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Judi Lynn Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-26-05 12:16 PM
Original message
Economists warn on US debt crisis
Last Updated: Wednesday, 26 January, 2005, 15:53 GMT


Economists warn on US debt crisis


US consumers' debts are an "accident waiting to happen", a leading economist has warned.

Morgan Stanley chief economist Stephen Roach told a meeting at the Davos World Economic Forum that the US was headed for a property bubble.

The cause, he said, was people's use of their houses as "massive ATM machines".

The US needed a sharp rise in interest rates to curb the rampant spending - but the Federal Reserve was "in denial" about it, he warned.
(snip/...)

http://news.bbc.co.uk/1/hi/business/4209527.stm
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qanda Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-26-05 12:19 PM
Response to Original message
1. "Denial"
The stuff Americans' hopes and dreams are made of.
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The Zanti Regent Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Jan-29-05 12:16 AM
Response to Reply #1
28. Who cares about debt, Jesus will rapture us in a week or 2!
This is what my INSANE family really believes!
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PROGRESSIVE1 Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-26-05 12:21 PM
Response to Original message
2. .
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TreasonousBastard Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-26-05 12:31 PM
Response to Original message
3. These Cassandra's have been whining about this..
for years now, and the bubble hasn't burst yet.

That's not to say it won't burst, and when it does it just might be spectacular.

The simple truth is that no one knows just how far this can go on without a major restructuring.

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keopeli Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-26-05 01:03 PM
Response to Reply #3
4. I have a feeling we're about to find out
I have a feeling we're about to find out just how far it can go.

I believe the reason it has been sustainable in the past is because the government made efforts to keep the boat afloat. But, this government could care less. They just want tax cuts and lots of spending. And that's exactly what they're getting.

Be a patriot! Help the war effort! Spend money! Go do DisneyWorld!
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idlisambar Donating Member (916 posts) Send PM | Profile | Ignore Wed Jan-26-05 03:57 PM
Response to Reply #3
11. the longer it waits...
... the worse it will be when it does finally burst.
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Occulus Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-28-05 02:03 AM
Response to Reply #3
18. You do know about China's recent announcement, don't you?
I'm only asking, but it seems to me their little say-so the other day was a rather bad omen... wouldn't you agree?
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TreasonousBastard Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-28-05 10:04 AM
Response to Reply #18
20. Which one? They...
made several, including telling us to stop blaming them for our problems. The Chinese have always had huge stones when dealing with the rest of the world.

China now is Japan's largest trading partner, and is heavily involved with South America. With Europe essentially telling us to bring back the Monroe Doctrine, it's us and Canada against the world.

And we're not all that sure about Canada.

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buzzard Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Jan-29-05 12:34 AM
Response to Reply #20
29. Canada from what I see is not with the US on many matters especially
with respect to the seemingly imperialistic designs, or global domination. I am a Canadian and have found that over the last few years we have as a nation been at odds with much of the policy coming from the current administration. In fact many of us believe that you especially the democrats and greens are seriously troubled by your current administrations actions. On the other hand hand we see our current Prime Minister bowing to Bush when it comes to missile defense which most of us oppose in order to as some of us believe have the ban on Canadian beef lifted as if this is really a good trade off (my opinion). This makes no sense to many of us who really oppose the star wars defense agenda. Iran invasion will also not be supported in my opinion. I shouldn't be typing now two glasses of red wine and I'm incoherent. I have been lurking at this board nightly since around September because I was sure Kerry would win and wanted to see what like minded Americans were discussing because it sure isn't what is reported in the news. I find Jon Stewart and Bill Maher to be more representative of my views. I hope for our sake as North Americans the madness ends soon soon the world is really unbalanced now in terms of what we have vs the "have nots" (Bush's term) and some things are more precious than the price governments are willing to pay to keep up the pretense. I know a lot of American's make fun of us for our lack of military and say we depend on the US to defend us but I think most of us really feel that the US is who we fear the most, I really can't think of any other nation that would want to invade us maybe I am just naive.


interesting article
Is the Annexation of Canada part of Bush's Military Agenda?
http://globalresearch.ca/articles/CHO411C.html
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TreasonousBastard Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jan-30-05 10:03 AM
Response to Reply #29
31. WOW!!!
That article about NORTHCOM is scary stuff.

Canada has been involved in US defense with the DEW line and all, but this goes beyond the pale.

We've been trying to annex Canada since the War of 1812, and this just might be the kicker.

As a bonus, we get your water, too.



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cthrumatrix Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-26-05 01:05 PM
Response to Original message
5. notice it's not from a US paper.... they can't write the truth
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AP Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-26-05 01:09 PM
Response to Original message
6. I suspect that the deductibilty of mortgage interest is one of the things
keeping the bubble from bursting. If you load up more debt on your house, you get it back from a lower income tax burden.

So, as long as you have an income tax burden greater than what you pay in interest, you break even in the short term on your debt, no?

I guess the problem is when your interest payments exceed your federal tax burden.

The other problem is that the federal government is subsidizing the debt -- we loose more and more money from the public purse the more money people borrow against their homes.

If there's no knock-on economic benefits from that debt, then we're all in trouble.
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One_Life_To_Give Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-26-05 04:54 PM
Response to Reply #6
16. Or the IRS goes after them
Many home Equity Loans are not supposed to have their interest payments, Tax Deductable. It is only deductable if used for Improvements to the Residence. Using the money for other purposes does not qualify.

Although the advertising encouraging people to take out home equity loans, skirts this issue.
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LiberallyInclined Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-28-05 08:15 PM
Response to Reply #6
22. I have a buddy with some problems becuz of this...
he and his wife managed to take a little too much advantage of home-equity loans, and now owe more than the house is worth(actually a hard thing to do, considering what property values have been doing around here lately), and now he's lost his high-paying IT job.
I'm really scared for them and their two kids.
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AP Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-28-05 08:24 PM
Response to Reply #22
23. Is it the case that the interest payments were swingable because...
...he could really use them to lower your taxable income?

Or was the tax benefit not worth that much to him?

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JDPriestly Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-26-05 01:15 PM
Response to Original message
7. Housing costs in Los Angeles
Housing costs in Los Angeles are way out of line with wages. The wealthy fools with money to gamble bought stocks in the '90s and are buying real estate in the 2000's. They think they are ahead of the game. In fact, they are being played for fools.

The sad thing is that a lot of people who are not buying homes as "investments," but because they need a place to live, are in over their heads. Sooner or later, their introductory ARMS will go up and we will have another economic crisis. Sad, sad, sad.
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Bono71 Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-26-05 04:19 PM
Response to Reply #7
14. Agree to an extent but real estate is a bit different from stock in the
Edited on Wed Jan-26-05 04:20 PM by Bono71
sense that it is really all about the local and sub-markets vs a national market...

Moreover, income generated from real estate is generally far above the cash on cash return generated from stock or bonds.

Finally, the good ole 1031 exchange (Thanks, Ted Kennedy!) allows us to flip 'til we drop, escaping the tax man forever...what a beautiful, beautiful thing.
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nolabels Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jan-30-05 10:46 AM
Response to Reply #14
34. If you have big money to gamble with in safe bets then it's not a problem
You can even kind of watch it, the the Real Estate market is a "REAL" market. It's over priced in some places. The correction is coming here in SO Cal. You can see the cracks on the wall, they are using all kinds of new and old verbiage to describe this curve to the downturn in obtuse ways
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Psephos Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-28-05 02:26 AM
Response to Reply #7
19. Agreed n/t
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TahitiNut Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jan-30-05 10:13 AM
Response to Reply #7
32. California (love it!) economics is like the hunters and the bear.
Each hunter knows he doesn't have to outrun the bear ... just outrun another hunter. In the Bear State, folks have looked at real estate and the stock market as a track. The slowest runners get eaten. They're often the old and blue collar. To a huge degree, this is the attitude around the country. I wonder when we'll decide to kill (or tame?) the bear?
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nadinbrzezinski Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-26-05 01:35 PM
Response to Original message
8. Well it is coming, the fall and crash
and no this is not casandra...
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NYC Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-28-05 11:33 PM
Response to Reply #8
25. I think Cassandra predicted the truth.
The problem was that nobody believed her.
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shrike Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jan-30-05 11:22 AM
Response to Reply #25
35. Yes, she did
According to the story, Cassandra was given the gift of prophecy by the god Apollo, but when she refused his love he became angry and levied the curse that no one should believe her.

In the Iliad, Cassandra warned Troy not to bring the wooden horse into the city.

I've been feeling a lot like Cassandra is in the past few years.
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salin Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-26-05 01:39 PM
Response to Original message
9. bushco is the only administration - to get a warning
from the IMF about the need to improve its fiscal policies.
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Kolesar Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-26-05 02:18 PM
Response to Reply #9
10. Yes. This warning does sound unprecedented
IIRC
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ProfessorGAC Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-26-05 04:00 PM
Response to Original message
12. Well, Duh!
The first paper i had published was about the economic drag effects of excessive national debt and deficit spending. That was back in 1986 at the height of the Reagan spending. Back then, i was declared a radical. Now, everyone's catching up?

I'm filing this under "Duh".
The Professor
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TahitiNut Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-26-05 04:38 PM
Response to Reply #12
15. As income inequality increases, so does debt.
Some people pay on the debt; some collect. :eyes:






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Robert Oak Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-26-05 04:14 PM
Response to Original message
13. did you read the quote?

"This is an utterly insane way to run the world economy," Mr Roach said.


He said it all.
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PROGRESSIVE1 Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-28-05 01:08 AM
Response to Original message
17. ..
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struggle4progress Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-28-05 08:06 PM
Response to Original message
21. kick for 1929
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54anickel Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-28-05 08:29 PM
Response to Original message
24. How the U.S. Became the World's Dispensable Nation
http://www.informationclearinghouse.info/article7838.htm

snip>

In other areas of global moral and institutional reform, the US today is a follower rather than a leader. Human rights? Europe has banned the death penalty and torture, while the US is a leading practitioner of execution. Under Mr Bush, the US has constructed an international military gulag in which the torture of suspects has frequently occurred. The international rule of law? For generations, promoting international law in collaboration with other nations was a US goal. But the neoconservatives who dominate Washington today mock the very idea of international law. The next US attorney general will be the White House counsel who scorned the Geneva Conventions as obsolete.

A decade ago, American triumphalists mocked those who argued that the world was becoming multipolar, rather than unipolar. Where was the evidence of balancing against the US, they asked. Today the evidence of foreign co-operation to reduce American primacy is everywhere -- from the increasing importance of regional trade blocs that exclude the US to international space projects and military exercises in which the US is conspicuous by its absence.

It is true that the US remains the only country capable of projecting military power throughout the world. But unipolarity in the military sphere, narrowly defined, is not preventing the rapid development of multipolarity in the geopolitical and economic arenas -- far from it. And the other great powers are content to let the US waste blood and treasure on its doomed attempt to recreate the post-first world war British imperium in the Middle East.

That the rest of the world is building institutions and alliances that shut out the US should come as no surprise. The view that American leaders can be trusted to use a monopoly of military and economic power for the good of humanity has never been widely shared outside of the US. The trend toward multipolarity has probably been accelerated by the truculent unilateralism of the Bush administration, whose motto seems to be that of the Hollywood mogul: "Include me out."

more...


Meanwhile the rest of the world begins to work together...

Call to end exit tax within Asean region
http://thestar.com.my/news/story.asp?file=/2005/1/27/nation/10005972&sec=nation

snip>

“It is hoped that by the end of the year, any point of entry by Indonesians to Malaysia will not be subject to exit tax.

“Neighbours in the region which currently impose exit tax may perhaps want to review the requirement to promote intra-Asean travel,” he said.

Former prime minister Tun Dr Mahathir Mohamad said tourists, whether they were from South-East Asia or outside the region, should enjoy a single visa privilege for easier travel within the region.

“It will be wonderful to be able to travel in South-East Asia with one visa, one procedure and one special lane,” he said, adding that such an arrangement would benefit Asean.

Dr Mahathir said in his keynote address at the Asean Tourism Forum here that travel would be made easier via a single visa.

“Of course there is the security aspect to consider but we must also address the issue of promoting travel,” he said.

He also suggested that Asean countries introduce a common form of greeting to distinguish South-East Asia from the rest of the world.

more...

Dec 26 tragedy brings Asean closer
http://www.malaysiakini.com/opinionsfeatures/33185

Apart from it, we also saw the opportunistic instincts of donor nations whose promise of relief aid was preconditioned, either with the cessation of rebellion in Aceh or an eye for political mileage.

For South East Asia, the impact of the disaster was also indeed an ‘opportunity’. As how Indonesian President Susilo Bambang Yudhoyono put it, it is a chance to build on the ‘culture of solidarity’, which over the years has been notoriously absent.

How much of inkling there was to that ‘culture’ can only be seen in the pre-1997 days. Then the region ‘abetted’ by the depreciation of the Thai baht triggered a series of financial meltdowns throughout South East Asia, capped memorably by former Malaysian premier Dr Mahathir Mohamad’ vitriol that pointed to a Jewish conspiracy theory.

When that was not enough, a series of spats involving Malaysia and Singapore put relations deeper into a freeze, highlighted by some unpleasant moments when Singapore athletes were jeered at the 1998 Commonwealth Games in Kuala Lumpur.

The tenuous state of relations plunged further after the Sept 11 terrorist attacks in 2001. And when the United States took retaliatory military action against Afghanistan and Iraq in 2001 and 2003, the drift among Muslims and non-Muslims states in the grouping widened even further apart.

more...

China becomes Japan's major trade partner in 2004

(MENAFN) According to its Finance Ministry, China replaced the United States as Japan's largest trade partner in 2004 for the first time since World War II, AFP reported.

Japan's trade with China, including the administrative region, totaled $214 billion last year, outpacing the $48.4 billion with the United States.

Low-priced Chinese-made goods have been flowing into the Japanese market while Japanese firms are boosting their factory capacity and sales networks in the neighbouring country.


U.S.-Japan schism over China possible at G7
http://www.washtimes.com/upi-breaking/20050127-083852-3525r.htm

snip>

Until recently, whatever differences the G7 nations, namely the United States, Japan, Britain, Germany, France, Italy, and Canada, may have had among themselves, they have largely been united when it came to how they viewed China. But as the world's most populous nation keeps growing as an economic power, differences in opinion on how to deal with China are beginning to emerge among the G7.

For one, the fact that China is being invited to take part in the G7 talks for the second time is evidence of the country's ever-growing economic clout. So while the United States continues to insist that China's fixed foreign exchange regime is one key reason for the ever-growing U.S. trade deficit, especially as its current account deficit with China keeps reaching record levels, other member countries might tend to side more with the Chinese rather than with the United States.

That's because for Japan, China is not just a trading rival, but also a major trading partner as it continues to be a major destination of Japanese exports. In fact, the Japanese finance ministry announced earlier this week that China overtook the United States for the first time as Japan's single biggest trading partner in 2004, as exports and imports between the two Asian nations reached $213 billion last year.

more...
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PROGRESSIVE1 Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-28-05 11:48 PM
Response to Reply #24
26. important read
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Rainscents Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Jan-29-05 12:14 AM
Response to Original message
27. We all knows, this is coming... head on!!!
However, it seems that, people are either not concern or just don't give a shit! Anyone who had been through depression or deep recession are the only one who remember and are concerns over this issue. I am waiting for this to happen within next two years and when it does, I'm praying people can make it through. Most younger generations of people haven't got a clue the hard time and it's coming head on like train wrack!!! Be prepare!!!
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Tsiyu Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jan-30-05 10:27 AM
Response to Reply #27
33. You are so right
If things go as they seem to be going- headed WAY South - there will be many "enlightened" folks. Poverty is not pretty.

Buy a little extra canned food every week. Pay off the car and the house if you can. And stop buying anything more than what you absolutely need.

I hope someone has a solution to the mess this administration has made of our economy. But there just aren't enough wealthy, influential people giving a red rat's about regular Murikins.
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RockStar Donating Member (184 posts) Send PM | Profile | Ignore Sat Jan-29-05 12:38 AM
Response to Original message
30. U.S. Economy (Were Screwed)
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