Economic History and the Future Crunch...

[Michaelangelica]

A friend just sent me this Australian article
The party's over and Liberals will soon be history - Opinion - smh.com.au
Although I'm not sure how being a psychologist makes you a good economist.
Perhaps, What you believe will happen, does, as in Cinderella?

Linked to this, but compounding it in frightening ways, is the imminent demise of the United States economy.
In fact the whisper, the subplot in economist circles, was that this election was one to lose. That whoever inherited Australia in 2007 inherited a coming economic collapse in globalised trade that would suck Australia and much of the rest of the world down with it. For two years now the best predictions have been that the subprime meltdown would act as merely the detonator of a much larger explosive charge created long ago by US consumer debt, concealed by Chinese and Arab investment in keeping that great hungry maw that is America sucking in what it could not begin to pay for. The avalanche-like fall of US house prices will be closely followed by the same in linked economies worldwide, and presage a harsh and very different world than the one we have lived in. In short, the party is over. We are a civilisation in collapse

[Qfwfq]

Did none of you notice the recent news (past month or two) about the Chinese gov't minister talking about the need to diversify the country's investments? First thing I thought was, you'd think he'd bloody well do so before saying it too loud...

My savings are in Euro!

[Buffy]

Originally Posted by Qfwfq

Did none of you notice the recent news (past month or two) about the Chinese gov't minister talking about the need to diversify the country's investments?

I can guarantee you that no one in the current administration's Treasury Department was listening!

Originally Posted by Henry Paulson, US Sec'y of the Treasury

"I would just say that I think I've been very consistent on a strong dollar...

...he said after the dollar had dropped 9% in the past year...

LA, LA, LA, I CAN'T HEAR YOU! LA, LA, LA!
Buffy

[Zythryn]

Originally Posted by Boerseun

Back then[2003-2004], gold was trading at around $400/ounce. He predicted that as the sale of dollars back to the States increase, gold should double within two years. Well, it's now two years later, and gold is trading at more than $700/ounce!

Could this be the first signs of the global meltdown to come? The dollar losing more than 30% to the the Euro, and gold almost doubling, and still rising?

First, yes, I believe we are living in a time where there will be massive economic upheavals.
Second, this guy is silly.
Funny how we always look back and latch only the predictions that were correct, instead of all the predictions that were wrong.
Go back to Mid 1977, gold was almost down to $50/once. By the end of 1979 we were up to $750/once, 1400%!
Yes, gold is going up in value rather rapidly, not it isn't (in and of itself) going to lead to economic meltdown.
Now, if it becomes clear we have reached peak oil (e.g. OPEC says it will raise production and it can't, and no one else can fill the shortfall), or if drinkable water becomes so scarce we have wars over it, or China sells all the US debt they have but no one wants it, then we may have a meltdown. But not solely because of gold's price (IMO).

[Boerseun]

Originally Posted by Zythryn

Second, this guy is silly.

I can quite understand your need to believe that I'm silly. You might have assets tied up in markets vulnerable to the future crunch. But saying I'm silly won't prop up your portfolio's defenses. Rather, I think you're misunderstanding my premise...

Funny how we always look back and latch only the predictions that were correct, instead of all the predictions that were wrong.

Why would you want to latch onto wrong predictions? Hindsight might be 20/20, but the only way to validate/invalidate a theory, is through analysing the results of tests and predictions, that can only be done in hindsight. When you're presented with the results of an experiment, the experiment has obviously taken place in the past. How else? In ignoring the predictions of the future economic crunch because it might be to your disadvantage if it were to happen, do you propose we ignore the flow of time, too? Er...
The more evidence comes in that supports the view expressed in the NY Times article referred to in the first post, the more likely it becomes that the theory holds. No theory is absolute, though - hence the name.

Go back to Mid 1977, gold was almost down to $50/once. By the end of 1979 we were up to $750/once, 1400%!

Exactly. Gold doesn't determine where the other indicators go - gold is a follower, and the gold price is a good indicator of what investors think of the rest of the market. If the markets are dodgy, gold rises in reaction to the dodginess. Gold blew through the roof in the '70s, because of the oil crisis. Guess where gold is going now?

Yes, gold is going up in value rather rapidly, not it isn't (in and of itself) going to lead to economic meltdown.

Listen, and listen carefully: Gold is not a leader, gold is a follower. If the gold price rise and rise consistently, it's a sure indicator that investors are losing trust in the rest of the market, said market including anything from oil to actual usable commodities. Gold has been steadily rising over the last few years. What can it mean? Was a new and revolutionary use for gold been discovered in the last few years? No. Gold is essentially useless (except for a few specialty uses - and, of course human vanity) BUT gold is a safe haven in times of economic upheaving. What does that tell you about the current state of world economic affairs, if gold has been steadily rising over the last few years?

Now, if it becomes clear we have reached peak oil (e.g. OPEC says it will raise production and it can't, and no one else can fill the shortfall),

The problem with investors, of course, is that they'll take their money and run long before the actual event. Peak Oil doesn't have to occur before they'll take their money - a good fright will trigger mass sales in a world living under the expectation of Peak Oil. We'll see some bad economic crashes and shakes long before the oil runs out. Investors are funny animals.

...or if drinkable water becomes so scarce we have wars over it, or China sells all the US debt they have but no one wants it, then we may have a meltdown. But not solely because of gold's price (IMO).

Like I said, Gold follows, not leads. The gold price won't trigger anything, because gold's price is established in reaction to the general stance of the marketplace. So, if the gold price is in steep decline, that's a good sign - people have enough trust in the market to invest in things other than that ancient bearer of economic value, gold. If the gold price is in a consistent rising phase, the opposite applies. It's merely an indicator of the market at the time.
...and your second point about China trying to sell US debt will happen once the world changes from oil trade in dollar to oil trade in Euro, because then there'll be an oversupply of dollars and the dollar value will come crashing down, basically destroying the value of what the US owes China. The US & China, and every other government, institution or individual who have any assets bound in dollars, will suffer. But not because of the prce of gold. I think you should read my prior posts a little more carefully.

[Michaelangelica]

[quote]

Originally Posted by Boerseun

I can quite understand your need to believe that I'm silly.

He might mean "silly" in the old AS or Old German meaning of "blessed"?

Exactly. Gold doesn't determine where the other indicators go - gold is a follower,

If the price of gold goes up; people are worried about the value of paper money

Listen, and listen carefully: Gold is not a leader, gold is a follower.

Whoh!!
a bit agro there, but correct
[ation of Peak Oil. We'll see some bad economic crashes and shakes long before the oil runs out. Investors are funny animals.

if the gold price is in steep decline, that's a good sign - people have enough trust in the market to invest in things other than that ancient bearer of economic value, gold

.
YEP
If the gold price is in a consistent rising phase, the opposite applies. It's merely an indicator of the market at the time.
YEP

...and your second point about China trying to sell US debt will happen once the world changes from oil trade in dollar to oil trade in Euro, because then there'll be an oversupply of dollars and the dollar value will come crashing down, basically destroying the value of what the US owes China. The US & China, and every other government, institution or individual who have any assets bound in dollars, will suffer. But not because of the prce of gold. .

I am not sure if this follows.
But we do live "in interesting times"- Chinese Curse.

[nutronjon]

Originally Posted by Michaelangelica

A friend just sent me this Australian article
The party's over and Liberals will soon be history - Opinion - smh.com.au
Although I'm not sure how being a psychologist makes you a good economist.
Perhaps, What you believe will happen, does, as in Cinderella?

I am very glad you all are discussing this issue. The concern in Michaelangelica's post is not only the collapse of the dollar, but the collapse of civilization. I have attempted to warn people of that are headed for economic disaster and war for several years, because all industrial economies are dependant on oil, and we are running out of oil. I still painfully remember everyone telling me we had plenty of oil, and how wrong I am about economic matters, and why we invaded Iraq. My strongest effort however, is not the economic problem, but the civilization one. What makes humans civilized? That is not the subject of this thread, I am just responding to the concern, and will start a thread so we can explore what makes us civilized and how we might weather through an economic collapse.

[Michaelangelica]

Originally Posted by nutronjon

I am very glad you all are discussing this issue. The concern in Michaelangelica's post is not only the collapse of the dollar, but the collapse of civilization. I have attempted to warn people of that are headed for economic disaster and war for several years, because all industrial economies are dependant on oil, and we are running out of oil. I still painfully remember everyone telling me we had plenty of oil, and how wrong I am about economic matters, and why we invaded Iraq. My strongest effort however, is not the economic problem, but the civilization one. What makes humans civilized? That is not the subject of this thread, I am just responding to the concern, and will start a thread so we can explore what makes us civilized and how we might weather through an economic collapse.

I am optimistic about Homo sapiens. . .(most days).

We should see the final reporting of companies affected by the sub-prime crisis in the next twelve weeks.

I think if we all pull together we can help solve the many problems our species has.

But Armageddon is certainly a USA theme song
So those that feel that way might like to post on these threads too?
http://hypography.com/forums/social-...ght=Armageddon

http://hypography.com/forums/philoso...ng-happen.html

I have posted what I see happening (economically) here
http://hypography.com/forums/social-...ight=sub+prime

Gold at $1,000+ an ounce. I remember when it was $35. It is a pity I wasn't born rich. I would be very much richer now.
I would be investing in metal detectors in Oz at the moment.

Off and rushing: gold's rise spurs amateur prospectors

Off and rushing: gold's rise spurs amateur prospectors - National
Metal Detectors Sell Out Near Beaches As Gold Prices Hit Record Highs - Orlando News Story - WKMG Orlando
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