World economy to hit the fan?

[predator9089]

Thought I'd start a thread for those interested in this subject.

As you probably know, there was huge news yesterday that the U.S. lost it's perfect AAA credit rating for the first time EVER in history. Congress is disfunctional. No world leaders are stepping up to the plate and actually being leaders for the people, rather than the corporations that own them. The stock markets have been diving in the last few weeks, in an eerily similar way to summer of 2008. It is possible that some European countries could default in the near future and the Euro could break apart.

What are EC members' predictions on how this is all going to play out? How were you effected by the previous recession (which never really ended) and has any of this changed your personal plans for the future? How do you think the economy should function in the future?

I've been pretty lucky, the worst part is big inflation in Canada for basic things.

[Emberstone]

well, only one ratings agency lowered it, and S&P are known for predatory practices, and supporting corrupt positions, so generally, they will not have as much impact in the long run because the other two ratings agency have a better track records, and they are holding firm that for now, AAA status is safe in their view.

Doesnt mean the system is not screwed up. You got the economists placing most of the blame on the republican policies and obstructionist behavior as of late. you got the republicans putting all the blame on everyone else, even if they had no power or influence in the matter... and glenn beck is doubled down on his tinfoil hats as we speak, fearing that obama is going to round up all the white people and throw them into forced labour camps.

That being said, Standerds & Poors is right that our political system is screwed up because too many people are too unwilling to find common ground and compromise to fix it.

[thylvin]

The world economy is never the same after the credit crunch and it will get worse.. big corporations are too greedy to help out, even though they know if the economy crashes, so does their profits! The EU helped bail america out of the credit crunch, now some EU countries are bankrupt... but the Chinese brought out some of their debt, but that doesn't save the Euro from continually falling down.

The bible actually predicted the world economy falling.

There are hundreds of multi billion dollar companies in the US, if each of them gives the government, besides their taxes, 5 billion, they will safe their own economy. take for instance six of the biggest companies I know.. Google, IBM, HP, Compaq, Apple and Microsoft and each pays 5 billion then you have 30 billion dollars to help bail out the debt defecate. Now i just mention 6, there are way more than that in the US, all standing together is capable of bailing the US out of the deficit, so much so that there are money left over to help strengthen the currency again.

But the red giant is waking up from it's slumber, already more than 30 tonnes of gold has been brought by them. They are becoming a force the world has never seen, and they will push for a one world, one currency plan.

[Mad Man L]

The US government is like the Australian (minority) government right now: everyone wants it to go away and force an election.

It is not the end of the world from the US, far from it. But instead of continuing to bail out places such as Greece, we need to let some countries "die off" for the greater good of the economy.

The recession never really happened here.

[Messed Up]

Long story short- I think we are sooooooo fucked. And I know this doesn’t do much to propel the conversation forward seriosuly but I think it’s interesting: We all heard that the world is to “end” in 2012 by some means...ummm....yea....if Mother Nature isn’t kicking our ass then I guess it’s the economy to fill in for her... in short, I have a feeling that if the world is to metaphorically end it is our own doing and the proof is in the pudding already (coff, coff, economy’s going to Hell, coff).

I reiterate; we are soooooooo FUCKED

[thylvin]

@The Lewder... Greese, Spain and so on EU countries are faileing cause they helped inject 145 billion euros into the american economies already, so the US also owes a debt to them.

But i will say this, the US will fail as all the rest of the world accept china. They are now a big economical force and have already started buying out debt of EU countries. They are waiting for the Americans to fall on their knees and then they buy the Debt out too, that will give them the power to be the only economical power in the world!

[biosynth]

i dont care how they do it at this point but they need to balance the budget, both dems and republicans are equally guilty on the ridiculous spending stuff. the only president in the last few administrations that has a claim to fiscal conservatism is Clinton, what we need (and hopefully will get) is a new president and congress after elections, this president will not be Sarah Palin, Bachman, or Romney and then you hope pigs fly and the politicians do what they are supposed to.

[Bi As A Kite]

I think the world needs to abandon currency en masse and return to things like barter etc. We're all chained up to debt because we use these currencies, but if we didn't use them then there'd be no problem. Kind of like getting out of a conked-out car and walking instead of trying to drive it with smoke billowing out the bonnet.

[Mad Man L]

Originally Posted by thylvin

@The Lewder... Greese, Spain and so on EU countries are faileing cause they helped inject 145 billion euros into the american economies already, so the US also owes a debt to them.

But i will say this, the US will fail as all the rest of the world accept china. They are now a big economical force and have already started buying out debt of EU countries. They are waiting for the Americans to fall on their knees and then they buy the Debt out too, that will give them the power to be the only economical power in the world!

...and instead of keeping to bail Greece out, we need to let it default.

As it is now, the EU countries are being dragged into debt due Greece's problems. It's sort of like going into battle and having someone getting seriously injured under heavy fire. You can either walk out, do your best to save them and risk dying in the process or let them die and defend what you still have.

[thylvin]

@The Lewder

I agree, at the moment the EU lost too much money to bail out the US during the credit crunch... but if you take your own words... where would the american economy be today if the EU didn't bail the US out and just let them default and all on their faces?

The only reason the EU did this is because most countries around the world trade in US dollars, even the African countries. If the US dollar fell, that would mean an instant wipe out of the world economics as we know it. You know the situation of Ethiopia... that could have been the whole world's situation and not just a few African countries.

The whole problem started when China stopped trading in US dollars a year or so ago. That mean the US dollar fell because of less trading in it. People under estimate the buying power China has and the influence they have over the world economy. By buying over 30 tonnes of pure gold, they strengthens their economy, something they feel is a safeguard when the world economy collapses. Already they brought out EU debt in exchange for valuable gold. They have their eyes on Fort Knox... greed is a funny thing, if you have some, you always want more and China is a greedy nation... not because of this and that, but to help elevate poverty in their own country. Remember 3 quarters of the world population lives in china, that is over 4bil people. the us is maybe a few hundred million but not more. The only other country with over a billion people is India, which they themselves is becoming an economy that is slowly rising.

Today it's not about how much money you have, but how big your population is!

But lets see, maybe things will turn out better, hopefully corruption and useless spending of budgets will stop... I for one hope the American Military will dismantle the area 51 project and all associated project, or maybe put it on hold. Keep the space program going cause that was also a major investment they had. many African countries used the US to send up telescopes. Many African and other countries brought or ordered satellites that NASA had to construct... not that the shuttle program is stopped, that huge income is gone.

[Danielle]

As far I am concerned the US and the European countries that ran themselves into the ground deserve everything they get.

The EU should have already gotten its shit together and I am worried that it might be too late for them. The US needs to focus on job creation and long term debt reduction instead of worrying about running deficits in the next few years. This means that the US is going to have to alter some or all of the following the programs: Social Security, Medicare, Medicaid. These are the only things that will be able to fix the long term debt problem. For now though, I think the main global concern lies in Europe.

As for S&P's downgrade - it shouldn't have any real impact on the markets as far as I can see. Their report did not contain any new information that the markets weren't already aware of and the downgrade was primarily based on speculation.

[thylvin]

Originally Posted by Kevin42

The EU should have already gotten its shit together and I am worried that it might be too late for them. The US needs to focus on job creation and long term debt reduction instead of worrying about running deficits in the next few years. This means that the US is going to have to alter some or all of the following the programs: Social Security, Medicare, Medicaid. These are the only things that will be able to fix the long term debt problem. For now though, I think the main global concern lies in Europe.

As for S&P's downgrade - it shouldn't have any real impact on the markets as far as I can see. Their report did not contain any new information that the markets weren't already aware of and the downgrade was primarily based on speculation.

people shouldn't worry too much about that rating, I mean here in Africa we were ecstatic when our ratting were upped to BAA as from BAF. Investors will still invest in the US no matter what, investors prefer to invest in a 1st world country rather than a 3rd world country where the governments do everything in their power to keep the countries in 3rd world status

The EU is busy reforming policies, but i think the Chinese will come as the shining knight in armour. They have already brought out 3 countries' debt, what's stopping them from continuing on that trend especially if they demand gold in return?

[predator9089]

Originally Posted by Messed Up

Long story short- I think we are sooooooo fucked. And I know this doesn’t do much to propel the conversation forward seriosuly but I think it’s interesting: We all heard that the world is to “end” in 2012 by some means...ummm....yea....if Mother Nature isn’t kicking our ass then I guess it’s the economy to fill in for her... in short, I have a feeling that if the world is to metaphorically end it is our own doing and the proof is in the pudding already (coff, coff, economy’s going to Hell, coff).

I reiterate; we are soooooooo FUCKED

I totally agree with you Messed Up!!! I don't think the world is going to end in 2012, but i do thing the financial system will collapse then.

@Bi As A Kite: Totally agree with you as well.

@The Lewder: OMG does Greece ever need to default. It's been so obvious for so long that it's going to happen, why would you throw more money at the problem and make it worse when it finally does default?? Oi. Such short term thinking. I like your comparison as well. BTW, i'm so jealous the recession never hit Australia, guess it helps that you are close to China and your economy is not tied to the U.S. like Canada!

@thylvin: I really like your idea of the six biggest companies giving 5 billion. Corporations are pulling in huge profits right now while people suffer from all the us dollars being printed and stagnant wages and unemployment skyrocketing. The government bailed out the private sector in 2008, so now it's their turn to help the government! God, the idea of China becoming the next superpower scares the out of me!!! Just what the world needs, a dictatorship running it and only one currency .

Originally Posted by thylvin

Remember 3 quarters of the world population lives in china, that is over 4bil people.

Point of correction here, the population of China is 1.3 billion at the moment.

[DarkClarity]

Here in the UK things aren't as bad as it in the US and other EU countries but it could easily go that way. We're not part of the Eurozone but our economy has stalled and we are heavily exposed so, we need to get the cuts correct and budget carefully so that maybe in 10 to 20 years time we would have started to recover. That not likely to happen though. I think that the current coalition government are going to make things much worse. If the Euro goes down, we're screwed. If the US goes down then we'll get hit badly.

My prediction is that things are only going to get worse. In the coming years I think we'll hear more stories about riots, crime and homelessness. The leaders of the world need to find a way to reduce their countries debt without destroying society in the progress.

As an outsider I can't comment much on the US but to me it seems quite strange that the country is in trillions of dollars in debt and the politicians appear to be squabbling among themselves and not trying to come up with a compromise.

[Emberstone]

America will never have a strong econamy again until grover norquest and his ilk are put on a ship and deported to some deserted island.

For too long, our econamy has been forced into ignoring the concept of revenues. they cut taxes like crazy, spend with even more abandon, then blame the poor, the sick, and the working class when things go to hell.

we need what every working class america has to do, to live by our means. my family only uses their credit cards when they know they already have the means to pay them off, and still have a bufferzone.

[predator9089]

Excellent analysis DarkClarity and Emberstone!

[DarkClarity]

I think another problem with the world economy is that for far too long there has been a steady redistribution of wealth from the working and middle classes to the super rich.

Sometimes then I hear economist and politicians quoting figures I sometimes think I sometimes can only think WTF? An example would be quite a while back when I heard that the US has over 70 Trillion dollars in debt. I thought to myself how the is that even possible?!

It's just not fair that the people who landed us all in this mess (bankers and big buisness) have got away with it and governments across the world are making working and middle class people pay while persecuting their public sector workers who haven't done anything wrong.

We live in such a mad world.

Originally Posted by DarkClarity

Sometimes then I hear economist and politicians quoting figures I sometimes think I sometimes can only think WTF? An example would be quite a while back when I heard that the US has over 70 Trillion dollars in debt. I thought to myself how the is that even possible?!

You are talking about unfunded US liabilities, not US debt. There is an enormous difference. Unfunded liabilities are essentially how much money the United States has promised to pay out to people or groups at some point in the future. How do you fund those liabilities one might ask: you collect taxes. Each year, the US collects taxes to pay that years unfunded liabilities. When there is not enough revenue, we run a deficit that year and when we run deficits over a period of years, we create the national debt (14 trillionish at present). There is nothing wrong with debt, but at some point it must be paid off. When it gets too big though and people start questioning whether you will ever be able to pay it off is when you run into trouble. The United States is not in trouble yet, but it will be if we don't fix Social Security, Medicare, and Medicaid or if we can't get the economy growing again. My evidence? Look at the debt to GDP ratio chart. The US is 36 on it and is way below the UK and Germany.

http://en.wikipedia.org/wiki/List_of...by_public_debt

[csm123]

Darkclarity has it spot on in my opinion.If interest rates go up here in the uk house repossesions will rise to an all time high.As people get into debt i think crime and theft will become a bigger problem,i was burgled myself this week.

It always amazes me how the general population who just earn an average wage,and cannot possibly be to blame for the state of the countrys finnances, end up being squeezed to pay for the mistakes of the high paid bankers and polititions.The bankers "bonus" far exceeds a wage and should be abolished,along with all these expences claims for accomodation etc which seem to be the norm to overly paid "big wigs" who are supposed to be working for the good of the county and its people.