How long till the roof falls in?

[halcyon]

Re: How long till the roof falls in?

Mike,

I know you are fond of hyperbole, but don't you think a reasoned analysis would be in order?

If we are talking about empires, it takes decades for the roof to fall in. Some time it happens in bursts, but even those bursts can be c. 50 years apart (compare UK pre-WWII and during 70s crash).

As for US position, nobody has in their interest to see it crash, not on the geopolitical arena or in the financial/economic arena.

US is still, for better or worse, the police of the world. Some countries willingly use US for that, as it's fairly cheap at that. Just recycle the dollars and that's enough.

Further, while the vendor-financing model may be slowing down, it cannot just completely go away overnight (or in a year). It takes time to unwind things orderly.

Politicians everywhere love stability: it makes for happier voters, more stable governments, re-electability and low likelihood of ending up at the gallows.

Now, to the actual question, what will be the initial public act that is the first proverbial shoe to drop? Has it already dropped?

Hard to say, these things only become apparent after 50 years has passed, mountains of books have been written on it and historians have settled the biggest clashes.

Till then, the sharpest pencils should try to keep their minds open to some unexpected short-term (1-5 year in this time-frame) scenarios, which can matter to most of us much more than what's going to come in the next 50+ years.

Just food for thought - I probably do not disagree on much of the 50+ year scenarios.

[nero3]

Re: How long till the roof falls in?

http://www.youtube.com/watch?v=1qXlFNYoyQg



double

Don't worry

http://www.youtube.com/watch?v=tmVQzwyWYZ0

[nero3]

Re: How long till the roof falls in?

pfff, it shows that most of you haven't been on holiday in Europe. Spain, Turkey etc are literally littered with young, fellow British who mainly seem to get drunk, and misbehave. Same has been going for Russians recently.

Of course there are plenty of places which you can avoid as they're well known for these settings to take place. But nevertheless I don't see why one can't hope for a specific part of society not being able to afford to go on holiday that often.

That's it. Like when I was in bulgaria, it was not british, [deleted]

[LargoWinch]

Re: How long till the roof falls in?

....The US will open the flood gates of inflation, more wealth is transferred to China ...No disorderly adjustment. ... [bold is mine]

Care to explain this? How can China benefit from the devaluation of the US dollar? Are you aware that the China is a major shareholder in Federal Reserve notes?

Also, how can the "flood gates of inflation" - as you indicate - not lead to a "disorderly adjustment"?

Perhaps you ought to think more about your comments and/or provide justification for your assertions before posting them.

[LargoWinch]

Re: How long till the roof falls in?

That's it. Like when I was in bulgaria, it was not british, but a group of germans next to our room,that were making a mess off our holiday, one night they was really drunk, banging on some prostitute the whole night, while yelling and cheering. The morning after, some intimidating guy that looked like Arnold, was inside our room, looking for his girl, going into the bathroom, even balcony. It's a crazy world. These was from germany, but it would had fit much better with my image if they had been working class british.

This is a macro-economic forum.

We do not care for your senseless comments and even less for your real or imagined personal experiences.

This comment does not deserve the pixels they are displayed on and should be removed.

[nero3]

Re: How long till the roof falls in?

Care to explain this? How can China benefit from the devaluation of the US dollar? Are you aware that the China is a major shareholder in Federal Reserve notes?

Also, how can the "flood gates of inflation" - as you indicate - not lead to a "disorderly adjustment"?

Perhaps you ought to think more about your comments and/or provide justification for your assertions before posting them.

Oh, nothing grease the wheels of liquidity like a weak dollar. That will get everything flowing again. So will that help China, and possibly boost foreign investment into China? Definitely. The era of weak government bonds, and a weak dollar was what gave way to japan, in the same way it's giving to China now.

It's a contradiction that China want a strong dollar, and still wants a recovery. it's definitely in their interest with a weak dollar, a weak dollar is really a give away to other countries from the US, they just don't seem to know it.

[medved]

Re: How long till the roof falls in?

Oh, nothing grease the wheels of liquidity like a weak dollar. That will get everything flowing again. So will that help China, and possibly boost foreign investment into China? Definitely. The era of weak government bonds, and a weak dollar was what gave way to japan, in the same way it's giving to China now.

It's a contradiction that China want a strong dollar, and still wants a recovery. it's definitely in their interest with a weak dollar, a weak dollar is really a give away to other countries from the US, they just don't seem to know it.

I don't think this is gonna work again. China was willing to pay the price of managed dollar devaluation to grow their exports. Now we will have a combination of falling dollar and protectionism. The years of growing $US debt bubble are not going to continue. This is over. Just like Japan bubble, hi-tech bubble or housing bubble.

[flintlock]

Re: How long till the roof falls in?

The rudeness you guys are describing is not limited to any nationality. Its just rudeness period, and part of the loss of civility we ware seeing across the whole world. Some places probably never had it( civility) so don't miss it. Others like England used to be known for it. Where I am from, the SE United States, manners even in the poorest class used to be the norm. Now its like a jungle out there. I avoid public places like the plague now, because with the dumb masses you never know what to expect.

[The Bouncer]

Re: How long till the roof falls in?

That's it. Like when I was in bulgaria, it was not british, but a group of germans next to our room,that were making a mess off our holiday, one night they was really drunk, [deleted]

Clean it up. Our members come here to avoid this kind of language and imagery.

One warning.

[nero3]

Re: How long till the roof falls in?

I don't think this is gonna work again. China was willing to pay the price of managed dollar devaluation to grow their exports. Now we will have a combination of falling dollar and protectionism. The years of growing $US debt bubble are not going to continue. This is over. Just like Japan bubble, hi-tech bubble or housing bubble.

What I think perhaps is most likely, is that the trend that started at the same time housing peaked in 2005, will go on. That is stronger RMB, higher yields on government bonds, more inflation, weaker dollar, but then again who really know. I think the US is far less significant than before. I think the BRIC countries will go on booming, while the US economy is kind of sluggish at first, and later of plagued with inflation.

These things seems to go in at least 5 year cycles. Dotcom from 95-2000, housing from 2000-2005, China and their stronger RMB, 2005-2010 ? or who knows when?

[bradzepfan]

Re: How long till the roof falls in?

Now I get it. Nero is a charming rake. Based on his previous comments about Alex Jones I figured he was just an A** H***.

[touchring]

Re: How long till the roof falls in?

I don't think this is gonna work again. China was willing to pay the price of managed dollar devaluation to grow their exports. Now we will have a combination of falling dollar and protectionism. The years of growing $US debt bubble are not going to continue. This is over. Just like Japan bubble, hi-tech bubble or housing bubble.

Now china is following what the US is doing - print money. As for protectionism, I always thought that service based economies that compete directly with the US will be targeted - Obama already announce the removal of tax incentives for overseas outsorucing.

btw, where's symbols?

[medved]

Re: How long till the roof falls in?

What I think perhaps is most likely, is that the trend that started at the same time housing peaked in 2005, will go on. That is stronger RMB, higher yields on government bonds, more inflation, weaker dollar, but then again who really know. I think the US is far less significant than before.

US is not a financial superpower anymore, but it still is political an military superpower. This should help US steer new financial developments its way. Short and medium term financial trends will be controlled by the gov’ts and their relationships, so size does matter. US will have to give up some of its privileges, but don’t count it out, TWAWKI depends on its well-being.

I think the BRIC countries will go on booming, while the US economy is kind of sluggish at first, and later of plagued with inflation.

BRICs have never been booming without massive debt bubble, both BRs natural resources and ICs labor needed it to supply liquidity to the market. Without it all of them face the fundamental question of recycling savings into investments. None of them has any experience doing it on its own, and no dogooder plans by their gov'ts will help. Western democracies in their capitalist phase of development used (more or less) free markets to do this recycling, but this phase is over. Whatever wealth was developed by employing free market mechanism is being consumed and destroyed. First it was destroyed by overregulated capitalism with massive gov’t sponsored fraud and speculation, when cheating is more profitable, than creating real wealth. Now it is turning into socialism proper, because “free markets don’t work” (as if regulation does).

We will now have the battle of the socialist states, where each of them wants better conditions for itself. Can BRICs create their own balance between demand and production? I doubt it, they will rather cooperate with G7 countries to recycle their savings on mutually acceptable conditions. It means non-stop bickering, demagoguery, changing rules and tariffs etc. None of it will revive the irrational exuberance, so I doubt we will see any bubbles. Forced cooperation – yes, decoupling – no. Bear market rallies – yes, bubbles – no.

So, Mega, the roof is not falling in. Ignore the cracking noises, it’s just your cousin’s family moved in with you and now occupies the attic. You are not gonna be happy, but you will survive. ;)

[nero3]

Re: How long till the roof falls in?

We will now have the battle of the socialist states, where each of them wants better conditions for itself. Can BRICs create their own balance between demand and production? I doubt it, they will rather cooperate with G7 countries to recycle their savings on mutually acceptable conditions. It means non-stop bickering, demagoguery, changing rules and tariffs etc. None of it will revive the irrational exuberance, so I doubt we will see any bubbles. Forced cooperation – yes, decoupling – no. Bear market rallies – yes, bubbles – no.
. ;)

It's difficult to explain but in my opinion it is entirely possible that debt growth in the west will be very sluggish, but if the goverments devalue enough, that will logically enough cause funds to flow into emerging market's as already is happening, to protect against this devaluation, and find growth. That will of course boost their emerging currencies (as have happened already), and again ,create support for lower interest rates in these emerging markets, and also support lower inflation rates, that in turn, mean that these countries due to low debt levels, compared to the west, will have credit expansion, through more consumer debt through their more effective money multipliers, on a much larger scale than in the west, where the multiplier effect is poor. Here brazil:
I think it's a sure thing that they will have a boom coming very soon, in fact, I think they are in a secular bullmarket. As long as the US pursue a weak dollar policy, I think countries like Brazil is likely to perform well, in fact it's almost impossible for them, not to have a boom, their yield curve is like the US in 1982. I have not studied Russia in detail, but I am of the opinion that they to are in a secular bull-market, and will have a boom going very soon. These countries have no trouble with the liquidity trap, getting people to borrow if the interest rates is low enough , etc. I think I read somewhere, someone worrying about deflation in China, and that is just insane, as their money multiplier is around 4-5, and the chance of a liquidity trap, with consumer debt at todays low levels simply can't happen.

[Supercilious]

Re: How long till the roof falls in?

It's difficult to explain but in my opinion it is entirely possible that debt growth in the west will be very sluggish, but if the goverments devalue enough, that will logically enough cause funds to flow into emerging market's as already is happening, to protect against this devaluation, and find growth. That will of course boost their emerging currencies (as have happened already), and again ,create support for lower interest rates in these emerging markets, and also support lower inflation rates, that in turn, mean that these countries due to low debt levels, compared to the west, will have credit expansion, through more consumer debt through their more effective money multipliers, on a much larger scale than in the west, where the multiplier effect is poor. Here brazil:
I think it's a sure thing that they will have a boom coming very soon, in fact, I think they are in a secular bullmarket. As long as the US pursue a weak dollar policy, I think countries like Brazil is likely to perform well, in fact it's almost impossible for them, not to have a boom, their yield curve is like the US in 1982. I have not studied Russia in detail, but I am of the opinion that they to are in a secular bull-market, and will have a boom going very soon. These countries have no trouble with the liquidity trap, getting people to borrow if the interest rates is low enough , etc. I think I read somewhere, someone worrying about deflation in China, and that is just insane, as their money multiplier is around 4-5, and the chance of a liquidity trap, with consumer debt at todays low levels simply can't happen,

I think I have to agree with medved on this one. I think the BRIC miracle was possible due to the unbalanced financial flows produced by the globalization. IMHO opinion only Brasil may be in a better situation due to the fact is on the list of Fed's favourites (got currency swaps and pretty good support from the Fed).

China is toast because their currency manipulation scheme is unraveling.
Russia is deleveraging its oligarchs and all wealth accumulated during the boom years is sucked back to the west. I think a month ago Russia announced they will start soon borrowing from the west again.
India already suffers from a reduced money inflow from the west although, to my knowledge it is not a big deal yet.