The reality of impending economic collapse

[themadscientist]

You didn't respond to the question. You deflected. You have been accused of the very thing you mention in your last post. May we take your silence as a lack of evidence to the contrary?

[Eikon]

Which question did you want me to answer? The part about rod knock?

[themadscientist]

This one.

You don't need to address my questions; they were rhetorical. I know you are too invested in your funhouse view of reality to ever move from your position even in the presence of irrefutable fact so I will save the two of us that silly dance.

rc1 responded quite formidably to your weak jab and I think he rates an answer.

Dude I really don't think you read my post. It has nothing to do with the stupid downgrade of credit rating. It had to do with the thing the most important commodity in the world is traded with, oil, and the American dollar.

If foreign nations decide to band together to create a new Standard Currency, or in other words the currency in which oil is traded in the nation will have a drastic change over night.

Now i am not saying it's going to happen, but the Chinese making threats that it will happen is in fact a huge deal and not one to take lightly. They are saying "fix the issues with the American dollar or we will".

I have done my homework extensively on this issue. And if Standard Currency changes to another fiat or commodity based currency it will spell the end of American economic and political dominance throughout the world.

Your talking about gas prices on mortgages. If the Standard Currency changes, gas will become a thing for the rich at 20 and 30 dollars a gallon. And mortgages will be almost non existent for the average American to secure any finances. At least for the first 5 years until we restructure. Not to mention, food, gas, electric, utilities or anything that is tied to the price of oil.

Now you told me i need to do my homework. Search for you own credible sources to find out hat will happen to our country if the Standard Currency changes. What exactly do think gave the FED the power to just print money whenever we needed it? I

[Eikon]

OK.. here goes...

Dude I really don't think you read my post. It has nothing to do with the stupid downgrade of credit rating. It had to do with the thing the most important commodity in the world is traded with, oil, and the American dollar.

If foreign nations decide to band together to create a new Standard Currency, or in other words the currency in which oil is traded in the nation will have a drastic change over night.

Now i am not saying it's going to happen, but the Chinese making threats that it will happen is in fact a huge deal and not one to take lightly. They are saying "fix the issues with the American dollar or we will".

I have done my homework extensively on this issue. And if Standard Currency changes to another fiat or commodity based currency it will spell the end of American economic and political dominance throughout the world.

Your talking about gas prices on mortgages. If the Standard Currency changes, gas will become a thing for the rich at 20 and 30 dollars a gallon. And mortgages will be almost non existent for the average American to secure any finances. At least for the first 5 years until we restructure. Not to mention, food, gas, electric, utilities or anything that is tied to the price of oil.

Now you told me i need to do my homework. Search for you own credible sources to find out hat will happen to our country if the Standard Currency changes. What exactly do think gave the FED the power to just print money whenever we needed it? I

So you are worried about what would/will happen if the world starts trading for oil in currencies other than the US$. The effect on the dollar would be a decrease in demand for the currency. How much? 60 million barrels a day x $100 a barrel (it's $85 right now, but lets aim high for fun).. that comes to $6 Billion. Hmm.. that's what .6% of what China currently holds in their reserves. Would that bring about a devaluation of the US $.. sure.. perhaps a small decrease. I'm not sure what that translates to though.. Let's go crazy and say it's a 10% change in currency value for the negative.. that puts the price of oil up what $.40 a gallon? Sure that affects inflation and makes matters worse. But I'm not sure how you come to the idea that gas will be $20 to $30 a gallon?

Besides, devaluing the dollar seems to be what our government has been trying to do over the past 10 years. Lower values for the dollar will lead to a shift in the manufacturing base. All of a sudden it's not quite so cheap to manufacture in China. It becomes more attractive to manufacture in the US.. Companies will start bringing jobs back to the US and that will help bring the economy back around.

Here's what I've learned in my studies of world economics.. Most people over-react. Everything is inter-connected. There are no absolute good things or absolute bad things. Something that is negative in one area causes a positive in another.

Look.. I'm not naive or isolated like you may think. I'm pretty worried about the long term and the way our economy and government is heading. I'm worried about oil. I'm worried about he value of the dollar. I wish I had a little extra cash to buy some gold coins to have in case of emergency. But.. I'm not convinced that one of the three credit agencies deciding to cut their opinion of the security of the US treasury is going to lead to a worldwide economic freak-out.

[themadscientist]

Move along, nothing to see here.

Nightmare on Wall Street; Dow takes 635-point tumble after S&P downgrades US credit
http://today.msnbc.msn.com/id/44054114/ ... us-credit/

The Dow Jones industrials fell 634.76 points. It was the sixth worst point decline for the Dow in the last 112 years and the worst one-day drop since December 2008. Every stock in the Standard & Poor's 500 index declined Monday.

[Eikon]

That did turn out to be a much larger tumble that I expected. What was interesting though was how it happened.

It was down 200 points and recovering at about 11:00 AM. Then the S&P released downgrade ratings on Fanny, Freddie, and a dozen other banks and other quasi-government agencies. Seemed like it was orchestrated.. I think S&P didn't like the Obama administration calling them out. Anyhow.. that dropped things another 200 points. Then Obama decided to speak to "calm everyone's fears" and did a crummy job of that.. dropping it another 200 points.

What's funny about the whole thing is that treasury yields should have gone up in price due to the higher risk associated with the "theoretical" downgrade. Instead, the opposite happened.. treasury yields went down.. Why.. because the US treasury is still the safest place to put your money.

http://finance.yahoo.com/news/Treasurie ... et=&ccode=

I think the market will come back in a few weeks when we get some better industry news... which I think will come soon.

Worst case, it'll take until the 2012 election for us to get a new president and revised congress... then hopefully they will all pull their heads out of their backsides.. or not...

Time to go stock up on canned good I guess.

[Encryptshun]

It's not my intention to turn this into a political thread, but Eikon, if we get a new POTUS in 2012 I'm betting that individual will be a radical. Like him or not, Obama is a moderate. He gets painted as an extremist (ironically by those who authentically ARE), but he's spent as much time trying to pull his own party to the right as he has pulling the Republicans to the left. In a time of this sort of turmoil, what we DON'T need is someone who will make rash, partisan decisions simply because they are idiologically myopic, so I hope that if we do get a new sheriff in town we have commensurate changes to Congress to be able to effectively stop the pendulum.

[themadscientist]

It's not my intention to turn this into a political thread, but Eikon, if we get a new POTUS in 2012 I'm betting that individual will be a radical. Like him or not, Obama is a moderate. He gets painted as an extremist (ironically by those who authentically ARE), but he's spent as much time trying to pull his own party to the right as he has pulling the Republicans to the left. In a time of this sort of turmoil, what we DON'T need is someone who will make rash, partisan decisions simply because they are idiologically myopic, so I hope that if we do get a new sheriff in town we have commensurate changes to Congress to be able to effectively stop the pendulum.

I'll preface this with the facts that I dont like Obama overall. I didn't vote for him. I do believe, however that the above assertion is quite true. He has radical roots and his rhetoric during the campaign was as well, but he has spent as much time trying to pull his party to the table as the Republicans.

I still don't wish to see another four years of him, but I do feel very sympathetic to what he is dealing with and give him due credit for trying to get some movement. If I had to place blame I would have to point at Congress as a body to include both parties. Obama has moved closer to the center as so many Presidents have had to. I knew the Republicans would never help him in any way, but to see his own party throw him under the bus made me angry for him. Obama is really out on his own and every day he doesn't crack under the pressure he earns more points with me.

I also fear the rise of a true radical, one who takes a hard right platform and pushes ideology rather than real solutions. The country and our government is ripe for such a person and there are sure to be a few people in the system who can seize on the emotions running through the electorate and seize power.

[rc1honda]

That did turn out to be a much larger tumble that I expected. What was interesting though was how it happened.

It was down 200 points and recovering at about 11:00 AM. Then the S&P released downgrade ratings on Fanny, Freddie, and a dozen other banks and other quasi-government agencies. Seemed like it was orchestrated.. I think S&P didn't like the Obama administration calling them out. Anyhow.. that dropped things another 200 points. Then Obama decided to speak to "calm everyone's fears" and did a crummy job of that.. dropping it another 200 points.

What's funny about the whole thing is that treasury yields should have gone up in price due to the higher risk associated with the "theoretical" downgrade. Instead, the opposite happened.. treasury yields went down.. Why.. because the US treasury is still the safest place to put your money.

http://finance.yahoo.com/news/Treasurie ... et=&ccode=



I think the market will come back in a few weeks when we get some better industry news... which I think will come soon.

Worst case, it'll take until the 2012 election for us to get a new president and revised congress... then hopefully they will all pull their heads out of their backsides.. or not...

Time to go stock up on canned good I guess.

That's because the demand of treasury bonds and yield have a inverse relationship. As demand for a bond increases such as we saw today the government can afford to let you lend to them at a lower interest rate.

And i have to say in my previous posts I wasn't trying to be a fear monger, but China throwing their weight around in the media was a hell of thing to witness.

I really think now is great time to learn to invest. I really wanna buy some more apple stock, and Chevron is looking really appealing. Now is a great time to see very tangible returns on basic stock buying and selling without all the complexity that goes with the exotic trading were huge fortunes are made and held in a marginal market.

I just wanna wait till midday tomorrow until i pull the trigger on anything. Don't wanna see my horses drop another 10% the miute after a buy them. But when the market starts to rebound i suggest you novice investors like myself keep you eye on you smartphone and make some moves. Some great deals out there to make a quick 10 to 100% return on you r savings account on huge reliable companies returning to their rightful market value.

[Eikon]

I think you understand bonds, but what you said was not quite right. The government doesn't "afford to let you lend to them at a lower rate".

What "should" have happened today was this: The lower bond rating "should" have made bonds less attractive, thus lowering demand. That lowered demand should have lowered prices (because bonds are traded on supply and demand principles just like everything else). That lower price should have led to an increase in the yield. But, what actually happened was the opposite.. people flocked to Treasury bonds, which increased demand and lower yields. This was proof that investors truly didn't care about the S&P rating and still recognize that US Treasury bonds are still the safest place in the world to put money.

China is in a funny situation. They are walking a knife edge. They need the US $ to stay strong for a couple reason.. first because they have so much money tied up in US debt, and second, because they need our cost of labor to remain high so that we keep sending manufacturing jobs to Asia and not back home to the US. They also peg their currency to the ours, so any decline in our currency forces them to decline theirs as well.. which reduces their purchasing power. It's a tightrope act. What China doesn't see coming is the labor revolt that is just a few years away. China is getting a taste of what business and industry can do for their standard of living. They will see that they have some of the worst human rights and labor rights in the world and just decide they are sick of it. Then things will get interesting.

If I were a stock market guy, I would agree that now is a good time to jump into the market to try to make a quick return. Everything is "on sale".. but remember, the drops happen quickly and the gains tend to be slow. Don't expect anything close to 100% return on your money.. that will take a while.

I'm still not convinced that the market has corrected fully. While I didn't expect a 600 point drop today, I did think it would drop to under 10,500 at some point this fall/winter. That will probably happen.


If I had money to invest right now.. I'd put it into land.. Good old fashion American earth. Farmland.. And not because I want to be a farmer.

[Eikon]

It's not my intention to turn this into a political thread, but Eikon, if we get a new POTUS in 2012 I'm betting that individual will be a radical. Like him or not, Obama is a moderate. He gets painted as an extremist (ironically by those who authentically ARE), but he's spent as much time trying to pull his own party to the right as he has pulling the Republicans to the left. In a time of this sort of turmoil, what we DON'T need is someone who will make rash, partisan decisions simply because they are idiologically myopic, so I hope that if we do get a new sheriff in town we have commensurate changes to Congress to be able to effectively stop the pendulum.

I agree with you completely. I'm worried about this coming election. I think Obama is on his way out (and admittedly, he's been dealt a bad deck), but unfortunately, I don't like any of the current contenders on the right. They all scare me a bit.

[themadscientist]

After this shakeout I think we will get a bit of a preview of what industries might weather the storm now which will allow them to return to profitability when things start improve. I am also looking to jump back into the the market after the killing is done. While events like this are bad they dude open up opportunities for people with liquidity.

[AZ89two4Tsx]

I agree with you completely. I'm worried about this coming election. I think Obama is on his way out (and admittedly, he's been dealt a bad deck), but unfortunately, I don't like any of the current contenders on the right. They all scare me a bit.

^ THIS

But imo, if our country stays as divided as it is (party wise), we'll end up with a president that no one is happy with. As much as I don't agree with many of the left wing solutions, both sides need to start working together or some really bad weather is heading our way...

[themadscientist]

It's not an or, it's coming.

Consider what you said would have to happen to avoid it then look at the historical behavior of the body in question. Now guestimate the likelihood of them becoming responsible adults despite years of abuse and current activities to the contrary. Start looking for cover.

[themadscientist]

So, uh, let's see. Gold is up about $100 and ounce in two days and is now eclipsed platinum. Anybody else seeing a trend? If only I bought friday. Wait, I did buy on Friday!

Hey, but I'm just an "alarmist" What do I know?

[DJ_B_Easy]

I just found this thread yesterday and proceeded to read it front to back. TMS, you nailed it dude. However if you want to survive the world demise/(zombie) apocolypse you should be stocking up on Twinkies, thats real gold right there.

[Encryptshun]

I think the only way this can end is with a huge flying saucer cruising into low-earth orbit.

"And for all their petty squabbles, for all their bickering and posturing, all nations were unified to stand against this new curiosity, this new realization, this spontaneous and unforeseeable threat to the survival of our very species."

[themadscientist]

Only if we elect Bill Pullman.

[RCA]

Where we are headed.

[themadscientist]

[youtube]http://www.youtube.com/watch?v=Ru6p5NLX ... re=related[/youtube]

[carloslebaron]

RT news (yes the Russian broadcasting TV news) said this morning that China will be the economic country leader in 5 years.

http://rt.com/news/china-economy-leader-us/

Also informed that investors are looking at Asia as their next stronghole to keep the worldwide economy running, I think that perhaps this moving is because the falling of the dollar (US) and the euro (Europa) is foressen as imminent.

We must notice that several countries are buying gold like crazy, to me, the new idea is to remove the privilege given to the dollar for trading purposes, and gold might recover this privilege again.

The secret for such a success is not a secret, but the work of a government that won't offer so many "freedoms", however The Chinese have been focused on retaining jobs domestically, and making sure that foreign investors are not able to compete with certain domestic industries, which is something that most countries cannot figure out. It is also important to know that China’s economy is still very much state led. And with the government controlling most of the financial sector, China’s banks have been relatively well shielded during the financial crisis.

All these expectations about China are very bad news for us, and the US government still deaf and is increasing the budget for "defense". hmm hmm hmm...bad move, who told politicians that for to come out of our crisis the solution is playing Rambo?

[Encryptshun]

China has been manipulating global currency markets and strong-arming its GDP in order to artificially keep its currency weak. However, that won't last for long, and if the world turns to the yuan as some sort of FX safe-haven it could be very VERY bad for China. If it grows versus the euro or the dollar, it will no longer be a best-cost-country from a manufacturing perspective and you'll see production facilities shuttered. If the dollar remains weak in the long-term, and if we can get some sanity back in the Union leadership, you're going to see a lot of manufacturing come back to the U.S. Especially in the green sectors.

[themadscientist]

We cracked $1800 gold today.

[themadscientist]

Russia and China have moved past kissing into heavy petting.
Putin Calls U.S. a 'Parasite' Over Its Debt
http://online.wsj.com/article/SB1000142 ... 94302.html

He's a murdering scumbag, but his financial analysis is spot on. The dollar's days as a reserve currency ARE ENDING. When that happens America will have to produce real results to prosper not kick the can down the road like we have been doing for decades.

[carloslebaron]

The funny situation is that the majority mocks of Ron Paul like if he is crazy, but actually, by listening him with more attention, he is the only candidate that hits reality, while the rest only make promises on the air. Who, after Ron Paul, is asking to audit the FED?

Some messages ago you said that the dollar's value as a reserve is not setteld with its correspondent backup with gold but with a condition called "confidence", since then I have been looking at it as if the dollar is no more than Monopoly money.

Some decades ago the whole worldwide economic system was changed as having the dollar as the common trade currency, what do you think is impeding to do a similar change to a new international common reserve like gold or another currency? It was possible in the past, why not today?

[themadscientist]

Because the BS goes out the window when you start backing a currency with a tangible accountable commodity. You can't "ease" gold or silver into existence. I'm starting to change my mind on this whole reserve currency thing. The loss of that status will certainly throw the U.S. economy into a tailspin and there will be a lot of pain in the short term, but perhaps by leaving us with no choice we will finally have to get our finances in order.

We are lazy, whiny, uneducated and immature as a whole, but I think easy money has allowed us to be that way. When the funny money collapses we will have to start curtailing some of our bad habits, get back to what really matters and quit screwing around. The gen Y people are going to experience a depression. Their children will be born into poverty and severe adversity, but I think we're going to get our s*** together and claw back out of the abyss because we will have to if we want to survive personally and nationally.

The world is screwed too. Economies are crashing left and right and I only see China and Russia with their eyes on the ball.That's bad. They are f*** and wish us and the rest of the world ill. The little world government lite experiment, the EU, is coming undone at the seams and that's going to cause a lot of turmoil. The next decade or two is going to be a ball-buster, but as the days pass my certainty of what is coming increases, but strangely so does my optimism for the final outcome.

[Encryptshun]

Ironically, if the former Soviet Union hadn't disbanded and assumed their mafiocracy, they'd probably be laughing their butts off at us right now. Imagine if the only two world powers NOT suffering this economic drought were the communist nations.

[themadscientist]

Irony can be pretty ionic sometimes. They have a low standard of living. That may account for their lower debt. They dam us, but if not for us they would not be where they are now.

[RCA]

[rc1honda]

The funny situation is that the majority mocks of Ron Paul like if he is crazy, but actually, by listening him with more attention, he is the only candidate that hits reality, while the rest only make promises on the air. Who, after Ron Paul, is asking to audit the FED?

I think Ron Paul is the only genuine presidential potential candidate America has had in decades. I agree with almost every idea he has. I think he is only one really taking a stance on real issues without worrying about hurting people feelings and he doesn't tell people what they wanna hear.

Not only does he wanna audit the fed and our gold reserves he wants to abolish the fed completely which in my opinion holds the redemption of our country.

Now I don't think that we could ever go back to commodity based currency, nor do i think we should. But the Government does not have to borrow it's own tender from a bank in the first place. The government has the constitutional power to mint fiat currency without having to borrow at interest. We don't need the fed and never did.