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| Is this a FOREX thread? Americans can take cuts, we aren't Greeks. We can take it down to the bone.
50 trillion, where does that number come from?
And finally, a weak US dollar is great for the US economy, manufacturing demands soar. Maybe not if you are trading dollars. But then again, one day some one will find out that Switzerland sold most of it's gold a while ago, and that this currency isn't a commodity based trade, and might look elsewhere; just my two cents...1.5 rappen. | |
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Hi confloozed
Please understand that I had to make a hard decision about my US investments and made the decision to sell out. It is not, in any way, an indication of my feelings towards the US or its people for which and whom I have fond memories and ties.
It was a decision that came about 95% because of cold facts and 5% from empirical evidence. Below is my resulting
opinion...
While I think Americans are capable of taking some strain, I am much more sceptical of the population (and of the west in general) to accept the level of strain, the kind of cutting that is necessary to get fifty trillion under control. I mean, you are talking about raising retirement to something closer to 70, to cutting (massively) Medicare and Medicaid, to cut the military. As far as universal health care- forget it. Raising taxes on already hard hit families- no chance. There is just no way, in the real world (we can wish and hope all we like) that any politician will stand on that kind of platform and be elected. In fact, it looks like the opposite, like spend and burn Obama will be the one to lead the world into the next financial crisis.
On top of all that, we haven't even begun to discuss State's debts. Almost certainly, the Federal government will bail them out adding even more debt to the pile. In fact, that is one of the most likely tipping points in my opinion. The one where suddenly only the Fed shows up to the treasury auction and we have a full blown currency crisis. This is an incredible disaster for the US and the world in the short term and it is not even on the radar for most folks, because, sadly, it involves a little financial understanding and research to comprehend. I think it will have to have become a crisis before it will be accepted.
Sometimes I think that there must be some game changing technology that Washington has in its back pocket, but actually it is just following the well trodden paths of super powers (The Romans and The British as examples) who forget their financial underpinnings, become overstretched and implode.
BTW-
50 Trillion is total US debt including unfunded liabilities. Actually, I think it is 50 and change now and it is variable depending on what you include, but mainly I think of SS and Medicare/Medicaid and so on.
Weak currencies are a disaster for countries as a whole-
*They ravage saving, which is wealth, which provides the fuel a healthy economy needs to fund investment.
They make everything more expensive and cause pain for people earning that currency (food and fuel etc, etc).
Manufacturers who import materials (most in this day an age) can balance the increased cost to foreigners against their lower manufacturing costs.
Switzerland is one of the premier safe havens because its fundementals are very sound, plus it has a reliable history (several hundred years or more) of protecting wealth from all manner of threats. It may not be gold backed, but the faith and credit of the Swiss nation is about as good a case for fiat money as one can find. What other nation has a whole currency printed and sitting in reserve, just in case the present one becomes corrupted! The CHF is, as far as I am concerned, the next best thing to gold.
The only criticism I have of the Swiss is that they should be letting the Franc float more freely and not playing so much ball with overtaxed, inefficient bullies like the US and Europe. That said I will volunteer for the militia to protect the borders when the crisis hits
*Historically, the US funded its own investment with domestic savings (low and no taxes and light regulation meant people saved), but over the past 40 years the US has had to rely increasingly on foreign savers (the Chinese primarily) to fund the party. Right now, even they (foreign banks) are reluctant to loan to the US- it's the FED that is buying most of the new bond issues, ie just printing money!!!! The only reason foreign banks are still buying is damage limitation- they are terrified of a dollar collapse because it will wipe out their USD holdings even faster than the current inflation. Ever wonder why someone would buy a treasury that yields barely above inflation? Why Japan, who needs to billions of dollars to rebuild damaged infrastructure, isn't cashing in its trillion USD reserves? Everyone is hoping for a miracle that the USD (and their investments) won't be wiped out.
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