World Financial Collapse Imminent

[photon]

Why buy gold? If the financial collapse comes, it's not going to be gold, it's going to be the guns that let you take gold from the guy who has gold!

[Lester]

I'm going to watch inside job tonight after the game. im ready to get angry.

[moncton golden flames]

sure, i own some precious metals, but the biggest asset i have are seeds and the ability to grow them. when it comes down to it, food security is the most important security you can have.

[pepper24]

Originally Posted by Azure

So, question is, if sub prime mortgages had never existed, would the economy have crashed?

Even the free market goes through a tough time....at some point.

Everyone knows that the US has a major debt problem. They just don't talk about it when times are good.

High oil prices was another key variable. Americans are addicted to cars just as much as homes. Also, has a ripple effect with food prices, transport costs etc.

[photon]

Originally Posted by moncton golden flames

sure, i own some precious metals, but the biggest asset i have are seeds and the ability to grow them. when it comes down to it, food security is the most important security you can have.

Me and my guns are coming for your seeds too. And the land to grow them.

[macker]

http://www.businessweek.com/news/201...s-qe2-end.html

Nearly 70% of the annualized issuance since the beginning of QE II has been purchased by the Fed, with the balance being absored by those old standbys - the Chinease, Japanese and other reserve surplus sovereigns.

China's investment in US debt totalled $1.16 trillion at year-end and Japan maintained its place as America's second-largest lender, with $882.3 billion of Treasuries at year-end.

Bond yields and stock prices are resting on an artificial foundation of QE II credit that may or may not lead to a successful private market handoff and stability in currency and financial markets. If at the end of QE, the private sector cannot stand on its own two legs-issuing debt at low yields and narrow credit spreads, creating the jobs necessary to reduce unemployment and instilling global confidence in the sancity and stability of the US dollar, then the QEs will have been a colossal flop. "Bill Gross."

[Oil Stain]

What are the odds that the US collapses, rather then just declines?

The British Empire for example didn't really collapse as far as I know. They just fell back with the rest of the pack. So if the USA does lose it's spot as the World's only superpower, that doesn't mean its going to be in a catastrophic event that destroys the world economy.

They could just lose ground gradually and end up as the 3-4th biggest economy in the world while everything, and everyone else justs gets on with business as usual.

[robocop]

Originally Posted by Oil Stain

What are the odds that the US collapses, rather then just declines?

The British Empire for example didn't really collapse as far as I know. They just fell back with the rest of the pack. So if the USA does lose it's spot as the World's only superpower, that doesn't mean its going to be in a catastrophic event that destroys the world economy.

They could just lose ground gradually and end up as the 3-4th biggest economy in the world while everything, and everyone else justs gets on with business as usual.

hyperinflation and the Chinese will probably have to disagree. The Chinese are eagerly awaiting the moment where the dollar starts to crash, they call in the debt and buy as many US assets as possible while the dollar still exists yet is very weak. Take for example the cash for clunkers program, it destroyed working cars, put Americans in debt with new car loans and shipped metal to China... which surprisingly enough was an idea pushed by the Chinese embassy.

[Tinordi]

Originally Posted by robocop

hyperinflation and the Chinese will probably have to disagree. The Chinese are eagerly waiting the moment where the dollar starts to crash, they call in the debt and buy as many US assets as possible while the dollar still exists yet is very weak.

That makes absolutely no sense.

[Matata]

Originally Posted by robocop

They were really making some progress up untill 2000, I wonder what could have...



damnit, america.

[robocop]

^it was equally clintons fault by deregulating the derivatives market

Originally Posted by Tinordi

That makes absolutely no sense.

it makes no sense because you think they wouldn't want to buy assets when the economy is crashing is what I think is confusing you. The material assets are being devalued only in comparison to the American dollar by the banking industry leaching money out of the economy. There are a select few making hundreds of millions of dollars by what is basically theft and the end result (through debt and inflation) is the buying power of the dollar drops because of this. The assets still maintain an intrinsic value even when the dollar is weak, so when the Yen comparatively grows in strength and the debt is called in the only option will be to sell these assets or go bankrupt.

[Tinordi]

Why the hell would a bondholder (China) want to see the devaluation of its bonds through a collapse of the currency they're held in? That's the nuclear option the U.S. has to get out of its debt troubles. It can devalue its currency to the point that it's debt is worthless.

You're just talking bafflegab.

[robocop]

the short term devaluation of their bond securities isn't as important as long term economic dominance is. I get exactly what you mean, but what made the US so strong in the past 60 years was their economic advantages by suppressing foreign economies to insure the US remained the reserve currency. Ultimately that's the goal of any superpower in today's economy, to have the global reserve currency. So it's in their best interest for the US dollar to crash even if they take a small hit in the process, they produce more than the US now and if they could get the reserve there would be no way to stop them.

[Tinordi]

Uhm, you don't know what you're talking about.

China holds trillions in U.S. bonds. A small hit if their dollar collapses? A small hit? Seriously?

China has shown very little willingess to let its currency float on the market, a requirement for it to become the reserve currency. Where do you get this idea that China wants to be the reserve currency? If they did, the easiest option would be to stop buying U.S. bonds and float their own securities onto the market. Something that they have given ABSOLUTELY NO INDICATION that they're interested in doing.

China's growth is inextricably linked to American growth. To say that China wants to see a U.S. collapse is just blog-based fiction invented by imaginative folks with little understanding of international economics and finance. An American collapse would severely hurt China and everyone else.

[robocop]

I know they've been resistant to exchange in the past, but as the American debt increases the rate at which they purchase bonds is decreasing. Their currency has been too unstable in the past and has been unable to develop significant demand in the market to substantiate significant trade of the Yen.

I think they want to be the reserve currency because it's only logical, the US did everything they could to ensure it after WW2 because they knew it would give them an economic advantage and it did. You are thinking in the past, the way things have been and you are correct about that, but any country that wants to be the dominant superpower has to look at the actions of the US after WW2 and see that their economic dominance was in large part due to the fact that they were the reserve currency. China will eventually stop buying US bonds in the next few years and start to float their own securities as soon as the interest on the American debt becomes larger than what they can pay. If they start too soon they risk damaging their production which is the strongest thing they have going. Of course, this is all assuming that China has an interest in being the global superpower.

When the interest on American debt is more than they can pay and inevitably hyperinflation occurs the only possible outcome is a collapse or a consolidation with some other currency (e.g. the Euro). I agree with a lot of what you say though, an American collapse would hurt the entire world but the interest on the debt is what will force it to happen if it does. Most of what I know comes from my dad who trades millions internationally on a daily basis so I wouldn't say I'm completely uninformed.

[macker]

If you take just the last year and look at who is buying/selling the US debt :

Buying :
American banks, institutions and individuals : $900 Billion
Britian : $356.3 Billion
Japan : $122.9 Billion
Canada : $84 Billion
Thailand : $36.1 Billion
Singapore : $21.9 Billion
Brazil : $18.6 Billion

Selling :
China : - $36.9 Billion
Russia : - $28.9 Billion

Over the last year China has been a net seller of US Tresury securities.