Is There Any Way This Can End Well?

We have 4 options to solve this mess from how I see it.

1. Devalue currency...only works assuming every other country in the world doesnt do it at the same time..which they are. Not going to work.

2. Get huge increase in GDP and pay down debt the 'good' way. Well we've been trying to stoke the economy for 8 years. It's not working.

3. Slash public spending. I am pretty right wing. But I have to admit the jury is still out from what I can see on whether austerity does more harm than good. Ppl are too dependent on handouts. And I mean this in an economic sense. Not raising any moral argument. So this probably won't work.

4. Default on debt. Can we really see the US/UK/Japan...the strongest political units in the world saying 'screw you guys..we're gonna do a Greece'. Never going to happen.

Am I missing anything?
 
tommo said:
We have 4 options to solve this mess from how I see it.

1. Devalue currency...only works assuming every other country in the world doesnt do it at the same time..which they are. Not going to work.

2. Get huge increase in GDP and pay down debt the 'good' way. Well we've been trying to stoke the economy for 8 years. It's not working.

3. Slash public spending. I am pretty right wing. But I have to admit the jury is still out from what I can see on whether austerity does more harm than good. Ppl are too dependent on handouts. And I mean this in an economic sense. Not raising any moral argument. So this probably won't work.

4. Default on debt. Can we really see the US/UK/Japan...the strongest political units in the world saying 'screw you guys..we're gonna do a Greece'. Never going to happen.

Am I missing anything?
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Yes, you are missing a lot, but have the blinders on so badly there is no use discussing it.
 
Nine_ender.

I think that's a pretty arrogant tone. I'm too 'blinkered' to possibly have you explain it ?

I started this thread with the sole purpose of opening our minds to a positive outcome. Please enlighten us..genuinely
 
tommo said:
Nine_ender.

I think that's a pretty arrogant tone. I'm too 'blinkered' to possibly have you explain it ?

I started this thread with the sole purpose of opening our minds to a positive outcome. Please enlighten us..genuinely
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In your mind, it's a done deal, worldwide economic collapse is coming. It's a ridiculous concept but you speak of it like it's inevitable. That in itself is an arrogant viewpoint,
 
I've outlined some genuine concerns. I am totally open minded. And actively seeking someone to put a positive spin on things. I want things to work out well. And you obviously feel they will.

So please explain how you think things are going to work out for the best.

Western countries have debt to GDP of 80%+ and we are still on emergency levels of financial accommodation. The world is in fear of interest rates rising to just 0.25%. This is 7-8 years after the crisis.

I am genuinely asking where the happy ending is. I'm not asking to just dismiss out of hand I want to know and want to believe it
 
Tommo, I think perhaps maybe your too focused on the national debt; national debt is kind of like the symptom - whereas the disease seems to be that the baby boomer generation is retiring; between Medicare, SSI and Interest on debt, they will be receiving over 61% of the entire federal budget by 2040.

07242015_medicare_explainer_chart1.gif


Unfortunately our debt to GDP will surpass 200% long before 2040 turning America into Greece - unless we have WWIII, a new Industrial Revolution, the young taxpayer base significantly expands, or this...

 
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CB's hope America is the next Japan (limitless debt level). We're not. Japan is a net creditor with tiny foreign ownership of Government debt. America is a net debtor with huge foreign ownership of Government debt. That means we're Greece/Portugal/Italy etc at about 110% debt-to-GDP. Give or take. Only way out of it is growth. That's what the permabulls are hoping for. It's possible, but not with todays technology. And not with outsourcing. We're going to need something revolutionary like the internal combustion engine/electricity/railroad. Something of that magnitude. US Military black projects probably invented this stuff decades ago. Free energy. Anti-gravity, cold fusion etc. That's what a lot of the UFO sightings are.....anti-gravity craft making right-angled turns, dead stops in mid air etc. Anyway, it probably won't be commercialized. So we're probably headed for Greece. It'll be bad. Like really really bad. Like have a cabin in the woods outside america, kinda bad.
 
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Nine_Ender said:
To answer your question, I think that moderate inflation ( check ), a more stable US economy ( check ), ending or reducing "QE" ( check ), recovering US housing market ( check ) were all in play. Sure, government debt is much higher ( concerning ), but look up Debt to GDP figures and you'll see it's not unprecedented levels and certainly not the albatross that many on here think it is. More important really is employment levels. If people have jobs, it will all work out as it did in the 1970s and 1980s. And if people have jobs, the Fed tool kit will include higher personal taxes to pay off debt. This is coming, Americans paid far too little income tax in the past in relationship to government expenditures. This is the legacy of core baby boomers, who had it fairly easy their whole careers.

This whole post is of course opinion, as are all the other posts. We can revisit this in the future, just like I love going back to 2009 and 2010 on here and seeing where people's heads were at. If I'm wrong, I still think Canada is a pretty safe bet to soldier on in today's world. Americans could possibly encounter some new hardships they aren't used to, sure.
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That's a lofty assumption, and really not backed by much empirical evidence.

How do you explain the Government debt implosion in Portugal, Italy, Spain and Greece over the past 5 years? How do you account for that?

US debt-to-GDP was much higher after WW2, but both the American and global economy were totally different. After WW2, America was the only industrial power left standing and rebuilt the world. Exports exploded in the United States, huge trade deficits were amassed, and the debt paid down. Germany and Japan paid down some of their debt but had a lot forgiven. Today, the situation is completely opposite. America is a gross net importer, with a decimated manufacturing base. And the world is built up. No broken windows to replace.

While you can dismiss us as pessimists, you can't account for the European debt crisis. This shit has happened for millennial. Try Reinhart and Rogoffs this time is different. 8 centuries of financial folly. This is nothing new. Govenrments have blown out economies for thousands of years by running up the national credit card to the point of bankruptcy. You're the aberration because you're the one saying this time is different. It's not. History is on the side of the pessimists, unfortunately. Do you honestly think America can borrow into perpetuity forever? That the national debt has no absolutely no bearing on the economy, interest rates, or inflation? At 100% debt-to-GDP, modest growth and interest rates offset each other (IR = 3% and growth rate =3%). There is no way to "out grow" the debt unless huge levels of growth are achieved. At that point, it becomes an economic blackhole. The debt never shrinks. We just carry this albatross around our necks in the form of debt-interest payments, forever. This creates a 'low growth' economy. Anyway, that's a rosey picture. The deficit and QE continue to mount. That's where all this BS "growth" has come from over the past 8 years since the big R = DEBT. Not nascent, real growth. But Government borrowing from China and spending that into the economy to create the illusion of economic activity that shows up in NFP and GDP prints YOU INTERPRET as a "Strong" economy. If I made a paltry 30K a year and put another 70K a year on credit card, would you say my income is "strong"???? Cause that's exactly what you're doing. All the stats you think indicate a strong economy only exist because the Government ran up the national debt to stratospheric levels and spent that into the economy to prop it up. Soon it'll be time to pay the piper, just like in the PIIGS. When debt-to-GDP gets too high, investors know Governments can't pay interest on the debt. Eats too much of the budget. Voters will never allow politicians to pay Goldman Sachs over putting granny out on the street. So investors jump ship. Selling begets selling and the situation becomes a self-fulfilling prophecy, that would have happened regardless. First out, gets to save their ass. This is the real world. Investors don't give a flying fuck about rosey optimistic itll never happen here scenarios. They just care about the numbers. When Government debt gets too high, they know they ain't gonna get paid back. Boom. Floor drops out, yields explode, then we're in some serious shit.
 
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