Last Lap for Bretton Woods

[metalman]

Re: Last Lap for Bretton Woods

Of course not. But that doesn't mean we can't speculate like we were sitting around a bar drinking and discussing it. ;)

another round, barkeep! things are sleepy tonight at the itulip bar and grill.

To me, this is going to be the most interesting part of the future United States and how it acts. What's the U.S. and its population going to do when it realizes it's no longer the superpower? How's it going to act when it has to treat China for example as an equal? China is clearly rising in power and I think most people realize it, but very few common Americans or politicians in public would ever think they'll become our equal in economy, military, geopolitics the way the Soviet Union once was.

Whether we treat it with grace and acceptance the way the British did after their failure at Suez in the 1950s or deny it all the way down and refuse to accept truth is going to have a large determination in my view of how the world will turn out after all this crisis is done. I personally expect us to deny it and we're going to have an even greater reckoning.

sure & 15 years later...

Britain Gaining Time; Massive I.M.F. Loan Allows Breather In Fight to Overcome Economic Woes
By CLYDE H. FARNSWORTH
May 13, 1965, Thursday

Section: BUSINESS FINANCIAL, Page 51, 910 words

LONDON, May 12 -- With a massive new loan from the International Monetary Fund, Britain has lost some of her economic sovereignty; but she has gained time in the attempt to solve her economic problems.

that's what happens when the colonies stop paying the bills.

So who's the weakest kid on the European bloc whose politics and citizenry can provide the earliest insight to what will happen there? Spain?

spain on the top of the itulip list. haven't seen any updates recently, tho.

Russia is a kind of oddball in this whole situation. I would call them a #4 power in the world right now, behind the U.S., China, and the EU. They have a strategic alliance with China that is mixed, and they supply resources to the EU and are using it to their strategic benefit. The EU is trying to limit their influence through a kind of buffer region of sympathetic states in Ukraine and Georgia for example, not to mention the EU want missile defense. However, I severely question the long-term potential of the EU when the member countries are required to take a bullet.

how about those riots in france? a strong euro and recession ain't going to help matters.

We could be coming up on a kind of pre-World War I period, where powers draw battle lines and alliances for their strategic interests and no one trusts anyone else.

that's why these guys are so friggin desperate to avoid a recession. they'll print & print & print until the cows come home. inflation sucks but war sucks more.

[Spartacus]

Re: the euro

India is as widely varied as Europe - linguistically (from Tibetan to Tamil to Pushtun, from Burmese to Hindi, with Arabic and/or Persian influenced dialects of every one) and culturally (with cultures varying between languages, and sometimes completely different cultures[*] within the same language group)

than Europe, IMHO - but the rupee seems to do well enough, with many fewer resources than Europe has.

2 more pieces on the euro:

1st a remark from bill fleckenstein:

"The euro is a flawed piece of paper, just not as over owned, nor as flawed as the dollar....someday it too will have problems, but that may be a while down the road."




2nd- here's ambrose evans-pritchard's latest

Are we primitive euro-haters?

Posted by Ambrose Evans-Pritchard on 27 Nov 2007 at 07:50


In answer to all those posts suggesting that we will use any piece of dirt to besmirch the euro, let me reply.

Politicians were told that the euro would lead to a crisis
It is true that a substantial army of British Eurosceptics kept insisting until the eve of E-day in January 1999 that the single currency would never get off the ground.
They then repeated their dire claims as the euro plummeted to 82 cents against the dollar, predicting a bond crisis.
Well, yes, but I was not among them, and nor were many of us diehard critics. The beauty of the internet (and often the curse, for journalists) is that you can check these things.
The article below was one that I wrote in late 1998, after a visit to Rome to talk to the Italian central bank and Treasury – since Italy was then viewed as the weakest link.
The euro will work - that's the problem
My point is – and always has been – that launching the euro was the easy part. The test would be 1) whether countries with vastly different structures, trade patterns, wage bargaining systems, debt structures, sensitivities to interest rates, productivity growth rates, and historic inflation rates would diverge so far over time that this would threaten the viability of the system.
2) Whether EMU could weather a bad storm without single treasury and debt union to back it up.
3) Whether the eurozone bloc had the “solidarity characteristic of a nation” (the Bundesbank’s term) required for it to endure through bad times.

[*] (along with north/south, east/west, dark skin / light skin bigotries within and between groups)

[jk]

Re: the euro

India is as widely varied as Europe - linguistically (from Tibetan to Tamil to Pushtun, from Burmese to Hindi, with Arabic and/or Persian influenced dialects of every one) and culturally (with cultures varying between languages, and sometimes completely different cultures[*] within the same language group)

than Europe, IMHO - but the rupee seems to do well enough, with many fewer resources than Europe has.


[*] (along with north/south, east/west, dark skin / light skin bigotries within and between groups)

india has a single polity, fractious though it may be. the federal institutions of the eurozone are very weak.

[metalman]

Re: the euro

india has a single polity, fractious though it may be. the federal institutions of the eurozone are very weak.

paradox... federal institutions in the usa are very strong, thus able to inflate and depreciate. in the global mess... live in the usa but own german bonds! worst... live in germany and own usa bonds (in the winter while putin turns off the heat). worst of all possible worlds... live in france and be an immigrant.

spruced the old museum up recently but the tribes of europe will go at it again some day.

[GRG55]

Re: Last Lap for Bretton Woods

...We could be coming up on a kind of pre-World War I period, where powers draw battle lines and alliances for their strategic interests...

That's along the lines of Niall Ferguson's views in War of the World.

http://www.amazon.com/War-World-Twen...6223096&sr=1-2

[fogger]

Re: Last Lap for Bretton Woods

The Euro and all of today's currencies have the same problem: pure fiat. (Even the Swiss Franc decoupled from gold in 2001.) As faith in this trust-based system is destroyed, people will demand something solid: gold/silver.


Looking at this through purely national lines is a mistake. Bankers are not national. The danger is when the solution is presented to create a single global currency issued by a world central bank (backed by gold of course).


What better way to consolidate power? Destroy faith, offer solution, rule the planet. If I owned the BIS, that's what I'd do. Ridding myself of those pesky central bank satellites stealing my profits.

[c1ue]

Re: Last Lap for Bretton Woods

if this is a replay of the '30s we must ask which nation holds the place of germany - with its unbearable burden of war debts hindering its economic growth.

Pogo's wisdom as always applies:

we have met the enemy, and he is us.

Substitute overconsumption for war debts...voila!

I note that the consensus on iTulip seems to be that the rest of world will sit idly by while both their export market to the US is eroded and the accumulated work of the past 20 years is inflated away - I'm not sure I agree. As I noted previously, all the ROW must do is stop lending money. Present debts are such that even this action would have clear effects - and bombing offshore production centers still doesn't put the Tonka truck under the Xmas tree.

As for Russia - while there is always the probability of politicians exploiting native Russian xenophobia, this time around there is not a nearby danger.

China is far away and apparently not needing Siberian land.

Europe is dependent on energy.

Iraq is neutralized from a geopolitical perspective, while Iran is severely restricted by the US fomented economic and political sanctions.

Only Turkey of all of Russia's historical enemies is still available to cause trouble, and they in turn have their own internal secular vs. theological state, plus minority unrest issues.

More likely the US would pick a fight with Russia to 'free the world from XXXX'

[Guest]

Re: Last Lap for Bretton Woods

C1ue -

You are way smarter than I am on economics, so please cut me some slack here on my criticism. You wrote:

< Substitute overconsumption for war debts...voila! >

It's really important however that one recognize, one absolutely cannot substitute overconsumption for war debts. One is voluntary, with options for change open within it's future, the other involuntary, trapped by past events. And people in those two situations really can't finesse that difference too much at all.

This is part of the what now seems fashionable around here - to equate many aspects of Weimar to the US. There are one or two limited parallels, but that's about it. I think Metalman at one point tried to point that out too, elsewhere.

[bart]

Re: Last Lap for Bretton Woods

C1ue -

...

It's really important however that one recognize, one absolutely cannot substitute overconsumption for war debts. One is voluntary, with options for change open within it's future, the other involuntary, trapped by past events. And people in those two situations really can't finesse that difference too much at all.

This is part of the what now seems fashionable around here - to equate many aspects of Weimar to the US. There are one or two limited parallels, but that's about it. I think Metalman at one point tried to point that out too, elsewhere.

I'll be gentle... ;)

The best parallel for Weimar war debts today in my opinion are derivatives and general very high indebtedness.

Debt to GDP today is way higher than at any other time is US history at roughly 3.6x, and just 100% US only attributed derivatives are well over $150 Trillion. World wide, it's over $500 trillion which is about 7-8 times total world GDP.

[Guest]

Re: Last Lap for Bretton Woods

Bart -

Overconsumption = Derivatives? That's news to me Bart.

Further, the 'derivatives' mess is arguably worse for the many other countries holding these time bombs, as they can't print more of the senior currency to paper over the cracks, unlike the US, which can.

Please note we've got people around here with a good few years in business in multiple locations overseas who seem remarkably certain the dollar won't be totally eclipsed as the senior currency for a while yet.

Lots of grey areas in there. I appreciate your reminding me that the scale of derivatives dwarfs any debt which Weimar Germany carried relative to GDP. But that is a firecracker that will take multiple countries down, and C1ue's analogy was regarding the US events, as distinct from any others.

Did Weimar have a senior currency?

[jk]

Re: Last Lap for Bretton Woods

the u.s. is the over-indebted country about to embark on a new experience [for the u.s.]: a severe and inflationary recession. let's hope there are no military adventures fomented to distract us from our pain.

[bart]

Re: Last Lap for Bretton Woods

Bart -

Overconsumption = Derivatives? That's news to me Bart.

Further, the 'derivatives' mess is arguably worse for the many other countries holding these time bombs, as they can't print more of the senior currency to paper over the cracks, unlike the US, which can.

Please note we've got people around here with a good few years in business in multiple locations overseas who seem remarkably certain the dollar won't be totally eclipsed as the senior currency for a while yet.

Lots of grey areas in there. I appreciate your reminding me that the scale of derivatives dwarfs any debt which Weimar Germany carried relative to GDP. But that is a firecracker that will take multiple countries down, and C1ue's analogy was regarding the US events, as distinct from any others.

Did Weimar have a senior currency?

No, overconsumption does not equal derivatives unless you're consuming too much Orwell.

True on it being arguable about which country will be most affected by derivatives but I urge you to consider that both the US's share is way higher than its GDP share of the world and that US multi-nationals are not accounted for properly in the world wide breakdown.

As far as Weimar, the facts of it remain the same regardless of senior currency issues.

[Spartacus]

Re: Last Lap for Bretton Woods

I'll beat Rajiv to this - you should you read Paul Craig Roberts and Seymour Hersh re: plans to nuke Iran

Also Karen Kwiatkowski on how the neocons pushed the Iraq campaign through US military intelligence

the u.s. is the over-indebted country about to embark on a new experience [for the u.s.]: a severe and inflationary recession. let's hope there are no military adventures fomented to distract us from our pain.

[Guest]

Re: Last Lap for Bretton Woods

Spartacus -

Neither of you had to beat the other to be the first to post that suggestion, as it was fully anticipated by me that someone would post such objections regardless. I think I'll leave that reading to you! If you think I'm unaware of these issues you are mistaken. I factor them, and I don't buy at least half (if not more) of the ideologically labored baggage which they carry along with that strand of an idea.

As for the US nuking Iran, I would recommend not hyperventilating about that. It's an extremely remote, (and fairly shrill) hypothesis. The whole baggage that goes along with this world-view suggests you find no significant gaps in reading the 'inexorable conclusions' of authors such as Ms. Wolf. For myself, I'm quite skeptical her views exercise a sufficiently broad field of probing observations about the wider context and issues, and I object to their highly selective focus in certain directions, and soft-pillow-down like silence in entire other (very broad, deep and critical) areas of international affairs.

I'll beat Rajiv to this - you should you read Paul Craig Roberts and Seymour Hersh re: plans to nuke Iran. Also Karen Kwiatkowski on how the neocons pushed the Iraq campaign through US military intelligence

[Spartacus]

Re: Last Lap for Bretton Woods

Spartacus -

As for the US nuking Iran, I would recommend not hyperventilating about that. It's an extremely remote, (and fairly shrill) hypothesis. The whole baggage that goes along with this world-view suggests you find no significant gaps in reading the 'inexorable conclusions' of authors such as Ms. Wolf.

I suggest someone (not you, JK) read PCR, Seymour Hersh and Karen Kwiatkowski,

therefore I agree with everything Naomi Wolf (AND VARIOUS UNNAMED OTHERS) ever wrote.

Is that what you meant to write?

That you know I completely agree with authors you have not even named?