In another thread Modus provided some very sobering finacial data. He cited our declining tax receipts, the amount of taxes needed to pay interest on debt, the lack of productive jobs vs jobs that simply redistribute wealth, etc. In order not to hijack the other thread, I decided to start a new one- What cold hard facts do you have to support your ideas of where the economy will go?

In ten years the annual interest on the national debt will be 850 billion USD per year, largely thanks to 0bamas budgets. That is clearly unsustainable. One day nobody will show up to buy our bonds.

Don't worry, we have a buyer with unlimited funds.  His name is Ben Bernanke.

Yep.  We already don't have enough buyers for our bonds, so the Treasury is printing money and buying them, about 50% IIRC.

Well, to answer the OP's question, it will be a life changing event for us all if the bond market crashes.

And in my opinion (based on what I've read) there is a real possibility of that happening.  In a weird way, I kind of hope it happens.  Maybe it's because I've always equated indebtedness to a form of slavery, and a de facto balanced budget ammendment would be a great thing.  On the other hand, I don't know if I'd really like the results of such an event, because I live in the city and don't have enough room to grow and raise my own food.

Here is a very interesting post about the bond market that I read in another forum and posted here at another thread.

http://www.greenenergyinvestors.com/index.php?s=a06b361986a40641ab8031835e040aeb&showtopic=6749&st=0&p=110721&#entry110721

This is news to me. You are saying that the Treasury (part of our Fed government) is borrowing money (selling bonds) to itself? This would be the equivalent of someone taking cash from a credit card to pay another one...compunded debt

Yes, they started doing it in March.  Actually, it is the Federal Reserve buying them from Treasury.  They are doing it to try and suppress yields, but it has already backfired and we are paying more interest now than we did back then.

Yes, yes this is true. Pretty amazing isn't it? The best part of it is, interest gets to be paid on what it sells to itself, which comes from the tax payers. Perfect way to enslave a nation.

Yep.

HH

Yes, that is correct. It is slavery in the basic sense.

Hell, even the Russkies see it coming.

American capitalism gone with a whimper
27.04.2009 Source: Pravda.Ru URL: http://english.pravda.ru/opinion/columnists/107459-american_capitalism-0

It must be said, that like the breaking of a great dam, the American decent into Marxism is happening with breath taking speed, against the back drop of a passive, hapless sheeple, excuse me dear reader, I meant people.

True, the situation has been well prepared on and off for the past century, especially the past twenty years. The initial testing grounds was conducted upon our Holy Russia and a bloody test it was. But we Russians would not just roll over and give up our freedoms and our souls, no matter how much money Wall Street poured into the fists of the Marxists.

Those lessons were taken and used to properly prepare the American populace for the surrender of their freedoms and souls, to the whims of their elites and betters.

First, the population was dumbed down through a politicized and substandard education system based on pop culture, rather then the classics. Americans know more about their favorite TV dramas then the drama in DC that directly affects their lives. They care more for their "right" to choke down a McDonalds burger or a BurgerKing burger than for their constitutional rights. Then they turn around and lecture us about our rights and about our "democracy". Pride blind the foolish.

Then their faith in God was destroyed, until their churches, all tens of thousands of different "branches and denominations" were for the most part little more then Sunday circuses and their televangelists and top protestant mega preachers were more then happy to sell out their souls and flocks to be on the "winning" side of one pseudo Marxist politician or another. Their flocks may complain, but when explained that they would be on the "winning" side, their flocks were ever so quick to reject Christ in hopes for earthly power. Even our Holy Orthodox churches are scandalously liberalized in America.

The final collapse has come with the election of Barack Obama. His speed in the past three months has been truly impressive. His spending and money printing has been a record setting, not just in America's short history but in the world. If this keeps up for more then another year, and there is no sign that it will not, America at best will resemble the Wiemar Republic and at worst Zimbabwe.

These past two weeks have been the most breath taking of all. First came the announcement of a planned redesign of the American Byzantine tax system, by the very thieves who used it to bankroll their thefts, loses and swindles of hundreds of billions of dollars. These make our Russian oligarchs look little more then ordinary street thugs, in comparison. Yes, the Americans have beat our own thieves in the shear volumes. Should we congratulate them?

These men, of course, are not an elected panel but made up of appointees picked from the very financial oligarchs and their henchmen who are now gorging themselves on trillions of American dollars, in one bailout after another. They are also usurping the rights, duties and powers of the American congress (parliament). Again, congress has put up little more then a whimper to their masters.

Then came Barack Obama's command that GM's (General Motor) president step down from leadership of his company. That is correct, dear reader, in the land of "pure" free markets, the American president now has the power, the self given power, to fire CEOs and we can assume other employees of private companies, at will. Come hither, go dither, the centurion commands his minions.

So it should be no surprise, that the American president has followed this up with a "bold" move of declaring that he and another group of unelected, chosen stooges will now redesign the entire automotive industry and will even be the guarantee of automobile policies. I am sure that if given the chance, they would happily try and redesign it for the whole of the world, too. Prime Minister Putin, less then two months ago, warned Obama and UK's Blair, not to follow the path to Marxism, it only leads to disaster. Apparently, even though we suffered 70 years of this Western sponsored horror show, we know nothing, as foolish, drunken Russians, so let our "wise" Anglo-Saxon fools find out the folly of their own pride.

Again, the American public has taken this with barely a whimper...but a "freeman" whimper.

So, should it be any surprise to discover that the Democratically controlled Congress of America is working on passing a new regulation that would give the American Treasury department the power to set "fair" maximum salaries, evaluate performance and control how private companies give out pay raises and bonuses? Senator Barney Franks, a social pervert basking in his homosexuality (of course, amongst the modern, enlightened American societal norm, as well as that of the general West, homosexuality is not only not a looked down upon life choice, but is often praised as a virtue) and his Marxist enlightenment, has led this effort. He stresses that this only affects companies that receive government monies, but it is retroactive and taken to a logical extreme, this would include any company or industry that has ever received a tax break or incentive.

The Russian owners of American companies and industries should look thoughtfully at this and the option of closing their facilities down and fleeing the land of the Red as fast as possible. In other words, divest while there is still value left.

The proud American will go down into his slavery with out a fight, beating his chest and proclaiming to the world, how free he really is. The world will only snicker.

Stanislav Mishin

Obama was elected president.

Kind of; look up "quantitative easing".

Hyper-Inflation from printing and using Monopoly (r) money to quadruple the deficits run by EVERY previous administration combined.

Well, that makes me feel better.

Israel attack on Iran sending gas to $7/gal.

Or just a modest economic recovery could send it to $7.

Bottom line, rising gas prices helped put us where we are and rising gas prices will help finish us off.

Only if we don't drill.  If we could start drilling, it would reverse the trend.  However since we have no energy policy we will revert to third world status.

True, unfortunate but true.

I'm guessing that eventually Obama will come up with an energy policy, and it will be a doozy.

It will be something like a $3 per gallon carbon tax on gas and a $5 per gallon carbon tax on Diesel with a $10 per person incentive to buy a made in China bicycle.

We be fucked with him in office.

Its real simple the Gov pissed away all the money we have (plus a lot more) they are coming after you for more.

If gas went up tommorow to $7 a gallon  ,it would be 1-3 years before we'd see much in terms of domestic oil if we started to tap everything, drilling takes time.

Yup, and if we just started 4 years ago when Bush first started talk about ANWR we wouldn't be in this mess.

In the next few years what fraction of the U.S. population will actually be working (and thus paying income taxes) with the Baby Boomers retiring?

One major difference between the US today and classic cases of hyperinflation (such as the Weimar, or Zimbabwe):

We have humongous quantities of material goods.  There is no shortage of luxury items, of necessities, or of anything.  Consumers have simply aquired them on credit, and are defaulting on their payments for them.

There is a glut of material goods.  People are trying to unload things to raise cash, or just get out from under payments.

This is a classic scenario for deflation.

The .gov will of course, in its infinite wisdom, cause inflation by printing more money and "buying" its own debt (classic shell game), and may succeed to a great degree.

But out of control hyperinflation occurs when there are people who need things, and there are very few things to go around.

We have more things than we need –– a lot more.

The more I think about it the more I believe that sherrick may be right in that there will be no 'collapse'

We will continue on our downward spiral until housing prices stabilize, and then we will stay there.  Stagnation - I think it's what is termed an "L shaped" recovery.  In other words, once the bleeding stops there is no transfusion of new blood.

One thing is for certain...the bottom callers right now are full of shit.  We will not recover until housing prices stop falling - and they are falling at an historic level.

Lots of stupid useless people and no jobs

What we're looking at is a big ball of nasty problems which compound each other.

First we have too much debt, public and private. The private debtors are defaulting (and deflating prices for things like houses) because they can't produce the cash flow needed to service the debt. The government has not faced economic reality, namely that it will not be siphoning off the same value from the economy for several years to come and that substantial budget cuts are needed. This insistence on staying delusional about reality on the part of our politicians is leading to the debasement (inflation) of our currency at a much higher rate than normal.

Second, the lawlessness of the Obama administration applied to the world of finance. They effectively rendered contract law null and void when they tried to undo the AIG bonus contracts and rearranged debt seniority in the Chrysler bankruptcy. There is no reason to set up contractual agreements if a political figure can barge in and rearrange the terms to suit them. Right now this means that unionized companies will have to pay more in risk premium for financing, but taken too far and we won't have financial markets at all. That means cash and carry for cars, houses, college educations...and cash may not be an acceptable form of payment per point #1.

Third, demographics. The baby boomers are starting to retire which means they want their financial assets in safer places (point #2 applies here). So capital is going to get scarce. They also want entitlements from the government to support themselves in retirement as well. If you count Social Security and Medicaid obligations as debts on the public balance sheet the government is bankrupt right now. Add in the fact that in real terms most of Gen X and Y do not and will not earn what their parents did and you can see that there's no value adding tax base to pay for the entitlements either (point #1 applies here).

Point #2 is fascinating really. I had never considered something like that happening. So, what do we use as currency?
Gold? A more stable currency?

Ammo

America is fucked as long as we keep letting forigners import more than we export.

Every person needs to stop buying from China Japan and other forign nations and buy American.

We need imports taxes and to get rid of envirmental, saftey, and wokers rloights

That worked great the last time too...

http://en.wikipedia.org/wiki/Smoot-Hawley_Tariff_Act

Another thing to consider is interest rates.  The Fed has been buying Treasury debt (Quantitative Easing) and artificially setting the interest rates low.  Low interest rates are very necessary to stimulate spending.  There is so much Treasury debt being offered, and competing with corporate, non-profit, and state/municipal issues, that there is not enough money to buy it all.  Competition breeds higher rates, so keep your eyes planted squarely on the 10 year yield.  If it goes up, then the .gov is fucked.

While past tariffs were simply taxes on American consumers (more efficient than sales and VAT taxes, though) I think selective tariifs are warranted. This means that instead of tariffing all widgets imported at the same rate, we should tariff widgets from select countries that violate human rights. Why? Aside from the morality of not wanting to support human rights abusers, we must acknowledge that de facto slavery yields a competitive advantage for those countries.

This, combined with a massive deregulation of the restrictions on operating a business here in the U.S., are the only ways I can see to bring back industry to this country.

I agree with this only if the product is made in the US by American workers. "Buying American" ie: a GM car imported from China, doesn't help.

As for tariffs, every country that complains about them, has tariffs against US goods, heavily subsidizes their own industries and dumps there products here. Yet we are supposed to believe that a free market exists and that we are bad. We've been hosed for decades on purpose. Our industrial base has been sent overseas in a deliberate act to weaken the US. This has all been done with the support of our government.

I don't get the troll reply.

I think he has a legit argument.  We import more than we export.  We spend more than our GDP.  Our debt-to-GDP ratio is fucked up.  Everyone is in debt:  the government, the states, the counties, the cities, the corporations, and the family.  If we don't actually produce enough to service this debt, then we are in for some pain.

Our credit card is maxed out and we barely make enough money to pay the interest.

eta- I'm not saying that we do not produce.  We have farming, aviation, computers, pharmaceuticals, et al, but what I am saying is that are ratio of production to debt is unserviceable, brought upon by a credit expansion that made money too cheap.

No shit.  Instead of Fred and Wilima taking the RV around the country for a tour, it will be in a Kenworth instead.

http://market-ticker.denninger.net/archives/1071-More-Yellow-Weeds-Chicago-PMI.html

http://www.upi.com/Top_News/2009/05/30/National-debt-at-545668-per-household/UPI-40641243709475/

Aren't a lot of good signs out there.

Try this experiment.  IGNORE the equities markets.  Pretend that the dow jones industrial average doesn't exist.

Does any other data out there, then, support the contention that we're recovering?

If so, what?

If not, why aren't you concerned that the indexes aren't mirroring the economic indicators?

Just what the hell is going on in the markets?

It's the "Bull trap" after the largest debt-bubble of all time, you'll notice that the areas most affected are the ones that were the most frothy on the way up (commodities, emerging markets, bank/RE stocks, etc.)

If you want to use the elliot pattern we are on wave B


It looks like the Bull trap short cover is running out of steam by most metrics, then we're on to wave C and the deflationary spiral...

Indeed

I am concerned that we are not recovering, and that the govenrnment numbers are purposely skewed.

That's what's bugging me. What if we find ourselves in an overall deflation on average simply because the prices for McMansions, jetskis, plasma TVs, precious metals, and wages fall while at the same time prices for food, medicine, and energy spike? The gov't will say that the CPI shows only a little inflation but the man in the street looking for food will know better.

Drunken typing! HAHA

Good point.  We are starting to see the first steps of that already.

Our people that volunteered to join the military's Reserves were told they would get retirement checks for their sacrifices and VA disability payments.

Uncle Sam's broke and broke the deal. Can't get both now.

Worse yet these old people in their late 60's started getting their "retirement" checks from the military and were still getting their VA disability.....Uncle Sam let them get paid for about a year then stops paying their retirements with a letter saying "sorry we've overpaid you since you've been receiving both, you now owe us $5000+ compound interest so we are keeping part of your retirement checks now for awhile".

And those old people that budgeted their last years upon expected revenue found out they didn't have the retirement revenue they thought and are missing mortgage payments since they stopped working and lost their homes.

This little money saver program only has started to happen over the last year or so.

Free trade accomplished what it was suppose to do. It destroyed the working class, giving them no choice but to support Democrats. Now, our industries will be nationalized, and protectionism will be brought back.

Look for trial balloons for Mexico, the US, and Canada to have a shared currency.
Look for a VAT tax.
Look for a new Tri-North American Government within 40 years.
Look for a police state.
Look for food and energy rationing.
Look for work camps.
Look for the elimination of a meat and dairy.  
Look for the almost complete elimination of automobiles.
Look for the elimination of free speech.
Look for the elimination of single family housing units.

^

No growth until we actually grow into the false growth we have had.  Unfortunatly the .gov is just extending the length of that process.

Rates are already starting to go up on their own.  Holding down the prime isn't working anymore.

When will the .gov learn you can't legislate the laws of physics and you can't legislate the laws of economics?