Is 2010 the end for the US?

[vinoveri]

Re: Is 2010 the end for the US?

Why? They are all doing something similar.

Japan has been toking on QE, with an increasingly bigger pipe, for most of the last 20 years. China works hard to debase its currency as fast as the US Dollar since it doesn't want the yuan to rise,. Russia...well, it has seen yet again quite recently what the currency markets do to the ruble when they do stupid things [which they seem to do with frightening regularity] so I wouldn't look to them for wisdom. And the German taxpayer is still happily bailing out German state owned banks as recently as last week.

If these be the virtuous, then easy virtue it be...

Bingo.
We live in a quasi-global fiat currency world right now. Governments, investors, and debtors are all on board and everyone is doing the "wink-wink" ..."if you won't tell, I won't either".

As for the bond market, governments and the banking cartel can control that beast at will.

I see no stopping any of this unless and until a major falling out occurs with countries that matter, that cause the financial cooperation and coordination to falter.

Anyone who, especially in light of what's happened in the past year, does not recognize that what we have is in in essence one giant Ponzi Scheme, albeit complex, is simply "fighting the last war" as it were and still in denial IMO.

[vinoveri]

Re: Is 2010 the end for the US?

both long and short rates are going up in 2010, I believe 300 basis points or so. It is inevitable because the truth is there is no "savings glut" and true capital is precious. All governments are in a race to devalue their currency and this will result in sharply higher rates as bond prices plunge in 2010.

maybe bond yields can be held down if "all governments" purchase their own and each others bonds with their fiat currencies, no?

[Camtender]

Re: Is 2010 the end for the US?

Now where in the world did that $200 billion number come from? Just looking at foreign purchases of Treasury securities, it was more than that. This is a red flag for me.

Same question I had and reason for posting here.

[grapejelly]

Re: Is 2010 the end for the US?

maybe bond yields can be held down if "all governments" purchase their own and each others bonds with their fiat currencies, no?

that will drive up the cost of commodities and then wages, introduce a round of social unrest with a falling standard of living for the still-remaining middle class.

Ultimately though it won't work because all the above will happen. Long rates will rise, short rates will rise, and commodity prices and wages will rise.

[vinoveri]

Re: Is 2010 the end for the US?

that will drive up the cost of commodities and then wages, introduce a round of social unrest with a falling standard of living for the still-remaining middle class.

Ultimately though it won't work because all the above will happen. Long rates will rise, short rates will rise, and commodity prices and wages will rise.

it undoubtedly will result in rise in commodities and a fall in the standard of living, but if done gradually, as if boiling a frog as the apt analogy goes, then the middle and working classes can be duped and will not be able to connect the dots, which in fact has been going on for several decades here in the USA anyway, as nominal (but not real) incomes rise. People can and will adapt, and if the change is slow enough, they may not even notice ...

[ThePythonicCow]

Re: Is 2010 the end for the US?

Why? They are all doing something similar.

The U.S. (federal, state, corporate, pension funds and individual, combined) has a bigger debt pile. Much bigger.

Some of those other guys will be hurting as well, but that won't stop them. After a point, given enough pain, nations go nationalist.

[GRG55]

Re: Is 2010 the end for the US?

The U.S. (federal, state, corporate, pension funds and individual, combined) has a bigger debt pile. Much bigger...

From a post by Mega...:p Current US public debt to GDP is roughly half of this. At this rate they'll have to try hard to catch up with Japan.

December 26, 2009

Debt-laden Japan shocked by £630bn spree to ‘save lives’

Yukio Hatoyama, the new Japanese Prime Minister, has stunned a nation already mired in huge public debt by unveiling the country’s biggest ever postwar budget: a 92.3 trillion yen (£630 billion) spending spree...

...The new budget will require additional debt issuance of Y44.3 trillion — within the Government’s expected band, but still at a level that will raise Japan’s debt-to-GDP ratio to nearly 195 per cent...

[ThePythonicCow]

Re: Is 2010 the end for the US?

From a post by Mega...:p Current US public debt to GDP is roughly half of this. At this rate they'll have to try hard to catch up with Japan.

U.S. federal government debt as a percentage of U.S. GDP (a rather distorted government statistic in itself) is not all that high -- you are correct in that.

Total U.S. (federal, state, financial, corporate and individual) debt in absolute terms overwhelms the rest of all the world's debt in toto.

I don't know if the following chart is correct or not, but our good friend Karl Denninger in a recent article There Is No Way Out Of This Box.... shows the following graphic:



Click on the above image for a higher resolution version.

The graphic shows massive increases in U.S. consumer, business, state, federal and financial debt the last few years, and the rest of the world's debt for the same years. Notice how small the rest of the world's debt is compared to any one of the five portions shown of the U.S. debt (is that part accurate ?!?)

[Serge_Tomiko]

Re: Is 2010 the end for the US?

In 2010 Obama will be forced to decide how to maintain the credibility of the US government because that will be the biggest question. With two failed wars going and the world questioning our ability to run things we are about to be fired as the world's focus. He has two choices: a bold narrative shift or deception. He won election in this country based on the promise of a bold narrative shift. Governing he has chosen deception with a wink and a nod towards the momentum of the economic crisis of 08. That phase is now over. In the US I think the crisis that is looming is one we all know and love but with a twist. The health care system in the US is poised for collapse. When people stop paying their health insurance premiums because of a failed economy either through inflation (lack of enough money) or deflation (lack of a job) the general insurance architecture that was "saved" a year ago will unravel very quickly. The Fed has no leverage at this level and the nightmare scenario of 08 that didn't happen will come to pass with all the financial disaster we were taught to fear. The Dems have passed "health care reform" to try and have something in place to try and save the situation because they will be the party of record when this goes down. We will be forced to choose between prosperity through defense or health care by necessity as our governing narrative. Obama will choose health care not because he is a "socialist" but because that will be the only priority the US government can deliver on to its citizenry and stay relevant.

Ahh, some refreshing realpolitik for a change.

[mesyn191]

Re: Is 2010 the end for the US?

it undoubtedly will result in rise in commodities and a fall in the standard of living, but if done gradually, as if boiling a frog as the apt analogy goes, then the middle and working classes can be duped and will not be able to connect the dots,

If rates really do start to rise at that speed (3% in a year despite all efforts to prevent that) it'll probably be impossible to play the ol' "frog boiler" card, at least effectively anyways. I'm sure they'll try but then you'll just see other problems pop up elsewhere since they're just going to end up trading one set of problems for another (with interest!) instead of actually fixing things.