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Niall Ferguson Sees U.s. Default On Social Security, Medicare

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http://www.bloomberg.com/avp/avp.asxx?clip=mms://media2.bloomberg.com/cache/vGTRUwlnyedY.asf&vCat=/av&RND=748813737&A=

Starts talking about the US from about 2 minutes in.

A bit of balance for RB's posts. I reckon it's all over for the US starting 2012 or latest 2013. Initially, it'll be debt:GDP over 100% but then it'll be huge tradedeficits on spiking oil prices, etc, etc.

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http://www.bloomberg.com/avp/avp.asxx?clip=mms://media2.bloomberg.com/cache/vGTRUwlnyedY.asf&vCat=/av&RND=748813737&A=

Starts talking about the US from about 2 minutes in.

A bit of balance for RB's posts. I reckon it's all over for the US starting 2012 or latest 2013. Initially, it'll be debt:GDP over 100% but then it'll be huge tradedeficits on spiking oil prices, etc, etc.

the biggest challenge for the US is oil. Their per capita consumption is over twice ours. Much of that is a 'structural' issue.

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the biggest challenge for the US is oil. Their per capita consumption is over twice ours. Much of that is a 'structural' issue.

+1

At least we have a good advantage with being relatively frugal.

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+1

At least we have a good advantage with being relatively frugal.

yes we live in smallish houses (relatively speaking), we're quite close together and don't have to drive too far to pick up a loaf of bread.

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Naked capitalism and the scary model

Steve Keen

Published 6:29 AM, 6 Jul 2010 Last update 10:18 AM, 6 Jul 2010

I met with Yves Smith of Naked Capitalism on the weekend, at a superb Japanese restaurant that only New York locals could find (and I'll keep its location quiet for their benefit – too much publicity could spoil a spectacular thing). Yves was kind enough to post details of my latest academic paper at her site in a post she entitled Steve Keen's scary Minsky model.

Yves found the model scary, not because it revealed anything about the economy that she didn't already know, but because it so easily reproduced the Ponzi features of the economy she knows so well.

I have yet to attempt to fit the model to data – and given its non-linearity, that won't be easy – but its qualitative behaviour is very close to what we've experienced. As in the real world, the model shows a series of booms and busts give the superficial appearance of an economy entering a 'Great Moderation' – just before it collapses.

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The motive force driving the crash is the ratio of debt to GDP – a key feature of the real world that the mainstream economists who dominate the world's academic university departments, central banks and treasuries ignore. In the model, as in the real world, this ratio rises in a boom as businesses take on debt to finance investment and speculation, and then falls in a slump when things don't work out in line with the euphoric expectations that developed during the boom. Cash flows during the slump don't allow borrowers to reduce the debt to GDP ratio to the pre-boom level, but the period of relative stability after the crisis leads to expectations – and debt – taking off once more.

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Ultimately, such an extreme level of debt is accumulated that debt servicing exceeds available cash flows, and a permanent slump ensues – a Depression.

There are four behavioural functions in the model that mimic the behaviour of the major private actors in the economy – workers, capitalists and bankers. Workers' wage rises are related to the level of employment and the rate of inflation; capitalists' investment and debt repayment plans are related to the rate of profit; and the willingness of banks to lend is also a function of the rate of profit.

The model is explicitly monetary – with bank accounts for workers, bankers and capitalists – and the crisis is marked by a collapse in deposits and a rise in inactive bank reserves.

[Click to enlarge the image]

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The same phenomenon is evident in the data, though the sharpness of the turnaround is far greater than can be replicated by the smooth functions in my model.

There's a lot more work to do before the model is complete – notably including the impact of a government sector that can add its own spending power to a depressed economy – but its basic features fulfil Minsky's challenge:

Can "It"– a Great Depression – happen again? And if "It" can happen, why didn't "It" occur in the [first 35] years since World War II? These are questions that naturally follow from both the historical record and the comparative success of the past thirty-five years. To answer these questions it is necessary to have an economic theory which makes great depressions one of the possible states in which our type of capitalist economy can find itself.

This is the first economic model ever that meets Minsky's standards for realism. Its final stage emphasises a message that Michael Hudson, one of the very few others to see this crisis coming, puts very simply: "Debts that can't be repaid, won't be repaid". As Americans now seem to be realising, the financial crisis has not gone away, because the debt that caused it is still there.

Having got ourselves into a debt-induced economic crisis, the only permanent way out is to reduce the debt – either directly by abolishing large slabs of it, or indirectly by inflating it away. I have very little confidence in the ability of the Federal Reserve to do the latter, while the former will take a level of political fortitude that is far beyond our current politicians.

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The US have no more guts for tough decisions than the UK - I read somewhere if their average vehicle mpg was the same as ours their oil dependency on the middle east could be wiped out at a stroke, for example. Could their government legislate to make this happen? It would just be seen as more 'Obammunism'.

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They spend as much on weaponry as the rest of the world put together. Unless someone makes them use it all, or the population revolts, they will stay no 1.

They spend as much on weaponry as the rest of the world put together. And thats just the private sector. The public sector spends even more than that.

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They spend as much on weaponry as the rest of the world put together. Unless someone makes them use it all, or the population revolts, they will stay no 1.

that is largely irrelevant when everyone else has nukes.

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I have a bit of experience of the US.

I think it is accurately described as the land of opportunity. You have the opportunity to accumulate great riches there, just as you have the opportunity to dwell in abject poverty.

And I think the Americans are good at spotting opportunity.

And when petrol prices become unsupportable in the US, road based multi-person transport systems (privately owned) will sprout like mushrooms.

Buses and mini-buses and mini-bus shared taxis will the keep car constrained USA functioning.

The USA's dependence on petrol is over-stated although its preference for it is not.

If they do it reasonably well, the quality of life might even be improved.

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And when petrol prices become unsupportable in the US, road based multi-person transport systems (privately owned) will sprout like mushrooms.

however constructing them will require oil.

and they will still be more expensive than similar multi person systems in europe given the larger distances involved and the excessive separation of residential and commercial property.

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I have a bit of experience of the US.

I think it is accurately described as the land of opportunity. You have the opportunity to accumulate great riches there, just as you have the opportunity to dwell in abject poverty.

And I think the Americans are good at spotting opportunity.

And when petrol prices become unsupportable in the US, road based multi-person transport systems (privately owned) will sprout like mushrooms.

Buses and mini-buses and mini-bus shared taxis will the keep car constrained USA functioning.

The USA's dependence on petrol is over-stated although its preference for it is not.

If they do it reasonably well, the quality of life might even be improved.

Surprising fact is they have far and away the biggest railway network in the world.

Mostly freight, of course.

A lot of cities have seen the error of their ways and are re-introducing trams and trains. LA, SF, Sacramento etc.

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Surprising fact is they have far and away the biggest railway network in the world.

Mostly freight, of course.

A lot of cities have seen the error of their ways and are re-introducing trams and trains. LA, SF, Sacramento etc.

Larger than India ?

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Larger than India ?

240,000 km connecting 48 continental states. That is enough track to circle the Earth five times.

Russia (154,000 km) and China (86,000 km) Canada (72,961 km) follow. India comes fifth with 62,658 km

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240,000 km connecting 48 continental states. That is enough track to circle the Earth five times.

Russia (154,000 km) and China (86,000 km) Canada (72,961 km) follow. India comes fifth with 62,658 km

Well I never. I must have been thinking about passenger numbers.

The US really should use that more for passengers. I have heard Amtrak is decent but very slow. Surely with a country like hte US a nationwide high speed rail service would be a great plan ? Well if they were not so addicted to cars of course.

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Guest UK Debt Slave

I have a bit of experience of the US.

I think it is accurately described as the land of opportunity. You have the opportunity to accumulate great riches there, just as you have the opportunity to dwell in abject poverty.

And I think the Americans are good at spotting opportunity.

And when petrol prices become unsupportable in the US, road based multi-person transport systems (privately owned) will sprout like mushrooms.

Buses and mini-buses and mini-bus shared taxis will the keep car constrained USA functioning.

The USA's dependence on petrol is over-stated although its preference for it is not.

If they do it reasonably well, the quality of life might even be improved.

America is not the land of opportunity anymore.

The middle class in America is vanishing, exactly as planned by the global ruling elite.

They figured that 300 million people using 30% of the worlds resources wasn't 'fair' so they took a wrecking ball to the US economy to destroy the middle class

Frankly, life in America is pretty zhit right now unless you already made your money. My wife was bankrupted by healthcare costs and the cost of livng has doubled in the last 6-7 years for the average Joe.

As for public transport...............forget it. It is grossly inadequate to keep the US economy afloat

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America is not the land of opportunity anymore.

The middle class in America is vanishing, exactly as planned by the global ruling elite.

They figured that 300 million people using 30% of the worlds resources wasn't 'fair' so they took a wrecking ball to the US economy to destroy the middle class

Frankly, life in America is pretty zhit right now unless you already made your money. My wife was bankrupted by healthcare costs and the cost of livng has doubled in the last 6-7 years for the average Joe.

As for public transport...............forget it. It is grossly inadequate to keep the US economy afloat

Did you not get your US visa application rejected a few weeks ago ? :unsure:

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the biggest challenge for the US is oil. Their per capita consumption is over twice ours. Much of that is a 'structural' issue.

why?

they ARE the biggest consumers on the planet,but that also means there is plenty of room for improvement.

should they have new innovative technologies under the counter to combat this,I would say the US is potentially in an excellent position provided they don't give the stuff away.

ready-made industry there to absorb a lot of unemployment.

frankly we should be doing similar,as we can no longer rely on north sea oil.

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They spend as much on weaponry as the rest of the world put together. Unless someone makes them use it all, or the population revolts, they will stay no 1.

ever heard of assymetric warfare?

doesn't matter how many multi-billion dollar aircraft carriers you make if you can invent stuff that dodges the electronic detection suite.

..one tiny little torpedo with gizmo's that evade such systems can put paid to several million quids worth of gear(and a few thousand lives) in seconds.

exhorbitant military budgets are NuLabour's school of defence(if they actually did any).......it's not necessarily about throwing the most money around,it's about how effectively it is deployed.

same with these IED's.

.....cost a few pounds to make,explode gear worth many multiples that in financial terms....plus the human cost(with appropriate media propaganda) is utterly demoralising.

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that is largely irrelevant when everyone else has nukes.

I would be more concerned with bio-weapons.

they have a far superior kill-rate at a fraction of the cost.

that's why they are gunning for the likes of iran/syria.

nothing to do with nukes,but these guys are world experts in nasty bugs.

quite a bit sneakier than pretty clouds and a really bright light-show too.

Edited by oracle

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ever heard of assymetric warfare?

doesn't matter how many multi-billion dollar aircraft carriers you make if you can invent stuff that dodges the electronic detection suite.

..one tiny little torpedo with gizmo's that evade such systems can put paid to several million quids worth of gear(and a few thousand lives) in seconds.

exhorbitant military budgets are NuLabour's school of defence(if they actually did any).......it's not necessarily about throwing the most money around,it's about how effectively it is deployed.

same with these IED's.

.....cost a few pounds to make,explode gear worth many multiples that in financial terms....plus the human cost(with appropriate media propaganda) is utterly demoralising.

USS Cole. Enough said.

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240,000 km connecting 48 continental states. That is enough track to circle the Earth five times.

Russia (154,000 km) and China (86,000 km) Canada (72,961 km) follow. India comes fifth with 62,658 km

Unfortunately, as they are mostly freight lines, that railway system doesn't tend to go anywhere that people want to go. Add in the vast distances in the US and you'd need 200mph+ bullet-style trains to beat the regional air routes., especially out west. New England and the east coast is slightly better served, though:

The HSR network planned does look good though:

810_US_HSR_Phasing_Map.gif

My trip to Utah a couple weeks ago showed the vast distances - Dallas to SLC was a 2h 35m flight, add in, say 2hrs for check-in and you have a 4h 35m journey time. Driving distance between the two points is just under 1,400 miles, so even at 220mph you're still talking over 6hrs, and the HSR route plans shows two changes between SLC and Dallas, with no direct route.

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  • 140 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • Even
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      • up 5%



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