America, the new Ottoman Empire?

[Hypatia1]

I hope this is not a dupe, but I heard the historian Niall Ferguson on the BBC comparing America's current woes to those of the Ottoman Empire's in the 1870s. He made sense. A quick Google search turned up this Financial Times piece:
http://www.ft.com/cms/s/6667a18a-b88...0779fd2ac.html

What do you think?

[GeraldRiggs]

Re: America, the new Ottoman Empire?

I hope this is not a dupe, but I heard the historian Niall Ferguson on the BBC comparing America's current woes to those of the Ottoman Empire's in the 1870s. He made sense. A quick Google search turned up this Financial Times piece:
http://www.ft.com/cms/s/6667a18a-b88...0779fd2ac.html

What do you think?

Good post. However, the US has the world's strongest military and I don't see that changing anytime soon. With all this "might", the US is not going to roll over like the Ottoman Empire did. Just MHO.

[FRED]

Re: America, the new Ottoman Empire?

Good post. However, the US has the world's strongest military and I don't see that changing anytime soon. With all this "might", the US is not going to roll over like the Ottoman Empire did. Just MHO.

EJ writes in:

America has the most adaptable and innovative economy on earth. It gets into trouble but can get out again pretty fast. Whereas a lot of nations have a culture of "Why?" and "That will never work" the US has a culture of "Why not?" and "We'll make it work." Other nations have a culture of "If you fail, you are a failure" but in the US it's "If you fail it's because you tried. You learn from failure. Try again."

On occasion this character of the US gets the country into big trouble: we take good ideas to an extreme. We ask, "Why not use financial engineering to create credit products to make it possible for people to buy a home who can't afford one?" Because if you do the credit markets and banking system will crash and bring down the economy with it, that's why not.

Sometimes we need to listen more carefully to the answers we get to the "Why not?" question.

[BiscayneSunrise]

Re: America, the new Ottoman Empire?

Agreed.

As Americans, we tend to overemphasize our problems and view our global competitors as invincible. Americans worry about failure. It is our global competitors who oftentimes make the opposite mistake by overestimating their abilities and underestimating the US. i.e. The Confederacy, the Japanese and Nazis in WW 2, the Soviets and now perhaps al-Qaeda, et al all have said things like "The Americans are lazy and effeminate, they are too materialistic to fight a war, they are in decline, history is on our side, etc." This paranoid fear of failure is not new. Our founding fathers had this sense that America could potentially be the new Rome with the same destinies of both greatness and failure. But, it was Andy Grove who said that "Only the paranoid survive", right?

And we have been able to turn that paranoid fear of failure into a gritty determination to beat the odds and succeed. It is that juxtaposition of national personalities that gives us the drive to pull out of our hole while, it is oftentimes it is actually our competitors who overestimate their abilities and make crucial mistakes.

Granted, our ship of state is springing a lot of leaks right now but given a choice a life rafts to swim towards, I'll pick the one with the Stars & Stripes on it, thank you very much.

[World Traveler]

Re: America, the new Ottoman Empire?

I can only speak from my own experience, but having lived what was really a serious local depression in Texas in the 1980's, I have a "gut feel" for how things will now unfold and turn out for the U.S.

Because the current crisis is so severe, it's going to take the U.S. much longer than most now expect to recover.

The local wisdom in 1980 was that oil was at $30/barrel and going up to $50/barrel. Recent past experience had validated that assumption. But it turned out to be wrong. And so Texas and Houston crashed. Parallels to current U.S. economy are obvious.

Texas/Houston eventually did eventually recover by mid-1990's, but the economy that re-emerged was a very different one and the process was a long one, much longer than most locals expected. (In 1983, the local wisdom was "Stay alive till '85") .

The U.S. will emerge from current debacle, but, having been badly burned, it will be less free-spending and less free-wheeling for a long time. The new steady-state we will be in will be much more low-key, after we go through the prolonged belt-tightening experience. Exhuberent optomism will be gone and hard to get back, businesses will be more cautious, as will consumers.

The dollar, having lost so much prestige, will have serious competition from other currency forms and foreigners will no longer be so willing to vendor-finance. We will have to earn our way in the world economy, which is a good thing, but it can be a shock initially.

On an inflation-adjusted basis, it took 20 years to get back to 1981 housing prices, per Houston Chronicle artcle in 2001. Today, in Houston, you never hear people talk about their home as an investment, it's just a place to live, and hopefully you'll make a little money if you sell your house, but don't count on it. I think the U.S. will experience something similiar over the next decade or two.

[BiscayneSunrise]

Re: America, the new Ottoman Empire?

On a recent flight to Washington DC, my seat mate was a Canadian woman from Winnipeg. She was hunting around the south Florida area for real estate bargains. My advice to her was very much the same as yours. There is NO big rush to bottom fish real estate. As many of you know the S. Florida condo market is glutted and there are still several thousand units under construction. To your point, in some sub markets down here it will be a generation before we get some normal market activity again. Trying to speculate in this real estate market is a fool's game; trying to resuscitate a dead man. Just like in the stock market, leaders in one bull market are never the leaders in the next bull market.

Some friends, of the aspiring Donald Trump persuasion, amateur investors who used leverage to buy at the very top are getting slaughtered. The personal and financial pain is palpable down here. All they want to do is get out and never see another real estate contract again in their lives.

What IS interesting, however, is a friend of mine who is a large developer/ contractor. This friend saw the top coming and got out of the speculative beach front condos about 3 years ago. He recently had a meeting with some big Wall Street finance types who were waving money at him wanting to get in on some of his new projects, mostly related around infrastructure and RE development in areas of the state that were underinvested in previously. To Eric's point, some people will be smart enough to innovate their way out of this. Or as our buddy Cramer likes to say, "THERE"S ALWAYS A BULL MARKET SOMEWHERE !!!!!!

[c1ue]

Re: America, the new Ottoman Empire?

Or as our buddy Cramer likes to say, "THERE"S ALWAYS A BULL MARKET SOMEWHERE !!!!!!

Emphasis, BULL ****