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Thread: in honor of the 100th anniversary of the Titanic sinking ...

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    Default in honor of the 100th anniversary of the Titanic sinking ...




    from our 'old friend' Charles Hughes Smith at

    (snip)"We are like passengers on the Titanic ten minutes after its fatal encounter with the iceberg: the idea that the ship will sink is beyond belief.

    As we all know, the "unsinkable" Titanic suffered a glancing collision with an iceberg on the night of April 14, 1912. Ten minutes after the iceberg had opened six of the ship's 16 watertight compartments, it was not at all apparent that the mighty vessel had been fatally wounded, as there was no evidence of damage topside. Indeed, some eyewitnesses reported that passengers playfully scattered the ice left on the foredeck by the encounter.

    But some rudimentary calculations soon revealed the truth to the officers: the ship was designed to survive four watertight compartments being compromised, and could likely stay afloat if five were opened to the sea, but not if six compartments were flooded. Water would inevitably spill over into adjacent compartments in a domino-like fashion until the ship sank.

    We can sympathize with the disbelief of the officers, and with their confused reaction, simultaneously reassuring passengers and attempting to goad them into the lifeboats. With the interior still warm and bright with lights, it seemed far more dangerous to clamber into an open lifeboat and drift off into the cold Atlantic than it did to stay onboard.

    As a result, the first lifeboats left the ship only partially full. Only when it became undeniable that the ship was doomed did people attempt to "make other arangements," but by then it was too late.

    The tragedy was a cruel mix of human error (entering an ice field at nearly top speed, 23-25 knots), hubris-soaked planning (only enough lifeboats for half the passengers and crew) and design flaws: the high-sulfur iron hull plating did not bend when struck by the ice, it shattered like china.

    As noted above, the watertight compartment design was also flawed; indeed, some studies have found that the ship would have stayed afloat an additional six hours had there been no watertight compartments, as water would have sloshed evenly along the entire length of the vessel.

    I think this perfectly describes the present. Our financial system seems "unsinkable," yet the reliance on debt and financialization has already doomed it, whether we are willing to believe it or not.

    Maybe the illusion that the ship is unsinkable can be maintained for another year or two; the Status Quo's success in masking the ultimate fate of the financial system for the past four years supports the belief that there is literally no limit to the Federal Reserve and Treasury's power to keep the ship afloat, regardless of the cost. In other words, the Fed and Treasury are perceived as "unsinkable."

    That illusion has cost trillions of dollars, trillions of dollars of new debt that now burden the taxpayers: $2 trillion added to the Fed balance sheet, $1.2 trillion in secret giveaways to the banking cartel, and $6 trillion in additional Federal debt/spending.

    Yet few of us are willing to entertain an exit from the belief system that supports the Status Quo. We are like passengers on the Titanic ten minutes after its fatal encounter with the iceberg: we can't believe this grand ship could sink, so we do nothing while it is still possible to influence our fate.

    In my new book Resistance, Revolution, Liberation: A Model for Positive Change, I explain how structural flaws doom the financial system and government finances alike to either default or destruction of the nation’s currency. There are no other end-points.

    We could insist on changes to these doomed policies, but we do not; why?

    Some of our reluctance can be attributed to disbelief, as the gap between what we know is inevitable--the ship will sink beneath the waves--and what we currently see--a proud, mighty ship, apparently only lightly damaged--is so wide.

    But if we delve deeper, we discern how calculations of risk and gain yield faulty assessments of self-interest. While the ship appears structurally sound, it seems risky to clamber into an open lifeboat and drift away into the freezing night, while the supposed gain (saving our life) is questionable: from the warm deck of the ship, it seems that climbing into a small lifeboat would place our life far more at risk than staying on board the mighty ship.

    This assessment of self-interest was tragically flawed, and by the time the impossible (sinking) had become the inevitable, it was too late to change the fate we’d selected back when all seemed permanent and secure.


    The point of this exercise is to reveal just how illusory our assessment of self-interest and security can be, and how prone we are to making decisions based on the present even when our rational minds are well aware that it is unsustainable.

    The financial system of the United States of America is like the Titanic. Hubris led many to declare it financially unsinkable even as its fundamental design was riddled with fatal flaws and the human pilots in charge ran it straight into the ice field at top speed.

    We have some time left before the ultimate fate is visible to all. Ten minutes after the collision, the Titanic's passengers had 2 hours and 30 minutes before the "unsinkable" ship sank. How much time we have left is unknown, but the bow of the ship will be visibly settling into the icy water within a year or two--and perhaps much sooner."(snip)

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    Default Re: in honor of the 100th anniversary of the Titanic sinking ...

    Sooo, am I going to have to 'go bush' to survive? Grow my own food? What is your world scenario?
    Tiny tweaks----->BIG CHANGES

    Quote Originally Posted by Kirakonstantin View Post
    More fear-mongering? Really? Yes, this is not the 1990's anymore. Yes, things are changing. Either dance or don't. Freaking out and sowing fear isn't going to help anyone.




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    Default Re: in honor of the 100th anniversary of the Titanic sinking ...

    ^^^ actually, I don't have a world scenario. But from an economic standpoint, IMHO one way or another the massive borrowing and spending by gov'ts MUST come to a stop, because international creditors are not going to keep 'lending' their REAL money at near zero interest rates for much longer. There are a number of different ways this could 'play out' ... from a 1930's-esque second great depression to Weimar-esque hyperinflation to something in between. But for sure, no matter how it 'plays out', the US average standard of living will drop and 'real' things / 'necessities' will be worth more than 'paper' things / 'luxuries'.


    However, I can offer up author Charles Hughes Smith's scenario ... from


    (snip)"Is 2012 a Reprise of 2008?

    Politicos declare the debt crisis is fixed and an imploding housing market is "contained," central banks flood the market with liquidity--hmm, does this remind anyone else of 2008?
    We all know that central banks and governments have been actively intervening in markets since the 2007 subprime mortgage meltdown destabilized the leveraged-debt-dependent global economy. We also know that unprecedented intervention is now the de facto institutionalized policy of central banks and governments. In some cases, the financial authorities have explicitly stated their intention to “stabilize markets” (translation: reinflate credit-driven speculative bubbles) by whatever means are necessary, while in others the interventions are performed by proxies so the policy remains implicit.

    All through the waning months of 2007 and the first two quarters of 2008, the market gyrated as the Federal Reserve and other central banks issued reassurances that the subprime mortgage meltdown was “contained” and posed no threat to the global economy. The equity market turned to its standard-issue reassurance: “Don’t fight the Fed,” a maxim that elevated the Federal Reserve’s power to goose markets to godlike status.

    But alas, the global financial meltdown of late 2008 showed that hubris should not be confused with godlike power. Despite the “impossibility” of the market disobeying the Fed’s commands (“Away with thee, oh tides, for we are the Federal Reserve!”) and the “sure-fire” cycle of stocks always rising in an election year, global markets imploded as the usual bag of central bank and Sovereign State tricks failed in spectacular fashion.

    Keep Doing More of What Has Failed Spectacularly

    Central banks and states responded by doing more of what had already failed spectacularly. In the ensuing years 2009-2012, they increased money supply and liquidity and lowered interest rates to zero or near-zero. And sovereign states borrowed vast sums to squander on “stimulus spending.” This “doing more of what has failed spectacularly” earned the apt moniker of “extend and pretend.”

    Nothing was actually fixed, but we were encouraged to believe it had been fixed with a flurry of absurdly complex “reforms” that only increased the power of the central states and banks without actually addressing the underlying causes of the meltdown: extremes of leveraged debt, extreme concentrations of financial wealth that then bought political power, shadow banking and opaque markets for hundreds of trillions of dollars in notional derivatives, systemic fraud and embezzlement, phony valuations assigned to assets and liabilities, and various schemes to misprice risk, among others.

    If we had to distill the entire global crisis into the simplest possible statement, we might say that the collateral that supported this great inverted pyramid of leveraged debt vanished, and as a result the entire pyramid crumbled.

    Since the global housing bubble was at the heart of the crisis, let’s use housing to explain this simple summarization. If a house that was owned free and clear (no mortgage debt) rose in value from $200,000 to $500,000 during the bubble, the collateral of that asset was valued at $500,000 at the peak. If the house has fallen to $250,000 in the post-bubble decline, the collateral is now $250,000.

    Since there was no debt leveraged off of that collateral, the owner experienced no leveraged consequence of that decline. His assets fell, and he felt the “reverse wealth effect,” so he feels poorer even though his asset is nominally worth more than it was prior to the bubble. (Adjusted for inflation, that nominal gain might well vanish into a decline in purchasing power, but that’s another story.)

    Compare that to the home purchased for $500,000 with a highly leveraged subprime mortgage in which 3% of actual cash collateral ($15,000) was leveraged into a mortgage of $500,000. (For simplicity’s sake I am leaving out the transaction costs.)

    The collateral was leveraged 33-to-1. This is delightfully advantageous if the house continues rising in value to $600,000, as that increase generates a six-fold return on the cash invested ($15,000 in, $90,000 out). But once the house prices slipped 10% to $450,000, then not only did the 3% cash collateral vanish, the collateral supporting the mortgage also declined. The mortgage was no longer “worth” $500,000.

    Since Wall Street securitized the mortgage into mortgage-backed securities (MBS) and sold these instruments to investors, then the value of those MBS also fell as the collateral was impaired. And since various derivatives were sold against the collateral of the MBS, then the value of those derivatives was also suspect.

    If $1 of collateral is supporting an inverted pyramid of $33 of leveraged debt, which is then the collateral supporting an even larger pyramid of derivatives, then when that $1 of collateral vanishes, the entire edifice has lost its base.

    And that's at the heart of current central bank policy: “Extend and pretend” is all about keeping the market value of various assets high enough that there appears to be some collateral present.

    In our example, the mortgage is still valued on the books at $450,000, but the actual collateral — the house — is only worth $250,000. The idea being pursued by central banks around the world is that if they pump enough free money and liquidity into the system, and buy up impaired debt (i.e. debt in which the collateral has vanished), then the illusion that there is still some actual collateral holding up the market can be maintained.

    Subprime Mortgages Have Given Way to Subprime Sovereign Debt

    The implosion of overleveraged subprime mortgages triggered the 2008 global meltdown because the market awoke to the fact that the collateral supporting all sorts of debt-based “assets” had vanished into thin air. Four years later, we have another similar moment of recognition: The collateral supporting mountains of sovereign debt in Europe has vanished. The value of the debt — in this case, sovereign bonds — is now suspect.

    The European Central Bank (ECB) has played the same hand as the Federal Reserve: Do more of what has failed spectacularly. Expand the money supply, pump in more liquidity and buy up the impaired debt all in the hope that the market will believe that there is still some collateral holding up the leveraged-debt pyramid.

    The ultimate collateral supporting the stock market is the book value of the assets owned by the company, but the notional collateral is corporate profits: equities are claims on the future free cash flow generated by the corporation.

    There are all sorts of inputs into this calculation, and markets are supposed to reflect these various inputs: currency valuations, sales, profit margins, costs of labor and raw materials, inflation and so on. Now that markets are manipulated to maintain the illusion that there is enough collateral out there somewhere to support the inverted pyramid of leveraged debt, it’s difficult to know what’s real and what’s illusion.

    One of the few ways we have to discern the difference is to compare various markets and look for divergences. If a spectrum of markets and indicators is pointing one way and another market is pointing the other way, we then have a basis for asking which one is reflecting illusion and which one is reflecting reality.

    In 2008, the central banks and governments lost control of the illusion that there was sufficient collateral to support a stupendous mountain of leveraged debt. By doing more of what failed spectacularly then, they have laboriously reconstructed the illusion that they control the markets (“Away, tides, for we are the ECB!”) and thus the valuation of collateral.

    Once again we are sternly warned not to “fight the Fed,” as if the Fed had the financial equivalent of the Death Star (“You don’t know the power of the Dark Side!”). Once again, we are in an election year where the four-year cycle is supposed to “guarantee” an up year in stocks.

    Or maybe 2012 is shaping up to reprise 2008, and the market will wake up to the fact that intervention doesn’t create collateral, it only creates the temporary illusion of collateral.(snip)

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    Default Re: in honor of the 100th anniversary of the Titanic sinking ...

    bear (I know thats not right!), with me. Will send you some links when my hubby wakes up and finds them for me.
    Tiny tweaks----->BIG CHANGES

    Quote Originally Posted by Kirakonstantin View Post
    More fear-mongering? Really? Yes, this is not the 1990's anymore. Yes, things are changing. Either dance or don't. Freaking out and sowing fear isn't going to help anyone.




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    Default Re: in honor of the 100th anniversary of the Titanic sinking ...

    Quote Originally Posted by Flickdreams View Post
    Sooo, am I going to have to 'go bush' to survive? Grow my own food? What is your world scenario?
    I wouldn't pay much attention to Melonie's gloom and doom prediction threads. She's been posting them for years, and for years they've been failing to come true. Here's one from 2008, predicting an economic collapse in 2009.

    http://www.stripperweb.com/forum/sho...%80%9D-Of-2009

  6. The Following User Says Thank You to eagle2 For This Useful Post:


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    Default Re: in honor of the 100th anniversary of the Titanic sinking ...

    Quote Originally Posted by eagle2 View Post
    I wouldn't pay much attention to Melonie's gloom and doom prediction threads. She's been posting them for years, and for years they've been failing to come true. Here's one from 2008, predicting an economic collapse in 2009.

    Melonie's predictions (or those to which she linked) were predicated on the absence of government intervention. Those predictions are still valid, if one accepts the underlying premise that, at some point, government intervention will become impossible.

    My view is that this is a lot like the 1970s, with attempted debt-monetization amid numerous negative macroeconomic trends. If I had to guess, we will probably weave our way out of this much as we did in the 1980s, after a bout of inflation resets the debt just enough for some long-overdue growth to turn what appears to be insurmountable debtloads into something more manageable.

    One thing I don't see discussed much here is that cyclical recessions are usually caused by an economy overheating. Given that we are beginning from a "frozen" economy in many ways, it would logically follow that the next true expansion will run much, much longer than the normal one, literally all the way to the point where much of the damage you see now is undone, as the normal resistance to a mega-expansion will simply not be present.

    As I said in another post, that many who are rich today will be poor tomorrow, and vice versa, is not a macroeconomic concern. Even all those bailouts still put money into the economy, and capitalism will eventually redistribute it to those who have either earned or stolen it.

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    Default Re: in honor of the 100th anniversary of the Titanic sinking ...

    It would appear that the 'Titanic' analogy is growing in popularity ...




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    Default Re: in honor of the 100th anniversary of the Titanic sinking ...

    The debt is a problem. Studies show that when a nation's debt exceeds 80% of its gross domestic product, it leads to declining standards of living. We have crossed that threshold. The US national debt stands at roughly $15.6 trillion. US GDP estimate for 2011 is $15.0 trillion. Both GDP and the national debt are growing, but GDP, not fast enough.

    Having said that, I do not share the doom and gloom outlook of our most prolific poster. I am more concerned with how quickly we are going to cut the debt and raise taxes. For, the US is poised to enact a massive tax increase at the end of 2012 when the Bush tax cuts expire. At the same time, we are going to engage in a massive impounding of government spending due to the failure of the so called "super committee" to reach some sort of agreement. Indeed, what I am looking at now is too much tax increasing at the same time we are cutting too much government spending. Now that could and probably will lead to another recession. Woe unto whomever wins the 2012 election because he is going to go back on a bunch of campaign promises in January 2013. Or, he's going to tagged as the next Herbert Hoover for sitting idly by as we lead the world into a huge double dip recession.

    Z

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    Default Re: in honor of the 100th anniversary of the Titanic sinking ...

    Quote Originally Posted by Zofia View Post
    The debt is a problem. Studies show that when a nation's debt exceeds 80% of its gross domestic product, it leads to declining standards of living. We have crossed that threshold. The US national debt stands at roughly $15.6 trillion. US GDP estimate for 2011 is $15.0 trillion. Both GDP and the national debt are growing, but GDP, not fast enough.

    Having said that, I do not share the doom and gloom outlook of our most prolific poster. I am more concerned with how quickly we are going to cut the debt and raise taxes. For, the US is poised to enact a massive tax increase at the end of 2012 when the Bush tax cuts expire. At the same time, we are going to engage in a massive impounding of government spending due to the failure of the so called "super committee" to reach some sort of agreement. Indeed, what I am looking at now is too much tax increasing at the same time we are cutting too much government spending. Now that could and probably will lead to another recession. Woe unto whomever wins the 2012 election because he is going to go back on a bunch of campaign promises in January 2013. Or, he's going to tagged as the next Herbert Hoover for sitting idly by as we lead the world into a huge double dip recession.

    Z
    So you're saying we're about to do what Reagan did in 1981?

    How was our economy from 1982-2000?

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    Default Re: in honor of the 100th anniversary of the Titanic sinking ...

    Quote Originally Posted by Frenchie View Post
    So you're saying we're about to do what Reagan did in 1981?

    How was our economy from 1982-2000?
    Nope. Reagan raised some taxes, but not near as dramatically as the expiration of the Bush tax cuts will raise taxes. Reagan did cut spending growth, but the failure of the super committee will result in real and deep spending cuts. Reagan accepted a recession, not a double dip recession. So no, this is not what Reagan did.

    Z

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    Default Re: in honor of the 100th anniversary of the Titanic sinking ...

    Quote Originally Posted by eagle2 View Post
    I wouldn't pay much attention to Melonie's gloom and doom prediction threads. She's been posting them for years, and for years they've been failing to come true. Here's one from 2008, predicting an economic collapse in 2009.

    http://www.stripperweb.com/forum/sho...%80%9D-Of-2009
    Melonie is NOT the author of most of these "gloom and doom" scenarios. To my understanding ,she posts them to provide food for thought.

    Shall we compare her predictions to whose ? Geithner's ? Obama's ? Krugman's ? Take your pick. The issue is what is likely to happen in 2013 and beyond.

    At some point, the Fed's "gravy train" has to slow down. As far as anyone can tell, there is not going to be a "QE III". What has been happening to all that easy money from the Fed. ? It has gone to purchase our own debt ! How the hell does that make sense ? No wonder "Main St." is not close to recovering. How long are Germany et. al. supposed to prop up Greece and the other PIIGS ? China's economy is slowing. Who thinks that will not affect how much of our debt they will be able to buy ? Only Brazil seems to keep humming merrily along and THAT has a LOT to do with their exploding oil business. They will be going from an oil importer to an oil EXPORTER. So could we btw,under the right policies.

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    Default Re: in honor of the 100th anniversary of the Titanic sinking ...

    Quote Originally Posted by Eric Stoner View Post
    Melonie is NOT the author of most of these "gloom and doom" scenarios. To my understanding ,she posts them to provide food for thought.

    Shall we compare her predictions to whose ? Geithner's ? Obama's ? Krugman's ? Take your pick. The issue is what is likely to happen in 2013 and beyond.

    At some point, the Fed's "gravy train" has to slow down. As far as anyone can tell, there is not going to be a "QE III". What has been happening to all that easy money from the Fed. ? It has gone to purchase our own debt ! How the hell does that make sense ? No wonder "Main St." is not close to recovering. How long are Germany et. al. supposed to prop up Greece and the other PIIGS ? China's economy is slowing. Who thinks that will not affect how much of our debt they will be able to buy ? Only Brazil seems to keep humming merrily along and THAT has a LOT to do with their exploding oil business. They will be going from an oil importer to an oil EXPORTER. So could we btw,under the right policies.
    I agree it'll be rough, like in 1981, and while it's not the same thing, as Zofia pointed out, Reagan would have had just as much faith in America today as he did then. As for the Bush tax cuts, they were supposed to expire, as their original purpose was to spend down our "surplus" in 2000.

    I'm sick of presidents who make excuses for being dealt a bad economy. Obama knew what condition this country was in when he ran for office. A president needs to play the hand he's dealt and not dwell on who caused what. Regan may have campaigned a bit by bashing Carter, but his main focus was the futgure, not the past.

    We need a leader who will do now what he did then.

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    Default Re: in honor of the 100th anniversary of the Titanic sinking ...

    Reagan was the one people pointed to and said "Deficits don't matter."

    Reagan and Obama have overseen (Blame Congress also if you wish) the largest expansion of our national debt.

    As Zofia said.... The problem is the debt.... But there is no easy remedy.... Everyone wants to go to heaven..... They just don't want to die to get there.
    The country has been looted.

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    Default Re: in honor of the 100th anniversary of the Titanic sinking ...

    Quote Originally Posted by Eric Stoner View Post
    At some point, the Fed's "gravy train" has to slow down. As far as anyone can tell, there is not going to be a "QE III". What has been happening to all that easy money from the Fed. ? It has gone to purchase our own debt ! How the hell does that make sense ? No wonder "Main St." is not close to recovering. How long are Germany et. al. supposed to prop up Greece and the other PIIGS ? China's economy is slowing. Who thinks that will not affect how much of our debt they will be able to buy ? Only Brazil seems to keep humming merrily along and THAT has a LOT to do with their exploding oil business. They will be going from an oil importer to an oil EXPORTER. So could we btw,under the right policies.
    This is what my husband has been talking about. These are some of the many Dvds he has been showing me;

    http://www.documentarywire.com/how-m...n-planet-earth

    http://www.youtube.com/watch?v=4Xx_5PuLIzc

    Is it ok to S**T myself now???
    Tiny tweaks----->BIG CHANGES

    Quote Originally Posted by Kirakonstantin View Post
    More fear-mongering? Really? Yes, this is not the 1990's anymore. Yes, things are changing. Either dance or don't. Freaking out and sowing fear isn't going to help anyone.




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    Default Re: in honor of the 100th anniversary of the Titanic sinking ...

    Quote Originally Posted by Flickdreams View Post
    This is what my husband has been talking about. These are some of the many Dvds he has been showing me;





    Is it ok to S**T myself now???
    Not just yet. We have a few saving graces, most notably that the wealthy would suffer the greatest in an economic collapse, and they have the greatest power to avoid one.

    No one wants war. Currency debasement, inflation, rationining of goods, and social-welfare benefits, with maybe a few wars and riots thrown in, is about as bad as it will get. At some point, it will once again be "morning in America," or the world.

    The 12,000-year trend is still the dominant one. We've come a very long way since then. Let's also pause for a moment and consider the intrinsic value of maintaining social order that our money enables, literally every day that we breathe. Even if everything did collapse tomorrow, our financial system has done an amazing job in that regard, for an amazing length of time.

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    Default Re: in honor of the 100th anniversary of the Titanic sinking ...

    Quote Originally Posted by Eric Stoner View Post
    Melonie is NOT the author of most of these "gloom and doom" scenarios. To my understanding ,she posts them to provide food for thought.
    I know Melonie is NOT the author of most of these "gloom and doom" scenarios, but after posting probably hundreds of them with the same theme, I think it's safe to say these articles reflect her views. My impression is, she's trying to bring her own doom and gloom views to everyone on SW. If she was just trying to provide "food for thought", I would think she would post articles showing all points of view. Instead, pretty much everything she posts is negative.

    Quote Originally Posted by Eric Stoner View Post
    Shall we compare her predictions to whose ? Geithner's ? Obama's ? Krugman's ? Take your pick. The issue is what is likely to happen in 2013 and beyond.
    The predictions she's been posting of impending doom have been way off, compared to mainstream economists. Back in late 2008, most mainstream economists were predicting an eventual recovery, while for the past few years, Melonie has posted articles predicting an imminent economic collapse, which always fails to occur. Nobody said this would be easy, or that things will turn around over night, but most economists expected things to improve. I remember reading that it wasn't expected for the U.S. to return to full employment until 2016 or later. Here's an article in USA Today from late 2008, with predictions for 2009:

    http://www.usatoday.com/money/econom...ook-2009_N.htm


    Quote Originally Posted by Eric Stoner View Post
    At some point, the Fed's "gravy train" has to slow down. As far as anyone can tell, there is not going to be a "QE III". What has been happening to all that easy money from the Fed. ? It has gone to purchase our own debt ! How the hell does that make sense ? No wonder "Main St." is not close to recovering. How long are Germany et. al. supposed to prop up Greece and the other PIIGS ? China's economy is slowing. Who thinks that will not affect how much of our debt they will be able to buy ? Only Brazil seems to keep humming merrily along and THAT has a LOT to do with their exploding oil business. They will be going from an oil importer to an oil EXPORTER. So could we btw,under the right policies.
    It depends on the Fed's outlook, and the economies job growth over the next few months. I think there should be one, but the Fed will be making that decision. Right now, IMO, the top priority for government and the Fed should be getting the unemployment rate down.

    The entire economy has benefited from the low interest rates as the result of the QE policies. Low interest rates helped keep things from getting worse, and eventually helped improve the economy. This has been especially true in the auto industry.

    Financing our debt is not a problem at all. Our government is able to borrow money at 2% interest.

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    Default Re: in honor of the 100th anniversary of the Titanic sinking ...

    Frenchie- watch the Attenborough documentary on the population overload on planet earth and prepare to shit yourself!!!
    Tiny tweaks----->BIG CHANGES

    Quote Originally Posted by Kirakonstantin View Post
    More fear-mongering? Really? Yes, this is not the 1990's anymore. Yes, things are changing. Either dance or don't. Freaking out and sowing fear isn't going to help anyone.




  19. #18
    Banned Melonie's Avatar
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    Default Re: in honor of the 100th anniversary of the Titanic sinking ...

    The entire economy has benefited from the low interest rates as the result of the QE policies. Low interest rates helped keep things from getting worse,
    As already pointed out in past threads, this particular viewpoint totally ignores the negative effects of low interest rates on people who save money rather than borrowing / spending beyond their means, totally ignores the negative effects of near zero interest rates and 'official' inflation rates on retirees and others living on 'fixed incomes' etc. The point can also arguably be made that rising prices for food, energy and other global commodities - which are an indirect result of QE money printing - has disproportionately harmed those with low incomes. In point of fact only certain segments of the economy have benefitted from QE policies ... bankers, speculative investors, and the first tier recipients of the increased gov't spending.


    Our government is able to borrow money at 2% interest
    As already pointed out in past threads, this 'temporary' fact is the result of past FED actions including money printing and a 'good ol boy' arrangement with FED member banks where newly printed money is deployed by said FED member banks to purchase newly auctioned US Treasury Bonds at very low interest rates in the absence of 'real' bond buyers. It is also the 'temporary' result of financial distress in the EuroZone. Certain historical 'real' buyers of US Treasury Bonds, most notably China and the Oil Sheiks, have recently stopped being buyers because they recognize a rising risk of principal loss given the very low interest rates resulting from recent FED member bank bond bids. Or put another way, as soon as the FED stops printing new money and 'giving it' to the FED member banks, those FED member banks will stop bidding at future US Treasury bond auctions - thus future interest rates gov't must pay to borrow money will instead be set by the bids that 'real' bond buyers are willing to tender ! This is precisely what has already happened in Greece, and is in the process of happening in Italy, Spain etc.


    The predictions she's been posting of impending doom have been way off,
    I'll grant you that the non-keynesian economic analyses posted here over the past few years have sometimes been inaccurate. I would contend that a major reason for that has been the unprecedented gov't / FED actions which have effectively converted trillions of dollars worth of 'safe' US taxpayer 'assets' into trillions of dollars worth of 'risky' assets ... from Fannie backed subprime mortgage paper, to TARP backed subprime auto loan and credit card paper, to actual stock share ownership in private companies, to gov't guaranteed loans to private companies etc. ... whose average real market value might only be 50 cents on the dollar overall. If the true market value of those 'risky' assets were to be acknowledged, the US economy would be in far different condition !!! 'Temporary' economic stability has been achieved by perpetuating the belief that, via QE and other inflationary policies, the real market value of these securities can be reinflated to the point where a loss need never be acknowledged. However, that belief is increasingly resembling a 'the emperor has no clothes' scenario, at least for foreign investors and those whose economic 'news' isn't spoon fed by mainstream US media.
    Last edited by Melonie; 04-17-2012 at 04:20 AM.

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    Featured Member Naida's Avatar
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    Default Re: in honor of the 100th anniversary of the Titanic sinking ...

    I hate to say it, but these "doom and gloom" scenarios NEED to be brought to SW! Why? Because our income as dancers/camgirls/etc are affected by the income of our customers, regardless of which "financial percentage" they happen to fall in. If we keep ourselves aware of the country's financial situation, we can plan our own accordingly.

    We're already in a pretty severe Recession. It's only inevitable that, if things don't change NOW, we will fall into another Depression. Unfortunately, those changes aren't so easy to see or, if they are, to make because they're not "politically correct" nor supported by the 1% who have major influence on the way Washington runs things.

    As of right now, my plan is to stay out of personal debt (something that many of my friends are SHOCKED to see I haven't got, while they have debt collectors breathing down their necks) and to physically hoard the cash I plan to save, just in case whatever bank I choose should fail. In a few years, when our economic situation is more stable, I'll re-evaluate. So far, Melonie hasn't steered any of us wrong, so I'll keep reading her posts.
    Exotic dancing is like any other job.
    If you work in an office, you wear dress shoes and a suit.
    If you work in a restaraunt, you wear skid resistant shoes and a uniform.
    If you work in a strip club, you wear 7" stilettos and lycra g-strings.

  21. #20
    God/dess Flickdreams's Avatar
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    Default Re: in honor of the 100th anniversary of the Titanic sinking ...

    Is it worth holding on to cash in the form of paper money? perhaps commodities would be another choice.
    Tiny tweaks----->BIG CHANGES

    Quote Originally Posted by Kirakonstantin View Post
    More fear-mongering? Really? Yes, this is not the 1990's anymore. Yes, things are changing. Either dance or don't. Freaking out and sowing fear isn't going to help anyone.




  22. #21
    Banned Melonie's Avatar
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    Default Re: in honor of the 100th anniversary of the Titanic sinking ...

    ^^^ unfortunately, not all forms of 'paper money' are created equal. For example, the exchange rate value of currencies like the Canadian and Australian dollar are more or less directly tied to the major commodities they export. The exchange rate value of the US dollar is arguably tied to FED policy as well as 'least dirty shirt' status in light of EuroLand ecomomic problems.

    Similarly, not all 'commodities' are created equal either. Prices for some commodities, like food, are tied to world population versus world production - MINUS diversion of food products toward ethanol and other non-food uses. Some commodities, like copper and oil, are more or less directly tied to economic activity / growth levels. Other commodities, like gold, are driven by entirely different factors.

  23. #22
    Banned Eric Stoner's Avatar
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    Default Re: in honor of the 100th anniversary of the Titanic sinking ...

    Quote Originally Posted by eagle2 View Post
    I know Melonie is NOT the author of most of these "gloom and doom" scenarios, but after posting probably hundreds of them with the same theme, I think it's safe to say these articles reflect her views. My impression is, she's trying to bring her own doom and gloom views to everyone on SW. If she was just trying to provide "food for thought", I would think she would post articles showing all points of view. Instead, pretty much everything she posts is negative.


    The predictions she's been posting of impending doom have been way off, compared to mainstream economists. Back in late 2008, most mainstream economists were predicting an eventual recovery, while for the past few years, Melonie has posted articles predicting an imminent economic collapse, which always fails to occur. Nobody said this would be easy, or that things will turn around over night, but most economists expected things to improve. I remember reading that it wasn't expected for the U.S. to return to full employment until 2016 or later. Here's an article in USA Today from late 2008, with predictions for 2009:

    http://www.usatoday.com/money/econom...ook-2009_N.htm




    It depends on the Fed's outlook, and the economies job growth over the next few months. I think there should be one, but the Fed will be making that decision. Right now, IMO, the top priority for government and the Fed should be getting the unemployment rate down.

    The entire economy has benefited from the low interest rates as the result of the QE policies. Low interest rates helped keep things from getting worse, and eventually helped improve the economy. This has been especially true in the auto industry.

    Financing our debt is not a problem at all. Our government is able to borrow money at 2% interest.
    This an atypical recovery. Usually, the worse the recession the bigger and faster the bounce back. After the Reagan "recession" of 1981-3 we had economic growth of 7.5% and job growth of as many as 500,000 new jobs per month. So WHERE is this "recovery" all those "mainstream economists" were predicting ? Seems like wishful thinking to some of us. We have economic growth of around 2 % ; 2.5 % at the most. We have job growth of 150,000 new jobs a month.

    Granted, most of what Mel ( and the authors she has linked to ) has predicted ; warned about ; worried about etc.,has not happened. YET ! But that does not detract from the seriousness of what she and others have been talking about. Or its potential likelihood IF we can continue on our merry way without making some fundamental changes.

    Financing our debt is arguably manageable at present BUT by 2020 we will be paying a minimum of $ 915 billion per year just in interest on the National Debt, according to the CBO.

    If the Chinese decide to invest their money in China instead of lending it to us, what will that do to interest rates ? And if other countries follow suit ? Remember, the Fed controls short term rates ONLY. Everything else from T-Bills to 30 Year Bonds is auction based.

    Still feeling confident in the future ?

  24. #23
    Banned Melonie's Avatar
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    Default Re: in honor of the 100th anniversary of the Titanic sinking ...

    This is an atypical recovery
    ya think ???





    The fairly obvious take-away from this graphical comparison is that, after 2 years worth of supposed recovery, lost jobs have now been regained to the point where present employment is just about equal to the worst level of recorded job losses during any 'recession' since World War 2 !!!

    I would also add that certain economic / financial circles have already deduced why this 'recession' is different ... it's named after the Russian economist Kondratieff who first published his 'theory' of long term economic patterns ...


    Last edited by Melonie; 04-17-2012 at 01:11 PM.

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    Default Re: in honor of the 100th anniversary of the Titanic sinking ...

    Nail Ferguson is interesting to read. However, I am of the opinion that we are about to raise taxes too quickly (letting the Bush tax cuts expire all at once) and cut spending too quickly all on December 31, 2012. I also see too much economic paralysis because we have not had an honest discussion in this country, or Europe for that matter, about our spending and taxing priorities.

    We need to bring spending and thus the debt into line with our economy. However, we need to do that gradually because the economy is still on life support. We don't want to turn into Spain with a 25% unemployment rate, or Italy or Greece. We do not want to cause a massive second dip of the recession. Likewise, we cannot continue spending 30% more than we take in year after year after year. That is going to require tax increases and spending cuts.

    Z

  26. #25
    Banned Melonie's Avatar
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    Default Re: in honor of the 100th anniversary of the Titanic sinking ...

    classic Niall Ferguson interview ...

    (snip)BI: So, Professor Ferguson is the United States still screwed?

    NF: Well this is not a technical term in economics that I recognize so let me maybe rephrase the question. Does the United States still have an economic problem? Yes. What is that problem? The problem is that having thrown massive fiscal and monetary stimulus at the economy it is still growing too slowly to bring down the unemployment rate. um what is the answer to that problem? some people say more fiscal stimulus and that indeed is what is being done and more monetary stimulus, and that indeed is what is being done in the form of QE 2. That may well have some short term impact but there is a risk that the fiscal position of the United States tips over from being stimulative to being unsustainable. And the big worry is that at some point this year, could be next year, the level of borrowing the United States engages in pushes inflation expectations or even default expectations to the point that nominal yields really start to spike and then The Fed is in a jam b/c it would then have to do QE3 on a massive scale and quite quickly we could be facing a really major dislocation either in the bond market or currency markets that is the problem. Is the U.S. screwed? No not the way Japan is screwed or even the way the Euro zone is screwed but the U.S. is certainly not out of trouble.

    BI: So isn't that what people were saying about Japan, in 1993, that they were done and here we are 18 yrs later and interest rates are still zero, they're still spending, still borrowing and borrowing and they haven't collapsed yet?

    NF: Well if that's the fate of the United States it is screwed right? So if the United States were to have two lost decades of growth then you'd have a mountain of debt and you would have an extremely disgruntled populace. There are two big differences between Japan and United States one is, Japan is a homogeneous society, it is ethnically almost completely homogeneous and it can cope with low growth, socially, culturally, the United States is not. Second difference is Japan finances its vast debt domestically. half the federal debt is in foreign hands and of that a very substantial proportion of that is held by the People's Republic of China. So its a completely different situation and I doubt very much if the United States is going to repeat the Japanese experience. Even if it did, it would hardly be a good outcome.

    BI: You've written a long presentation on what happens to countries that get into a situation that the United States is in basically that there's no easy way out. What do you think will happen to the United States?

    NF: Well never make predictions especially about the future but there are a couple of obvious scenarios, one is based on historical evidence. One is inflation which is the kind of obvious way out if you have large debt in excess of 100% of GDP that is denominated in your own currency and your own currency you can print for free. Then you would expect the fed to let the printing press run, as happened in the period after WWII particularly in the '70s. Second scenario which is not quite so likely is default, where the United States defaults on some of its liabilities, perhaps its external liabilities. It certainly will default on its liabilities in social security and medicare that is very likely. But on the bond market i doubt a U.S. default is likely. Defaults by states however, Illinois, California, seem very likely so there will be elements of default at the state level. The third scenario which gets much less air time is one in which the US can not escape from the debt mountain b/c every time it tries to inflate the markets price and the inflation risks with higher yields and in that sense it begins to look more like your Japanese scenario, except that as i said there is much less social stability to cope with that low growth, high debt scenario and you've got foreign creditors getting very uneasy. So, I think at the moment its scenario three that I think is most likely, and that is a scenario in which the debt mountain wont go away, the dollar refuses to depreciate fast enough to reduce the debt burden, the economy doesn't grow very fast, and significant social and political problems ensue because I don't think Americans will take it lying down. And then it gets a little cloudier in my crystal ball to see where we'll be even a year from now is difficult if there is a shift in bond market sentiment, if there is a big move in currency markets, who knows? Right Now the US is indeterminately pursuing fiscal and monetary stimulus while the rest of the world is putting their foot on the break. At some point I think that has to end b/c frankly foreign governments will refuse to finance US borrowing at these kinds of rates, in the low threes. It's just not likely to continue and when we get to that point, I think the Congress and President are going to face an incredibly difficult decision and I have the sense by the way that those risks are being underestimated (snip)

    from

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