The End of the American Century?

[chrix]

It is possible that the political power of the U.S. is slowly declining.........

[chrix]

if we will follow the theory of the decline and fall of civilizations, its possible that the decline of the American Empire will come .................

[kidpoker]

Your first point is self-contradictory because you argue that the U.S. is in control but market forces determine the value of what they lend. On top of that, you forgot to mention that each time the U.S. gets fewer cents for every dollar that it borrows due to mounting debt.

 

You don't know anything about rigged credit ratings? How do you think those investments that led to the 2008 crash received high ratings?

The problem isn't just a "big government" but increased total borrowing and spending across all sectors. The bigger problem is U.S. banks exposed to over $370 trillion in unregulated derivatives, part of a global market made up of more than a quadrillion dollars. It was some of those derivatives that led to the 2008 crash, and it's similar to that trillion dollars leveraged many times around the world. So, you see, I do get the "bigger picture."

 

Your last point is contradictory: you want to cut down the size of the government but you also want the government to give "free food."

 

What will likely happen is that one credit crunch will follow another, with government and banks attempting to thwart that with QE3, QE4, and more, meanwhile receiving fewer cents for every dollar borrowed. Oil prices will go up each time energy demand hits production ceiling, as global oil production has remained flat since 2006 and oil discoveries peaked in 1964. Ultimately, it's that type of problem--a resource crunch--that will make economic crisis look like a walk in the park.

 

The 2008 crash was caused by 'toxic assets'. Toxic assets are mortgage based securities/derivatives with extremely high risk; it was extremely high risk because the banks lent money to people who do not have good credit and the housing market was highly inflated (real estate bubble). The derivatives failed because those derivatives are built from extremely high risk mortgage. Also, the insurers of these derivatives underestimated the risk and are unable to pay for the insured amount when the massive failures happened. That in turn caused the failure of several US banks and financial insurers such as Lehman Brothers and the American Insurance Group (AIG).

 

Most of the funding for these mortgages are not from the US government but from foreign and local fund holdings company. The US housing bubble was funded by money from abroad who thought the US housing market was stable before 2008. So, if they pushed a $1 million to the US housing market before 2008, by 2008, their money is only worth about $100,000 or less. That explains why many heads of funding companies committed suicide because they wouldn't be able to get their money back; they had not diversified their investments and was attracted by big potential profits in the US real estate market. It also explains the massive loses from the derivatives market. The loses in the derivatives market does not translate to debt. It only means that somebody lost money by betting on the wrong "horse".

 

You wouldn't need credit ratings anymore if your stock, derivatives or securities already went to bust. That's how market forces work.

 

The US is a First World country. Food is not a problem. Food is not considered big government spending.

 

Honestly, you have to read more macro economics, stock/derivatives trading, and fixed income books to understand the financial markets. I know it because I work in the financial markets industry.

[kidpoker]

Your first point is self-contradictory because you argue that the U.S. is in control but market forces determine the value of what they lend. On top of that, you forgot to mention that each time the U.S. gets fewer cents for every dollar that it borrows due to mounting debt.

 

You don't know anything about rigged credit ratings? How do you think those investments that led to the 2008 crash received high ratings?

The problem isn't just a "big government" but increased total borrowing and spending across all sectors. The bigger problem is U.S. banks exposed to over $370 trillion in unregulated derivatives, part of a global market made up of more than a quadrillion dollars. It was some of those derivatives that led to the 2008 crash, and it's similar to that trillion dollars leveraged many times around the world. So, you see, I do get the "bigger picture."

 

Your last point is contradictory: you want to cut down the size of the government but you also want the government to give "free food."

 

What will likely happen is that one credit crunch will follow another, with government and banks attempting to thwart that with QE3, QE4, and more, meanwhile receiving fewer cents for every dollar borrowed. Oil prices will go up each time energy demand hits production ceiling, as global oil production has remained flat since 2006 and oil discoveries peaked in 1964. Ultimately, it's that type of problem--a resource crunch--that will make economic crisis look like a walk in the park.

 

Just to add. Banks have gotten stricter now in lending money. In fact, it is hard to get credit nowadays. How can you have a credit crunch if banks are hardly lending?

[kidpoker]

This came out today:

 

http://business.inquirer.net/16593/us-stocks-pummeled-by-bleak-jobs-data

 

"Financial stocks took a severe pounding after The New York Times reported that US authorities would sue more than a dozen big banks over their peddling of mortgage-backed securities prior to the 2008 financial crisis."

 

This gives credence to accusations that Wall Street and US banks' excessive greed caused the 2008 financial crisis.

[FrankMartin]

in relation to this topic watch

 

"Mabuhay ang Tsina" Word Of The Lourd Episode 79

 

http://www.youtube.com/watch?v=StriunoE8Sg

[abtt]

At least, they have a century of dominance.....their decline is more on massive liberal entitlements than being fiscally responsible.

 

They (US gov't) recently added 4 trillion dollars in deficit under the Obama administration, who can recover from that?

[kidpoker]

At least, they have a century of dominance.....their decline is more on massive liberal entitlements than being fiscally responsible.

 

They (US gov't) recently added 4 trillion dollars in deficit under the Obama administration, who can recover from that?

 

US government can just cut down on expenditures to fix it.

[*kalel*]

how can a country with the following collapse? i doubt it...

 

1. has the most advance tech and arms

2. controls oil in the middle east and has a large untapped deposit within their boundaries

3. has the largest virgin forest reserve

4. has the biggest gold reserve

5. prints the international currency

6. has the biggest international banks

7. one of the financers of the world bank

[kidpoker]

how can a country with the following collapse? i doubt it...

 

1. has the most advance tech and arms

2. controls oil in the middle east and has a large untapped deposit within their boundaries

3. has the largest virgin forest reserve

4. has the biggest gold reserve

5. prints the international currency

6. has the biggest international banks

7. one of the financers of the world bank

 

i think doomsayers are being influenced by the full moon.

[BrightestStar]

Can it happen soon?

[BrightestStar]

US government can just cut down on expenditures to fix it.

 

 

Yes, of course. They even give at least 2 Billion a year to Pakistan. They can always fix it if they want to.

[asedillo]

how can a country with the following collapse? i doubt it...

 

1. has the most advance tech and arms

2. controls oil in the middle east and has a large untapped deposit within their boundaries

3. has the largest virgin forest reserve

4. has the biggest gold reserve

5. prints the international currency

6. has the biggest international banks

7. one of the financers of the world bank

 

 

Yes, an American collapse is possible. But only after all the other countries have collapsed.

[Ryuji_tanaka]

Yes, an American collapse is possible. But only after all the other countries have collapsed.

 

Hmm....that was what was said of the Roman Empire, the British Empire and the German Reich.

[kidpoker]

Hmm....that was what was said of the Roman Empire, the British Empire and the German Reich.

 

Definitely not in your lifetime.