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The Greatest Depression

Discussion in 'Off-Topic' started by SaroDarksbane, Nov 24, 2011. | Replies: 451 | Views: 20586

  1. SaroDarksbane

    SaroDarksbane IncGamers Site Pal

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    The Greatest Depression

    Anyone else here watching the coming economic avalanche with great interest? Things have really been picking up speed lately as Greece collapses, Italy and Spain are paying unsustainable amounts on their debt, Germany (the "savior" of the EU) just suffered from a failure to cover on their bond auction, France is on the verge of losing their AAA credit rating, and the UK struggles under a crippling 500% total-debt-to-GDP ratio.

    Good news for Americans in the short run: the mass exodus from the euro into the "safety" of the dollar is likely to drive prices down as the dollar appreciates in value.

    Bad news for Americans in the long run: lowered treasury yields from the high demand are going to eat pension funds alive, we've gone from $15 trillion dollars in debt to $15.1 trillion in debt in just the last week (over 100% government debt-to-gdp!), and our banks are about ready to pop themselves unless Bernanke starts helicoptering in pallets full of newly-printed cash.

    So, who else is up for some good ol' fashioned survivalism? :thumbup:

    "The trouble with Socialism is that eventually you run out of other people's money."
  2. BobCox2

    BobCox2 IncGamers Member

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    Re: The Greatest Depression

    Trying to call it never goes well Saro

    Just saying.

    A lot of us have been waiting for years

    Ask vdzele
  3. Technomancer

    Technomancer IncGamers Member

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    Re: The Greatest Depression

    I've been watching with great interest the people who are convinced everything's on the brink of collapse.

    You can't buy that kind of entertainment.

    [​IMG]
  4. krischan

    krischan Europe Trade Moderator

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    Re: The Greatest Depression

    Money, debts and bonds are just a measurement unit of trust put into others, so the value of money etc. depends a lot on what others believe, no matter how silly these beliefs might be. Maybe you are underestimating the problem.

    I hope you don't believe that your monetary savings are safe all the time. In the recent centuries, those without land or industry had a far greater chance to became poor or extinct than those without money (not counting countries which are small enough to fill certain niches) and you probably don't want to be among the wrong ones at the wrong time. So I assume you have a piece of land or you can produce something which will be useful at nearly all times. If nobody wants your money, it's worthless.

    Germany couldn't sell all 10 year bonds in their recent auction which means that the market is currently satiated with respect to investments with interest rates of 1.6% or so. However, that might change quickly when there aren't enough other means of investments available which are considered as safe by other people. I don't believe that German bonds are 100% safe, but they are safer than most other bonds and that's enough to find buyers at a price which is more to the liking of the Bundesbank.

    It seems the US currently doesn't produce results at all regarding their budget and deficit problem. The other countries don't care about how the US produces these results or why there are none, they will just have a look at what the situation is like and then react accordingly. Allies might be more patient, but enemies aren't. In any case, nobody will be waiting until the US have elected their next president.
  5. stillman

    stillman IncGamers Member

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    Re: The Greatest Depression

    Yes, very much so. Two words: fiat currency. They have all collapsed in the past.

    I look forward to it, actually. It's a tooth that needs to come out. These things take time, Bob and Techno. It could be drawn out for another decade or two, who knows.


  6. vdzele

    vdzele IncGamers Member

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    Re: The Greatest Depression

    I posted this more than 3 years ago. Just after Lehman failed.

    This guy knows



    and this guy has some solutions





    Last edited: Nov 24, 2011
  7. jmervyn

    jmervyn IncGamers Member

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    Re: The Greatest Depression

    If 'interest' is the right word.

    But you knew I was.
    Krischan is smug in the knowledge that he will be a citizen of the re-emerging Holy Roman Empire - though he may not be aware of the Biblical speculation about that.
    Yeah, but unfortunately my "401K" is in international funds, which for some insane reason are pegged more to European futures than to Asian ones.
    So much so that it would almost seem like it was done deliberately, neh?
    For many years now. Plus, I finally have a base (and no I won't tell you where). Now I just hope my Steyr AUG wasn't actually stolen during my travels...
    Palast is a good news writer, but that appears to be a book/screenplay. If you were just throwing it out there, then I'll throw this back at you.

    I don't think things will be as bad as we imagine, based on what FerFal has written - i.e. not Fallout 3 so much as living overseas in a third world country and only being able to shop in the commissary once a month. But things will be very, very bad. Once the hammer falls, I imagine ten years before America gets back on its feet - or far longer if this sort of Leftist utopia continues.


  8. jmervyn

    jmervyn IncGamers Member

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    Re: The Greatest Depression

    I have to say, though, if this is actually part of Palast's book then it sounds like a great read:
  9. jmervyn

    jmervyn IncGamers Member

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    Re: The Greatest Depression

    I think I'll keep poking this thread with a stick, since we are all watching the headlights of the same approaching train engine. Just from different sides of the pond.

    Question - "Should the Fed save Europe from disaster?"

    Answer - No. Sorry, guys, I love you all dearly but you know where you can stick your Socialist Utopia. The problem is, once your cities are in ruins (yet again) we'll no longer have the scratch to come fix them up for you. Still, I don't think it's going to really be the Dark Ages part deux...

    Incidentally, about "Utopia" - from wiki,
    The word comes from the Greek: οὐ ("not") and τόπος ("place") and means "no place".
  10. nurman

    nurman IncGamers Member

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    Re: The Greatest Depression

    I think the real question is that can the Fed afford to save Europe.
  11. krischan

    krischan Europe Trade Moderator

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    Re: The Greatest Depression

    Of course not! You sweep the poo off your rug, we care about ours. You cannot save us anyway and vice versa. Likewise, the one shouldn't give friendly or haughty advice to the other, that's just a cheap attempt do distract from one's own problems and failures by blaming others. The same goes to the English government BTW.

    I'm a supporter of the Euro, but it seems that all of Europe expects Germany and France to do something while nobody wants Germany to gain too much of the power which will come from doing that. That sounds a lot like "give us your money, then shut up and don't come back", doesn't it? BTW, if we are able to help others, we already have the power which they don't want us to have, don't we?

    I don't think that Germany takes advantage of the situation, but I expect our government not to put our heads in the lion's maw and vouch for the future credits of others without having a say on making these debts.



  12. jmervyn

    jmervyn IncGamers Member

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    Re: The Greatest Depression

    Of course we can! We'll just print more dollars. After all,
    "There will always be more; that's what <more> MEANS!" - Earl Sinclair, The Dinosaurs.
    Not sure if you're trying for a double entendre here, since the standing turn of phrase is to 'sweep something under the rug' and our establishment is definitely doing so frantically.
    Oddly, that hasn't stopped Europeans from taking big stinky dumps on the U.S. for decades. But as I said here some years back, watching the European Socialist experiment drag all of Europe into the abyss will be a Pyrrhic experience at best; we're following on your heels.
    Why? What makes sense to you about having a common currency but individual State government? It comes as no surprise that the Greeks and Italians having gold-plated civil servant careers would cause this instabilty.
    I prefer the analogy of the Greeks holding a gun to their head and threatening you.
    I hope your Faraday cage is operating at full force, lest that knock on your door be some heavily armed EUrocrats.
    Which is exactly what you're being expected, and demanded, to do. But hey, THE WON has already stated one of the most outrageous lies of his career to date (and that's a high hurtle already) and claimed that America would support the EU as long as it didn't involve U.S. taxpayer dollars. :doh: :banghead: :action-smiley-061:



  13. krischan

    krischan Europe Trade Moderator

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    Re: The Greatest Depression

    Because it's a win-win situation.

    1. Each EU country on its own has a smaller economy than the US, Japan, China etc. with accordingly less influence. If each country did its own thing, it would be even easier to play off one against the other than it already is.

    2. If Germany had its own currency, we might have run into the same problem as Japan and Switzerland, with a currency that would be more sought after than the others, leading to higher exchange rates. We would have difficulties to get our wares sold and we even might have a deflation like Japan because our money might gain value at a higher rate than you can earn by collecting interests on investments in other currencies. The currencies of many other countries would devalue in comparison to ours (like they did all the time before the Euro) which means less imports for them and less exports for us.

    With respect to the Euro, the economically strong countries can sell more into other countries because the others lower the value of the currency while the other countries would have a more stable currency than they would have with their own money.

    We have to strengthen our inner market in order to be less dependent on exports, but that will not come for lower exports, but in addition to what they already are like. However, using more self-made goods would also mean less imports from other countries, the medal has two sides.

    Germany has 2 trillions of debts (80% of our yearly GDP*), but the advantage of ours is that more than 99% of them are made under German sovereignty, i.e. they are made in whatever the German currency might be (not to be confused with the question who owns the bonds). I guess it's similar with the US because the dollar is a world currency. In contrast, many EU countries have made debts under the law of other countries (often up to 40% in contrast to our 0.5%), so they will have to be paid in whatever the other countries' currencies might be. That means, if the Euro falls apart, Germany could pay in D-Mark (which will skyrocket if we had our own currency again) while e.g. Greece would be screwed because their Drachmes would devalue massively because of their massive debts. That means Germany could start the money press in order to pay back the debts and to counter the deflation and devalue the currency at the same time (in theory... the state cannot command the Bundesbank to do that). However, we wouldn't be able to get all that stuff sold which is meant for other countries because of the exchange rates.

    I'm an amateur at these things. Half of it is the result of what just came to my mind when writing this, so my thoughts about it might not be complete. There might also be counter-arguments which I didn't consider at all.

    * The GDP is a bit of a bogus number. If you sell something and then buy it back, both transactions will add to the GDP AFAIK, so it's easy to increase it artificially, e.g. to let the debts appear less severe, and the expressiveness of the GDP has to be assessed in separate.



  14. jmervyn

    jmervyn IncGamers Member

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    Re: The Greatest Depression

    Yeah, I guess you forgot that Margaret Thatcher quip about "other people's money"...
    Sure; it's the same principal the United States' confederacy is based upon. This is immaterial. Not only is the Euro a fiat currency, but the individual countries were not "states". They're countries. If the Greeks, say, fund Palestinian terrorists to the tune of 6 hundred billion Euros, then who has to pick up the bill?
    You have no idea how much your referring to what I knew to be the norm as "the same problem" amuses me.

    Such currency markets are simply the way the world works, while the Euro was a great exercise in mystical thinking. A nation-state's currency is valued at whatever people will consider it to be worth. You can try to artificially peg your currency to another unit, but I recall seeing illegal currency trading even back when I was there.
    Making you unpleasantly akin to the U.S. :wink:
    I still have all my old Marks.
    I'll forgive you. Having been the spittoon for European Socialists for a long while now, I'm somewhat more lucid and versed in understanding Euro-twaddle than you are. However, the GDP issue isn't immaterial; over-producing West Germans are still unequally yoked with lazy French/Irish and wastrel Spanish/Italian/Greek types. My suspicion is that the French & Irish will be allowed a seat at the adult's table after they are appropriately spanked, but the 'southerners' won't.



  15. krischan

    krischan Europe Trade Moderator

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    Re: The Greatest Depression

    I don't think the dollar is overvalued. It's pretty low in comparison to the Euro and that's what the dollar should compare with, not the Chinese currency which is undervalued anyway.

    I still have old Reichsmark from before 1923, from my grandfather. They only have a collector's value, unlike your D-Marks (the good old ones from the 80s and before, with e.g. the sailing ship on the DM10 note?) which you can still exchange at the Bundesbank, even those from 1948 when the D-Mark was established. I changed all the bank notes into Euros and donated the coins.

    I knew you will bite on that :azn:.

    You mean it would be best for all non-German EU members to bind their currency to a future D-Mark? Maybe a few small neighbour countries would do that, but there are none with currency problems (except maybe Belgium) and France, Poland and in particular England certainly won't.



  16. stillman

    stillman IncGamers Member

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    Re: The Greatest Depression

    I'm still confused about whether or not I should pay off the rest of my student loan. Predictors of fiat currency collapse and economic disaster keep advising to get out of personal debt. But why bother, says I? If there are millions of folk who each owe 100k, then what's the point of paying my loan off especially if the economy collapses? I already feel ripped off from paying most of it with the looming possibility that I may as well have never paid any of it.
  17. Noodle

    Noodle <img src="http://forums.diabloii.net/images/pal.gi

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    Re: The Greatest Depression

    Are you comfortable stealing?



  18. stillman

    stillman IncGamers Member

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    Re: The Greatest Depression

    If the goods turn out to be worthless, is it really stealing? It's like I steal a couch which is infested with bugs, saving the homeowner a trip to the dump.

    Also, who is the real crook? They loaned me bad money pretending it was good.

    But if it really is stealing on my part, let's just say Robin Hood: Prince of Thieves with Kevin Costner is one of my favorite movies!

    And...I'm disgruntled. I'm full of excuses. Did I mention I'm a philosopher sometimes as well? The bigger thieves are those who owe 5x more money. And shouldn't the country pay off its debt and set a good example for little fish like me? I'll do it if they do it!

    I'm a new person now. That guy who signed the papers was the old me!

    Maybe price gouging laws will arise in the future, so I'm doing the right thing like a visionary.
  19. krischan

    krischan Europe Trade Moderator

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    Re: The Greatest Depression

    You feel ripped off for having to pay back your debts after you spent the borrowed money? Are you from Greece? :scratchchin:

    If I borrow money from you, can I consider not to pay it back as well?

    Did I get this right, you accepted money from a thief? If you don't want to give it back to that thief, then give it back to those whose money he stole ;).

    Maybe your creditor is a new person as well, so you will have to start with your payments from anew :D

    OK, I will assume that you aren't serious :azn:

    Please take note of the amount of smileys I added.
  20. SaroDarksbane

    SaroDarksbane IncGamers Site Pal

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    Re: The Greatest Depression

    Bah, I wouldn't dare to speculate on when we finally go over the cliff, given that I'm not the one with my foot on the gas.
    I didn't know, but I would have guessed.
    I'm down if Berlusconi gets to be the antichrist.
    I went through my 401k and dumped any funds that had high exposure to EU banks. Oddly enough, the "self managed account" option available to me specifically doesn't allow investment in precious metals. :scratchchin: Guess the central banks don't like competition, eh?
    Unfortunately, I'm stuck in the suburbs outside Orlando. At least I have a privacy fence around my yard, and a nice garden going. Early next year I'm going to get my pitiful front and back doors swapped out for some heavier duty fare, maybe see about getting those metal roll-down hurricane shutters for my windows, and replace a useless tree or two for some fruit or nut trees instead.
    The question is, can they? When the Bernank decided on QE1 and QE2, the official inflation numbers were around or below 0%. The current official inflation number is near 4%, with the real number over 10%. That's why we haven't seen QE3 yet; Bernank is painted into a corner. He'll print in the end. He has to; like the scorpion and the frog, it's his nature. But I think it will be after the EU goes and the US banks are faced with massive losses on their exposure to PIIGS debt.

    Related Question: If France and the UK slip (further) into trouble, will the new acronym be PIIGSFUK? :whistling:
    Yeah, I'm hedging every which way. I don't hold any high interest debt (credit cards) to protect myself from deflation, but I'm not putting any extra on my mortgage or student loans in case of inflation. I have cash in a TBTF bank, soon to have cash in a credit union (in case of a run on the bank), cash on hand (in case of a run on the credit union), and precious metals (in case cash becomes worthless altogether).
    What's stealing? If they demand to be paid in paper, I'll gladly repay them in paper.*

    * Value of said paper not guaranteed.



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