Wednesday, Aug 11, 2010
Interesting
Fortune: Is this finally the economic collapse?
Now that the US can't cut interest rates any lower, the only option left on the table is what the Fed just announced it would start doing -- buying Treasury debt. And that could lead the country to the brink of collapse: According to economists Carmen Reinhart & Ken Rogoff, whose views we share, crossing the 90% debt/GDP threshold is the equivalent of crossing the proverbial Rubicon of economic growth. It's a point from which it's almost impossible to return.
Posted by mark @ 08:11 PM (1444 views) Add Comment
14 Comments
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1. debtfree said...
Yes.
It is.
The western powers that have held control for so long are losing power behind a web of lies that the sheeple choose to ignore.
Some will laugh, but only because they fail to understand the true magnitude of the problem.
It's not the be all and end all, just change.
2. sneaker said...
Where was such commentary in Q1/2 2000 or Q3/4 2007?
3. Stevie Dee said...
Rogoff, i remember referring to him in my finals of my macro economics degree. In the same sentence i referred a village being on fire and the central bank being the fire brigade was simply oblivious to such an occurance. Wrote this 8 years ago. The fire engines have no water or hydrant to quell the flames.
4. mountain goat said...
The 2008 crash was a prelude but not the real collapse because the infrastructure that makes the financial system so fragile was left intact. Big banks bailed out, cautious regulation etc. So with a bit of liquidity (QE etc) the whole leverage game bounced back quickly.
I expect the next decline will be a lot more destructive of this infrastructure, and so hopefully we will have a more sound financial system as a result. At least for a few years, until the next loopholes are found.
5. general congreve said...
Cross the rubicon, DO IT!!!
6. Stevie Dee said...
Gentlemen, careful for what you wish for. There is a revolution in progress. A resetting of the existing paradigm. We all have a responsibility to think positively and productive fashion. Yes, the system is corrupt and defunct, but the obligation of the intelligent, the seers, is to make this awkward transition less traumatic. Think positive. Vigou macro not micro. Think about what you can do to help. This is a very serious situation we are ALL in.
7. techieman said...
MG - responded to your points on the http://www.housepricecrash.co.uk/newsblog/2010/08/blog-well-further-as-in-not-paying-it-back-for-longer-not-further-as-in-more-of-it-in-total-29791.php
As i said did you read Mr Ps interim report - shame he didnt produce it a day earlier! :).
GC - is this you? :
8. debtfree said...
Techieman,
I don't look at the day to day movement of a currency like you and analyse every movement.
IMO the dollar is going to the dogs and that's that.
Your more than entitled to cheer during dollar rallies, but please, don't jump on every upwards movement and blow your own trumpet how dollar bears are wrong.
9. Wageslavex14 said...
I am amazed that all these articles are now making it into the mainstream press.
I always thought Prechter was a loon, but it looks like he might be right.
10. techieman said...
debtfree . hang on a minute. Up until a few days ago i was riding the dollar down moves by shorting it. I stopped doing that on Tuesday, the day the fed announced "Qe2". I actually lost a bit that day.
But overall yes i thought this was a dollar counter trend bear move. I honestly try to post stuff for you dollar bears not to over expose yourself.
As for that thread and blowing my own trumpet - i think you need to re-read that thread and see what you and GC said. The you tube video is aimed at GC for what he says at 4 above, and nothing to do with that thread. He basically wants the world to go to the toilet so long as gold goes up! Thats how i read 4 and that why i posted it.
So lets look at that thread - since you have raised it:
These are what you say
@4 : "More cash please, press the button FED. Bye bye dollar"
@ 5 Yeah baby yeah. More of it please, no delays. Bullion, bullion, bullion That's the stuff for me.
@ 6 "Money supply is only going one way." - by which i assume you mean up!
@ 11 - in response to MG's political point "Please, don't make me laugh.".
And my response?
"MG - The dollar bears are getting more lairy, just when the trend is getting mature (but possibly not over) - do they ever learn? Nope!
£ down almost a cent this morning and Eur 132 pips down the greenback. Is this just a counter trend move against the recent move lower for the dollar - or has the down move finished?
Personally think we are sill looking for countertrend dollar lows and equity move ups before "its all over" "
So yes there has been (but actually may stil be another dollar weakening - but in my view if there is thats when you need to switch to being a bull -- or of course it may be all over.
How long will it be over for - quite a few months - and yes eventually you may be right the dollar may reverse and collapse. [but imo not until after a big move up].
Then @ 39 i say " Its just amusing that debtfree / GC starts calling the $ finished and then we have a 300 pip move in the Euro and 2 cents in the £. Honestly? The dollar could weaken one more time and bump up equities in the 2nd wave of the 1st wave of this 3rd wave - and yes it does look like we are now starting the third wave."
And sorry but it is amusing... i didnt get caught with my trousers down did i! :)
11. mountain goat said...
TM - I would say the strength of yesterday's move in dollar and equities argues the dollar low is in place. Wrote a bit more on that older thread to avoid people getting upset about market chatter.
12. techieman said...
MG - yes would tend to agree. Probabilities are much higher - as we discussed we thought it was a case of if not when. I have commented on that older thread re your last post.
13. sureseam said...
sneaker: the Elliott Wave mob amongst others were certainly putting out strident views in 2000 and 2007.
The dollar like all previous fiat currencies will fail and die; but the road map will not be as the crow flies.
FWIW, I think, the dollar has turned upwards and will rise through, at least the rest of the year. This may reflect fear in the equity markets as in late 2008.
The thing HPC folk need to catch is that Central Bank lending rates follow the bond markets and the first significant rise in interest rates will lead to a rash of reposessions and games of reposession dominoes by BTL investors. We have been waiting for sensible house prices but this will look and feel like a motorway pile up in slow motion. Sadly no politician had the courage to let the air out of the balloon slowly especially when it comes to the UK property market.
14. techieman said...
"The thing HPC folk need to catch is that Central Bank lending rates follow the bond markets " yes which is why worries about the base rate being stuck at 0.5% isn't really the issue. Even though folks do keep on about it here.