Article by a Boston University economics prof, published in the Federal Reserve Bank of St. Louis:
http://research.stlouisfed.org/publi.../Kotlikoff.pdf
http://research.stlouisfed.org/publi.../Kotlikoff.pdf
Is the US bankrupt?
- Thread starter Pekelo
- Start date
When you have a printing press AND nuc-u-lar missiles you can never really be bankrupt.
I don't have to read another Chicken Little paper by a guy who's never left the Campus...
Because business is war... not some theoretical textbook sh*t.
In the 70s... the Saudis were gonna own all of America using oil revenues...
In the 80s... the Japanese were gonna take over the US using export revenues...
And what happened in each instance?
The Foreigner bought HIGH... and sold LOW...
And Americans lined their pockets.
It was all a one way, win-win deal from Day One.
The idea that a Foreigner can profit over Locals is ** laughable **...
Just try going to Loiusiana or Russia and taking out some wealth...
A judge or jury will stick you with a judgement that will bankrupt your company in no time...
And then the Tax Department will pick your bones...
And you will be lucky to avoid Hard Time.
In terms of the US deficit... Americans are IN CONTROL...
And the Creditors carry all the risk... not the Debtor...
In reality... unlike what you might read in an economics textbook.
Economists that have never run a global business... should simply be ignored.
Because business is war... not some theoretical textbook sh*t.
In the 70s... the Saudis were gonna own all of America using oil revenues...
In the 80s... the Japanese were gonna take over the US using export revenues...
And what happened in each instance?
The Foreigner bought HIGH... and sold LOW...
And Americans lined their pockets.
It was all a one way, win-win deal from Day One.
The idea that a Foreigner can profit over Locals is ** laughable **...
Just try going to Loiusiana or Russia and taking out some wealth...
A judge or jury will stick you with a judgement that will bankrupt your company in no time...
And then the Tax Department will pick your bones...
And you will be lucky to avoid Hard Time.
In terms of the US deficit... Americans are IN CONTROL...
And the Creditors carry all the risk... not the Debtor...
In reality... unlike what you might read in an economics textbook.
Economists that have never run a global business... should simply be ignored.
Excellent Commentary All............
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The idea about the US being in dire straights regarding its economics ...as compared to other countries is indeed a subject of intrigue...
...............................................................................................
Houses....
A simple example would be to view a row of houses whose appraised value today carries an average of $1,000,000....The value 10 years ago was $350,000...
During the 10 year period...all sorts of different legal agreements were transferred regarding price known as sales agreements....The average equity being $300,000....
Half of this equity was used to finance credit card balances...
Thus the appraised value changed to $750,000....and then to $500,000...and then to $350,000....
As the values shifted down...there was all sorts of verbalizing and name changes regarding house ownerships...
But at the end of the day....every house stood the same on the ground as it did before...
The assets remained the same...the legal prices changed...
............................................................................................
The US has lots of assets....and indeed at some price these assets continue to transact...
Will prices change in the US economy....always...just as in the stock market...literally everything has a changing price....
But the US is a long long way from not having any houses on the street...and there will be many price changes of these houses as time goes by....
Thus the US is much more so in turmoil about price agreements than it is not having assets...
..................................................................................................
Now if the day comes that there are no longer houses on the street...then indeed there are no assets to price....
No assets...then you are indeed poor and broken...
The US is definitely not in shortage of assets....
.............................................................................................
Which brings up another interesting point....ie FORD Motor Company....
The problem with Ford is not a shortage of assets...it is one of having the most desirable cars for sale...
It only makes sense that some of FORDs assets will be salvaged to end up making competitive cars by some company at some price...
Thus one would note that the asset has to be PRODUCTIVE in order to have value....
Thus productivity of assets is the key in the US...and this will happen because of dissatisfaction of the state of ones affairs...
If everyone collectively is satisfied with the state of affairs...then things will tend to remain the same....
There is nothing more certain ...than CHANGE.....and perhaps nothing more uncomfortable as well.....
.............................................................................................
The idea about the US being in dire straights regarding its economics ...as compared to other countries is indeed a subject of intrigue...
...............................................................................................
Houses....
A simple example would be to view a row of houses whose appraised value today carries an average of $1,000,000....The value 10 years ago was $350,000...
During the 10 year period...all sorts of different legal agreements were transferred regarding price known as sales agreements....The average equity being $300,000....
Half of this equity was used to finance credit card balances...
Thus the appraised value changed to $750,000....and then to $500,000...and then to $350,000....
As the values shifted down...there was all sorts of verbalizing and name changes regarding house ownerships...
But at the end of the day....every house stood the same on the ground as it did before...
The assets remained the same...the legal prices changed...
............................................................................................
The US has lots of assets....and indeed at some price these assets continue to transact...
Will prices change in the US economy....always...just as in the stock market...literally everything has a changing price....
But the US is a long long way from not having any houses on the street...and there will be many price changes of these houses as time goes by....
Thus the US is much more so in turmoil about price agreements than it is not having assets...
..................................................................................................
Now if the day comes that there are no longer houses on the street...then indeed there are no assets to price....
No assets...then you are indeed poor and broken...
The US is definitely not in shortage of assets....
.............................................................................................
Which brings up another interesting point....ie FORD Motor Company....
The problem with Ford is not a shortage of assets...it is one of having the most desirable cars for sale...
It only makes sense that some of FORDs assets will be salvaged to end up making competitive cars by some company at some price...
Thus one would note that the asset has to be PRODUCTIVE in order to have value....
Thus productivity of assets is the key in the US...and this will happen because of dissatisfaction of the state of ones affairs...
If everyone collectively is satisfied with the state of affairs...then things will tend to remain the same....
There is nothing more certain ...than CHANGE.....and perhaps nothing more uncomfortable as well.....
I agree.
John
They still own a lot. Currently the Russians are buying up the US steel industry...
But the other guy is correct, as long as you can print money, you can always inflate the debt.
But to think that a country can never go bankrupt is incorrect. It happened before, will happen again...
P.S.: The EPA was made so they could take over lands, so foreigners would have collateral on our debts...
...."In terms of the US deficit... Americans are IN CONTROL...And the Creditors carry all the risk... not the Debtor...In reality... unlike what you might read in an economics textbook.
Economists that have never run a global business... should simply be ignored.".....
You guy are from the right wing economist extreme; debt is never good. It was the greedy global capitalist who never owned a company who benefited from the trade deficit; they are the middleman (salesman) as such trying to sell China products in return for a profit.
What will happen to companies that are currently enjoying the cheap labor from China, in 50 yrs or so, they will have to hand over the company when their leases expire, that was in the agreement. So what do we have left, nothing, all good companies will belong to China and we still have the salesman who are still trying to profit from the mishaps of the current US economic policy.
With the current policy, there will come the days when the US will be just a specialty shops like the situations now in Western Europe.
Economists that have never run a global business... should simply be ignored.".....
You guy are from the right wing economist extreme; debt is never good. It was the greedy global capitalist who never owned a company who benefited from the trade deficit; they are the middleman (salesman) as such trying to sell China products in return for a profit.
What will happen to companies that are currently enjoying the cheap labor from China, in 50 yrs or so, they will have to hand over the company when their leases expire, that was in the agreement. So what do we have left, nothing, all good companies will belong to China and we still have the salesman who are still trying to profit from the mishaps of the current US economic policy.
With the current policy, there will come the days when the US will be just a specialty shops like the situations now in Western Europe.
i would agree that they are bankrupt - but the question is who is going to call their loans and when? could take a few months or years or decades or centuries...which makes trying to time the demise a tricky proposal.
if you look at the u.s. as a business - they have 9 trillion in debt plus pension obligations that are incalculable (50 or 60 trillion?) . they are burning 3 billion a day in cash and are growing at a conservative 0-2% a year. growing at 2% a year while inflation is around 5%= negative growth.
debt is running at 7 or 8 % of gdp - so if they were a company - they lose 7 or 8 bucks for every hundred dollars in sales.
the management of the u.s. is in dissaray to put it pleasantly.
the customers of the u.s, us, have a negative net savings rate, for the most part no plan for retirement. our houses are our assets and they are losing value by the second...
the irony of this is these numbers reflect the numbers put up by General Motors the past decade. half a trillion in debt, negative cash flow, incalculable pension obligations, shrinking market share, confused management. and, surprise, GM was the top performer in the dow this year, up by 60%. In America , we reward greed and incompetence.
Eventually you would think this would catch up to AMerica and it is to a degree in the currency market - which is growing increasingly difficult to manipulate for the US.
feel free to flame away - but this isnt chicken little anything as evidenced by gold and silver tripling in the past few years. commodities across all classes are hitting record levels. the usd is TANKING. the bond market is speaking loud and clear... the only place that this hasnt been reflected is in equities but i suspect this is symptomatic of the great amount of inflation in the system - all markets are currently gunning up in the world:italy, malaysia, uk, sweden, switzerland, spain, singapore, mexico, hong kong, france, canada.
most americans are feeling good - their portfolios went up a few percent in the past few months. however - if you buy any product imported from another country(which we buy 70 billion dollars more of then we export each month) - you actually lost money on the deal as the usd has tanked that much in the same time period...
as for the argument that we will inflate the debt away - i buy it to a degree but don;t believe for a second that wont come at a great cost to our lifestyles and relevance as a country...better learn to speak chinese...
if you look at the u.s. as a business - they have 9 trillion in debt plus pension obligations that are incalculable (50 or 60 trillion?) . they are burning 3 billion a day in cash and are growing at a conservative 0-2% a year. growing at 2% a year while inflation is around 5%= negative growth.
debt is running at 7 or 8 % of gdp - so if they were a company - they lose 7 or 8 bucks for every hundred dollars in sales.
the management of the u.s. is in dissaray to put it pleasantly.
the customers of the u.s, us, have a negative net savings rate, for the most part no plan for retirement. our houses are our assets and they are losing value by the second...
the irony of this is these numbers reflect the numbers put up by General Motors the past decade. half a trillion in debt, negative cash flow, incalculable pension obligations, shrinking market share, confused management. and, surprise, GM was the top performer in the dow this year, up by 60%. In America , we reward greed and incompetence.
Eventually you would think this would catch up to AMerica and it is to a degree in the currency market - which is growing increasingly difficult to manipulate for the US.
feel free to flame away - but this isnt chicken little anything as evidenced by gold and silver tripling in the past few years. commodities across all classes are hitting record levels. the usd is TANKING. the bond market is speaking loud and clear... the only place that this hasnt been reflected is in equities but i suspect this is symptomatic of the great amount of inflation in the system - all markets are currently gunning up in the world:italy, malaysia, uk, sweden, switzerland, spain, singapore, mexico, hong kong, france, canada.
most americans are feeling good - their portfolios went up a few percent in the past few months. however - if you buy any product imported from another country(which we buy 70 billion dollars more of then we export each month) - you actually lost money on the deal as the usd has tanked that much in the same time period...
as for the argument that we will inflate the debt away - i buy it to a degree but don;t believe for a second that wont come at a great cost to our lifestyles and relevance as a country...better learn to speak chinese...