What Could Go Wrong in the U.S.

[A.W. Bowman]

Financial Times
Europe

Dublin bail-out spooks investors in Spain

By Victor Mallet in Barcelona

Published: November 26 2010 20:18
For full text and citations, see:
Dublin bail-out spooks investors in Spain

It would be easy for investors to assume that Spain – like Greece, Ireland and Portugal, those other fiscal offenders on the fringe of the eurozone – is being punished in the bond markets because its public finances are out of control. Easy, but wrong, according to independent economists, market analysts and senior Spanish officials.

In retrospect, it is true that José Luis Rodríguez Zapatero, the Socialist prime minister, erred in following international fashion at the start of the crisis two years ago. He poured government money into the economy in order to help stave off another Great Depression, just as tax revenues were collapsing.

Add to this unemployment, housing markets going under, banks failing, insurance rate going sky high, major inflation sitting on our door step, and other such inconveniences, what could go wrong?

[coadie]

Spain is running over 20% unemployment. When people work, they pay taxes. We can have more room for error if we have economic growth and low unemployment.

I am glad to see you quote the FT. It can print stories about america, the state run media over here will not touch.

[Sam]

Well, some "doomsday" prognosticators are saying that BHO wants to destroy the financial structure of the U.S., nationalize everything, and turn this country into a European socialist state.

[sandie]

This is what happens when they run out of other people's money.

[A.W. Bowman]

Originally Posted by sandie

This is what happens when they run out of other people's money.

The Fed start up the printing presses again, like they are suggesting right now! The Fed has proposed to start buying up government bonds. That is, to generate money to buy up the very debt they helped to create. This puts more cash into the system with nothing to back it up - except our national debt (promise to pay).

More money in the system without being 'created', just printed, yields inflation. What use to cost a dollar now costs two. A dollar today will buy about what 15 cents did in 1925. Economics 101. A rather good men's suit back then cost about $25.00. Believe that? Its true, and today a good suit still costs about $25.00 - in 1925 dollars. But then, back in 1925 we were still on the gold standard and everyone had gold dollars available to them (they were still legal tender). Of course, a $5,000 income per year was at the top of most pay scales back then. Today, $5,000 per month income is not that uncommon.

As long as we continue to go into debt, either personally or nationally, the less our income will purchase. I remember when a cup of coffee cost a nickle - now I am lucky to find a cheap cup for $1.25. Before, this did not affect me so much because my dollar income kept pace, or even exceeded the rate of inflation. But now that I am on a fixed income, it becomes harder every day to meet our basic needs. At some point in the not too distant future that diminished ability will fail all together. There are millions of us in that same boat - what then?

If you are no longer a productive economic unit, and have become a 'drag' on society, then as it has been in much of modern history, eliminate the drag.

[sandie]

Originally Posted by HaShaliach

The Fed start up the printing presses again, like they are suggesting right now! The Fed has proposed to start buying up government bonds. That is, to generate money to buy up the very debt they helped to create. This puts more cash into the system with nothing to back it up - except our national debt (promise to pay).

More money in the system without being 'created', just printed, yields inflation. What use to cost a dollar now costs two. A dollar today will buy about what 15 cents did in 1925. Economics 101. A rather good men's suit back then cost about $25.00. Believe that? Its true, and today a good suit still costs about $25.00 - in 1925 dollars. But then, back in 1925 we were still on the gold standard and everyone had gold dollars available to them (they were still legal tender). Of course, a $5,000 income per year was at the top of most pay scales back then. Today, $5,000 per month income is not that uncommon.

As long as we continue to go into debt, either personally or nationally, the less our income will purchase. I remember when a cup of coffee cost a nickle - now I am lucky to find a cheap cup for $1.25. Before, this did not affect me so much because my dollar income kept pace, or even exceeded the rate of inflation. But now that I am on a fixed income, it becomes harder every day to meet our basic needs. At some point in the not too distant future that diminished ability will fail all together. There are millions of us in that same boat - what then?

If you are no longer a productive economic unit, and have become a 'drag' on society, then as it has been in much of modern history, eliminate the drag.

I can remember in the late 60's 50 dollars filling two grocery carts to the brim...including...hold on to your hat....meat!

As far as I can tell we have bonified morons in charge. Hate using the word moron but what else can explain the madness they're perpetrating?

How do you think this "drag" will be eliminated?

[A.W. Bowman]

Originally Posted by sandie

...

How do you think this "drag" will be eliminated?

There are a number of simple and effective ways - many are in place and being practiced in many places in the western world already.

Denying the elderly selected medicines and medical procedures, because they are too expensive, as already practiced by some insurance companies and embedded in the new health care bill. Then, as already practiced in several Scandinavian countries, the elderly will not go to see a doctor and refuse to enter a hospital, because they most likely will not walk out again (they receive injections that terminate their 'illness'). All of these kinds of things have been in the news for several years in the European press, not so much in the US press. Oops, so sorry!

BTW, England is ditching much of its social medical system because it hasn't worked and they can no longer afford it. Quite a bit of what they are ditching? You guessed it! It is a lot of the same stuff that we have just been saddled with in the Obamacare bill. (Reference: The Telegraph [telegraph.co.uk])

[Sam]

Originally Posted by HaShaliach

5.
...I remember when a cup of coffee cost a nickle - now I am lucky to find a cheap cup for $1.25. ...

When I went to the Apostolic Bible Institute for the 1956/1957 year, there used to be a restaurant across the street called Jean's Restaurant. It was run by a Jewish French couple. You could get two eggs (cooked to your order) plus two pieces of toast and a cup of coffee for 35 cents. There were free refills on the coffee. It was a real deal for us who might have slept too late on Saturday for breakfast at the school. I don't remember what the minimum wage was back then but I think it was 50 cents an hour.

[A.W. Bowman]

An additional development:

China and Russia Quit the Dollar, remembering that China owns a vast amount of US debt - in dollars. If China stats dumping dollars, we are in very big trouble - something we will not be able to spend our way out of.

Added note: Of course, as long as China and Russia continue to use dollars in the rest of their transactions with the world, that might slow down our own problems!

[sandie]

What are the spiritual implications to all of this, I wonder?