The reality of impending economic collapse

[Bubba1]

i skimmed a lot but all I can say is one thing:

12/21/12

2 more years of life.

which means two more years without you getting laid....



Nala, you have many well-wishers here. They'd all like to throw you down one.

[sbird1]

Nala, you have many well-wishers here. They'd all like to throw you down one.

ZING! Count me in. Then, after he releases a movie and announces that he's going to kill us in 7 days, we can have some fun!

[Chaotic_Warlord]

T minus 7 hours until the Federal Gov. shuts down because Obama is a tool and denied the temporary fix to the budget (which would give them a year to work on a more permanent fix). Has anyone played Homefront? The back story of that game is looking more and more like it's coming to fruition.

[OriginalWheelman]

T minus 7 hours until the Federal Gov. shuts down because Obama is a tool and denied the temporary fix to the budget (which would give them a year to work on a more permanent fix).

That's so they can blame the shut down on the Republicans, and use it to further Obama's reelection campaign.

[gwoods]

IF this happens I will not vote for any of these fools again!

[Encryptshun]

T minus 7 hours until the Federal Gov. shuts down because Obama is a tool and denied the temporary fix to the budget (which would give them a year to work on a more permanent fix).

That's so they can blame the shut down on the Republicans, and use it to further Obama's reelection campaign.

This space for rent.

[szh]

Okay, we are veering into a politics discussion ... not in this forum, please!

Z

[TOMMY VERCETTI]

Goes to say you can't trust the U.S. Goverment anymore..

[themadscientist]

Thread is about money. So is politics, but I digress.

[Chaotic_Warlord]

Thread is about money. So is politics, but I digress.

Politics and Religion are the 2 most volatile topics of discussion, but more murders are committed over money, so to say that Money isn't as an inflammatory topic of discussion is just wacky.

Oh and some how the Federal Government managed to miraculously form a budget to Obama's liking with only minutes left on the clock. I'mma call BS, I think this new budget was already put together, they just wanted to get everyone all in a tizzy so that Obama could look like a champ for saving the day at the last possible second. Someone's been watching too much 24.

[IBCoupe]

...they just wanted to get everyone all in a tizzy so that Obama could look like a champ for saving the day at the last possible second.

Those wacky Republicans. That's so like them.

[Jookmasta]

good read with a lot of words. i am not sure myself as to what bodes for us in the future, but it is obvious that we are headed down a dark road. we all are unfortunate to have to deal with these conditions, but it is what it is. there were some good ideas presented in this thread, but i could probably place a hefty wager that none of em will occur. just the mere fact that a government can shut down due to lack of money at this day and age is beyond my comprehension. it really makes you wonder what the hell the senate members and representatives of the states of this country are doing inside their offices......

[themadscientist]

Their interns and secretaries most likely. At least they take the occasional break from f*** us.

[hbpignosePA]

Their interns and secretaries most likely. At least they take the occasional break from f**king us.

[carloslebaron]

Thread is about money. So is politics, but I digress.

Sure is about money, and the majority ignores a key point that makes US to survive better the impending economic collapse...even against its debt collectors.

Before the invasion to Iraq, the leader of this Middle East country announced that Iraq won't exchange dollars for oil anymore.

US and UK practically saw a dark horizon as soon as this announcement was made, and the assumed "weapons of mass destruction" were no more than toys in comparison to the attempt of stopping the dollar circulating freely in that part of the world. If Iraq was successful rejecting the dollar and other countries around Iraq took the same action, the economical situation of US should be coming to a sure chaos.

What makes US to survive better over other countries is the circulation of the dollar around the world. This circulation is what make the dollar "so powerful", and, on the other hand, a currency that stop circulating causes an economical disater.

In a near past, the Japanese Yen and the Russian currency were even of more exchange value than the dollar, but they fell because they were not accepted as a common currency in any other country for purposes as exchange for big trade or just to pay a food meal in a restaurant in Spain or Canada, as an example.

Recently, after the famous "wikileaks", words were said by a French TV economist commentator -I watch the 30 plus channels of regular digital TV, which broadcast news from other countries-, that Europe can't trust US anymore and must take the option to use gold instead of dollars for trading purposes. This is again, an attempt to destroy the US economy in its most strong international pillar but also in its most exposed point.

If US and its currency fall, the collapsing will cause a strong damage greater than the economical collapse of any other country, for this reason, no one -in the big international trade- wishes the falling of US, but its enemies.

So far, US is protecting itself very well, for example, by taking Saddam out of power and installing a new government that won't mess with US and will use dollars for trade currency. The invasion to other countries is not to liberate other nations from dictators or similar, but to spread out the circulation of the dollar, and by consequence, the several other influences arised from this step.

Historically, doing a review, there is no powerful nation in the world -today or in the past- that obtained its strong economical status by working hard in conjunction with idealism and principles like freedom and similar...to assume or believe it this way is plain bull...because the whole world history shows that powerful nations became economically strong only by trade and by invading other countries...

That is the crude reality.

[JTR]

As a person who practically lives from paycheck to paycheck, is a renter and has no savings, I really can't see any impact it will have on me or pretty much anyone I know very well (with very few exceptions).

I will continue to work day-to-day and take out quarterly estimated taxes and work in all kinds of different fields; moving to another area if needed. Lesson learned, specialization is death. Be a renaissance man.

$10 a gallon gas.
$5 loaf of bread.
Your municipality defaults on its debt.
Police and Fire service cut
Trash pickup suspended
etc.
etc.
prices changing throughout the day because the velocity of devaluation is at terrific speed. Don't think you won't be affected.

The spiraling hyperinflation of post WWI Germany gives us indications of what one might expect.
http://www.historylearningsite.co.uk/hy ... ermany.htm

The impact of hyperinflation was huge :
People were paid by the hour and rushed to pass money to loved ones so that it could be spent before its value meant it was worthless.
People had to shop with wheel barrows full of money
Bartering became common - exchanging something for something else but not accepting money for it. Bartering had been common in Medieval times!
Pensioners on fixed incomes suffered as pensions became worthless.
Restaurants did not print menus as by the time food arrive…the price had gone up!
The poor became even poorer and the winter of 1923 meant that many lived in freezing conditions burning furniture to get some heat.
The very rich suffered least because they had sufficient contacts to get food etc. Most of the very rich were land owners and could produce food on their own estates.
The group that suffered a great deal - proportional to their income - was the middle class. Their hard earned savings disappeared overnight. They did not have the wealth or land to fall back on as the rich had. Many middle class families had to sell family heirlooms to survive. It is not surprising that many of those middle class who suffered in 1923, were to turn to Hitler and the Nazi Party.

I respond to rest of the points later, but you know, $10 /gallon has been a norm in most of the world for years.
Food prices are usually costs 2-3 times in most of the world, even in parts of the world where they make less than us.
Moreover, house/ real-state costs are typically 2-3 times of costs in rest of the developed world.
on and on
yet apocalypse hasn't taken a place.

I am not too optimistic about US economy, I believe housing, market is going to drag for another couple of years, but I highly doubt there will be a total collapse.

[themadscientist]

I am well aware of the COL in foreign countries. I have lived in Japan for 16 some odd years. When my buddies b**** about $4 a gallon gas on base, I point out that it's near twice that outside the fence. The same occurs with other consumables like food. I could get a house four times the size of my current one had I bought stateside.

The American economic model has gone past break even to now credit-based. Not only are most Americans debt slaves to the credit bills that they have accrued over their lives living beyond their means, the government itself behaves the same way. As long as the music keeps playing the fact that there only 2.2 trillion seats for 14.2 trillion metaphorical people will not be a problem.

The first time a dollar is declined the music stops. It won't stop slowly like record coasting to a stop. It will stop abruptly like the needle getting yanked off. Go back and look at how quickly American economic failures have exploded.

Countries around the world are moving out of dollar-based investments at various rates. Being a multichannel foreign media monitor, you should know this. Russia and China are actively seeking to break away from dollar dependency and while I detest them, I can't blame them. I am doing the same on a personal level; I see what they see.

Now, getting back to the cost of living. People in other countries are not my concern. That they pay more is actually rather irrelevant. They are used to a high cost of living, a point we both agree on. Americans, as previously suggested, are not. Imagine the impact upon your life if tomorrow everything cost twice what it did yesterday.

Could you adjust? Could you survive? Do you have enough disposable income cushion to cut back in some areas and meet your fixed obligations and daily non-negotiable living expenses? If not, here's your wake up call. You better get your finances together and start putting redundancy in your personal monetary policy. We can't keep these idiots in Washington from selling us down the river. We can, however, do something to recognize the potential threats to our personal prosperity and prepare contingencies.

Now, getting back to the rest of the world. There will be backlash from the collapse of the U.S. economy. We subsidize a lot of countries.

http://www.vaughns-1-pagers.com/politic ... gn-aid.htm

That, combined with the elimination of a huge customer base for consumer products that is the United States populace, exporting countries will see a significant hit in their economies.

[themadscientist]

We have entered the bubble phase methinks. When liberal radio commentator are pushing gold investing in their advertising blocks, the last doubters have seen the light. Unfortunately, the light has been on for several years and the chance to get yours at a reasonable price is long since past. As the general public races like lemmings into the the commodities markets armed with their brand new Ameritrade accounts, whatever is left of their savings, and a copy of Speculating for Dummies, we can expect to see a lot of activity this year.

I have a long memory and watching financial gurus who have labeled metal bugs as idiots now suddenly calling on their faithful disciples to get into gold this late in the game makes me wonder why people pay them for their opinions. I was calling for over $50 silver back in 2008 and now here we are with a Friday close of $43. Silver refiners are apparently getting backed up with scrap as average Joes start raiding the silver service sets for "easy money." We saw this sort of mania during the 80s in the Hunt brothers bubble.

Bubbles aren't necessarily bad if you know when to get out. Do your analysis, set your target metrics, and stick to the plan. It's easy to get swept up in mob mentality and start making emotional moves and that's when you get burned. Me, I'm out; I hit my purchase ceiling back in the mid $20s. A few more ticks up and I've tripled my investment. I just listen to the smartypants on the radio and watch people scramble around these days looking for the last lifeboats on a sinking ship.

I'm calling bubble initiation right now. Jump in and ride it for as long as you think is safe and get the hell out with your profits. Unless you are playing with a significant amount, you won't get rich, but you could see a nice return and strengthen your financial situation for the future. DYODD and good luck to you.

[IBCoupe]

We have entered the bubble phase methinks. When liberal radio commentator are pushing gold investing in their advertising blocks, it becomes obvious that they're really just in it for the money.

FTFY. Listen to these:

Planet Money's The Tuesday Podcast: The Gold Standard
Planet Money's The Friday Podcast: Gold Standard, R.I.P.

And here's a link to their entire series on Gold.

[themadscientist]

You misquoted me, but that's not important.

If by your post you assume I support a return to a gold standard, you would be incorrect.

[themadscientist]

WHOOPS.

http://www.businessinsider.com/sp-revis ... ive-2011-4

MARKETS ARE TANKING AFTER S&P DOWNGRADES US DEBT OUTLOOK TO NEGATIVE

Read more: http://www.businessinsider.com/sp-revis ... z1JshpbwGb

And boys and girls, let's watch what metals do; shall we?

[IBCoupe]

You misquoted me, but that's not important.

If by your post you assume I support a return to a gold standard, you would be incorrect.

Nope. Just saw a good opportunity to insert those there. In public discourse, the two are related.

[Onizuka]

Cool thread, just some observations:

If you truly believe the dollar will become a worthless asset in the near future, now is the time to leverage yourself to the hilt: $1,000,000 mansion and a brand new Ferrari in the driveway. Bank loans dont adjust for inflation so if the US hits hyper inflation your loans should cost no more than a loaf of bread in a few years. Put your soon-to-be-worthless-money where your mouth is, so to speak.

Fiat currency doesn't have value just because someone says it does. Unless you believe in no government (IE anarchy, AKA Somalia), you believe in taxes, and taxes are only payable in dollars, which is what makes it have value instead of being a worthless piece of paper. Every country in the world uses Fiat currency now (yes even China), because its way more efficient than collecting taxes in bushels of corn or any hard asset for that matter.

I really do hope the budget is fixed within a year, because a downgrade of US bonds would hurt the US and global economy something fierce.

Even if it isnt solved, I dont think The People are weak enough to roll over and die if things get bad. We've endured far, far worse.

[carloslebaron]

I think that from the 1930's until 9/11 2001, the US Dollar was as secured and trusted as gold. No record in US history shows an attack to its economy that makes it tremble as if was a third world country until 9/11. All around the world, every country failed as to have a strong monetary currency with a stable country host as solid background, and such a security for invesments as it is the US.

Guerrillas and lesser social-political movements of different kind are the daily pain in the stomach of different nation leaders, and international investors avoid them as a safe place to set a headquarters. On the other hand, US offered such a security, that many investors decided not only to have their business headquarters in this land, but also to become US citizens.

For this reason, the trusting about safety and security had a sudden negative impact right after the easy attacks with commercial airplanes to a great business headquarters plus to the headquarters of the military operation in US.

An interview made on the day of the attacks -that has not been broadcasted anymore since the morning of that day- was the questions made to a woman who was the Pentagon's remodeling contractor representative, who said that a week before -the atacks- she asked for the "exit lights" locations in the area of remodeling -because she saw none-, in case of an emergency...and that the Pentagon's representative was surprised by such a question, and he answered her something like, "(emergency?) this is the Pentagon!"

Until that day, US was indeed the most safe country for investors to set their business headquaters...plus living in this country without the daily guerrillas attacks problem found in other nations, including Europe. But apparently, the side effects of the 9/11 attacks still are destroying such a feeling of safety towards US.

Today, when there are iniciatives to discard the dollar as a worlwide accepted currency, the next candidate to take the first place is the Euro -a currency by the way, that Saddam opted to welcome in Iraq as the only currency acceptable in his land for trade purposes- .

So far, the Euro still is an immature currency, but it can grow up. My view is that US might end in a close bankruptcy, and that Europe will come to the rescue, in order to impede that any other nation might try to take the leadership, like China as an example. (China as well, is a country without social-political guerrillas, the followers of the Dalai Lama don't use weapons).

That is my opinion, because I think that even with today's technology, traders are most comfortable by making transactions with monetary currency than doing it with gold. It won't be so complicated to change transfers of funds with gold pounds -or kilos- instead of any monetary currency, but I don't see that such will work well with all kind of transactions, I really don't...

[themadscientist]

Cool thread, just some observations:

If you truly believe the dollar will become a worthless asset in the near future, now is the time to leverage yourself to the hilt: $1,000,000 mansion and a brand new Ferrari in the driveway. Bank loans dont adjust for inflation so if the US hits hyper inflation your loans should cost no more than a loaf of bread in a few years. Put your soon-to-be-worthless-money where your mouth is, so to speak.

I have. For example, I took half my 401K, I would have cashed it out if I could, and bought metals. I have outperformed the market.

I have a half million dollar house mortgaged to the hilt. I am also betting against the yen.

I have a set amount of paper for a couple of months, but nothing more. Any excess cash is turned into real things or investments that will increase in value in a collapse. Food, basic supplies, etc.

I'm not screwing around. I'm confident in my analysis and I'm all in. Other people are convinced that bankers and government officials that have demonstrated time and again that they are ignorant and outright liars are somehow honest and correct for once. They are all in too. They have their intangible investments, they have their savings accounts and their 401Ks, etc and believe the way America works makes sense and will survive into perpetuity.

One of us is right and we will all find out soon. S&P's opinion of America's outlook mirrors mine and is Silver's playing with $44 an ounce and gold bouncing off $1500.....

[Onizuka]

I bow down to TMS

Glad to hear you are diversified. I've done pretty good in the stock market over the last 5 years just doing mutual funds. I've pulled out most of what I have saved up out to work on buying a cheap rental property, I like the idea of an investment that has real world function. I'm young and dont have too much, so in any apocalypse scenario I'm going to rely on the best investments I have, family and personal technical skills.

[themadscientist]

Were I stateside I would be snapping up property before interest rates shoot up on threats of government debt default fears. More power to you on that move; I think you are right on target.

[themadscientist]

Here is fundamental problem with those that deny my assertions.

The problem with elevating your opinion to that of a natural truth is the longer you stay with it, the more nagging facts that subvert your forecast start to force you to delude yourself and deviate from honest objective analysis so as not to appear foolish.

Much like an investor who bet on a market that went the opposite way, you lose time and money allowing ego and emotion to make you second guess what is obvious to your eyes and cut your losses. With each new opportunity to reassess you can process the new information and adjust your position or turn a blind eye and further lash yourself to the sinking ship of your initial bet. When 33% of my 401K evaporated I woke up. I knew the housing market was a bubble and advised my mom to sell, but she didn't listen. Now she is stuck with a house worth less than it used to be. I wish I had dug deeper and realized how the subprimes intertwined through the markets; I would have done a lot of things differently.

I am not personally attached to my opinions. I can and will change them at each new exposure to newer information or clearer analysis of existing. Those that continue to argue against the coming of economic turmoil cannot thus far demonstrate how very real economic forces can be turned away from disaster. They speak of things having always "worked out." That is illogical and specious.

I do budgets for a living, it's part of my job. Historical information is very important. Without it you lack any sort of foundation to begin planning. Before charting a path to a destination, you must first know where you are. I see a lot of people doing a moving average. They take the last three years data and average it and knock off for the rest of the day.

This is exactly what many financial gurus are doing. They continue to advise their clients to basically "do what we have always done." The problem with this is, things are not as they have always been. A good budget maker or any person who must forecast trends and make plans takes that initial average and then looks at the current situation. They also look ahead and start asking hard questions.

* What are the evolving forces that could influence this thing I am forecasting?

* What are the potential directions for the market?

* What are the strongest possibilities?

* Are they so strong as to be actionable?

* If so, how must I move to position for best advantage in this likely future?

and so on.

If there is one overarching truth that the last few years have shown us it's that the old "truths" are no longer true. It's not that they were never true; they were true within the context of their time. The lifespan of those truths has come to an end and new truths are asserting themselves which somewhere down the road will similarly become "untrue."

This nostalgia for the way things used to be permeates government and financial advice. Would you attempt to repair a 370Z using the 300Z shop manual? It was always relevant before, right?

Would you open a Blockbuster video today? It was always profitable before, right?

and on and on.

We are at a crossroads and each of us will have to decide which way to turn or if to turn at all. Metaphorically, I am scanning the other possibilities and seeing potential clean pavement there. Straight is full of potholes, then becomes dirt and ends in a cliff. Self-anointed gurus are telling us to keep going straight as they aloofly read a magazine and rifle through your wallet. You go straight if you wish, I've put on my blinker already.

[themadscientist]

Big doins in the market. Several factors have collaborated to induce a huge pullback. As I type this silver is tracing back through $38

http://www.marketwatch.com/story/silver ... 2011-05-05

*

The Chicago Mercantile Exchange raised margin requirements on silver futures four times in two weeks. While margin requirements must go up when prices go up, four times in two weeks sure is grist for those who say the big banks are short silver and will do anything to derail silver’s bull run.
*

Disappointment over silver’s failure to breach the psychologically important $50 level last week is also a factor. The hot money is moving on to other things for now. This leads to a correction, a normal and necessary part of any bull market.
*

And then there’s simple profit taking — many people bought silver at much lower levels and so they’re locking in gains. Certainly big funds run by George Soros and others are doing just that. And you know what, I told my subscribers to do that, too, because there’s nothing wrong with taking profits. Silver, gold hit by report of Soros selling.

My metal forum is awash with daytraders bleeding from self-inflicted wounds. It's quite amusing. Here is a guy holding a bar, or even an ETF share saying "I've lost money!" This is a curious perspective, but illustrates the fundamental mistake they made. They saw the market lurch violently upward and jumped in without really understanding it. They thought it was going to just keep going up and they could flip it really quick. That sometimes works, but not at the moment and they think they have lost money. Unless they think the price will never again go up, they are are right. They were weak opportunists and got burned. Good! You only lose money on a purchase when you are unable to sell it at a profit. Holding it until it is profitable is still an option, but a daytrader can't afford that.

This is a good thing for people who are looking at commodities as a hedge because they, we, I are in it for the long haul. To us this is one of those dips you buy on and a dip like I have never seen. If your interest is long term as a safety net against dollar devaluation, this is a gift. If you are an opportunist looking to get rich quick, not so much, but not a bad time to look for an entry point for the next rise. The difference being when you start to see people buying furiously with no overall plan, bail out.

For those of you small guys like me trying to diversify and cover your a**, I write these things. I want you to be ok when things tank. Please do your own analysis and decide for yourself if you agree with me and if the factors line up for you the same way. Don't risk more than you can afford to lose because any investment is a risk, but do take responsibility for your financial future and adopt the same thinking as those evil bankers.

I AM TOO BIG TO FAIL!

Watch this dip, I think we have some more to go and friday should give some indication of whether we are going to pick up the drop on monday or if there is still more blood to let. This is a snowball effect starting with the most ill-timed and poorly-planned investors running. After them the wiser investors see the signs and take profit. As they exit the drop picks up speed and successively more stubborn profit-seeking investors jump ship. People start to panic more as it drops and emotional moves assert themselves. I stand on the sidelines enjoying the scent of blood in the air. I call your attention to it so you might be able to venture into the post massacre field and collect some shiny trinkets with me. It's wise because despite this event, the fundamentals are unchanged and a long view holds steady.

*

Industrial demand for silver is enormous. Nearly 75% of the world’s silver supply is used to make everything from chemical reagents to jewelry to solar panels to plasma TVs. And with the global economy expected to grow by 4.5% this year, according to the International Monetary Fund’s latest figures, that industrial demand for silver is only going to increase.
*

The decline in the U.S. dollar is threatening to turn into a collapse. The buck recently touched its lowest level against the euro since December 2009, and the U.S. Dollar Index /quotes/comstock/11j!i:dxy0 DXY -0.03% was recently off 7.5% just in 2011. For a currency, that’s a huge move! Since silver — as well as gold and other commodities — are priced in dollars, they generally move opposite to the greenback. It’s what I call the “seesaw of pain” — somebody’s always getting hurt.
*

Mine supply of silver is tight. While silver fabrication demand grew by 12.8% last year, silver mine production rose by only 2.5%, and mine supply accounts for 70% of all silver supply, according to GFMS. It’s hard for miners to crank up silver production because two-third of silver produced by mines is as a byproduct to other metals. Mine supply IS expected to rise this year, but it will be hard-pressed to keep up with the expected rise in demand.
*

Mine supply of silver is tight. While silver fabrication demand grew by 12.8% last year, silver mine production rose by only 2.5%, and mine supply accounts for 70% of all silver supply, according to GFMS. It’s hard for miners to crank up silver production because two-third of silver produced by mines is as a byproduct to other metals. Mine supply IS expected to rise this year, but it will be hard-pressed to keep up with the expected rise in demand.

[Chaotic_Warlord]

TMS, since you obviously know your isht and are apparently watching the commodities market like a hawk let me ask you this, if the price of gold is goinging through the roof why isn't the American dollar value also going through the roof, thus making it stronger? After all, it's base value is supposedly based on the value of the gold in Ft. Knox? I understand that there are more dollars being made than are being destroyed thus weakening its value, but money isn't worth anything if the commodity it's based off of isn't worth anything, in this case gold, and the price of gold is up up up, so the value of the dollar should also be up up up.

Oh and I was wondering, if the price of gold is rising, does this mean my gold dollar coins are worth more than a dollar? Everytime I get a haircut and give my guy a tip he gives me a gold dollar coin, I must have like 20 or 30 of these damn things and I refuse to use them.