It’s 2008. The U.S. Has Dragged the World into a Depression.

Quote from southamerica:

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It’s 2008. The U.S. Has Dragged the World into a Depression.

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Please use the correct terminology

It's the global Bush Depression!

Or as Bush likes to say, it's the mother of all recessions.
 
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377OHMS: Remember all those Brazilian investments you were hyping? How did those work out?


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November 20, 2008

SouthAmerica: I wrote an article about China investing $ 200 billion dollars in Brazil. But the Brazilian government would pay interest on that long term debt and the Brazilian government would be the one to invest that money in nuclear power plants, bullet train, infrastructure, state of the art high speed broadband fiber optics technology, and so on….

On another article I suggested that the Brazilian government nationalize and buy the 30 percent of common stock of Petrobras that is being held by foreigners.

Here are other recommendations that I made here in the United States:


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SouthAmerica: Today October 18, 2008, I bought a copy Fortune Magazine and the cover story is about General Electric asking: Is GE Okay?

I saw this coming at the time when Jack Welch retired from that company and I was trying to convince a very good friend of mine that he should not add thousands of new shares of GE stock to his portfolio. He already had enough shares of that company, but he did not listen to me and in January of 2004 he bought some more GE stock at around $ 34 per share.

About 2 months latter when I saw The Charlie Rose Show and Jack Welch was being interviewed, since that experience with my friend was so fresh on my mind then I decided to post on the Charlie Rose Show Message Board the conversation that I had had with my friend about GE stock at the time when he bought a new batch of GE stock.

Right now GE stock is trading around $ 19 dollars per share, and most likely that stock is going to follow the same steps that ITT stock did after Harold Geneen left that company.


http://www.elitetrader.com/vb/showthread.php?s=&threadid=141766&perpage=6&highlight=ge&pagenumber=1

Since that posting the GE stock declined to $ 14 dollars per share.


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October 13, 2008

SouthAmerica: In your opinion my writing is all about “DOOM & GLOOM”, but I have been right about my predictions.

Thanks to my “DOOM & GLOOM” as you put it, a very good friend of mine sold his industrial farm in Texas that he had with his family. I kept saying to him over, and over again sell this large corn-producing farm that you guys have because the party is going to be over before you know it.

Finally he told me that he was able to convince his brothers and they found a sucker to buy their large corn-producing farm, and the got top price for it, they sold the place to a Hedge Fund.

He is glad that he listened to me because since after he sold his farm, the price of corn went down, and today his farm would be worth a lot less because of problems with real estate financing and everything else.

If you read my postings here on this forum then you could have followed this particular story since I mentioned many times before and after he sold his farm.

Other friends of mine followed my suggestions and they got out of stocks that they would have lost money or gone nowhere. And they bought some stock that I had suggested to them and they did very well.

My friend who sold his farm I had been suggesting to him that he should invest his money on US government – TIPS.

If when you read my postings you had not concentrated only in the DOOM & GLOOM stuff, then you would have noticed that I said many times that cash is king after the crash when you can pick up real nuggets that you find among the wreckage.

For you it is just DOOM & GLOOM, but for me a Great Depression is a time to recalibrate the entire economic system and start all over again.

Here is another DOOM & GLOOM for you:

Sure we are going to have the complete collapse of the US dollar – it’s just a matter of time, and only fools can’t see it coming…

You don’t need to be a rocket scientist to figure that one out.

Great Depressions are times for great opportunities for the people who saw it coming.

http://www.elitetrader.com/vb/showthread.php?s=&postid=2122575&highlight=corn+farm#post2122575


Note: I had been trying to convince my friend that he should sell his family farm in Texas about the entire year of 2006. I told him over and over again he had to take advantage when the market was hot and he had to find a sucker to buy that farm ASAP. Finally in February of 2007 he told me that he sold the farm for top dollar to a Hedge Fund.

Since he found a sucker to buy that farm the price of corn and ethanol went way down. He sold that farm and got the best price he could have got.

But after he got the money he did not listen to me when I told him the best thing he could do with that money was to buy US government – TIPS.

He invested his money with an insurance company and right now is having a hard time getting his money back.

I had mentioned about my friends corn farm on other postings on this forum.


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I posted the following on this forum:

06-06-05 07:23 AM
SouthAmerica: The only place that makes sense to park your money is in U.S. Government securities - "TIPS"

Below is brief information about these US government securities. Better safe than sorry. Cash is king when the S… hits the fan. If you have cash on hand, after the decline you can pick up the pieces for a fraction of its previous price.
http://www.elitetrader.com/vb/showthread.php?s=&postid=763146&highlight=Tips#post763146


It is no coincidence that since I wrote my predictions in November 2004 - Economic Forecast For US Economy for 2005 and Beyond
http://www.elitetrader.com/vb/showthread.php?s=&threadid=49982

And also published on February 13, 2005 on Brazzil magazine the article: ”It’s 2008. The U.S. Has Dragged the World into a Depression.”
http://www.elitetrader.com/vb/showthread.php?s=&threadid=124509


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On June 6, 2005 I posted the following on this forum:

06-06-05 07:23 AM
SouthAmerica: The only place that makes sense to park your money is in U.S. Government securities - "TIPS"

Below is brief information about these US government securities. Better safe than sorry. Cash is king when the S… hits the fan. If you have cash on hand, after the decline you can pick up the pieces for a fraction of its previous price.
http://www.elitetrader.com/vb/showthread.php?s=&postid=763146&highlight=Tips#post763146


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377OHMS you said: Remember all those Brazilian investments you were hyping?

The only investment advice that I have been giving to many people for many years it is that they should invest in TIPS and I suggested on my articles going back 6 years now that Brazilians take their money out of the United States and invest it in Europe or in Brazil. They would have done well in either case because the devaluation of the US dollar against the real and the euro during that period of time.

Please show me all the investments that you claim that I have been hyping on this forum. If you check all my suggestions for investment I was right almost 100 percent of the time.

And if you read most of my postings here on this forum you also would have learn that I thought it was a big mistake for people to invest money on ethanol made of corn. And I mentioned a number of times that these people were fools and nothing else, and since then many of those people have lost their shirt on that business.
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SA, what should be the current course of action.

If and when the depression hits ( with the USD collapse ) it will hit the industrialized nations harder than the third world countries.

Would you suggest buying farm land in a third world nation.

How long do you see the depression lasting.
 
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Arealpissedqoy: SA, what should be the current course of action.

If and when the depression hits ( with the USD collapse ) it will hit the industrialized nations harder than the third world countries.

Would you suggest buying farm land in a third world nation.

How long do you see the depression lasting.


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November 29, 2008

SouthAmerica: I just saw your posting a few minutes ago, but I don’t know the answer for your questions.

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November 29, 2008

SouthAmerica: On Friday I was listening to Bloomberg News on my car radio when Tom Keene was interviewing Steve H. Hanke and he mentioned a revised figure for the US government liabilities regarding the Baby Boom generation related to Social Security, Medicare, government workers Pensions, and so on…


On my article: “It’s 2008. The US Has Dragged the World into a Depression.”
Written by Ricardo C. Amaral - Brazzil Magazine - Saturday, 12 February 2005 –
I said: ...that figure does not include all the other US government unfunded outstanding liabilities conservatively estimated at US$ 70 trillion dollars.


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The US$ 70 trillion dollars figure that I used on that article was the old estimate for these US government liabilities – the latest revised figure as of November 2008 is around: US$ 100 trillion dollars


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Bloomberg News
November 28, 2008

Steve Hanke, professor of applied economics at Johns Hopkins University, talks with Bloomberg's Tom Keene about the US economy and policies.

Hanke, speaking from Washington, said that Federal Reserve efforts to encourage lending could lead to inflation and leave the central bank "behind the curve" as the economy improves.

A few years ago the United States had an estimated $ 70 trillion dollars in outstanding liabilities that will start come due very fast in the coming years – these liabilities are related to Social Security, Medicare, government workers Pensions, and so on…

During his Bloomberg radio interview according to Steve Hanke’s latest estimates the revised figures for these liabilities are approaching US$ 100 trillion dollars.


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Steve H. Hanke’s Biography:
http://en.wikipedia.org/wiki/Steve_H._Hanke


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Quote from Jayford:

Hey Einstein,

Guess who has been propping up the world?

Take away Yank consumption, there is no China miracle.

You just do not get it.
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The original poster makes many valid points. Fed policy has been horrendous over the years, and U.S. govt policy even worse - - the result of short term 'just patch it up' thinking. - - On the other hand, it is easy to make America the bad guy. Fact is, after expending blood & national treasure to save the world from facism in World War II (and America was the Only nation able to do that) - - - the global economic system was formed and America became the engine for rebuilding the world. Devasted countries had nothing and could buy nothing. Their answer was exporting and so it all began. The world economy has been driven by U.S. consumption, more recently sustained by cheap credit provided by foreign countries who needed to do something with their dollars & not wanting their own currencies to adjust upward and stop the export engine. But that international system was unsustaneable and it is now crumbling. - - There's plenty to find fault with in U.S. policy, - - but many of these countries would still be little 3rd world pits of poverty if they hadn't had the U.S. as an investor & later a buyer for these past decades. - - - If the U.S. is dragging the world into depression now, it is because of the global trade & economic framework created after they dragged the rest of the world out of the likely depression that would have existed after the end of WWII. - -
 
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December 1, 2008

SouthAmerica: Reply to Tigerjaw

If you read the enclosed article published a little over 2 years ago then you will understand what happened to the international monetary system since WW II and in a nutshell the reason why that system has finally reached the end of the line in 2008.

On September 6, 2006 Brazzil Magazine published another article where I mentioned the US economy and globalization – you can read it on the following web site:

Brazzil Magazine - Wednesday, September 06, 2006
“While the American Dream Is Outsourced Brazil Drives the World into the Future”
Written by Ricardo C. Amaral
http://www.brazzil.com/component/content/article/171-september-2006/9684.html

Quoting from that article: “History background

Let me give you first a little history background and let’s set the stage to show why this economic revolution is under way today, and why this couldn’t have happened before our time at the speed that is happening today. There are many factors that are coming into play and help us understand this revolutionary economic evolution of the capitalist system.

After the end of World War II, with the reconstruction of Europe under way a large pool of US dollars ended up with European banks as a result of the Marshall Plan and this new pool of US dollars become known as Eurodollars. After World War II the US dollar also became an important part of many countries foreign currency reserves.

One thing we have to keep in mind: since the end of World War II until the fall of the Soviet Union in 1991, the United States benefited a great deal from the fact that most communist countries and its satellites stayed away from the international financial markets. For all practical purposes during almost fifty years until the collapse of the Soviet Union in 1991 the communist countries did not compete with the United States for the pool of money available for investment from around the world.

Since the collapse of the Soviet Union, the U.S. has a lot more competition from other countries than in the past for this pool of money available for investments on the international financial markets. But the people from countries around the world are still operating under their old mindset and they have been financing the US government humongous budget deficits. Global insecurity regarding terrorism created an unique situation in the last five years in which the United States have been allowed the hogging of almost 90 percent of total global savings - year after year.

This unique situation can’t continue much longer and investor’s mindset has started to change finally. There is a real possibility that in future years the competition will become very tough, and a large portion of this pool of global investment money will go to other countries instead of the United States.

It takes time for people to change their old mindset and their old theories and start adapting to the new circumstances and the realities of the new global economic environment – mainly today when we have a new and unique global economic structure as never seen before.

Technology changed everything

Right now, we are in the middle of a historical turning point. In the last few years we had a revolution in technology, and today we can do things that were not viable only two years ago. In the late 1990’s a few corporations including Global Crossing connected the entire world with fiber optics, combine that to the advances we had in broadband technology, and in internet telephony technology, plus all the latest developments related to computer technology, storage capability, faster computers, powerful computer chips, and you have a new cheap communications system around the world like we have never seen before.

Outsourcing has been around for a long time, but now for the first time in the history of the world, because the price of communications is so low: you can transfer data, and use the telephone 7/24 for a very low cost. Until recently the costs of international telephony, for talking of transferring data was very expensive and did not make economic sense to transfer overseas a lot of company operating functions. Because of this technological revolution only in the last year or so started making economic sense to outsource everything in sight. With the current technology, we can outsource probably 50 percent or more of all American jobs to a cheaper country such as India, China, Brazil and a zillion other places around the globe.

Today the United States is not outsourcing only jobs that Americans don’t want to do. The US today is exporting millions of hi-tech jobs as fast as they can. At the same time, China and India are moving very fast into the future. They are investing heavily in R&D and they are developing the new state-of-art software, and the future in electronics. Today, there is something revolutionary and new regarding outsourcing; and it moves at the speed of light….”


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Note: Keep in mind that this article it does not take in consideration the destruction of the value of the US dollar that has been going on in 2008 and the US$ 8 trillion dollars in bailouts and other US government guarantees.

Basically the value of the US dollar is doomed in the coming years, and the current global financial crisis has just pushed a little forward into the future the massive meltdown of the US dollar.

The only reason the US dollar recovered a little in world markets is because US financial institutions had to sell everything in sight around the world to bring the money back home to cover margin calls and redemptions from investors – that massive US selling of assets around the world destroyed stock markets from Russia, to China, and to Brazil and when these American institutions brought the money back to the US they gave the false impression that the US dollar is getting stronger against other currencies.

The US economy is the one in intensive care and the one that is dying a quick death, many of these countries that the US institutions sold their positions in local markets had enough foreign exchange on hand to take the shock sent from a collapsing US economy.

On November 27, 2008 a Folha de Sao Paulo newspaper published a front page article saying: “Henrique Meirelles the president of Brazil’s Central Bank said on a speech on November 26, 2008 that since the end of October 2007 the global stock markets have lost US$ 29 trillion dollars – a number equivalent of 40 percent of total global stock market value at that time.

That means that in the last 12 months the global stock markets went from being worth about US$ 73 trillion dollars and after losing US$ 29 trillion dollars in assets that melted away, today the global stock markets are worth only about US$ 44 trillion dollars.

In the coming months as the US stock market test the 7,000 level on the Dow Jones index we can assume that the value of the global stock markets will lose further value and will decline to around US$ 35 trillion dollars.

Last week we had a major “sukers’ rally” on the US stock market based on wishful thinking and nothing else, but the reality is: the eye of the Perfect Storm still ahead of us and only God knows when the flood of bad news is going to end.

What most economists in the US don’t understand is that we have a global financial crisis plus the global economic transformation that I mentioned on the above article that is going on at the same time.

This is not your usual business cycle since the jobs are being outsourced to other countries and millions of jobs are also being destroyed forever because they are being replaced by technology as never before. And the companies that are laying off millions of workers during this deep recession also will replace a large number of these workers with technology in the future.


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02-23-06 05:16 PM
February 23, 2006

SouthAmerica: “The End of Dollar Hegemony” is a very good article by Ron Paul, but he left out some important points as follows:


1) Communism expanded after WW II and kept many countries out of the international financial markets until the collapse of the Soviet Union in 1991 - and the US economy was a major beneficiary of that unique situation.


2) After WW II European countries were flattened with everything in sight being destroyed during the war years. The US established the Marshall Plan to help in the reconstruction of Europe – that created a massive new market for US dollars in Europe – these US dollars held outside of the US by mostly European banks until the early 1970’s received the name of “Eurodollars.”

For obvious reasons the US dollar became an important world reserve currency since WW II.


3) The author said: “By 1979 interest rates of 21% were required to rescue the system.”


But interest rates became so high in the late 1970’s as a direct result of all the defense spending that had happened - related to years of financing the Vietnam War.


4) The author also said: “Most importantly, the dollar/oil relationship has to be maintained to keep the dollar as a preeminent currency. Any attack on this relationship will be forcefully challenged – as it already has been.”


In 2006, two oil producing countries come to mind that are in the process of switching their oil trades from the US dollar to Euros – Iran and Venezuela.

The US dollar is losing its clout in South America – with countries such as Brazil and Argentina paying off most of its debt denominated in US dollars.

Source: http://www.elitetrader.com/vb/showthread.php?s=&postid=990328&highlight=Ron+Paul#post990328
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Prices have to adjust to:

$73 Trillion going to $34 Trillion


Real Estate Prices declining from 30 to 60%....worldwide...


The $7 Trillion in savings was squandered by the largest
banks and brokers.... and the government policy is financing this loss by issuing debt, and printing money....and the individuals that had the savings are being asked to replace their own money.....


Credit has been dramatically reduced or eliminated for the majority of the middle and lower class....


The government programs are aiding and abetting the very firms that caused the financial problems.....

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Thus the prices of cars, houses, medical, school, clothes....you name it has to come down to be in line with the new economics....

And they have to come down 50% or better....

ie a car that was $30,000 has to come down to $15,000....etc...
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Two major items can be changed to make up these losses.....

A change in tax structure.....eliminating the individual and corporate taxes...to be replaced with a 10% consumption tax....

A change in market structure.....BATS has proven it can replace the NYSE with a hand full of people and computers that can be
located anywhere in the world....100 shares should cost no more than 20 cents....
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Google has proven that detailed information can be delivered in any format....anywhere in the world....

The world agrees now that accounting regulations need to be standardized....Thus public firms can be boilerplated and low cost entries and reporting is possible...

Banks need to be localized to know their actual customers....
 
southamerica - - thank you for taking the time to post your reply. Actually I am quite aware of the conditions & history that have led up to the current situation. And, I agree with the economic points that you have brought up. There will be a drastic global economic change that will leave many people reeling. This is inevitable.

As an American, I do grow tired of the "evil America" posts however. Perhaps it is inevitable that the "big dog" would be sniped at by others. But IMHO Western Europe is in much better shape than it would have been if Nazi Germany had prevailed. The world is in better shape than if facism would have prevailed. The world is in better shape than if America did not provide for rebuilding the devasted countries after the war. The lives of many good men were sacrificed.

I bring up WW2, of course, - because the structure that made the dollar the world's reserve currency came about as a result of that conflict. - - Unfortunately, afterwards IMO things screwed up in ways that would lead to where we are today. When the worlds economy is based on U.S. consumption and everyone else exporting and then providing cheap money with their dollar earnings (and even artificially setting their currencies low in order to drive their exports) - - you get what we've got.


Yes, there has been a great deal of stupidity practiced by the politicians and bankers since the end of the war. This has led to the problems that the world is facing now. But sometimes as an American it would be good to hear a little bit of appreciation for the good that our nation has done - - - even though, as human beings, we have often fallen far short of perfection.

Regards, - - -
 
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