How long can we last without economic collapse?

[gordianot]

Another $800 Billion in the debt ceiling for the next 18 months. This averages to 1 million dollars in loans per second as I heard on NPR. Estimates on National Debt is 5-7 trillion dollars. So much for pay as you go as advocated by Democrats.

Anyone remember what happened to Argentina after their debts caught up with them or is that a bad analogy?

How long can you spend like no tomorrow? When does tomorrow come?

[K-W]

1. Its a matter of how long it takes for corporations to free themselves

of the constraints of our economy.

[bryant69]

2. It will be bad, but I suspect the problem will be

. . . more of a slow gradual decline rather than an immediate shock. It's not like everybody will call their debts in at the same time. Rather it will be more like the debt has a contracting effect on the economy causing it to slow down more and more as the debt gets larger and larger.

Bryant
Check it out --> http://politicalcomment.blogspot.com

[K-W]

4. Without growth it very rapidly crashes.

And yes, everybody will call in thier debts at the same time, because once a few people sell thier bonds, the value of the bonds drops and there is a fire sale, that is exactly how it happens.

[MrUnderhill]

11. There are offsetting factors.

As they sell their bonds, the price goes down (which drives the rate of return UP). You will quickly hit a rate where buyers offset sellers and things stabilize.

You can't "call in" the debt. You can't demand payment of the government... you can only sell the security and somebody has to buy it.

[ret5hd]

19. what happens when there is no buyer?

inflation, say at 10%-15%...u.s. securities returning what? a few percent?

laid off people withdraw money from banks, ira's, etc

banks, ira's etc try to sell those securities, but no one's buying.

i might not know all of the particulars, but i can recognize a death spiral when i see one. i'm not saying it WILL happen, just that it can.

[cliss]

25. I agree. I think our economy has been so strong

that there will be many mitigating factors to save it. However, you can only push an economy so far, and it simply won't produce for you.

There are many, many forces at work so it's got to be tough to predict what will happen. However, I can safely say without hesitation that we cannot keep this up forever.


How long till we topple? 2 years maybe.

[barb162]

27. I think this is how it will happen, once it starts, it will be very fast

[kostya]

6. No, it will be relatively sudden. Not all in one day, but

it won't take years. More on the scale of weeks or months. The psychological makeup of markets flips 180 degrees as soon as growth goes from black to red (and vice versa but usually slower in the positive direction). It's like a binary switch goes off in people's (countries') heads when things go negative. It's definitely non-linear. - K

[BlueEyedSon]

3. Cheap energy is the engine for US economic growth.

And it's almost gone, so we cant grow our way out of the debt/deficit (i.e. as a way of generating higher tax revenue).

Cheney knows the end of the US economy as we have known it is coming, which is why he is running the place like a corporate liquidation.

For more on Peak Oil look here:

http://www.doomsdayreport.com/links.html

[Warpy]

13. Oil has remained "cheap" because of the strong dollar policy

that has been pursued ever since Nixon was ousted.

That artificially strong dollar has also been what has made offshore workers look more attractive to corporate bean counters than we do.

We're not seeing the peak oil phenomenon, not quite yet. What we are seeing is a decline in the purchasing ability of the almighty buck overseas as other currencies become more attractive.

Peak oil is on the way, though, as the Chinese put aside their bicycles in favor of gas powered scooters for the many and cars for the few.

Since we're going to see a great deal of inflation in the short term, I'd suggest unloading the gas guzzlers in favor of econoboxes, especially if you've got a long commute. I'd also strongly suggest getting those credit cards paid off ASAP, and getting rid of them.

[Fovea]

60. Another idea or two

1. Move closer to work.
2. Do all non car required trips on foot, or by bike...buy a small trailer for shopping.
3. Press for rail transit everywhere.

[paula777]

20. the articles about peak oil on this link are terrifying

[BlueEyedSon]

22. Do your own critical thinking, given the data.

Some say these scenarios are optimistic!

[paula777]

24. Guess I'll buy a bike and find a new job

Because I'm part of the problem, I commute 3 hours a day (round trip).

[gordianot]

26. I have the same problem.

When you carpool you get to sleep.

[barb162]

28. I agree and am an avid believer in Hubbert's curve analysis, but

oil is still relatively cheap, cheaper than in the 70s I believe when we had the previous crisis

[BlueEyedSon]

31. For how long? 5 years? Will we pay off the debt by then?

[barb162]

34. LOL, you know people filling up those damned SUVs whine about

what they pay, but gas is still incredibly cheap here compared to Europe and elsewhere and also by 1970s standards. The government should put a huge tax on it to get the SUV owners to sell those monsters and buy more gas effiecient cars.

I hope gas prices rise gradually but somewhat fast over the next five years (it will help get those gas guzzlers off the streets), but I think we will be lucky to get to 3 years what with China consuming so much energy lately. All the scenarios use "current consumption rates" which is a crock of shit right there as if there is no growth anywhere, here or abroad. The last major oil field was found about 20 years ago...they are not really finding them anymore. People like to keep their heads in the sand. When Saudi Arabia earlier this year said they couldn't pump anymore, I think that was a real clue. Also the quality of Iraq's oil was damaged by water or salt and lousy pumping methods from what I read. So when people read about the huge stash of Iraq oil they might want to lower their numbers a bit at what is really good and what's extractable.

Bush said in 2000 he would start paying debt off. Of course he also said his tax cuts to the rich would create more than 320,000 jobs a month starting 2 years ago. I think he made that number 1 month and that was due a lot to construction(70,000 temporary jobs) for the Florida hurricanes.

[GainesT1958]

5. Well, Greenspan is already admitting to the warning signs...

Involving our ENORMOUS trade deficit. And in London, the Dollar is edging ever so surely toward "free-fall" mode.

To me, if the new still Repub-controlled Congress passes Dub's desire to make his tax pork wagon permanent, that would seal the deal--that there's going to be an economic collapse within the next year.:scared:

First the bond market will go, then the real estate bubble will burst. Then, the stock market. Like doninoes.

The only silver lining in all of this is that it WILL occur under Dub's--and the Republican Congress'--watch.

Be kind of hard to blame Clinton then, wouldn't it?:eyes:

B-)

[kostya]

8. Oh, I'm sure they won't have any trouble at all blaming

someone else, if not Bill himself. They simply don't take responsibility for anything, zip, nada, and so far have gotten away with it handsomely. :( - K

[merbex]

23. Methinks we'll hear much more about VALUES

and how we all have to turn to God

But they will never admit that they did anything to cause the coming morass

[gordianot]

9. That is my suspicion.

Also why I suspect maybe Kerry conceded so quickly. I do not see a remedy in current political climate.

[alexisfree]

15. we need gold

prepare your selfs with gold bars ...i had acquired them at 350 each now they go up to 440..certified gold..no they are not from monex...

[alexisfree]

16. we need gold

prepare your selfs with gold bars ...i had acquired them at 350 each now they go up to 440..certified gold..no they are not from monex...

[barb162]

29. oh come on you can ALWAYS blame Clinton.

I am rather amazed Greenspan has waited this long to say these things, I think shrub paid him off on the side the last 4 years. You notice how all this stuff (draft, and this) comes out a few weeks after the election.

[Getchasome]

7. Don't worry about it. Pat Roberton said the rature is coming

soon, the debt will be left for all the sinners.

[kostya]

10. The "rature"? :) Is that when the rats flee the sinking ship?

[Getchasome]

12. My bad. I meant the "rapture."

The rature is what's going on in Shrub's cabinet right now.

[Dhalgren]

14. I like "rature" - it is more apt.

[RaleighNCDUer]

21. And when the Allmighty sees what the chosen few have done

to the rest of us with this unconscionalbe debt, will those few be unraptured?

[salin]

52. the fools won't be "raptured" in the first place

the deal isn't just that the "accept" Jesus and keep trashing all of his teachings through their daily interactions with others.... the "accepting" is only real if they then adopt the teachings/behaviors. Those folks missed all the parts about false prophets - you know the one's that pander to base instincts to sell their elixer... be evil - but be saved! right.

[gordianot]

53. Right that part does not get much play.

I think there is a self fullfilling prophecy effect going on here.

[jobycom]

17. Well, there are three levels of the economy to worry about

The first is the immediate consumption level, based on the dollar and how well business is doing. Since the dollar is based on the strength of the US Government, the more in debt we go, the weaker our buying power is. That will be the first problem--inflation of prices and deflation of dollar buying power. That goes hand in hand with unemployment and underemployment.

The second level is the labor level. How educated and trained is our labor force, and that includes small business owners. The further we lag behind in education and training, and in having programs in place that can quickly adapt our workforce to new needs and conditions, the less able we are to keep up with the market, and so we lag behind in useful market products. We begin to lose our technological edge, in other words, and move closer to a sweat shop level economy, relying on multi-nationals for our meager income. With the declines in education of substance-- and teaching students to take standardized tests is not an education of substance-- the further behind the rest of the world we lag, and the more our material comfort level falls. This is a slow decline, because we do still have a good education system, but with each technological leap, we fall more quickly behind, even though it is often our scientists and engineers who create the technology.

Finally, there is the natural resource level. The less we protect our natural resources through energy policies, environmental policies, limits on over-farming, over-mining, over-polluting, etc, the more we lose the basic backbone of our economy. Actually, the most basic backbone is labor-- money is simply labor in portable form-- but when our resources run dry, labor is less useful as a commodity.

So the collapse will be slow, but the first stage could go quickly, and then it is simply a matter of skill and careful management and quick response to determine whether we can prevent the collapse of the other two sections of the economy, after that.

Bush is on a roll, downhill, on all three areas.

[gordianot]

18. So we become a third world supplier of natural resources.

and all live in a Wal-Mart world. So in the end with their new warm weather Northern ports via global warming (Russia who has plenty of untapped resources) becomes the economic center because they have the natural resources?

[barb162]

32. "scientists and engineers who create the "

when we ship so much of this overseas and lay off our own engineers and researchers, we are headed to deep deep trouble quickly. There is a lot of crap out there in the press that only low level tech stuff was sent to India. In fact, there was a lot of high level stuff sent there and continues to be sent there today. When we give away our science and technology, we give away EVERYTHING. ANd this is what corporations have been doing to force wages down and make a bigger buck. It will soon turn out to be an extremely short-sighted policy. There really also is no point for students to study the sciences or tech when there are no jobs here for it. Then the professors who teach it have no students and they leave the schools to do something else or teach in India, Japan, whereever. America often is a world leader because of its tech power. We basically threw this away to Asia for NOTHING but dirt cheap wages. The government in the name of capitalism /free trade/ the market, allowed it all to happen. This will hit us in the face very soon.

There are hundreds of thousands of highly educated tech and science types who lost good paying jobs and are doing grunt work now.

[gristy]

64. I see this every day at work.

I work for a high-tech semiconductor manufacturer. They have a hiring freeze in the US but are still hiring overseas. They want to hire and are hiring in China, India, and Russia. These overseas engineers are privy to all kinds of technical secrets. The company does this to save money. A short-term savings, I would say.

[Yavin4]

30. Things Will Turn Bad In 2005

and completely collapse in 2006. For the last four years, our economy has been propped up with extremely cheap debt and massive government stimuli, from tax cuts to huge spending programs.

Next year, the cheap debt and the government stimuli will all go away. You will see higher and higher short and long term interest rates which will kill our consumer based economy. In 2006, the full effects of a sluggish economy will be felt. There will be massive layoffs with a U.E. rate somewhere between 8.5% and 9%. The housing bubble will burst, and in the end, over half of the American middle class will plunge into poverty.

But, there is good news. Homosexuals won't be able to get married. /sarcasm

[gordianot]

33. That is what I am hearing.

I started this thread and am hearing the same thing from others. The media has to know this is coming.

Greenspan is even starting to insinuate doubts.

I suspect this will be a big topic on DU someday.

[barb162]

38. I think it will all tank next year... he's spending like a drunken

sailor on Iraq while doing tax cuts at the same time ( what an IDIOT!!!!!), this endless gargantuan deficit....

The current unemployment rate is highly understated as people have taken crappy jobs just to eat and as they tighten the rules for getting unemployment pay. I know more unemployed and underemployed people who aren't counted at all, really educated people.

[Eurobabe]

63. what, you saved money on your car insurance with GEICO?

nt

[rndmprsn]

35. starve the beast...its a way to cut all social programs

across the board...thats how they will get it "under control"

[gordianot]

37. Also tends to make people real mad.

Of course when you have the voting process under control.

[frngy]

36. The collapse

There can be little argument that a catastrophic economic collapse looms on the horizon. Some are concerned with question of when. I'm concerned with what will be the lefts response to the impending collapse. There needs to be an organized revolutionary response to the coming storm. Otherwise the right will create a world that will make Germany or Italy circa 1930's look moderate.

[RaleighNCDUer]

44. What response? What left?

In the twenties there were battles in the streets between the Nazis and the communists and socialists in Germany.

People here don't believe it is happening, not deep in their hearts. Not many revolutionaries here.

Me? I'm terrified for our future.

But not of those shits.

And Welcome to DU!

[gristy]

65. Welcome to DU, frngy!

Thanks for your input. :hi:

[Deja Q]

39. I'm shocked that the reptilicons voted FOR the ceiling increase:

If all the DUers who say the government wants to shut down all social programs, NOT LIFTING THE CEILING would get us to that point more quickly.

And we all know the pukes will find a way to spin this against the Dems.

(semi-unrelated:) Hell, if NPR is now stooping so low as to say that Clinton with the Republican majority balanced the budget, they'll be a ho for anything.

[gordianot]

40. To me none of this makes sense.

10 years ago Republicans were screaming for a balanced budget. The are outspending Democrats and now Republicans seem only slightly concerned.

I maintain Republicans are spending like there is no tomorrow on purpose. The question is Why?

[RaleighNCDUer]

46. Well, the Rapture is tomorrow. Or maybe the day after.

So why worry?

[Lone_Wolf]

47. If they spend enough, they will destroy Social Security, Medicare...

Massive debt is a way for them to destroy the government programs they hate. They are simply trying to return us to the days before the "New Deal."

[gordianot]

49. Would that be counter productive to building a political base?

Social Security is still very popular. Maybe Republiscams are at a point they do not feel they need a political base other than the super rich 1%. If I recall Nazi party membership was very low in Germany of the 1930's and the Communist Party membership in the evil Soviet Empire was not very high.

This defies logic but after the last 4 years anything is possible.

[RaleighNCDUer]

45. Actually, the higher the debt ceiling, the greater the collapse.

After all, despite the debt, and despite the Repuke congress, Clinton was able to pull us out without gutting the safety net programs.

They are creating a situation which even Clinton would not be able to fix.

[knight_of_the_star]

41. If what myself and some friends of mine think will happen

A currency crash in this country will make us wish that we were in early 1920s Germany.

[gordianot]

42. Devaluing currency seems to be the game plan.

I also understand it is very dangerous.

[Porcupine]

43. Faith Based. No faith in the U.S.= No Economy

On fundamentals we are totally screwed. We no longer make all the little spare parts and gadgets that make our lives work. Every single plumbing, appliance, auto or electrical part comes from outside the U.S. Guess how long we can survive without them?

Add to this the fact that we sell very little to the rest of the world that they cannot buy elsewhere. Add also the fact that a huge percentage of the U.S. economy is employed mowing lawns, doing nails, and selling each other plastic crap that we don't need and are throwing out in six months. That's why Christmas sales drive the economy.

It's a pyramid scheme on a massive scale. The pyramid ALWAYS COLLAPSES. As near as I can tell there are no safe jobs. We need to start networking, creating open source tribes to support us in times of need.

[scarletlib]

48. Excellent Thread

Everyone should read this thread. Good discussion of the issues and concerns.

This has been one of my biggest fears. You simply cannot fight a war and continue the other federal programs at the same level without raising taxes much less cutting them as bushco has done. Econmically it simply will not work. I am old enough to have lived through Vietnam and the inflation problems caused by it in the late 60's and early 70's. At that time Johnson was trying to have his 'guns and butter' programs without raising taxes. At least he did not cut them. It just didn't work.

As a nation we are going to pay for this and probably sooner rather than later. My one hope for a Democratic win was that at least the collapse would have been somewhat cushioned by some tax changes, etc.
That's not going to happen now.

[gordianot]

51. I heard a passing reference from Kerry.

"Fighting a war on the cheap". I also thought this was a big deal, but it never got much coverage during the election.

Media wanted to talk about the swift boat liars, what someones wife said, or a reference Dick Cheney's daughter.

[klyon]

50. Well, when it gets to the point no one will buy it at any price

they will have to stop.
The interest will crush us like a 10 ton sledge on an empty Bud light can before it happens.

KL

[Ms_Mary]

54. I don't know, but this is not sustainable

We can't keep it up. I heard the NPR report in the AM too and later in the day caught a discussion on what Bush plans to do. His tax reform plan is supposed to be revenue-neutral. He wants to simplify the tax code but not generate any new money on the process. You can't spend money and do nothing to bring more in.

You can't keep losing jobs overseas and expect people to be able to maintain their lifestyles or even pay the bills. I run a small business. My costs are going up every week and my revenues aren't that great because my customerbase is just like me and has an ever lessening purchase power. A few years ago, I was SAH with my son and working part-time and was a heck of a lot more financially comfortably. My income was less but my money was worth more. Multiply me by millions and you have where a huge portion of Americans are right now. I'm looking at businesses shutting down, empty storefronts, empty manufacturing plants... And it just keeps getting worse.

The whole situation makes no sense. This asshole is going to bankrupt America and the people who live here.

[gordianot]

56. I heard the evening spin on NPR also.

The drop in the value of the dollar is on purpose, using this to hope to stimulate the economy. They also said Greenspan was nervous this can really backfire.

NPR is the only forum I hear this discussion. I am at a point I have turned off television. Some of my co-workers are scared and follow this closely.

We know * does not read, did not listen to his professors at Yale, and no one is going to tell him what to do. Those who put him where he is now do what they want to do and do not have to ask. They get in trouble he covers for them (Kenny Boy). Then he has daddy Dick to handle what needs to be done as long as his heart holds out.

[Ms_Mary]

58. IA, Liberal media my ass.

I made the mistake of turning on Fox one day. I had to change the channel before I started screaming at the TV. I watch CNN but they only cover the same tired stuff over and over.

NPR covers the stuff everbody else ignores.

[oneighty]

55. 6 Trillion is the number of miles light can travel in an Earth year.

The speed of light is 186,000 miles per second. Convert that to spending $186,000 per second.

The national dept has exceeded the speed of light.

I guess. It boggles the mind!

180

[gordianot]

57. I though I heard them say a million a second.

That does not add up. You have good line someone needs to use.

"The national debt has exceeded the speed of light. "Spending at the speed of light."

oneighty you got it first.

:thumbsup: :kick:

[oneighty]

59. Actually when I was politically active

I coined that phrase and a politician friend of mine did use it in local politics where he became very successful. It always pleases me that years ago I first got him registered to vote and into politics. And oh boy did he ever!

I was not questioning that which you said. I brought it up because the figures are wrong, not your own self.

180

[NMDemDist2]

61. and watch the bankruptcy laws change, so you will own your debt til you

die....

November 3, 2004

As a result of the election results it is almost a foregone conclusion that Congress will reintroduce the horrific bankruptcy legislation that had previously been narrowly "defeated" before (it wasn't actually defeated, but just kind of died due to logistic concerns). Now with a strong GOP majority in the Senate and House and Bush back in the White House, there is virtually nothing stopping the passage of any bankruptcy reform legislation regardless of its content. So be prepared, folks. Sometime soon we may see the end of bankruptcy as we have known it for decades.

much more at link.... http://www.bklaw.com/newbankruptcylaw.html

[gordianot]

62. We can have debtors prison.

Make criminals of us all.

[salin]

66. just read that there a bunch of empty prisons in florida

built for "youth offenders" - and even when others were already empty - they kept building them (presents to jebbies contractor cronies).... all this empty space... right in jebbies back yard - they can throw folks there and strip them of their voting rights forever...