the US, China and Russia are already calling the shots....mears said:
The US economy for dummies
- Thread starter jayeola
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nino_savatte
No pasaran!
mears said:
My dad is bigger than your dad.
ymu
Niall Ferguson's deep-cover sock-puppet
I mean that the Monroe Doctrine is in trouble even according to right wingers in Washington.mears said:
The US is a huge consumer market because US consumers are willing to go into huge debt to pay for stuff, or be conned into doing so by largely unregulated salesmen. Ah, freedom! It's only a valuable market if the US can keep paying for stuff with money it doesn't have. The US has a massive trade deficit and the national debt (owned by China, India and Japan) is only sustainable even at the current level, let alone growing at the rate it is, whilst the world keeps needing dollars for international trade.
But dollar hegemony is rapidly eroding and globally states are divesting of dollar reserves. The value of the dollar is plummeting. How will US spending levels survive when its massively eroded manufacturing base has to compete with low paid and/or slave labour in Asia? The huge deficit built up by Bush in less than 7 years to cover the shortfall in income compared to expenditure has prevented any internal corrections (ie plummeting dollar -> buy less, sell more), thus setting up the US economy, and people, for a huge fall.
Europe definitely won't be happy if Dubyanomics puts them into recession too, but the euro is one of the currencies challenging dollar hegemony right now, so they have more tools to deal with it. European governments suck up to the US a lot because of the trade thing, but it's about money not friendship. Really. They've been at war with each other for centuries, so why you think they'd automatically be especially fond of other European types across the Atlantic is beyond me.
BG linked to this a few weeks ago and it's a goodun considering the complexity involved.
Fictitious Capital
The fictitious bubble in the contemporary world is first of all the huge ($3-4 trillion, at current, conservative estimates) dollar ‘overhang’, the net US external debt ($11-12 trillion held abroad, minus $8 trillion in US assets overseas), held mainly in central banks. Everything, from a capitalist viewpoint, must be done to prevent its deflation. The US government is busy depreciating it by its ‘managing empire through bankruptcy’, and its foreign creditors fret at the erosion of their holdings. But they re-lend the money to the US government and US financial markets, making possible more domestic US credit, more consumption, and more imports from America’s creditors, because for now the collapse of the dollar would be their collapse as well, and they as yet see no alternative.
Fictitious Capital
The fictitious bubble in the contemporary world is first of all the huge ($3-4 trillion, at current, conservative estimates) dollar ‘overhang’, the net US external debt ($11-12 trillion held abroad, minus $8 trillion in US assets overseas), held mainly in central banks. Everything, from a capitalist viewpoint, must be done to prevent its deflation. The US government is busy depreciating it by its ‘managing empire through bankruptcy’, and its foreign creditors fret at the erosion of their holdings. But they re-lend the money to the US government and US financial markets, making possible more domestic US credit, more consumption, and more imports from America’s creditors, because for now the collapse of the dollar would be their collapse as well, and they as yet see no alternative.
Backatcha Bandit
is not taking your calls
jayeola said:
You might like to give Max Keiser and Stacy Herbert a listen - they do a show called 'The Truth About Markets' on Resonance 104.4 FM between 7 and 8PM on Saturdays.
They also do a daily(ish) podcast as 'Karmabanque Radio', which is a sort of tongue in cheek potty-mouthed swear-athon commentary on the demise of the US/World economy.
I don't agree with everything they say, but it's fucking hilarious - and a fuck sight more informative than any other financially-orientated news programme out there.
Max also does the odd little doco for Aljazeera English, e.g:
ymu said:I mean that the Monroe Doctrine is in trouble even according to right wingers in Washington.
The US is a huge consumer market because US consumers are willing to go into huge debt to pay for stuff, or be conned into doing so by largely unregulated salesmen. Ah, freedom! It's only a valuable market if the US can keep paying for stuff with money it doesn't have. The US has a massive trade deficit and the national debt (owned by China, India and Japan) is only sustainable even at the current level, let alone growing at the rate it is, whilst the world keeps needing dollars for international trade.
But dollar hegemony is rapidly eroding and globally states are divesting of dollar reserves. The value of the dollar is plummeting. How will US spending levels survive when its massively eroded manufacturing base has to compete with low paid and/or slave labour in Asia? The huge deficit built up by Bush in less than 7 years to cover the shortfall in income compared to expenditure has prevented any internal corrections (ie plummeting dollar -> buy less, sell more), thus setting up the US economy, and people, for a huge fall.
Europe definitely won't be happy if Dubyanomics puts them into recession too, but the euro is one of the currencies challenging dollar hegemony right now, so they have more tools to deal with it. European governments suck up to the US a lot because of the trade thing, but it's about money not friendship. Really. They've been at war with each other for centuries, so why you think they'd automatically be especially fond of other European types across the Atlantic is beyond me.
I hope you understand that the European Central Bank believes the Euro is to high against the dollar and would like it to come down. I hope you understand as well that China is flooding the EU with cheap goods with an artificially low yuan. In the this era of increasing globalization, its a big mistake to look at these issues soley through the perception of American dominance. Multinational corporations move jobs and capital around the globe at lighting speed. Factories can shut down in Alabama, New Castle of Lisbon and open in China. Radiologists in Berlin could lose their jobs to colleagues in Bombay.
Its not always about the US.
ymu
Niall Ferguson's deep-cover sock-puppet
Well, if you'd read the article, Mears, you'd know that China is keeping the yuan artificially low - not having much of an internal market (yet), it relies on a huge export market for it's cheap goods for growth. This is why the US deficit is so huge - China won't allow the dollar to devalue enough to stimulate US manufacturing to trade the way out of debt so it just keeps on growing. Good luck saving your way out of trouble...
Johnny Canuck3
Well-Known Member
ymu said:
US manufacturing will never catch China's again.
nino_savatte
No pasaran!
Johnny Canuck2 said:
And....?
nino_savatte
No pasaran!
mears said:
<Yawn> All America all the time. You have the debating skills of the 6 year old.
Change the record, son.
ymu said:
I don't have to read the article to know that. China keeps the yuan low to so its exporting companies can still sell their cheap goods in Europe and North America. The Chinese government is subsidizing their companies by keeping the yuan artifically low via hording dollars. But as the US dollar loses value this in turn means less money for China as they keep the bulk of their foreign currency holding in dollars. We are all intertwined.
Backatcha Bandit
is not taking your calls
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