VeriSexy

"What is clear now is that this unsustainable effort is likely to come to an end sometime in 2005, just after the elections, regardless of who is President. Given the scale of the money-printing by the Fed and the US Treasury since 2001, it is pre-programmed that the "correction" of the latest Greenspan credit binge will impact the entire global financial and economic system. Some economists fear a new Great Depression like the 1930's. The world today depends on cheap US dollar credit. When US interest rates are finally forced higher, dramatic shocks will hit Europe, Asia and the entire global economy, unlike any seen since the 1930's. Debts that now appear manageable will suddenly become un-payable. Defaults and bankruptcies will spread as they did in the wake of the 1931 Creditanstalt collapse."

"Ever since raising rates, Greenspan has calmed nervous markets by stating that future rises will be ever so gradual. In other words: don't worry, speculators. But if he is to keep the confidence of the large bond markets, he must convince them that he is still vigilant against inflation. That is tough when prices for everything from copper to oil to lumber to soybeans and scrap steel are rising from 50% to 110% over recent months. His only anti-inflation tool is higher interest rates, or promise of same. The longer he fails to raise rates as prices rise, the greater the risk of a dollar crisis, as foreign investors fear the worst, namely that the US economy is in far worse shape than officials admit. The Fed is in a trap.

Yet higher interest rates threaten to explode the trillion dollar home mortgage debt bubble, where home values are estimated to be at least 20% overvalued nationally, or $3 trillion.

When private bond investors such as major pension funds and banks lose confidence in Greenspan's inflation commitment, the only other source of support for low interest rates would be the willingness of Japan and China above all, to pour billions more of their dollars into buying US bonds."


http://www.globalresearch.ca/articles/ENG407A.html

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VeriSexy

Nobody cares? USA is hitting lows all the time cause they are printing money like crazy.

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Dildozer

It's gonna prove interesting for sure, better get a fixed interest rate instead of a floating one, especially with the 4th raise today.

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Veterans Day

Not if your a short term owner 3-5 years

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VeriSexy

Yup, very good idea. China and Japan owns one trillion in US bonds. Bush made his tax cuts and will find it hard to make payments on the interest. He will either have to cut more services in healthcare and education or raise rates even more.

How many interest rate hikes will you guys seen in the next 4 years?

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eadweb

I expect the US economy to begin an implosion within the next 5 months. It's impossible to say when exactly it will begin but the risk will rise daily from here on in. Last week in Feb is plug pulling time if you are in Canada assuming the markets hang on that long. In The US... who knows. Hide your money in no risk stuff until Oct 2006.

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BRISK

Tomorrow, the Fed's Open Market Committee is expected to boost its federal funds rate to 2 percent, the fourth consecutive rate hike since June. Already this year, consumer rates have followed the Fed's lead. The national average $30,000 home equity line of credit rate has increased from 2.5 percent in June to 3.74 percent as of yesterday. Similarly, the average credit card rate has risen from 13.5 percent to 14.1 percent. "That trend will continue"

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VeriSexy

Interest rates might hit anywhere from 8-12% by 2008

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Doctor Dre

This is where the euro comes strong and the whole world addopt it

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Veterans Day

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Paul Markham

I would not be so quick to laugh at it. The US has been living on borrowed money for four years.

Yes 9/11 hurt, but Bush has made it worse. Eventually you have to repay what you borrow or do you think they will wipe out the US debt like some third world nation?

During the last four years the Euro has shown itself to be a better managed currency than the dollar. No matter how strong and wealthy your nation is you need people at the helm who can steer it.

I'm afraid the last two elections have not shown me one man with that ability. Both sides.

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Veterans Day

Charly, if you think the world is just gonna adopt the euro overnight, I suggest you step back into reality for a moment

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VeriSexy

"The largest buyers of US government debt have been the central banks of the Asia-Pacific. The central banks of Japan and China alone hold more than $1 trillion of US Treasury bonds as foreign currency reserves. Worldwide foreign central banks hold some $1.3 trillion of US government debt. If private debt is added, the United States is the world's largest debtor, with some $3.7 trillion in net foreign debt, as of the start of this year, likely well over $4 trillions by now. In 1980 when Ronald Reagan was elected the US was the world's creditor with a plus of $1 trillion."

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Snake Doctor

We've been living on borrowed money for alot longer than that.
Our budget was only balanced for 2 or 3 years....for most of the century before that we ran a deficit also.

Our deficits and total debt as a percentage of our economy are smaller than most of the other industrialized nations in the world.

And if the US economy collapses, the rest of the world's economy will collapse with it......and you're a fool if you think otherwise.

The great depression hit the whole world, not just the US.

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VeriSexy

You are right, the whole world will be in deep shit

"When Bush became President he inherited a Federal budget in surplus. Since then he has created the largest deficits in US history, near $500 billion in 2004 and estimated to reach $600 billion in 2005. In 1971, when Nixon took the dollar off the gold standard, the Federal budget deficit was an "alarming" $23 billions."

"All this economic consumption has created the illusion of a recovering economy. Behind the surface, a huge debt burden has built up. Since 1997, the total of home mortgage debt for Americans has risen 94% to a colossal $7.4 trillion, a debt of some $120,000 for a family of four. Bank loans for real estate purchases have risen since 1997 by 200%, to $2.4 trillion. Average US home prices have risen by 50% in the period since 1998. In 2003 alone a record total of $1 trillion in new mortgage loans were made. In 1997 mortgages totalled $202 billion."

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pornguy

the usa is screwed... we need someone to get rid of bush!

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pornguy

And I see that some people are still failing to see that this guy will impact the entire world.

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Veterans Day

stfu, what are ya gonna do shitface? Nothing, exactly. Roll with the punches, damn your fucking annoying

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blackmonsters

Ahhhhhhhhhh STFU!!!!!!!!!

That doesn't matter because the US will go broke because we spent all our money chasing invisable weapons of mass dumbshit in Iraq.

Bush is a trained monkey for Osama.
Osama was praying for Bush to be re-elected so that he can get another 4 years of draining our resources while we hunt down 4 year old kids in Iraq.
This is the exact strategy Osama used to bring down the Soviet Union..."They will spend all their money before they kill even half of us".

The war of attrition....we lost everyone of those so far!!!!!!!

Melody

I have read this same gloomy prediction about our economic future a hundred times over the last twenty years.

Of course things are bad. Of course Bush is a toad. But the situation will be no better in Europe or Canada than it is here, for numerous reasons that run to economic integration of resources and various other things.

We'll all get out of this...we have to.

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VeriSexy

That is cause economy is pretty hard to predict, remember when there were people who warned about the dot com bubble and people were laughing at them? Look what happened

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VeriSexy

I thought it was the US that brought down the Soviet Union. They spent all their money making war weapons and in the end there was no war. Not Osama but he is using the same plan to try to bankrupt the US.

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VeriSexy

Bin Laden: Goal is to bankrupt U.S.

http://edition.cnn.com/2004/WORLD/me...ape/index.html

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VeriSexy

As part of the "bleed-until-bankruptcy plan," bin Laden cited a British estimate that it cost al Qaeda about $500,000 to carry out the attacks of September 11, 2001, an amount that he said paled in comparison with the costs incurred by the United States.

"Every dollar of al Qaeda defeated a million dollars, by the permission of Allah, besides the loss of a huge number of jobs," he said. "As for the economic deficit, it has reached record astronomical numbers estimated to total more than a trillion dollars.

The total U.S. national debt is more than $7 trillion. The U.S. federal deficit was $413 billion in 2004, according to the Treasury Department.

"It is true that this shows that al Qaeda has gained, but on the other hand it shows that the Bush administration has also gained, something that anyone who looks at the size of the contracts acquired by the shady Bush administration-linked mega-corporations, like Halliburton and its kind, will be convinced.

"And it all shows that the real loser is you," he said. "It is the American people and their economy."

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Melody

The dot com bubble busting was an easily understood phenomenon with a clear cause and effect. Anybody who invests money in vapor can only expect a vapor dividend. This US financial collapse doomsday scenario has been around forever (my left-wing friends in college told me the same thing, only Reagan was in the White House as the devil incarnate). It's never going to happen to the extent the gloom-sayers describe.

Put your money in safe places, don't overextend, and you'll be okay. That's all I'm saying.

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reynold

many people say the economy will fall 6 months from now.

ULVideo

Good luck tomorrow (someone's probably posted that already....).

SquishFish

The dollar is not looking good in the near term. Probably going to see parity with the CDN $ and close to 1:1.50 with the EURO.

Its not going to do the trade deficit any good

liquidmoe

I think the one thing that remains to be examined is where all of this money is going. Although a deficit is bad on the surface of things, it's not like the money that was printed was burned. It was invested into something, of course a ton went into Iraq and we wont see much benefit from that, but where did the rest of the money go. Dont forget you have to spend money before you see a return, the majority of GFYers know that sometimes you need to put in $10, 20, 50K, which soon can become a deficit, until your business model picks up and you start making profits and eventaully getting in the black.

There are certainly over inflated real estate prices, and that market could have a dip, but in the long run they will still rise. Speculators who invest just before the dip will get burned as usual, the long term investors will still make out fine. The only real things to consider are the financial impact of the war in Iraq and how America's dollar is going to influence world trade.

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OzMan

No, the majority of GFYers ask their Mom for an advance on next week's allowance if they have a deficit.

Paul Waters

China is your second largest creditor.

They own you...

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Paul

WarChild

You really don't get it, do you? With a US strong hold in Iraq, Saudia Arabia under your thumb and Isreal collectively vowing "never again", the chances of the Petro Dollar becoming the Petro Euro are very low. This more than anything else protects the Euro from taking over as "world currency".

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Rich

Once they start fighting China and North Korea, the militarized economy will turn things around.

WarChild

That is true. War tends to be good for economies.

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Chichio

Seems a little like a dooms-day scenario. Most of the economic indicators show a growing US economy. They raised interest rates today in order to have some space to lower them later and to keep growth in check.

The good news for Canadians is that Canada burnt through 1/5 of their annual trade surplus in September. I?m guessing this will mean that Canada will have to lower their dollar vs. the American dollar or it will burn through the entire surplus being that they trade heavily with the U.S.

Hey, but what do I know, I?m no economist. I only studied it in school.

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Paul Waters

Like Vietnam was good for the economy?

Now you have two Vietnams.....

... your currency is in free fall.

China owns you...

In five years you will all dress the same way, and bow when your boss enters the room...

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Paul

OzMan

I wouldn't be so sure.

Iraq is ours only until we leave and we will have to leave one day.

The Saudis are two-faced fuckers.

Israel needs us at the moment only.

There are many other countries in the region some of whom won't be bullied as easily. Iran, Syria etc

WarChild

I'm Canadian. Maybe you shouldn't make assumptions as to who owns me.

You honestly don't think war stimulates economy? Really?

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Rich

No, Iraq is like Vietnam. I'm talking about a war against NK and China, and obviously at the same time a number of other states like Iran. That would mean a fully militarized society, like WWII. Everything stops being made besides essentials and weapons.

WarChild

Israel will be blowing up Iran's nuclear capacity in short order. Mark my words.

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FlyingIguana

not really, its not like china has a claim on anything. the states can default and there's shit china could do.

Paparazzi

they need to realize it's not like it use to be before...

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OzMan

Yup that is quite likely.

They did before didn't they?

I am not sure if it was in Iran but I remember reading that the Israeli astronaut who died on the space shuttle was a fighter pilot before and he had bombed a nuclear facility in a neighboring country.

CET

Oh no, the sky is falling!

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"Just as a man who has fallen into a heap of filth ought to seek the great pond of water covered with lotuses, which is near by: even so seek thou for the great deathless lake of Nirvana to wash off the defilement of wrong. If the lake is not sought, it is not the fault of the lake."

CET

This depends on the economy remaining static, which is not a historical trend. Classic economics tells us that in the long run, all capitalistic economies have positive growth.

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Rich

That would be Iraq's.

CET

The Euro has had lots of inflation, where as the Dollar has had little to none. France and Germany are about to implode due to their overly generous and unsustainable retirement funds. Sweden is about to implode from the highest tax rates in the world and their welfare state. In contrast, America is doing just fine, thankyou very much.

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Webby

CET:

Who is talking about any other country than the US??

At least other countries have this weird tendency to engage qualifed people to balance their budgets and not live in lala land.

What country on this earth has managed to not have one trade surplus in 25 years??

Where is the largest social security deficit on the planet, despite the US makes up only 5% of the world popluation?

Where is the largest international debt in the world??

I'll whisper a clue - you are bankrupt and OWNED!!

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VeriSexy

Spending all the money on weapons didn't seem to do very well for the Soviet Union. You don't remember that?

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VeriSexy

True but you can kiss all foreign investors good bye. Nobody will trust investing in US bonds anymore. They will no longer be a safe investment.

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