Great Depression Upon Us...Again?

[fmahovalich]

Been listening to analysts. And as I have been saying as well, I don't think the western economies have bottomed out yet!!

U.S.A. has climbed to 14.7 trillion in debt. They need to raise the debt ceiling another 2 trillion..to ensure their bond and credit ratings remain intact. HOWEVER.... by election time they expect to again reach the NEW PROPOSED debt ceiling.


What is worrying however..... is the TRUE debt.....the short term liabilities on the horizon.

Medicaid, Medicare and Social Assistance payments, including old age pensions...push this debt to approximately 50 Trillion. Add in all the Bailouts, etc and analysts think debt load is pushing 100 trillion.

USA is truly in far worse shape than Greece.

Now one might say...we have an economy to carry that debt. DO WE? I am not so sure.

GDP along with the every decreasing job market tends to hinder the potential for debt repayment. Jobs, and salaries are on the decline. At the same time energy and cost of living is on the rise in the western world.

THE USA is headed in only two directions. 1) MASSIVE spiralling debt that WILL NEVER be paid off. NEVER!!. Or 2) DEFAULT!!!! Neither scenario is tasteful.

Buckle your seatbelts folks. I think I will quit the hobby to prepare

So..for a capitalist society...as I proposed in the title....it is very hard to push through these times without a depression. Third world countries are much better prepared in fact to outlast a depression...in a sad sorta way!!!

 

[groggy]

That's the end run result of unbridled capitalism and free trade.
Free trade has leveled the wages around the world, the US is now competing with China and India for factory work. Which is why most things are made in China these days and the US is undergoing downward pressure in wages and pensions to compete.

Free market capitalism has meant the end of the middle class as well, in the US. The division of wealth among the population is now at about the same levels as it was during the depression.

Their screwed up political system means only rich folks in the pockets of corporations will ever be elected, and they will never raise taxes.

 

[danmand]

In practical terms it will mean a massive devaluation of the $US (and $CAN) and therefore a wipeout of savings in North America. Likely, Europe will suffer the same fate.

The other question is, if the US will go quietly like the Soviet Union and Britain or will go out in a blaze of fire like many empires before it.

 

[fuji]

Many of the same principles as drove the Great Depression are operating today in the United States. However, I think what's more likely to result is a Japanese style "lost decade" rather than a Great Depression. A period of 10 or 20 years of stagnant or no growth while the debt is slowly unwound.

 

[kratz]

genius idea groggy, lets ignore reality, lets ignore that china and india and africa exist. competition? nah who needs it .

free market capitalism has not ended the middle class. sorry. entitlements, too expensive benefits like defined benefits pension plans, and dependance on government largess in return for votes has decimated the economy. you liberals are always focused on dividing the wealth, or redistributing the wealth, how about you get off your lazy ass and work to GROW the wealth. it doesnt have to be a race to the bottom.

if you believe that ANY government can allocate capital better than I can or the private sector can than you deserve your lot in life. I refuse to let your inherently small worldview drag me down. It is a wonderful world out there and NA has tremendous relative and absolute skills and knowledge to offer it.

There does not have to be a depression. But if we continue to focus on the govt as the be all, end all, then for sure we will have one as the government (US govt and traditional Europeans) have run our of policy bullets, monetary and fiscal. And their regulatory regime is killing domestic expansion. So i chose to work where my capital is wanted and rewarded. Im pretty sure that "producers" are doing the exact same thing.

Finally the links between your beloved Obama and WallStreet, GE, unions (public and private) are all very real and very powerful and ultimately very detrimental. The real growth engine is entrepreneurs and the Obama regime has disenfranchised and stifled that engine completely. Im delighted now to see real pushback coming from all corners. Just yesterday Obamas Chief of Staff Daley was quoted on not being able to defend the indefensible- i.e. their anti business relations and policies. Markets look forward ... the last few months of Bush were so bad because the producers saw Obama was going to win the election and started to prepare for that disaster. The financial crisis?? go read Reckless Endangerment by a NYT columnist... a real story on cronyism corruption and destructive policy.

That's the end run result of unbridled capitalism and free trade.
Free trade has leveled the wages around the world, the US is now competing with China and India for factory work. Which is why most things are made in China these days and the US is undergoing downward pressure in wages and pensions to compete.

Free market capitalism has meant the end of the middle class as well, in the US. The division of wealth among the population is now at about the same levels as it was during the depression.

Their screwed up political system means only rich folks in the pockets of corporations will ever be elected, and they will never raise taxes.

 

[Malibook]

While a depression scenario is certainly possible, I don't think it is probable or inevitable just because of unsustainable debt.
As long as money can be created out of thin air, there will always be the option of diluting the debt and dramatically lowering the standard of living.
I think a depression would happen if there is an uncontrolled sudden financial contagion but I would hope this is highly unlikely.

I think the next great tragedy for humanity will more likely be a solar event that wipes out the power grid, or a catastrophic weakening of the Earth's ozone and/or magnetic field, or a depletion of fresh water and top soil, or an asteroid impact.

 

[wet_suit_one]

What if there isn't enough energy in the world to keep the economy as we have known it going?

Just curious...

 

[kratz]

there is plenty of energy, and water. I am concerned abut topsoil though.

We will get through anything if we all stick together.

What if there isn't enough energy in the world to keep the economy as we have known it going?

Just curious...

 

[onthebottom]

All wealthy western nations have large entitlement obligations that spell disaster, in this regard the US is in comparatively good shape (due to our less generous entitlements and growing population that is aging slower), although we're all broke in the end. Entitlements will need to be reformed and healthcare costs will need to be brought under control - that is the harsh reality of the situation.

The public sector will need to be brought into the same reality that the private sector has been dealing with for a couple of decades now, you see the reality of this at the state level with all the reforms the GOP legislators and governors are passing. We need the same process at the federal level and quickly.

OTB

 

[danmand]

All wealthy western nations have large entitlement obligations that spell disaster, in this regard the US is in comparatively good shape (due to our less generous entitlements and growing population that is aging slower), although we're all broke in the end. Entitlements will need to be reformed and healthcare costs will need to be brought under control - that is the harsh reality of the situation.

The public sector will need to be brought into the same reality that the private sector has been dealing with for a couple of decades now, you see the reality of this at the state level with all the reforms the GOP legislators and governors are passing. We need the same process at the federal level and quickly.

OTB

To balance the US budget, all other programs than the military, homeland security and the veterans administration need to be completely eliminated.

 

[papasmerf]

To balance the US budget, all other programs than the military, homeland security and the veterans administration need to be completely eliminated.

Well there ya go

Keep only the welfare state programs and eliminate all others.

Quite socialist of you.

 

[WoodPeckr]

The public sector will need to be brought into the same reality that the private sector has been dealing with for a couple of decades now, you see the reality of this at the state level with all the reforms the GOP legislators and governors are passing. We need the same process at the federal level and quickly.

Thought your vaunted Globalism would correct this???
Remember how you used to chirp how Globalism would create millions of new jobs and this would cause the USA to 'grow' out of our Debt???

WTF happened bottie, to all this crap you learnt in business school???....

 

[nottyboi]

Including present day value of liabilities is a red herring. No one knows what is the cost of those liabilities and what will be the size of the US economy when they come due. On the whole I think the US can still easily deal with it's debt/deficit. In that respect they are in much better shape then Europe.

 

[WoodPeckr]

On the whole I think the US can still easily deal with it's debt/deficit. In that respect they are in much better shape then Europe.

Exactly!
The battle is over 'how' it will be handled.
The GOP wants to do it on the backs of the poor and middle class while protecting the 'entitled' Haves and Have Mores...their base...

DEMS want to more fairly spread the misery around....

 

[fmahovalich]

i THINK YOU HAVE TO COUNT THE FUTURE LIABILITIES.....MEDICARE, ETC ETC...


WHY?


Because these are huge real costs coming down the pipe....a plan that is dreamt today, however.... will be paid tomorrow from citizens whos jobs and wages are constantly on the decline. It is a job to do it...but one has to factor in this differential...which unfortunately is a growing negative number.

 

[groggy]

free market capitalism has not ended the middle class. sorry. entitlements, too expensive benefits like defined benefits pension plans, and dependance on government largess in return for votes has decimated the economy. you liberals are always focused on dividing the wealth, or redistributing the wealth, how about you get off your lazy ass and work to GROW the wealth. it doesnt have to be a race to the bottom.

Exactly, thanks for making my point.
Entitlements, as you like to call them, are the things that separated first from third world. Things like social services, unemployment, pensions, public schools, health care (at least here). Those aren't the things that have lead to deficit and debt, that was the lowering of taxes on the upper classes and corporations without any reduction government spending. Reaganomics has only lead to government debt, not high employment or any trickle down effect. So now you want to pay for the tax breaks for the rich by slashing social services, all that will do is lead North America into a third world economy where US workers will be competing directly with global workers, and be working for a pittance.

Bring back the taxes on the rich and corporations, that's the way to fix the problem.

 

[danmand]

Exactly, thanks for making my point.
Entitlements, as you like to call them, are the things that separated first from third world. Things like social services, unemployment, pensions, public schools, health care (at least here). Those aren't the things that have lead to deficit and debt, that was the lowering of taxes on the upper classes and corporations without any reduction government spending. Reaganomics has only lead to government debt, not high employment or any trickle down effect. So now you want to pay for the tax breaks for the rich by slashing social services, all that will do is lead North America into a third world economy where US workers will be competing directly with global workers, and be working for a pittance.

Bring back the taxes on the rich and corporations, that's the way to fix the problem.

The GOP is following the same playbook as Harper, used by conservative governments everywhere:

First, give gwenerous tax cuts to the rich, and buy lots of military hardware, to create a massive budget deficit. Then slash government services to balance the budget.

 

[nottyboi]

i THINK YOU HAVE TO COUNT THE FUTURE LIABILITIES.....MEDICARE, ETC ETC...


WHY?


Because these are huge real costs coming down the pipe....a plan that is dreamt today, however.... will be paid tomorrow from citizens whos jobs and wages are constantly on the decline. It is a job to do it...but one has to factor in this differential...which unfortunately is a growing negative number.

The decline has been a short one thus far, we have NO IDEA if this is the "new normal" yet. No one knows what the future holds. We may very well have to do with less... but maybe not. benefits may get cut back as well...who knows. Taxes may soar.. many ways to deal with the issue. There are lots of ways to deal with healthcare as well, but a part of that is going to war with the doctors, drug companies, hospitals etc etc etc.

 

[fmahovalich]

I agree cutting the taxes hurts...when rich and corporations don;t pay.

But herein is the pickle...

You cut the taxes..so these Corporations can compete in the global economy..and the rich will continue to invest in N.America!!.,.

Without the lower taxes...who knows how MANY MORE companies would leave the USA to find workforces for cheaper in foreign lands.

We are in a real quandry!!!

 

[IRIS]

If every country is in debt, where is the money?