Potential Global Collapse

[CG51]

In a report entitled "Worst-case debt scenario", the bank's asset team said state rescue packages over the last year have merely transferred private liabilities onto sagging sovereign shoulders, creating a fresh set of problems.

Overall debt is still far too high in almost all rich economies (http://www.telegraph.co.uk/finance/financetopics/g20-summit/6228450/Debt-levels-risk-another-crisis.html) as a share of GDP (350pc in the US), whether public or private. It must be reduced by the hard slog of "deleveraging", for years.

Related Articles


'Debt levels risk another crisis' (http://www.telegraph.co.uk/finance/financetopics/g20-summit/6228450/Debt-levels-risk-another-crisis.html)
"As yet, nobody can say with any certainty whether we have in fact escaped the prospect of a global economic collapse," said the 68-page report, headed by asset chief Daniel Fermon. It is an exploration of the dangers, not a forecast.


Under the French bank's "Bear Case" scenario (the gloomiest of three possible outcomes), the dollar would slide further and global equities would retest the March lows. Property prices would tumble again. Oil would fall back to $50 in 2010.

Governments have already shot their fiscal bolts. Even without fresh spending, public debt would explode within two years to 105pc of GDP in the UK, 125pc in the US and the eurozone, and 270pc in Japan. Worldwide state debt would reach $45 trillion, up two-and-a-half times in a decade.

(UK figures look low because debt started from a low base. Mr Ferman said the UK would converge with Europe at 130pc of GDP by 2015 under the bear case).

The underlying debt burden is greater than it was after the Second World War, when nominal levels looked similar. Ageing populations will make it harder to erode debt through growth. "High public debt looks entirely unsustainable in the long run. We have almost reached a point of no return for government debt," it said.

Inflating debt away might be seen by some governments as a lesser of evils.

If so, gold would go "up, and up, and up" as the only safe haven from fiat paper money. Private debt is also crippling. Even if the US savings rate stabilises at 7pc, and all of it is used to pay down debt, it will still take nine years for households to reduce debt/income ratios to the safe levels of the 1980s.

The bank said the current crisis displays "compelling similarities" with Japan during its Lost Decade (or two), with a big difference: Japan was able to stay afloat by exporting into a robust global economy and by letting the yen fall. It is not possible for half the world to pursue this strategy at the same time.

SocGen advises bears to sell the dollar and to "short" cyclical equities such as technology, auto, and travel to avoid being caught in the "inherent deflationary spiral". Emerging markets would not be spared. Paradoxically, they are more leveraged to the US growth than Wall Street itself. Farm commodities would hold up well, led by sugar.

Mr Fermon said junk bonds would lose 31pc of their value in 2010 alone. However, sovereign bonds would "generate turbo-charged returns" mimicking the secular slide in yields seen in Japan as the slump ground on. At one point Japan's 10-year yield dropped to 0.40pc. The Fed would hold down yields by purchasing more bonds. The European Central Bank would do less, for political reasons.

SocGen's case for buying sovereign bonds is controversial. A number of funds doubt whether the Japan scenario will be repeated, not least because Tokyo itself may be on the cusp of a debt compound crisis.

Mr Fermon said his report had electrified clients on both sides of the Atlantic. "Everybody wants to know what the impact will be. A lot of hedge funds and bankers are worried," he said.

http://www.telegraph.co.uk/finance/economics/6599281/Societe-Generale-tells-clients-how-to-prepare-for-global-collapse.html

[JJHH]

What goes up must come down..

[Rugal09]

America has too much debt because:
a) we spend more than we earn
b) we don't emphasize savings
c) we live on credit and we finance by credit

for there to be a real change, our mentality with regards to money should change as well.

[Connaught Ranger]

With regards the man in the street:-

Don't spend what you don't have, simple.

[MaDuce]

With regards the man in the street:-

Don't spend what you don't have, simple.

The same could be said of the men in the Whitehouse/Capital.

[Nano]

The same could be said of the men in the Whitehouse/Capital.

True, but then given the nature of the jobs/positions governments spend the money that man on the street gives and has in the bank.

As for the article's premise of a global collapse well it is going to be interesting how the crooks/politicians spin it.

[Thugut]

That's why NASA has been, and needs to be continuously funded. We need to find extraterrestrial races, and have them buy our debt.

[XShipRider]

We don't have time for economic pragmatism. Haven't you heard? Health care must pass or the whole country will go to hell in a hand basket. That and the economic stimulus package which doesn't cost any of us a dime.

[Kilgor]

The same could be said of the men in the Whitehouse/Capital.

This is the core problem. The debt mentality is engrained in everyone. From toilet cleaner to congress.

[MaDuce]

I guess we could always print more money it worked pretty well for the Germans back in the day.

[Nano]

I guess we could always print more money it worked pretty well for the Germans back in the day.
Yeah it worked so well that the whole of Germany was convinced that the Nazis were sane in comparison to the ongoing business of printing money.:roll:

In any case perhaps it is necessary that sometimes we need to be reminded by rather harsh lessons as to the proper social economic duty of care that is required of the general society. (The World in fact)

Let the Global Collapse commence. 2012 would be an opportune date for it to be begin it's final descent into the abyss.

[Nano]

This is the core problem. The debt mentality is engrained in everyone. From toilet cleaner to congress.
The real problem in my view is the perception by those who perpetuate/d and profit/ed from this fraud that there is not going to be any equivalent consequence. The same perception is shared by everyone else who lives on the basis of no personal responsibility, but a shared one. It is going to be something interesting I'm sure how the whole thing finally unwinds and everyone is ****ed.

[LRPV]

I guess we could always print more money it worked pretty well for the Germans back in the day.

Isn't that the current US response? With China now reconsidering buying US debt?

No matter what happens in the near term, there has to be a financial restructure. I'm hoping that in Australia banking becomes re-regulated.

[Zarak]

I want my grandchildren (someday) to see the United States of America. They will not, at this rate, not even a close approximation. The current rate of spending in the federal government is unsustainable, period, full stop.

We need to have a real crisis to give us the motivation to make the changes necessary. "We" being not only the federal government, not only Americans, but most of the civilized world.

[Nano]

Isn't that the current US response? With China now reconsidering buying US debt?

No matter what happens in the near term, there has to be a financial restructure. I'm hoping that in Australia banking becomes re-regulated.
Re-regulat what? I was not aware that Australia had no banking regulations or standards. I wonder how the Australian economy stays afloat without any monetary constant. How many currencies do you guys currently have/use/issue?

[Nano]

I want my grandchildren (someday) to see the United States of America. They will not, at this rate, not even a close approximation. The current rate of spending in the federal government is unsustainable, period, full stop.

We need to have a real crisis to give us the motivation to make the changes necessary. "We" being not only the federal government, not only Americans, but most of the civilized world.

+2 vote for Global Economic Collapse any others??..

[DaveDash]

Isn't that the current US response? With China now reconsidering buying US debt?

No matter what happens in the near term, there has to be a financial restructure. I'm hoping that in Australia banking becomes re-regulated.

???

I have many friends who work in banks here in Australia. ALL of them have AA credit ratings and are among the healthiest banks in the world (not to mention, all Australian banks are in the biggest top 50 banks in the world). The "GFC" barely had an effect here at all.

So please explain what you're talking about?

[slaveman]

Unfortunately, most Americans simply don't care what happens. I agree, it's going to take something big for most people to wake up...

One problem to consider though, is that after the collapse, most of the infrastructure will not be owned or controlled by Americans. Members of the Fed, along with all of their international banking friends, have been buying up just about everything of value they can, with the money they print (that no longer has true value)!

Just like most of the third world nations, the banksters move in, hijack the economy, and bankrupt us. When all is said and done, they pretty much own and control everything. And like the others have said, it's our own fault for allowing them to do it.

Take a look a Argentina. I think that's the best example for America. We will be more worried about getting the electricity turned back on than fighting for values, indpendence, and freedom. It's almost like we're under a spell...

"Nothing bad will ever happen to me! You're crazy! Now get out of my way so I can finish watching the game!"...

See what I'm saying? It's going to be hard to wake people up. Not impossible, but very, very hard...

[XShipRider]

???

I have many friends who work in banks here in Australia. ALL of them have AA credit ratings and are among the healthiest banks in the world (not to mention, all Australian banks are in the biggest top 50 banks in the world). The "GFC" barely had an effect here at all.



That's probably because Australian banks either; a) have common sense regulation (e.g. loaning money to those who can actually amortize); b) maintain liquidity and solvency through healthy reserves; c) both A and B; or d) got lucky. I'm thinking C.

We here in America decided to make housing affordable, misnomer if there ever was one, to people who could not otherwise afford a car let alone a house. Many could not qualify for small personal loans but that was not to stop us. The so-called "American dream" became the "American birthright." We also made these little plastic cards then told people to use them, not to worry about the payments because they had only to pay the minimum, then told them to go out and buy, buy, buy. Why wait? Best of all the marketers and admen have us believing it's all about image rather than substance. Somewhere along the way we confused good business practice with stereotyping or profiling.

Our economy as well as our thought processes are sick. This crisis is just what the doctor ordered but change is not in our nature. It will take complete financial collapse before substantive change takes place.

[Jaegermeister + Red Bull]

That's probably because Australian banks either; a) have common sense regulation (e.g. loaning money to those who can actually amortize); b) maintain liquidity and solvency through healthy reserves; c) both A and B; or d) got lucky. I'm thinking C.

We here in America decided to make housing affordable, misnomer if there ever was one, to people who could not otherwise afford a car let alone a house. Many could not qualify for small personal loans but that was not to stop us. The so-called "American dream" became the "American birthright." We also made these little plastic cards then told people to use them, not to worry about the payments because they had only to pay the minimum, then told them to go out and buy, buy, buy. Why wait? Best of all the marketers and admen have us believing it's all about image rather than substance. Somewhere along the way we confused good business practice with stereotyping or profiling.

Our economy as well as our thought processes are sick. This crisis is just what the doctor ordered but change is not in our nature. It will take complete financial collapse before substantive change takes place.

Actually something often overlooked but is quite significant is the compulsory 9% superannuation contribution your employer makes on your behalf, only accessible when you retire at 65. I am talking about Australia btw in case you are wondering.

9% of US$1055.9 billion is over $90 billion dollars every year, invested into a diversified range of products such as property, shares, forex, bonds, and good ol' fashioned fixed interest term deposits in banks etc by your fund manager.

[tea drinker]

The same could be said of the men in the Whitehouse/Capital.

Of course, removing safeguards used after the last depression helped bring around this round of wealth transfer.


???

I have many friends who work in banks here in Australia. ALL of them have AA credit ratings and are among the healthiest banks in the world (not to mention, all Australian banks are in the biggest top 50 banks in the world). The "GFC" barely had an effect here at all.

So please explain what you're talking about?
Hey - don't tell anyone - but sometimes bad banks have a good credit rating! If you believe ANYTHING from these rating agencies etc without having a solid think about what their gain is, you are fooling yourself.
Blaming the stooges on the street with with $$$$$$ debt (wealth transfer) is not enough. Some people didn't realise they were gambling. Pensions are blown and FFS people are dead because of this.



Analysts at the three biggest credit rating agencies who gave positive, investment-grade ratings to AIG and Lehman Brothers up until their collapse have not been fired or disciplined, the heads of the agencies admitted at a Congressional hearing today.
Moody's, Standard & Poor's, and Fitch Ratings all maintained at least A ratings on AIG and Lehman Brothers up until mid-September of last year. Lehman Brothers declared bankruptcy Sept. 15; the federal government provided AIG with its first of four multibillion-dollar bailouts the next day.
Under questioning by Rep. Jackie Speier (D-Calif.), Raymond W. McDaniel, Jr. of Moody's, Deven Sharma of S&P, and Stephen Joynt of Fitch said the analysts in charge of ratings for the now-disgraced firms are still employed.
McDaniel defended Moody's ratings of Lehman Brothers by pointing to the government-engineered rescue of Bear Stearns in March of 2008, arguing that it played an important role in Moody's analysts maintaining an A rating on the now-bankrupt firm. Joynt said his analysts have since done "a lot of thoughtful soul-searching."

That's nice of them.
Privatise profit - socialise losses
Keep it coming baby

[DaveDash]

Hey - don't tell anyone - but sometimes bad banks have a good credit rating! If you believe ANYTHING from these rating agencies etc without having a solid think about what their gain is, you are fooling yourself.
Blaming the stooges on the street with with $$$$$$ debt (wealth transfer) is not enough. Some people didn't realise they were gambling. Pensions are blown and FFS people are dead because of this.


Well given ALL the banks in Australia remained fairly healthy through the GFC, and so did the economy, I'd be inclined to believe they are all healthy banks.

My comment was aimed at LRPV, who seemed to want Australian banks regulated, as if they wern't regulated already. If anything, other banks should be COPYING the Australian model given the banks health through the GFC.

This speaks nothing for US banks.

[CG51]

+2 vote for Global Economic Collapse any others??..

I'm down. Stock up on MRE's.

ORDO AB CHAO

[Kit]

Maybe 2010 will bring in a new Congress. But asking voters to bring in responsible politicians is impossible, especially in this day and age. This will sound politically incorrect, but it used to be that only the educated and decisive people voted, which gave a better chance of somebody competent. Now with every Tom, ****, and Harry voting, you have a mindless mob mentality running Washington, with politicians that only want to appease their constituency with pork spending. That's the price of a free society I suppose.

[tea drinker]

Well given ALL the banks in Australia remained fairly healthy through the GFC, and so did the economy, I'd be inclined to believe they are all healthy banks.

My comment was aimed at LRPV, who seemed to want Australian banks regulated, as if they wern't regulated already. If anything, other banks should be COPYING the Australian model given the banks health through the GFC.

This speaks nothing for US banks.
Understood Dave.
OZ definately outperformed the rest of the Anglo-saxon world by a long shot, but I would worry that some (financial) suicide bomber would start developing policies there in the future - regs MIGHT help prevent that.
At least someone is doing well, long may it continue.... you need some compensation for the rabid wildlife there p-)

Gov needs to start representing the people who pay the most tax a little better. And education have they started teaching kids how to cut up a credit card yet or something useful as a life preparation?

[JPBaz]

Maybe 2010 will bring in a new Congress. But asking voters to bring in responsible politicians is impossible, especially in this day and age. This will sound politically incorrect, but it used to be that only the educated and decisive people voted, which gave a better chance of somebody competent. Now with every Tom, ****, and Harry voting, you have a mindless mob mentality running Washington, with politicians that only want to appease their constituency with pork spending. That's the price of a free society I suppose.

Wow, you guys are a trip. Every Tom, **** and Harry voting is a problem huh? How about a better solution where only property owners vote? How about a $1,000.00 voting fee to limit it to only those who really care about their vote. Jeez while we are at it lets just elect a guy to take charge and run the show. We don't need real elections every 4 years. Vladimir Putin is currently under employed, maybe he will be available? It really frightens me to think of Americans willing to give up the vote to solve this problem. It ranks up with those true Americans that would love to see a global financial collapse just to put Obama back into his place, that uppity so and so with his unwashed rabble that voted for him.

Oh and another thing...home ownership...to quote from the great American Banker George Bailey...

" Why - here, you're all businessmen here. Doesn't it make them better citizens? Doesn't it make them better customers? You - you said - what'd you say a minute ago? They had to wait and save their money before they even ought to think of a decent home. Wait? Wait for what? Until their children grow up and leave them? Until they're so old and broken down that they... Do you know how long it takes a working man to save five thousand dollars? Just remember this, Mr. Potter, that this rabble you're talking about... they do most of the working and paying and living and dying in this community. Well, is it too much to have them work and pay and live and die in a couple of decent rooms and a bath? "

http://www.youtube.com/watch?v=dXzVnsx6wYg

Starts at the 4:30 mark.

Its a bit early in the season for this clip so I apologize to those that try to avoid the hype until after Thanksgiving.

[eskachig]

America has too much debt because:
a) we spend more than we earn
b) we don't emphasize savings
c) we live on credit and we finance by credit

for there to be a real change, our mentality with regards to money should change as well.That's the reason for our high private debt. I'm more worried about our public debt honestly.

[KoTeMoRe]

Let me be an arse...NEVER GOING TO HAPPEN! Why? THERE IS NO PLAN B!

This means that for the first time in the ongoing battle between the "Have" and the "Have not" the "Have not" have more to loose than the "Have".

The "Have not" have no more revolutionary guide, spare solution or the will to try and change things. In the Western World. Mortgage to pay et caetera!

Welcome to the real End of History. The end of alternatives!

[tea drinker]

Let me be an arse...NEVER GOING TO HAPPEN! Why? THERE IS NO PLAN B!

This means that for the first time in the ongoing battle between the "Have" and the "Have not" the "Have not" have more to loose than the "Have".

The "Have not" have no more revolutionary guide, spare solution or the will to try and change things. In the Western World. Mortgage to pay et caetera!

Welcome to the real End of History. The end of alternatives!
Interesting - but it's a transitory phenomena.
Humans are just doing what is necessary to survive - not a whole lot right now, but that could change pretty quick when they (majority) get hungry.
Some people liken humans to a virus, they always evolve

[Lethal Lou]

Of course there is always the simple, most ruthless (pragmatic?) solution. Go the banana republic route. Declare "regime change" a la the 2nd/3rd/4th/5th French Republics and repudiate all debt. Then start issuing new debt. Sure the rest of the world would be pissed but 1) they wouldn't go to war over it; 2) the US still produces stuff other countries want so they would continue to do business with us. Wouldn't hurt to change the currency at the same time to take all the folding money/stockpiles out of circulation (say 6 months grace to turn them in then it's all confederate money).

Key element here is do you do what is best for the American people (effectively declare bankruptcy and start over) or do you do what is best for the global economy -e.g everyone else.

[Mastermind]

I guess we could always print more money it worked pretty well for the Germans back in the day.
I know you are being sarcastic (or facetious) ...but, this is, in my opinion, exactly what the Obama administration will do.

They have, so far, painted themselves into a corner they can not get out of. They have rejected almost every sane approach to solving the problem...and now, if they continue the dirction they have so aggressively thrust themselves, they will have no choice but to simply print more money.

This is what the Chinese have so directly and bluntly warned the Obama admin. about. If Obama and the Dems go ahead and monetize the debt, the global economy will suddenly and dramatically collapse.

I expect this to happen within the next six months....all hell is going to break loose.

Of course, there is a very remote possibility, once the Obama-ites come to the brink and look into the abyss, they may shrink back and do the hard things they must to govern responsibly...at the obvious peril of destruction of their party's power position. However, I do not believe they are quite that magnanimous. I think they will choose eleven more months of power over the salvation of the global economy.

No matter what happens, the next Spring...they next year particularly...will be very interesting.

[JPBaz]

Of course there is always the simple, most ruthless (pragmatic?) solution. Go the banana republic route. Declare "regime change" a la the 2nd/3rd/4th/5th French Republics and repudiate all debt. Then start issuing new debt. Sure the rest of the world would be pissed but 1) they wouldn't go to war over it; 2) the US still produces stuff other countries want so they would continue to do business with us. Wouldn't hurt to change the currency at the same time to take all the folding money/stockpiles out of circulation (say 6 months grace to turn them in then it's all confederate money).

Key element here is do you do what is best for the American people (effectively declare bankruptcy and start over) or do you do what is best for the global economy -e.g everyone else.

+1

Do what is best for the American people before it is too late. Do it now while we still have some industry left and ability to feed and defend ourselves. A fuel embargo will hurt for a while but there will still be the option of taking what we need (Venezuela) or waiting until the sellers of energy products want to get back into our markets.

The way I see it, the folks that own our debt have not played fair in the first place (see exchange rates) and they would do the same to us if it served their own purposes.

[Mastermind]

+1

Do what is best for the American people before it is too late. Do it now while we still have some industry left and ability to feed and defend ourselves. A fuel embargo will hurt for a while but there will still be the option of taking what we need (Venezuela) or waiting until the sellers of energy products want to get back into our markets.

The way I see it, the folks that own our debt have not played fair in the first place (see exchange rates) and they would do the same to us if it served their own purposes.
Now, that's just crazy talk. If the US falls economically, there are so many countries holding massive amounts of US debt and currency, there will be global chaos...lasting decades.

It would be like a throw of the dice in a crap game...but, dice made of deadly sensitive explosive. There is no telling what will happen.

[KoTeMoRe]

Oh BTW Dubai is in knee-high deep $hit. Abu Dhabi is still holding, but in all cases the ME is on for a rough ride.

[Lethal Lou]

Now, that's just crazy talk. If the US falls economically, there are so many countries holding massive amounts of US debt and currency, there will be global chaos...lasting decades.

It would be like a throw of the dice in a crap game...but, dice made of deadly sensitive explosive. There is no telling what will happen.

- The intent is NOT to have the US fall . . . we could muddle thru on our own resources (and those we elected to deliberately obtain in the region) but the rest of the world would in fact tank if the current US paper they were holding turned to - well - paper . . . Reverting back to the key element (recognizing that this is an international board) - should the US do what is best for the global economy or what is best for it's domestic citizenry?

[Goggen]

- The intent is NOT to have the US fall . . . we could muddle thru on our own resources (and those we elected to deliberately obtain in the region) but the rest of the world would in fact tank if the current US paper they were holding turned to - well - paper . . . Reverting back to the key element (recognizing that this is an international board) - should the US do what is best for the global economy or what is best for it's domestic citizenry?

No, the world isn't dependent on the US economically, you underestimate the global economy's capability for adaptation. If the US would fail a great depression would surely ensue. China and a lot of other countries would lose the vast sums of money they hold in bonds, but China would be able to turn to and develop its domestic demand and consume the products it's producing instead of exporting them. The Eurosector would also scale down but would soon be able too utilize the new emerging asian markets, China would be a new export prospect for example. It won't be some kind of global apocalypse. It would simply be a painful restructuring.

[Mastermind]

- The intent is NOT to have the US fall . . . we could muddle thru on our own resources (and those we elected to deliberately obtain in the region) but the rest of the world would in fact tank if the current US paper they were holding turned to - well - paper . . . Reverting back to the key element (recognizing that this is an international board) - should the US do what is best for the global economy or what is best for it's domestic citizenry?
In this sort of muddled Global interchange and intercourse, how can any country as large and involved with global affairs as the US do only for themselves and not for the world?

The US is the world in terms of economic. If the US were to turn inward (how that could happen I have no idea), the rest of the world would find unprecedented (to use an Obama cliche') economic problems. Just in terms of transportation and technological support, the world has adopted so much that is "American" any US withdrawal in world affairs is bound to be a shock.

That is not to say the world could not get by without the US. It would just create an upheaval for a considerable time.

And, to more or less degrees, the same can be said for any developed nation. It just that when the US has the equivalent of an economy four times greater than the next largest, a US withdrawl would leave very significant scars.

No. The US and the rest of the world are now symbiotic. It is best for everyone to accept that and continue to work together to solve the challenges we all face. I doubt there is any acceptable way of going back to isolationism.

[JPBaz]

- The intent is NOT to have the US fall . . . we could muddle thru on our own resources (and those we elected to deliberately obtain in the region) but the rest of the world would in fact tank if the current US paper they were holding turned to - well - paper . . . Reverting back to the key element (recognizing that this is an international board) - should the US do what is best for the global economy or what is best for it's domestic citizenry?

It should be noted that no one in the US govt has every commented that this is an option, for me this is just idle conjecture. Mastermind your points are well taken but considering the long term picture, the US economy must be restructured before it is too late. US corporations have been selling their soul overseas for too long. Our economy is 4X larger than any other but much of it has been financed on credit. How will our democracy compete with the dictatorial oligopolies being that are becoming stronger at our expense? Do the American people even really care?

Having the US default on its debt would create a worldwide upheaval, social and economic. The structures we take for granted would be irreparably damaged and the forces of tribalism and authoritarianism would be embolden to create new global conflicts. We would survive as a nation but would we want to exist in that world? The ideas of Freedom and Liberty would be forever tarnished.

That said, the US must restructure its economy. We must take the hit and live within our means. This may hurt the international economy, so be it. Other nations do not care about the standard of living in the US, they are focused on their own well being (see Spratley Islands, Kuril Islands, Chinese support of African regimes, European gas pipelines, Hugo Chavez, lack of Russian support of US in Afghanistan, Russian pressure on eastern European nations, etal). It's not our job to defend Taiwan and Israel. If the Chinese want to take Taiwan back, so be it. If the EU is worried about Russian aggression, so be it. There is no reason for the US to pay for European bases. If China will not allow their currency to float on the open market, why should we support open trade with them? Our market is vital to the Chinese now, their internal market has not developed yet, but it will. What will happen to the debt they hold once they do not need the US markets? The Chinese will do what is good the communist party, to our demise. We must stay focused on our own democracy and economy. This is a critical time for our nation, we need to wake up before it is too late.

As much as the 2008 election focused on breaking ties with Bush's mistakes and the feeling of hope that Obama inspired, I hope 2012 will focus on doing what is right for the American people. What does democracy mean in the new millennium? The social and economic challenge that we will face in the next 50 years is frightening.

[MichaelF]

FYI (someone mentioned gold): Gold may have a higher store of value, but silver is much, much more liquid (try paying for a cab ride with a gold coin...). If you are planning for the Apocalypse, you may want to mix it up, with a heavy lean towards silver.

[Mastermind]

Clearly, the US and the world are about to face a tremendous social and economic upheaval the like of which we people have seen only a few times in history.

I think one of the times was the appearance of the dark ages after the fall of the Roman Empire.

Another was the advent of the Industrial Revolution post the American Revolutionary War.

Perhaps another, shorter term evolution, was the Great Depression that affected just about every nation on this planet that had been developed at the start.

These massive changes can not be stopped...they can not be avoided. But, they damn well will be gone through.

[JPBaz]

. But, they damn well will be gone through.

I agree, hence my preoccupation with the idea of what our democracy means to the average American.

One of my favorite poems...

TURNING and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.

I am sorry to be so negative because I really do have a lot of faith in the average American's ability be tolerant of differences, work together, ignore extremists and do what is best for the nation.

[Kilgor]

Blame the left or blame the right, but at the end of the day its spending beyond ones means has become a entrenched mentality of both government and individual over the last decade or so. This is indisputable. Politicians can't take harsh measures, this is politically impossible in the 4 year electoral cycle. US policy of printing money, issuing bonds will continue until the dollar is eventually broken beyond repair.

What applies to the US, also applies to many other countries. (the UK is royally fvcked)

If you want to see the future of the US, look at Japan. Stagnant, ageing and extremely debt ridden. (except at least Japan still makes stuff).

Its all a question of when that final straw will break the US back.

"deficits don't matter" -**** Cheney.

Edit. The current debt at 12 trillion is right near the congress set limit of 12.1 .

[Mastermind]

I have to wonder what happens IF? How does this collapse manifest itself to the man on the street...households, kids, old folks, pensioners and the disabled.

My mother told me really heart breaking stories. But, also a lot of heartwarming stories about how people in desperate...really desperate...situations pulled together. The government and the rich financiers had failed everyone miserably. Just as now.

But, the way people pulled out of it was by really just ignoring the government. The began to barter. They created very small "shoestring" business and little back yard farms. One lady could sew, another could cook...one man could fix things, another could dig wells....they began to raise pigs and chickens in their yards...in spite of city regulations against that. They would trade a chicken or a peck of peas or a small sack of potatoes or a jar of marmalade or for services. They did this for years.

Kids went to city parks and played when the yards were turned into gardens. She said she got a job in the city as a stenographer for a car dealer that had survived the crash...for a long time, she said, he actually paid her in sausages...his brother ran a hog slaughtering shop. She would take the sausages home and trade them in the neighborhood for all sorts of food. She and her family and the families around them did fairly well...day to day, little by little, things got better.

But, I look around at this society today and I have to really wonder...if the bottom falls out...these people are really fcked...in my opinion.

[Macs.]

Mastermind - I believe such a financial collapse wouldn't be as "apocalyptic" as people imagine. Such collapse usually doesn't happen overnight, people get used to slightly decreasing living standards over time.

Look at some examples in the past... East-Germany shortly before the end of the socialist regime or countries of the UDSSR where people didn't have anything and still no one was going amok.

[Mastermind]

Mastermind - I believe such a financial collapse wouldn't be as "apocalyptic" as people imagine. Such collapse usually doesn't happen overnight, people get used to slightly decreasing living standards over time.

Look at some examples in the past... East-Germany shortly before the end of the socialist regime or countries of the UDSSR where people didn't have anything and still no one was going amok.
yeah...But, you have to remember, those regims, people really had pretty much crap lives to begin with...sure they were subsisting....they were used to empty shelves at the grocery. A lady friend of mine grew up in Romania and came here at the breakup...she told me they basically lived by the barter system. Butter, cheese and bread economy even when times were stable.

Another friend (an engineer from Moscow) said pretty much the same thing in his part of the USSR...even in apartments, people coped ...the entire thing was just like one long massive depression for the people.

Just like the Americans of 1929 - 1938. There were an awful lot of people fresh off the farm...America had millions of family farms and most Americans still were rural. Most had milked cows, slaghtered chickens, baked pies, etc...first hand at some point in their lives...so going back was, well, i guess the only word for that is "easier"...as hard as it was.

But, these people of today..here. Except for the Mexican illegals and Chinese emigrants...and old people...all these people know about getting food is at the Pizza parlor or at the prepared food section at the grocery. They have never had to go hungry or struggle for their food. Ha...my neighbor lady would schet her Ann Taylor underwear if she got splattered by blood from a headless chicken running around in her yard. And, aint no way she's gonna pluck that sucker. And that's the same for just about everyone I know here.

A society that lives on imported bottled water is not going to transition to boiled salt pork and pinto beans very fast.

Sure...they would learn. But, the transition had damn well better come really, really slow.

[Kilgor]

I have to wonder what happens IF? How does this collapse manifest itself to the man on the street...households, kids, old folks, pensioners and the disabled.

.

Might I add, in a society of 300million plus firearms ?

[Henry's Fork]

Might I add, in a society of 300million plus firearms ?

Looks like alot people are going to have plenty of long pig to dine on. I hear code pinkers are great with Napa Merlot. p-)

[Mastermind]

Might I add, in a society of 300million plus firearms ?
Funny you should say that. I have a very good friend I used to work with...not much of a one to worry. One day a co-worker who is somewhat of a survivalist...collects food, lives on a farm he bought specifically to improve his families survivability come the "end"...the Survivalist as the non-worrier, "So, I'm all ready, got lots of food, livestock, ...I'm all set. How are you set?"

the non-worrier says, "Nope...I've got just the regular stuff in the refrigerator...case of beer, some stale pizza...I'm good"

"Well, how do expect to survive if the end comes...?"

"Oh, I have two friends who will help me get anything I need."

"OH?"

"Yep...Mr. Smith and Mr. Wesson."

"Oh....."

The Non-Worrier then asked, "Where is it you say your farm is?"

The survivalist guy clammed up and left the room....

[seanvi]

Mastermind - I believe such a financial collapse wouldn't be as "apocalyptic" as people imagine. Such collapse usually doesn't happen overnight, people get used to slightly decreasing living standards over time.

Look at some examples in the past... East-Germany shortly before the end of the socialist regime or countries of the UDSSR where people didn't have anything and still no one was going amok.

Funny you mention this because there is an excellent article comparing the collapse of the Soviet Union to a potential economic collapse here in the United States. In summary he argues that it would be much worse here because Americans have farther to "fall". Russians were already equipped with the skills to survive because of the conditions they were forced to learn to deal with under Communism. Here's the link if anyone cares to read it: http://www.energybulletin.net/node/23259

[Goggen]

Funny you mention this because there is an excellent article comparing the collapse of the Soviet Union to a potential economic collapse here in the United States. In summary he argues that it would be much worse here because Americans have farther to "fall". Russians were already equipped with the skills to survive because of the conditions they were forced to learn to deal with under Communism. Here's the link if anyone cares to read it: http://www.energybulletin.net/node/23259

That indeed seems to be the most realistic scenario, not some apocalyptic melodrama like a lot of people envision :roll:. Looks like we're heading for both more scary and exciting times. I hope I'll be able to finish college before things turn really sour. Though further ahead we'll have a peak oil crisis if things continue the way they are and that will make any economic collapse seem like a slight annoyance.

[Mackie]

Of course there is always the simple, most ruthless (pragmatic?) solution. Go the banana republic route. Declare "regime change" a la the 2nd/3rd/4th/5th French Republics and repudiate all debt. Then start issuing new debt. Sure the rest of the world would be pissed but 1) they wouldn't go to war over it; 2) the US still produces stuff other countries want so they would continue to do business with us. Wouldn't hurt to change the currency at the same time to take all the folding money/stockpiles out of circulation (say 6 months grace to turn them in then it's all confederate money).

Key element here is do you do what is best for the American people (effectively declare bankruptcy and start over) or do you do what is best for the global economy -e.g everyone else.


Ahh really? The problem of your plan is that the US will lost all it's patents or copyrights. I mean why should someone accept them after the collpase?
Today it's hard to find a product made in the US. All you can find is: Made in China, designed in CA. p-)

[Telmar]

Just for precision's sake on the French regime change, republics don't change just because the French feel like it. And republics are interrupted by the introduction of empire, return to monarchy, back to empire, the 1940 defeat, and finally the incapacity of the fourth republic to solve the situation in Algeria.

And AFAIK those changes did not include state debt repudiation.

If the USA changed republic and repudiated debt, all creditors of the USA, would evidently collapse. America's assets abroad would be taken...and..

Well, I don't know what would happen next...but nothing good...including for the US.

[Kilgor]

Funny you should say that. I have a very good friend I used to work with...not much of a one to worry. One day a co-worker who is somewhat of a survivalist...collects food, lives on a farm he bought specifically to improve his families survivability come the "end"...the Survivalist as the non-worrier, "So, I'm all ready, got lots of food, livestock, ...I'm all set. How are you set?"


Ha, the pacifist mentality fails to grasp that the well armed, starving and nothing to lose masses will defile his farm in seconds.