dismantling has been going on for a decade now? Like the fact that unemployment numbers have been deliberately skewed and worked over in order to make our unemployment picture look much rosier for the past twenty years? And that some experts say that this covers up the fact that our real unemployment rate is at greater by at least fifty, and even one hundred percent, thus putting our real unemployment rate at roughly ten percent? That our financial markets have been artificially toyed with, pumped up, dumped off, etc. for the past twenty five years, and that is only what the government and corporate whistleblowers will admit to, there might be much much more? Like the fact that the wealth of this nation has been systemactically concentrated into an ever smaller, record breaking smaller, group of people.

You say that you know all of this, yet you still claim, despite the fact that this all is almost the same sort of setup that led to the Great Depression, that there is no way we can have another Great Depression? Damn friend, I want some of the drugs that you're on, for I too need that great reality escape.

Prove it then, I've been asking you to do this all day, plain and simple, prove it. No vague mutterings, no pious platitudes, no suspension of disbelief. Prove it, in black and white, with reputable sources. I've asked you to do this time and again today, yet you have evaded and dodged the question, or simply repeated the same thing over and over. So please, prove me wrong, OK?

Until then I'm going to go with my perceptions and conclusions, for I know that they are backed by sound economic theory, historical reality, and many educated sources. So let us see you do the same. I'll be waiting, for a long while I suspect.

[MadHound]

103. One other thing that you should also be aware of

Back during the Gilded Age, lots of wealth concentrated into a very few hands. And these select few, while obscenely rich, wanted even more, wanted to go a big buying spree. Thus when the storm clouds started to gather during the twenties, though they could have done much to prevent it, they didn't. Why? Because they saw their dearest wish coming true, a once in a lifetime buying spree, when massive amounts of consumer goods, property, corporations, all of that and much much more would be up for sale at bargain basement prices. So these wealthy and knowledgble few quietly withdrew their money from the market, battened down their finanicial hatches, and weathered the initial storms of the Great Depression. They watched as people starved and died, as company after company went belly up. And then they went out and embarked on a buying spree.

Now then, during the ninties the wealthy few, the real players in the tech market and the financial markets made obscene amounts of money. And many of them who were in the know quietly withdrew their cash to safer harbors before the tech bust in '00. They're now also quietly withdrawing their money from the real estate market. Seems like they're battening down the hatches and getting ready for another big buying spree.

Think about it.

[Nordmadr]

46. That was my point but you said it far better Madhound. N/T

[pitohui]

49. don't forget 1987!

that was the great modern crash to my mind (while you suggest 82):

http://www.lope.ca/markets/1987.html

be that as it may, i agree w. yr main point, i'm just a hopeless nitpicker

crashes come & go but usa & world keeps on truckin'

[DemocratSinceBirth]

91. Exactly...

The Dow lost 35% of its worth in one day... At mid afternoon it was down by fifty percent before it rallied a bit...


And the economy barely hiccupped...

[rman]

67. Part of the economy was doing quite well during the Great Depression

It's just that the low and average income majority of the population was suffering and dying. The rich were not. Certain industries were not.

Many people seem to think that when the economy is doing better, a majority of people will benefit. Reality is that the economy has been growing some 2 to 3% average per year since like forever, during which period the rich got richer and the not-rich got poorer.

Which leads to the question: who's economy is it anyway?

[depakid]

68. An interesting article on point from was posted recently

and it seems credible- as it looks to be written for Chinese consumption- and not directed at the west as propagada:

It's time to take seriously a US-led global recession

http://www.chinadaily.com.cn/english/doc/2005-10/06/con...

[madrchsod]

8. amazing

in 4 years this country has ended up where it is today. we have pissed off canada,venezuela,and most of the free world. we are no longer the leader of the world and now we are the outcast of civilized soceity. we have betrayed the trust of the world and we have betrayed ourselves. there would be no talk of collapse of the world economy if it wasn`t for bush`s delusional view of the world and how he thinks others should bow to his whims. the rest of the world will by pass us and we will fall into a second class country unless we decide to take back our country and resume our role in the world. it is amazing that we even have to think of our economic collapse.

[Traveling_Home]

10. Aid and Food

I seem to remember growing up (a long long time ago) with the notion that we were the breadbasket of the world. I have no idea if that is or ever was true.

But to further your idea -

If all of our food aid (soybeans, wheat ???) was stopped what would be the effect on the nations currently receiving it?

What would be the effect on the rest of the world if all of our commercial food exports stopped because of a US economic collapse?

[newyawker99]

35. Hi Traveling_Home!!

Welcome to DU!!

[hogwyld]

53. It would be a boom for the rest of the world

Because of our heavy subsidies, we basically sell our food below cost of production. This squeezes out the farmers in the developing world that do not receive govt. help. Without our price "protectionism" global agriculture will thrive as there will be incentive for the farmers.

[redacted]

13. It won't. Get real. And if you are real -- learn some economics.

Do some reading. It's won't collapse -- at least not anytime soon.

Hell we are not even in a recession. Stagnant and mismanaged, but not recession.

Sorry if I sound flip -- I get so sick of the "sky is falling" economic predictions on DU from people who know nothing about these things.

It just creates hysteria among the vulnerable to anxiety.

[MazeRat7]

17. I'm also getting a bit tired of the recent "sky is falling" mentality....

And it doesn't seem to be limited to the economy. Sometimes I think folks just loose the ability to think in critical and measured segments. Oh well... whatever...

MZr7

[Deja Q]

18. Especially since I consider myself to be in both categories. That aside,

I agree with your point.

I hope you have a steady career. I don't.

So don't let anyone find out what you do. You'll be the next victim for their "prosperity".

[redacted]

22. LOL. Steady career only because I made my own way.

And I don't ever plan on firing myself.

[mandyky]

19. What are YOUR credentials?

And do you really believe any numbers coming out of this administration?

I don't believe their unemployment numbers nor their growth numbers. They use ENRON accounting to bolster support for their the tax cuts for the well off, meanwhile people lucky enoough to have jobs are underemployed or have to work more than one job, just to tread water.

One thing I hate about folks who claim to be economic geniuses is they look at the numbers with no heart or emotion, and are as clueless as the politicians in Washington DC.

[Deja Q]

20. It's just business to this lot. And THAT is the problem. No soul. Just $.

So many $-lovers get Hummers and SUVs and don't bother to look at the frigging MPG ratings because the tax breaks give them orgasms. (I'm not suggesting he is that stupid, but I know too many who ARE more than THAT stupid...)

Bit of a pity, that...

[redacted]

23. Look. You didn't like what I said -- so you attacked me. Not fair.

That's what the politicians you hate so much do.

What proof do you have that the numbers are being fudged? Show me.

If you don't believe me -- go to the archives and look up economy with the user ProfessorGAC

and he has no love of the administration.

[mandyky]

26. Your post was so "know-it-all", I merely asked your credentials

here's what you wrote - in which you told us we were hysterical and chicken little and not thinking critically.

As for ProfessorGAC, just because someone has professor in their name does not mean they have grasp either. There is more to economics than the market and profits. We are turning into a third world country due to the deficit spending, the number of poor are growing, and even if the economy doesn't collaspe, the American people will revolt.

redacted (930 posts) Wed Oct-19-05 09:53 PM

Response to Original message

13. It won't. Get real. And if you are real -- learn some economics.
Edited on Wed Oct-19-05 10:30 PM by redacted

Do some reading. It's won't collapse -- at least not anytime soon.

Hell we are not even in a recession. Stagnant and mismanaged, but not recession.

Sorry if I sound flip -- I get so sick of the "sky is falling" economic predictions on DU from people who know nothing about these things.

It just creates hysteria among the vulnerable to anxiety.

[redacted]

79. Well my post was not to you -- it was to the OP and if you look up, you'll

see he took it with the spirit with which it was intended.

Never used the word you, never even knew you existed. Never said the poster was hysterical , but was commenting on the quantity of economic doom posts from those know not what they speak. It creates a culture of fear that plays right into the repukes hands.

And I am fairly sure Prof GAC is REALLY a professor and an economist, but you can ask him directly. He comments very authoritatively before.

[rman]

70. You used an argument of authority, a logical fallacy - not fair

There's wasn't much in your post other then "i know, you don't. i'm right you're wrong". It could just as well be you say that simply because you disagree.

What's your measure of the health of an economy? The amount of wealth going around (and accumulating), or the well-being of The People?

Judging by the latter we're already deep in recession, have been for at least 30 years, and it's only getting worse.

[redacted]

80. and besides, my flipness started a hell of a discussion and . . .

I apologized for it in advance.

[MazeRat7]

24. Administration "numbers" don't control the "ecnonomy".... the markets do.

I doubt anybody on this board believes the administration numbers, I certainly don't, but that was not the point of the OP.

The point of this thread was about "possible collapse" of the economy. The health (or lack of) our economy is based on the (global) markets. The administrations numbers are only a lame attempt by bureaucrats and bean counters to characterize an intangible and put the best spin on it.


MZr7

[mandyky]

25. And the markets are as dishonest as the administration

Remember the tech bubble, I had this nagging feeling that they were pushinng it to hard in the media.

This time it is refinancing your home. If and when the bottom falls out, there will be a lot of homeless people. This is all part of people being thought of only in terms of being a consumer.

Why are we not in inflation? They don't count food and gas! With the number of poor growing in this country (I believe it is up 12 million) since 2000, not counting food is plain ridiculous. If the poor are lucky enough to have a job, the rise in gas and food prices
are 2 of the 3 expenses, the other being shelter.

Sure the corporations are raking it in, but that does not help the rest of the economy if people become so poor they don't consume.

[tritsofme]

27. They do count food and energy price rises in the inflation numbers,

That's headline number that increased 1.2% in September.

What you're talking about is Core Inflation, and that excludes food and energy prices. They don't just do it for fun, it allows economists to judge whether or not price increases or decreases are spilling over into the rest of the economy.

As for this thread, I think the death of the American economy has been greatly exaggerated.

[DemocratSinceBirth]

32. Exactly...

If you define collapse by 1929 standards the chances are essentially nil...



I see lots of folks here saying the administration is manipulating the numbers....


These numbers are in the public domain and any economist can verify them or dispell them...

[converted_democrat]

65. Kind of O/T, but worth a read....The market is being manipulated.

http://biz.yahoo.com/bw/050906/65371.html?printer=1

The market is being manipulated.

[ProfessorGAC]

37. Sorry, That's Not True

While i don't dispute your earlier contentions in this thread, the CPI, which is the most often reported index of inflation does not count direct energy, housing or food. The reason claimed by conventional economists is that it's too volatile and therefore too difficult to track. It's not to allow them to determine whether those increases are spilling over. There are FAR more precise and honest mathematical ways to do that.

Those of us who track economic performance from the analytical school use a term called REAL inflation index (not core inflation, which is also a self-compressing value), which tracks the change in costs of all direct consumables accounting for any change in the value of the dollar and median take home wage. I think you'll find that this is a far more reliable indicator of inflation than any other indicator. It reflects how prices are rising due to all factors and how it affects the typical consumer.
The Professor

[DemocratSinceBirth]

38. You're Right

During his administration Nixon wanted so many items removed from the inflation index to make the numbers look better that Herb Stein opined that there would be nothing left to measure....


Back to the oroginal topic I'm not Paul Samuelson but I find talk of a 1929 like collapse nonsensical...

[ProfessorGAC]

40. Same Page, DSB

By my analyses, this economy is the worst since 1981. The various indicators of economic vitality (a term i use in place of the conventional ones) show that the consumption base is in danger of sinking to a point that would be recessionary, by any definition. (That's another thing with which i differ from conventionalists.)

Currently, these last 4 years have all indexed below the mask of a five year moving average analysis from the last 50 years. The mask is set at 2 sigma below the mean. But, comparing the Depression, the years proceeding to the total meltdown (shortly before and shortly after the collapse), show those years to be at least 3 sigma further below the mean of the prior 50 years. Thus, we're light years from Depression-like collapse.
The Professor

[DemocratSinceBirth]

43. Your Analysis Is Beyond My Ken..

but as a social scientist I have taken my share of economics course....

I'm not a fan of this administration but they aren't "smart" enough or "dumb" enough to blow up an economy as big as this...


Lots of factors contributed to the Great Depression-stupid monetary policy, stupid fiscal policy, mindless speculation , etcetera...



Oh, the OP asked what would happen to the rest of the world if the American economy "collapsed"... They would collapse along with us as in 1929....

[ProfessorGAC]

48. Once Again. Same Page

The U.S. economy is the keystone of the global economy. But, in fact, any economy as large as this (say the E.U.'s) collapsing could not help but take everything down with it. So, it's not so much whether we the keystone, (although i think that's true). It's simply sheer magnitude. An economic F7 tornado, if you will. Nothing that shares it path is spared.
The Professor

[DemocratSinceBirth]

50. I Tried To Find It On The Net

What % of our exports are agriculture related?


I once read it is a lot and the world would starve without our food or at least there would be acute shortages....

[Yavin4]

21. They Said The Same Thing About The Titantic

It was too large to sink.

First of all, there really is no such thing as the U.S. economy. What everyone is referring to is a amalgamation of different regional economies. In many regions of this nation, the economy has indeed collapsed. If you live in parts of the South (Miss, Ala, and LA) ot the NE (Maine, N.H., Vermont) or the Midwest (OH and IN), then the economy has indeed collapsed.

Even the word collapsed is sort of a misnomer. What's really happening to America is that the nation's wealth is becoming increasingly concentrated into a few hands in a few regions of this country. With a small percentage getting more and more of the wealth, the rest of the population's economy can collapse, but the stats will show otherwise.

If Bill Gates walked into a bar of unemployed people, then average wealth of the people in the bar would be well above a million dollars.

[DemocratSinceBirth]

30. I Don't Think You Can Make Economic Predictions On Such Random Events As

The Titanic...


I have a better chance of getting struck by lightning today than of a cruise ship running into an iceberg...

[Nordmadr]

33. My my, aren't we smug? You just insulted and attacked

everyone that disagrees with you.

While I am no "economist" I have read a book or two in my day...and I have still have my senses. I see people everywhere running in place and not keeping up. I see predictions for natural gas costs increasing 30 - 70% this heating season, with oil obviously continuing it's climb as well long term. These costs are now beginning to spill over into other consumer goods.

Housing bubble
energy increases
outsourcing and the general fucking of the american working public
auto and airline industry just treading water (again, energy related)
U.S. debt owed internationally
budget deficit
Potential for oil trade switching to Euro away from "petro" dollar


A very large amount of our economy is based on the consumer actually consuming. As we lose our ability to do that the economy will drop. Seems rather basic and logical to me. Don't need to read a damn book to figure that out.

Another thing, it seems every economist out there will give you a different opinion. Funny how I keep reading...so in so came in below/above market predictions...surprising economists...seems they get it wrong just as much as they get it right...so what makes them so fucking brilliant and deserving of pedestal status?

Olaf

[DemocratSinceBirth]

36. Give Me A Link To A Tenured Economics Professor At An Accredited

University And You Have My Attention...


Since "collapse" is such an amorphous word in this instance let's use the Great Depression as a benchmark....


I doubt you would find a mainstream economist who says a collapse like that is in the offings...

[Nordmadr]

45. How about Matthew Simmons, not an economist, but

an investment banker and Bush energy advisor.

Here are some of his speeches, predictions, etc.:

http://www.simmonsco-intl.com/research.aspx?Type=msspee...

Now I also would like to point out that it would seem unwise for a bunch of economists to come and start predicting a major downturn or "collapse" in the U.S. economy. This would have the potential of frightening away investors, thus making it a self-fulfilling prophecy.

...or this article by a professor of history at the Stern School of Business, New York University.

http://afr.com/articles/2004/06/10/1086749836166.html

with points like this:

..."Losing that subsidy - in effect, the premium foreigners are willing to pay for the sake of holding the world's favourite currency - could be costly. For a rise in US long-term interest rates to the levels recently predicted by the economist Paul Krugman (a 10-year bond rate of 7 per cent, a mortgage rate of 8.5 per cent) would have two devastating economic consequences. Not for big US corporations - they are hedged (more than five eighths of all derivative contracts are based on interest rates). But a 3 percentage-point jump in long-term rates would whack first the federal government and then US homeowners with considerable force. For neither the US treasury nor the average US household is even a little bit hedged. The term structure of the federal debt is amazingly short: 35 per cent of it has a maturity of less than one year, meaning that higher rates would feed through almost instantly into debt service costs (and into the deficit). Meanwhile, even as rates have been nudging upwards, the proportion of new US mortgages that are adjustable-rate rather than fixed has risen from about 12 per cent in late 2002 to 32 per cent.

The geopolitical implications of this are worth pondering. A rise in American interest rates has the potential not just to slow down the US recovery; it could also cause the federal fiscal deficit to leap even higher. Under the circumstances, the pressure will increase to reduce discretionary spending, and that usually turns out to mean defence spending. It will get steadily harder to sell an expensive occupation of Iraq to a population groaning under rising debt service payments and alarmed by spiralling fiscal deficits."

Gee, that sounds promising. Whacking home owners, leaping federal deficits, etc.

I am sure I can turn up more, but don't have time right now.

BTW, just to be clear, my initial comments from my previous post were not directed at you, but at redacted, in case that was unclear.

Olaf

[DemocratSinceBirth]

47. I'll Take It...

The OP is implying a 1929 like Depression is imminent....


That's a lot different than a nasty recession as the folks you cited suggested might happen......



During the Great Depression the equities markets crashed, manufacturing plummeted, and unemployment exceeded twenty five percent....


We are nowhere that....


And again if the US economy collapses it's taking the whole world with it...

[Nordmadr]

52. Bill Gates, the richest man in the world, says the dollar is going

down...

http://www.democraticunderground.com/discuss/duboard.ph...

Olaf

[rman]

72. Paul Krugman

at MIT:
http://web.mit.edu/krugman/www /

at Princeton
http://www.wws.princeton.edu/pkrugman /

NYT
http://www.nytimes.com/top/opinion/editorialsandoped/op... /

Harpers
http://www.harpers.org/TheIcebergCometh.html

[DemocratSinceBirth]

76. I Read Krug Every Day In the NYT

I didn't know he was predicting a 1929 like collapse that featured

-25%+ unemployment


- a forty percent decline in industrial production


- and a GNP that was almost cut in half...


I think our GNP is around $11 trillion dollars....


Is Krug predicting it to be cut in half?

[rman]

78. Do you think there will be a collapse, just not as bad as the Great one?

Even if not as bad (perhaps just not global), it can still be quite bad for many people in the US, and it already is bad for many.

[DemocratSinceBirth]

82. I'm Not An Economist And Far From A Fan Of This Administration

Do I think there could be a nasty recession?

Sure....


Is there lots of froth in the housing market?


Sure....



Are the defecits large?


Kind of but not my historical standards....


During the Great Depression the GNP was sliced in half and over twenty five percent of Americans were jobless....


I don't see that...

[rman]

105. These days one can have a job and be dirt poor at the same time.

I say the only relevant measure of an economy is the people's well-being. Having a job does not automatically mean you're doing well - regardless of unemployment numbers, GNP and national debt.

[nadinbrzezinski]

16. Used to be that the US got a slight cought

the world got pneumonia, we are no longer the essential nation

[NewJeffCT]

31. that is true... but

If the US gets sick, the rest of the world will get sick, too.

In the unlikely event the US economy collapsed, it would take a good part of the world with it. Who would buy all those cheap Chinese goods? Who would buy all the I/T services from India? The EU alone isn't enough to sustain it all. China won't be ready to surpass us as the world leader for at least a few decades.

[hogwyld]

54. China's already raced by us

With 1.3 billion people, they can just step right in a take our place as the consumer. Just think about it, between China and India, that's roughly 40% of the global population. They could care less about our puny 300 million. Pretty soon, we'll all be sneaking across the border with Canada standing at their home depot looking for work.

[NewJeffCT]

56. big difference

Average income in China is less than $2,000 per year. While it's growing rapidly - especially on the East Coast of China - it will be a while before people there have the purchasing power of Europe or the US. There are only so many big ticket items people there can buy on that income. While their overall economy may be one of the top 5 in the world based on total GDP, the average Japanese, German or Brit has a lot more purchasing power. You have to divide China's GDP by 1.3 billion people, while you divide the US's GDP by only 300 million people.

The same with India.

[hogwyld]

57. But

By the OP, if the U.S. economy were to collapse, we would have no purchasing power. That slice of the pie has to go somewhere.

[NewJeffCT]

61. it would be worldwide deflation

If the poople in the US can't afford to buy $2,000 TVs, who is going to buy them? Will the price go down to $200 so people in China can buy them, too? That certainly means less profit for Mitsubishi or Sony or whoever makes your big screen TV.

The same with cars. Who is going to buy those cars from Toyota? Right now, a car in China costs a good twice what it costs in the US, if not more. If I wanted to buy a $20,000 Toyota Corolla here in the US, that same car would be $40,000 in China, if not more.

The same with refrigerators, stereo equipment, air conditioners, etc, etc.

[hogwyld]

62. Not necessarily

What will happen then is there will be more Chinese car manufacturers. Since their labor costs are enormously less, the cars will also be less. A lot of the price inflation for Toyota's in China is tariffs. Domestic manufacturers don't have to pay that. If you go to WalMart, all the a/c's, refridgerators, etc. are already made in China.

[DemocratSinceBirth]

94. Again

"If you go to WalMart, all the a/c's, refridgerators, etc. are already made in China."


Exactly... We are buying all their dreck....


If America was broke how would they buy China's dreck....


It would be like opening a Tiffanys in Appalachia...

[hogwyld]

97. You make a good point

But, let me ask this, we are a fraction of the 6 Billion people on Earth. Cannot the Chinese sell their goods to Europe, Canada, Australia, amongst? Supply and Demand would dictate that prices would drop, due to a surplus of energy amongst other things if our economy were to go.

[DemocratSinceBirth]

102. How Many Of Those Six Billion Have Money?

And Europe basically set up the EU to foster trade among themselves.... They have enough challenges employing their populations without buying dreck from China they can make themselves...


The reason the US runs such humongous trade defecits is because our liberal trade policies result in us buying everybodys elses dreck....


And you ignore a salient fact about America... It's agriculture is the most advanced and fecund in the world... It is so good we pay folks not to grow stuff.....

That's our ace in the hole...

[DemocratSinceBirth]

93. Exactly-The Per Capita GDP In The States Is About 35K

That's a better measure...

[ProfessorGAC]

51. Oh Yes We Are

We are still the single largest fully unified economy and the dollar is still the most highly traded currency, when the actual use within the country is counted. The Euro is close. Actually it's barely lower from a statistical point of view. But, trust me, after studying macroeconomic and global economic behavior, mathematically, for the last 20+ years, if we get a cough, the other countries at least get a cold.

If we get the flu, some of them will die.
The Professor

[DemocratSinceBirth]

28. If You Define Collapse By Great Depression Standards Never

eom

[Loonman]

41. Fear mongering

We're still technically in a "Golden Age", no need for paranoia. It would take a sudden fuel shortage or nuclear war to derail the economy.

[DemocratSinceBirth]

44. Yeah- A Prolonged Fuel Shortage Would Be Catastrophic For Everybody....

It would depend on the length ... It would have to be a "long" time to throw the world into depression...


I put "long" in quotations because I have no idea how "long" it would have to be...

[hogwyld]

55. Not only will they survive

They will thrive, ignore us, and revel in our return to the stone age. We are on the road to becoming the hunter, gatherers of yore. Oh, they might let us mow their lawns, wash their dishes etc. China could probably buy us all outright. Practice your Mandarin everyone.

[Democrats_win]

59. Nada. But we better learn to speak Spanish or Chinese and learn to swim.

[rucky]

63. worry more about the housing market, for now. n/t

[Bernardo de La Paz]

64. Your assumption is not a fact in evidence. Debatable when / if collapses.

[earth mom]

69. After reading this thread...

I have to say that it doesn't take an economist or an expert on the stock market to know that the economy is in deep trouble.

Outsourcing, unemployment (grossly underreported as it is), high fuel and energy prices, stagnant wages, predatory credit companies, spiraling prices for goods and services, the housing bubble, the millions of people who lack of health care with costs for it rising on a daily basis, millions of people living as the working poor, millions of middle class people living paycheck to paycheck with both of these groups being just one step away from disaster...all these things are indicators that this country is in BIG trouble. It doesn't take a rocket scientist to figure that out.

We're close to the Great Depression 2; it won't take much more to send us over the edge. And I would say that the naysayers who don't want anyone to rock the stock market with talk of "panic" as what happened in 1929 are doing so for self protection. As long as people are blissfully unaware of how bad it really is, then some people can continue to make money in business and the stock market...ain't that right?

Things are bad. They are NOT getting any better and WILL get worse. Fasten your seat belts.

[hogwyld]

96. What do you think

Is a good Depression proof place for investments? I want to get everything out of the stock market, except maybe some internation funds, sell the house, and stock up on gold and lead.

[Nordmadr]

74. Come on folks, recommend this thread for greatest! N/T

[nadinbrzezinski]

75. you got it

and by the way, I do beleive we are in for some economic pain, and I will say, unlike some, that I agree with the OP, we are in for a 1929 event. Why? the conditions are very similar

[hogwyld]

83. The collapse has already begun

It's just the the MSM keeps hitting the snooze button. Bushco's policies have so alienated us from the rest of the world, we are the global pariah. We have become the axis of evil, and I think the world has had enough with us and would probably do everything they can to push us over that cliff. All the people that say we are to essential to the global economy do not see the new global reality. We don't make anything here anymore, our number 1 export is debt.
After the collapse, the rest of the world will boom because energy prices will drop like a rock. Thanks to *, we have become the hemorroid to the world. We're here, but the world would love for us to go away.

[Name removed]

86. Deleted message

Message removed by moderator. Click here to review the message board rules.

[hogwyld]

89. I truly hope that you're right

It's just that I have never seen things this bad. I am generally an optimist, but everything I see and read points to a meltdown, and an end to an era. It just would have been nice to pass something down to future generations other than memories.

[myrmenki]

90. Some gossip on how the rich are preparing

and it's family gossip only, mostly about distant relatives. I myself live in Europe.

They are buying houses all over Europe, houses they consider living in one day. (The most right wing relative I have has even started polishing up his French, because that's his country of choice.) They've invested heavily in gold, but for private purposes only, and I mean real gold, not just the stuff you own on paper and leave in a bank vault, and made sure it's not in the US. They've moved much of their private wealth into European and Asian stocks (not Japan).

This has been going on for several years, and now they lean back and wait. The day the markets collapse they will have withdrawn from American stocks.

A few weeks ago I met a Wall Street relative of mine (who himself isn't one of the really rich), and I asked him what I always ask when I meet him, in a conversational tone, "So tell me, when is the US economy going to collapse?" And he said "Any day now." His answer used to be "Oh, in the worst case, it could be only months".

But, if I understood well, the collapse of the Dollar (and subsequent collapse of the US economy) won't take place unless the Chinese and several others say so, and they won't right now. Western Europe is going to take a heavy blow but recover, Canada will collapse, Japan might, and Mexico will be far better off than now after a few years. (I'm simplifying matters, it's much, much more complex than that.)

These are the assumptions based on which the wealthy invest their private money. And, again, it's only gossip, like "oh, and guess what your cousin-twice-removed's brother in law invested in last week?" and I have no way of backing it up, nor do I know if it's representative at all.

Based on those assumptions: World economy of course will survive, but America won't be the best place to live and invest in for years to come.

And no, I don't think world peace would suffer too much if the US military stops meddling in other countries. At least I hope so.

[hogwyld]

95. That goes to the heart of the problem

Once the U.S. is perceived to be in trouble, investment in our markets will collapse. It will be a self fulfilling prophecy. Money stops coming, economy tanks, even less money comes, economy collapses. Presto, chango, we become another Zimbabwe.

[Name removed]

99. Deleted message

Message removed by moderator. Click here to review the message board rules.

[myrmenki]

104. It will be an avalanche

once it starts.

But of course you aren't going to be Zimbabwe or any other third world country. You have the infrastructure and knowledge in place to keep going, albeit on an economically lower level. It's no doomsday scenario, it's just the consequences of the recent rather foolish economic policies (spell: Bush administration). But there will be no time machine that transports you back to pre-developed times.

[hogwyld]

107. I somewhat agree

However, we may have the infrastructure, but it takes a lot of money and time to maintain it. How long do you thing the roads, sewers, electic grids will last without constant maintenance? Our infrastucture is already crumbling, what do you think less money will do?

[rman]

106. see, they're not really Americans, they're transnationals

(much like the corporations they own, have invested in or work for at some upper management position).
The planet is their playground, and we're just toys.

[Mike03]

101. Wonderful Thread

Kicking and thank you all

[hogwyld]

108. Kicked and Recommended! eom