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the end is near>?
November 2, 2010
5:51 pm
kilarney
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USA going down? taking Canada with them?
#1 Corporate insiders are selling off stock at a blinding pace and are
looking for the exits. Alan Newman, the editor of the Crosscurrents
newsletter, examined a number of the top performing stocks in the market
including Google, Apple and Target and found that the ratio of corporate
insider stock sold to corporate insider stock purchased over the last
six months for those companies was 3,177 to 1. At the group of firms
that Newman looked at, corporate insiders had purchased 38,000 shares of
stock over the last six months and yet had sold off over 120 million shares.

#2 Analysts at both Bank of America and Goldman Sachs both believe that
the U.S. Federal Reserve is going to initiate a new round of
quantitative easing in November. It does not take a genius to figure out
that this is very likely to push up inflation and have very serious
consequences for the U.S. dollar.

#3 Economists at Goldman Sachs are projecting that the Fed will have to
purchase at least $4 trillion in assets during this next round of
quantitative easing to get the U.S. economy moving in a positive
direction once again.

#4 In the United States today, there are 5,057 janitors with Ph.D.'s,
other doctorates, or professional degrees.

#5 Investors have very little faith in the U.S. dollar (and in paper
currencies in general) at this point. Precious metals are soaring to
obscene heights. The price of gold has increased more than 20 percent in
2010. The price of silver has skyrocketed about 40 percent this year.
These are not signs that indicate that the U.S. financial system is stable.

#6 Robin Griffiths, a technical strategist at Cazenove Capital, told
CNBC on Monday that the U.S. dollar is in danger of becoming "toxic waste."

#7 In the United States today, 317,000 waiters and waitresses have
college degrees.

#8 U.S. lending institutions repossessed an all-time record total of
102,134 homes in the month of September. That was the first time that
home repossessions in the U.S. had ever exceeded the 100,000 mark during
a single month.

#9 According to a Standard & Poor's/Case-Shiller home price report that
was released on Tuesday, single family home prices in the United States
declined for a second straight month in August.

#10 In the United States today, over 18,000 parking lot attendants have
college degrees.

#11 During the months of August and September, the state of Nevada had
an unemployment rate of 14.4 percent, which was the highest in the
history of the state. Not that the rest of the country is doing any
better. The state of California has become a complete and total economic
disaster zone, and the city of Detroit, Michigan is literally dying.

#12 The "official" unemployment rate in the United States has been at
nine and a half percent or above for 14 consecutive months.

#13 The number of people unemployed in the state of California is
approximately equivalent to the populations of Nevada, New Hampshire and
Vermont combined.

#14 According to the president of the Federal Reserve Bank of New York,
there are approximately 3 million more vacant housing units than usual
in the United States.

#15 China has reduced the export quota on rare earth elements for the
second half of 2010 by 72%, thus strengthening their position in the
world economy even more. Rare earth elements are absolutely crucial to
the manufacture of a vast array of high technology products, and now
even more of them will have to be made in China.

#16 In 1985, the U.S. trade deficit with China was 6 million dollars for
the entire year. In the month of August alone, the U.S. trade deficit
with China was over 28 billion dollars.

#17 Wheat, corn and other staples are absolutely soaring in price on
world markets. These higher food prices are going to hit U.S. consumers
hard.

#18 In 2007, 3 U.S. banks failed. In 2008, 25 U.S. banks failed. In
2009, 140 U.S. banks failed. Last Friday, it was announced that 139 U.S.
banks have failed so far this year and it is not even the end of October
yet.

#19 Total student loan debt in the United States is climbing at a rate
of approximately $2,853.88 per second.

#20 Back in 1980, the United States imported approximately 37 percent of
the oil that we use. Now we import nearly 60 percent of the oil that we use.

#21 According to an analysis by the Congressional Joint Committee on
Taxation, the health care reform legislation that Congress didn't read
but passed into law anyway will generate $409.2 billion in additional
taxes on the American people by the year 2019.

#22 Median household income in the U.S. declined from $51,726 in 2008 to
$50,221 in 2009. That was the second yearly decline in a row.

#23 One out of every six Americans is now enrolled in a government
anti-poverty program, and yet the number of Americans signing up for
food stamps and other social programs just continues to set new all-time
records month after month after month.

#24 The number of Americans working part-time jobs "for economic
reasons" is now the highest it has been in at least five decades.

#25 American 15-year-olds do not even rank in the top half of all
advanced nations when it comes to math or science literacy.

#26 According to a recent poll conducted by CNBC, 92 percent of
Americans believe that the performance of the U.S. economy is either
"fair" or "poor."

#27 After analyzing Congressional Budget Office data, Boston University
economics professor Laurence J. Kotlikoff came to the conclusion that
the U.S. government is now facing a "fiscal gap" of $202 trillion dollars.

#28 A trillion $10 bills, if they were taped end to end, would wrap
around the earth more than 380 times. That amount of money would still
not be enough to pay off the U.S. national debt.

#29 According to the U.S. Treasury Department, the U.S. national debt is
rapidly closing in on 14 trillion dollars and and will climb to an
estimated $19.6 trillion by 2015.

#30 At our current pace, the Congressional Budget Office is projecting
that U.S. government public debt will hit 716 percent of GDP by the year
2080.

The U.S. economy is in the midst of a long-term decline. There are
always going to be moments when it seems like things are getting a bit
better, but then reality will kick in and the depressing slide will
continue.

November 2, 2010
7:04 pm
guest
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Take a chill pill man! You've been watching too much sensationalism on TV.

November 3, 2010
5:47 am
guest
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chill-pill indeed! sounds like killarney might need suicide intervention...

killarney forgot to add one thing to his cut-and-pasted analysis... there is no better global alternative to the USA, and there likely won't be a better alternative for many decades to come. people can piss and moan all they want about global ponzi schemes (countries buying eachother's debt), fiat currency allowing value to be created from nothing, etc.. etc.. but at the end of the day, everyone knows that the USA is simply "too big to fail", and every country on the planet with an interest in the USA, whether it's through stock ownership or US government bonds, would never allow the USA to fail, as it would plunge the world into financial armageddon.

November 3, 2010
8:31 am
mike
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I would partially agree that the USA will bring Canada down (just like the article in Canadian Business says). USA is Canada's biggest trading partner and it's not easy to find a replacement for US demand.

Canada has been very fortunate as of late, but our economy is sorely stressed with an average household debt of 148% and unemployment that seems to not want to get lower than 8%.

Have a great day

November 3, 2010
8:34 am
Prag
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In my opinion, none of the developed countries (not just the US) were ever sustainable at their former overly high, decadent standards of living and cost levels. It was just a matter of time until their populations were forced to scale back and reduce their material standard of living significantly.

You can't expect booming economic growth forever, as it demands increasing materialism and consumerism and a growing population. We should have been working toward figuring out how to foster an inflation-free, steady-state economy with flat population level once it became clear the factors that support growth were leveling off. We should have worked toward a land where $1 has the same buying power in twenty years as it does today, and where the same number of people are born as die so that demographics are stable across the age range, instead of greying demographics undermining the sustainability of social programs and health care and pension plans.

I also think that globalization, outsourcing, and automation, which used to destroy only blue collar jobs, but now destroys middle class jobs such as IT, has finally reached a point where a critical mass of people in the USA in both the lower and former middle classes can no longer afford to buy goods because their wages are so depressed, and won't ever be going back to what they were.

The good jobs no longer exist by choice; the North American companies chose to move them overseas to chase the cheapest labour, and we as a species keep choosing to automate everything. The end result of these trends is less and less jobs, especially as technology gets better and self-improving so that less techs are required to maintain each generation of it. There's a chance automation will bring a self-maintaining utopia to us all, but that won't be for a while if it does happen.

This has all been foretold by decades by people looking far ahead at the end result of the automation, outsourcing, and sustainability trends.

If you want to get people back to work immediately, then the companies on US soil need to stop moving their workers overseas. Production needs to return to North America, which should have a VARIED economy of both labour and white collar jobs. Until then, you can kiss goodbye to the late 20th century standard of living, although honestly it wasn't sustainable in the first place anyway. I think it's pretty clear that's we're never going back to how things were.

Get used to living in tiny houses, rooming houses, having no real disposable income, not being able to afford kids, and taking transit or walking (or driving a 20 year old car) to a minimum wage job. Though still employed in a middle class job, I started transitioning to living that way a few years ago when I noticed the unsustainable trends, and am now very glad I got used to living like that by choice instead of being forced into it now like everyone else is. Also glad I paid off all debts (including mortgage) last year so lack of work will be less of a disaster when it happens in the future.

I can assure you that simple living is still highly enjoyable, so it's not all doom and gloom. At this point, there's no going back anyway, so you might as well embrace it and start radically changing your lifestyle and spending habits into something that doesn't require more than a minimum wage job in the first place!

It's not just the US that's going to experience loss. The developing countries are also being shortchanged of their taste of late 20th century standard of living. The best they can expect to get is what we're adjusting down to now. Right now we're all living through a great equalization across the world to a livable but spartan standard of living for *all* people. That's the end result of globalization.

The end of the era of decadence is here, nothing more. It's the beginning of the era of frugality and of a more common standard of living across the globe. Like I said, it's not so bad. You still have family, love, friends, and enjoyment of nature's splendours even if you're living simply. Kicking and screaming about wanting to go back to the good old days is just going to make the transition hurt more than it needs to. Adjust to it, get frugal, develop a strong social network, and you'll be fine.

November 3, 2010
8:47 am
jeremywong
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This is called pessimism porn, a form of entertainment that began in 2007. It gives the illusion of being better informed (and smarter) than average people.

November 4, 2010
5:24 pm
Andrew
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It gives the illusion of being better informed (and smarter) than average people.

If the statements are facts, then I would argue that those who are aware of the statements are indeed better informed than the average person, but perhaps I give the average person too little credit. The illusion would be if the statements are false.

Being smart would be to admit that the pessimistic predictions could be possible outcomes.

November 4, 2010
7:15 pm
kilarney
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the original post was thought provoking to me and since we are all looking for information to make decisions on investing I wanted to get feedback on it. I am not the most seasoned guy on investments and will take any info I can find and like to see your impressions as I have learned lots on this site! i know the world isnt ending and appreciate your input!

November 4, 2010
10:58 pm
msl25
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in that case, i say, great to hear that, kilarney. you have a good day.

November 5, 2010
6:58 pm
jeremywong
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Andrew said:

The illusion would be if the statements are false.

The veracity of the statements is not in question. The lure of pessimism porn is that the future is knowable if enough bad economic news is gathered, and knowing the future makes one feel wiser than average people. Being able to predict the future is always an illusion, because the course of history never runs straight.

November 6, 2010
10:00 am
Andrew
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and knowing the future makes one feel wiser than average people. Being able to predict the future is always an illusion, because the course of history never runs straight.

True. But this is how we all try to make our decisions, by being as informed as possible and trying not to get burned if it doesn't go the way we think it will.

Inflation is currently a big concern with the quantitative easing happening in the US. How much more money can they print before they are no longer able to support their military at its current might? Once the fear of retaliation for dropping the US dollar subsides, then the US dollar could possibly collapse. Until then, there will still be a slow devaluing since the other G20 countries agreed not to compete to devalue their own currencies. How much more steam is there in the US usury-based economy? It's anyones guess, but Peter Schiff has a lot of capital that he's betting on his version of the future (whether it is the same as what he publicly says or not is a different story).

November 6, 2010
7:09 pm
jeremywong
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Andrew said:

...this is how we all try to make our decisions, by being as informed as possible and trying not to get burned...

Being well-informed means knowing more than useless information; it means knowing information one can use. Pessimism porn from the likes of Peter Schiff is a source of true news, but it is junk news.

Inflation is currently a big concern with the quantitative easing happening in the US.

Quantitative easing in the US is the Federal Reserve buying debt in an attempt to stop credit contraction, or better yet, to expand credit. The need for a second round of QE means the first round didn't work. QE is not inflationary because it doesn't work. Credit is still contracting. Once the tide changed from consumption to conservation, the Fed cannot reverse it.

Once the fear of retaliation for dropping the US dollar subsides, then the US dollar could possibly collapse.

What "fear of retaliation"? Has the US threatened any country planning not to trade in US dollar? Has any country threatened the mighty USA for devaluing the US dollar?

How much more steam is there in the US usury-based economy?

The US doesn't have a usury-based economy. Usury means credit at an exorbitant interest rate. The biggest borrower is the US Treasury. Nobody borrows cheaper than the US Treasury, and it borrows at a historically low rate. Credit card debt is at a high interest rate, but it is not exorbitant, at least not more exorbitant than in other countries, and US credit card debt is shrinking.

November 6, 2010
8:38 pm
Andrew
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What "fear of retaliation"? Has the US threatened any country planning not to trade in US dollar?

Some would argue that a big reason for attacking Iraq was due to Iraq wanting to trade oil in other currencies, it certainly wasn't because of 9/11 that they attacked. Some would argue that Iran's desire to trade oil in Euros is a bigger reason for the US wanting to attack rather than nuclear proliferation, or Venezuela's desire to do the same rather than freeing the people from the regime that governs them. The US enjoys the position of being the world's reserve currency, and their military might is quite the insurance policy to keep it that way.

The US doesn't have a usury-based economy.

I suppose that my usage of the term "usury" is out-of-date. It used to mean lending money at interest, it now means at "exorbitant interest" as you correctly pointed out. I was trying to use it based on the obsolete meaning of the word. The fractional reserve system allows banks to lend out more money than is deposited in them. In order to keep that type of fiat monetary system intact, economic growth is a requirement in order for the banks to continue to essentially create credit out of thin air. Basically, this is what drives US economic policy since growth is such an essential element to keeping things going and why consumption is so important.

As a saver, I'd think credit contraction would be a good thing.

November 8, 2010
12:45 pm
mike
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QE, QE2 deflation.

The way I see it, and like many of you, I've chosen to "invest" in cash, is the US economy (personal, corporate, gov't) has lost A LOT more than both QE+QE2 bailouts are.

Thus, I see it as deflationary. Less money out there in total.

Have a great day

November 8, 2010
2:52 pm
Andrew
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mike said:

QE, QE2 deflation.

Thus, I see it as deflationary. Less money out there in total.


I am all for deflation and credit contraction, however, QE and QE2 are inflationary by design. The Fed has stated that they want to target a rate of 2% inflation per annum as measured by the Consumer Price Index (CPI).

Currently, the rate of inflation in the US is 1% (again, as measured by CPI), which is below their target rate of 2%, so they want to intervene and cause inflation so that they can meet that target. Thus, Quantitative Easing is inflationary.

Now, the first round of QE is believed to have failed not because it caused deflation, but because it did not inflate enough. However, this is all based on the assumption that CPI is a good measure of inflation.

According to Wikipedia (http://en.wikipedia.org/wiki/Inflation):

Economists generally agree that high rates of inflation and hyperinflation are caused by an excessive growth of the money supply.

The term "inflation" originally referred to increases in the amount of money in circulation, and some economists still use the word in this way. However, most economists today call an increase in the money supply monetary inflation, to distinguish it from rising prices, which may also for clarity be called 'price inflation'.[12] Economists generally agree that monetary inflation is one of the main causes of price inflation.

I don't know whether CPI understates or overstates inflation, however, due to the housing bubble, and the fact that house prices are not included in the calculation of CPI (only rent is), some believe that CPI currently understates inflation.

Either way, inflation robs savers and rewards debtors. If the market is not interested in buying toxic assets at the values that would keep the banks in business, why should the Fed? The banks made a gamble, they lost, now they expect savers to pay for their losses?

November 14, 2010
8:09 am
Selby
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I am old enough to remember the panic of the early 1970's. All the talk was about how we are running out of oil and the eastern bastards could freeze in the dark. 40 years later it still hasn't happened and we now know of more oil that ever before--even if it does cost a lot to get at it.

Doom perception is very easy. Seeing the future is tough.

jeremywong said:

This is called pessimism porn, a form of entertainment that began in 2007. It gives the illusion of being better informed (and smarter) than average people.


May 27, 2011
1:06 am
Andrew
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Selby said:

I am old enough to remember the panic of the early 1970's. All the talk was about how we are running out of oil and the eastern bastards could freeze in the dark. 40 years later it still hasn't happened and we now know of more oil that ever before--even if it does cost a lot to get at it.

Doom perception is very easy. Seeing the future is tough.

jeremywong said:

This is called http://abcnews.go.com/Technolo.....038;page=1

May 27, 2011
6:45 pm
Andrew
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Here's some more "useless" information:

An article sent through Reuters entitled "U.N. sees risk of crisis of confidence in dollar"

http://www.reuters.com/article.....EI20110525

"We're not saying the collapse is imminent, but the factors are further building up that we could quickly come to that stage if other things are not improving quickly on other fronts -- like the risk of the U.S. not being able to service its obligations,

June 11, 2011
9:38 am
Andrew
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I don't know if anyone reads this thread anymore. I haven't seen jeremywong on here for a while and kilarney hasn't replied to his original post. If no one else posts to this thread then I will stop posting to it.

According to this article: http://www.straitstimes.com/Br.....78361.html a ratings agency in China stated:

Washington had already defaulted on its loans by allowing the dollar to weaken against other currencies - eroding the wealth of creditors including China, Mr Guan said.

I think this is in reference to QE2 which "monetizes the debt", even Ben Bernanke cleverly says that while the Fed is not technically printing any money, they are growing the money supply:

"What the purchases do... is... if you think of the Fed's balance sheet, when we buy securities, on the asset side of the balance sheet, we get the Treasury securities, or in the previous episode, mortgage-backed securities. On the liability side of the balance sheet, to balance that, we create reserves in the banking system. Now, what these reserves are is essentially deposits that commercial banks hold with the Fed, so sometimes you hear the Fed is printing money, that's not happening, the amount of cash in circulation is not changing. What's happening is that banks are holding more and more reserves with the Fed. Now the question is what happens the economy starts to grow quickly and it's time to pull back the monetary policy accommodation. There are several tools that we have"

Reference: about 19mins into this video: http://www.c-spanvideo.org/pro.....m/296446-1

Now, in the Keynesian view of economics, this action is supposed to have a stimulative effect because banks are supposed to loan out up to 10 times these newly created reserves (due to Fractional Reserve banking) to stimulate production which results in growth. As the past year has shown, this hasn't happened, because people are skittish about debt and haven't borrowed the amounts allowed to be created from those excess reserves. Growth is key because if production doesn't keep up with the money supply, inflation is the result because there is now more money available but not enough demand for use of that money.

Some people argue that if no one is using the money, then the money doesn't really exist so it shouldn't cause inflation. This would have been true if the Fed didn't create the reserves by purchasing Treasury debt (ie. monetizing the debt).

The original amount of newly created money has already been used to purchase $600+ billion of US Treasury Notes on the open market (Open Market Operations), so the money supply has already grown by $600+ billion dollars. The money supply could grow up to $6 trillion if the banks loaned up to 10 times those reserves out. Productivity has not increased proportionally

This is the reason why credit agencies are downgrading (German agency Feri just did this: ), or contemplating downgrading the rating of US Treasury debt, because the US is basically creating their own money to pay for their own debt while not maintaining the value of their currency by increasing productivity.

June 11, 2011
5:25 pm
kilarney
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I am still waiting to see the darn interest rates tick up a bit. I have taken a beating on stocks in the past few months but wish I could get more on cash savings. Our system chugs along and many say it will fail but it doesnt seem that it will all crash down. Low rates just keep the housing bubble expanding.....we all have to live within our means and stop wanting everything instantly!

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