Like Tree15Likes

Who is to blame if the US defaults on its debt?

Closed Thread
Page 9 of 9 FirstFirst ... 6 7 8 9
  1. #81

    Join Date
    May 2006
    Location
    Pampanga, Philippines
    Posts
    30,092
    Quote Originally Posted by Freetrader:
    WTF? First of all, of course the US is in deep shit - unfortunately, the US is also in a better position than pretty much every other country. We are all in deep ship, bro.

    Secondly, Bush hasn't been President for three years - not sure how him being a fool is relevant to the US being 'in deep shit'?

    Thirdly, since when does the US 'rule the world'? - the US has been the most influential country in the world for the past seventy years, and that will certainly be the case for the foreseeable future - since there is no remotely plausible alternative.

    I'm afraid you've once again made a stupid, trollish comment without thinking it through.
    I think the US in a false position. At the local level towns are going bankrupt, not happening in other countries that I know. The infrastructure is crumbling and billions need to be spent on that. The deficit is still growing not reducing as in many other countries. When they finally, if ever, get round to reducing the deficit the impact on the GDP will be significant. The housing market is flat and dire. Corporations are doing well but for how long? I think there is a lot of blinkered views going on in the US. The shit hasn't started yet. To cut government spending by US$1 trillion or more a year just to reach a balanced budget is going to knock the economy big style.

  2. #82

    Join Date
    May 2010
    Location
    Back in California (finally!).
    Posts
    2,079
    Quote Originally Posted by hullexile:
    I think the US in a false position. At the local level towns are going bankrupt, not happening in other countries that I know. The infrastructure is crumbling and billions need to be spent on that. The deficit is still growing not reducing as in many other countries. When they finally, if ever, get round to reducing the deficit the impact on the GDP will be significant. The housing market is flat and dire. Corporations are doing well but for how long? I think there is a lot of blinkered views going on in the US. The shit hasn't started yet. To cut government spending by US$1 trillion or more a year just to reach a balanced budget is going to knock the economy big style.
    Sorry Hull, but I think you are in over your head. The fact that a few towns or cities in the US have effectively gone bankrupt is not particularly enlightening, particularly given that in the US, states, towns and cities are required to balance their books every year. Bankruptcies are due to high public sector pensions, which is the result of typical public-sector largess and will need to be worked through (two quasi relevant points - one, bankrupcty is actually a sign of health, and a sign of the realization that things aren't sustainable. The US has good bankruptcy laws, the EU less so, places like Japan, awful - hence the lost decade, or really 20 years, in Japan, second, I had to laugh when transiting through Heathrow this week - the UK 'high level' unions are striking to retain their unsustainable pension benefits - and except for incurring public hostility, no one even cares. Heathrow is more efficient than ever without the public workers. Makes ya think).

    Anyway - 'infrastructure is crumbling'. Mmmm..really? The roads and bridges in the US seem more than adequate, and, anyway, those are paid for by gasoline taxes which has little to do with the overall fiscal situation.

    The housing market is bottomed out - about which I am personally very happy and it has now settled at a good, low, sustainable, rent-to-value ratio - looks much better than most of Europe right now, by the way:

    Global house prices: Castles made of sand | The Economist

    Government spending? Geez, I just thank Allah that the US has a relatively low-Government spending to GDP ratio - as the private sector picks up, the reduction of the government spending props will have less impact. Would not be possible in a country where the government is half the economy.

    BTW, what is a "false position"? Have no idea how a country can be in a false position - it's syntatically impossible. I expect you are trying to say that the poor benighted Yanks aren't 'facing reality' or somesuch.

    The trend is usually that because the US has a more open, classically 'liberal' economy, the shit hits fan there first - and gets cleaned up. The big problem in the US is long-term government entitlements. That's the only thing that should keep anyone up at night. The Republicans, for all their faults, have at least highlighted that this is the real problem. The debate now is about how to fix it.

    BTW, Hull, with respect to National debt:

    Guess Which Country Has Debt Of Nearly 1000% Of GDP...

  3. #83

    Join Date
    May 2006
    Location
    Pampanga, Philippines
    Posts
    30,092

    That debt figure is highly misleading as most of it is due to London being a financial centre. It is not Government or household debt.

    On infrastructure, the Chinese are coming to the rescue:

    China keen to invest in US infrastructure: Commerce Minister Chen Deming - The Economic Times

    By false position I meant that the GDP growth figures are pre the cutbacks required.


  4. #84

    Join Date
    Jun 2004
    Location
    HK
    Posts
    14,625

    Ah, FT is back. Told ya'.


  5. #85

    Join Date
    May 2010
    Location
    Back in California (finally!).
    Posts
    2,079
    Original Post Deleted
    Huh? Who said anything about being richer? The issue was national debts. You and Hull seemed to have not read the article which makes the very point that the high level of private corporate debt which is due to the concentration of finance in Britain's economy is what is so worrying - not to say that the UK is Iceland but the worrying example is there. Anyway, the chart is in response to Hull stating that the US is overindebted - which I agree with - it just isn't as overindebted as lots of other places.

    Also, the existence of 'wealth' being derived from leveraged property is sign of another risk - real property, which seems to secure much of the banking sector's assets, is not very liquid and it's value is inherently volatile. Lot's of people were paper millionaire's on property six or seven year's ago, and at least according to The Economist, the necessary value adjustments haven't been flushed through the system in the UK yet. So, again, that is cause for concern an economy has huge financial liabilities relative to GDP.

    But, getting back to the point, the level of debt in the developed world is a cause for concern, since it is always sustainable, until it isn't.
    Last edited by Freetrader; 05-12-2011 at 10:32 AM.

  6. #86

    Join Date
    May 2010
    Location
    Back in California (finally!).
    Posts
    2,079
    Original Post Deleted
    Ah, yes, the cousins quarrel. When in doubt, never hesitate to insult someone's nationality.

    Read my damn post, Brit. Read the Economist article on the housing bubble that I attached TO MY POST. The point is that the UK has a long slide to go; the US doesn't. I stated very clearly in my post why high levels of gross debt are still worrysome. In any case, it is impossible to show 'net debt' since that would fluctuate with property values - THAT IS THE PROBLEM. A chart showing the 'net wealth' of each country would be meaniingless in this regard (although it would show the US being far richer, of course).

    Re: Americans being fat. They certainly are, but we are all individuals. As a competitive distance runner and sometime mountain climber, I am not particularly fat, actually. In any case, the level of obesity in the US vs the UK is hardly significant - and if you don't think Brits are fat, you've been living in Asia for too long.

  7. #87

    Join Date
    Jun 2004
    Location
    HK
    Posts
    14,625
    ..............

  8. #88

    Join Date
    Aug 2009
    Posts
    966
    Quote Originally Posted by Freetrader:
    ...the US has been the most influential country in the world for the past seventy years, and that will certainly be the case for the foreseeable future - since there is no remotely plausible alternative.
    FT, From a layman's point of view I gather the economic and political landscape has already changed and rapidly so in the past few years in china's favor.

    I almost choked on my breakfast when I read this statement btw

  9. #89

    Join Date
    Jun 2004
    Location
    HK
    Posts
    14,625

    This is going to be interesting. lol.


Closed Thread
Page 9 of 9 FirstFirst ... 6 7 8 9