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135 Comments
- soulkitchen, on 09/29/2008, -1/+71Don't worry, we still make weapons. We'll just make a market for those.....
- dragongrrl, on 09/28/2008, -1/+41hah! i've been worrying for a while that America no longer makes (much of) anything. our biggest expertise is in entertainment and marketing -- things that have little 'intrinsic' value.
i have to believe that part of the reason that the bailout is going through is due to pressure from our trading partners who hold much of our debt. - rawg, on 09/29/2008, -2/+27Debt is a way of making money out of money.
What the US economy has been doing for the last few years is massively increasing the money supply through leveraged debt, i.e. mortgages, corporate debt, etc. This should have resulted in price inflation causing higher interest rates or weakening the dollar to bring the market back into balance but instead foreign banks in export driven economies like China and Japan and oil producing countries in the Middle East have absorbed trillions of dollars in excess money supply by buying our debt and taking the dollars off the global market.
In effect, we've exported our inflation to the rest of the world and now they're holding our economies hostage. If we stop consuming the imports of countries like China, Japan and OPEC, then they will no longer need to hold our dollars as reserve currency. If they put those dollars back on the market then the dollar will collapse and allow foreign countries to buy US assets at severe discounts just like what happened when the sheiks and the Japanese were buying up US companies and real estate in the late 80's during the last real estate crisis, i.e. S&L bailout.
Republicans were in charge back then too. Makes you wonder what's really going on sometimes. - DeskFlyer, on 09/29/2008, -9/+33I wish we could export Bush supporters.
- inactive, on 09/29/2008, -1/+24Interesting but basic. Doesn't exactly paint the full picture. China and Japan prop up the US by buying US treasury bonds (thus insuring the debt). Explosive American consumerism props both of these economies up (especially China) and serves as the global economic engine for growth.
China's domestic market is growing though, and once that reaches its full potential...well who knows... - CAisBacK, on 09/29/2008, -0/+17*****.... Designed in California Assembled in China
Does that say something? - DiggsOnlyJew, on 09/29/2008, -2/+16Everyone acts like the US is the only country with debt:
http://en.wikipedia.org/wiki/List_of_countries_by_ ...
Japan's debt is almost $8 trillion with 40% of the economic output of the US. - Charlotte_Web, on 09/29/2008, -6/+19Here's the problem: in 2004, the Republicans in the House held a dozen hearings to investigate corruption in Fannie Mae and Freddie Mac. Watch this video, it'll make you mad as hell:
http://digg.com/2008_us_elections/VIDEO_Dems_fight ...
Democrat after Democrat after Democrat after Democrat are "pissed off" at the Republicans for trying to fix something that they claim "isn't broken"!
Even the CEO of Fannie Mae, Frank Raines, claims in the video that home mortgages carry almost no risk! Is this guy an idiot or what?
$700 BILLION WAS SPENT BECAUSE DEMOCRATS OPPOSED THE INVESTIGATION OF FANNIE MAE AND FREDDIE MAC. - tajitj, on 09/29/2008, -7/+17Yeah Ron Paul turned me on to this fact.
Pledge to support a 3rd party debate. I bet one of them will tell the people about this.
http://www.thirdpartyticket.com/ - DD2CC2U, on 09/29/2008, -0/+10No this is much Bigger than Fannie Mae and Freddie Mac. They are just symptoms of the illness. This economic mess started way before 2006.
- dafragsta, on 09/29/2008, -1/+10It was NEVER 6 trillion. If it was, I seriously doubt anyone would be sweating an $1 Trillion loan and further socialization of the banking system. There might have been an estimated surplus of $6T at the end of the timeline Clinton drew, which was for 2020-ish if I recall correctly. Something else is definitely up. The GDP of the US is in the trillions, but I don't know what'll happen if the world soon sees the US as a bad investment and pulls the financing.
- eastwood24, on 09/29/2008, -1/+10Yah, the world market is paying too much for design plans. I bet some Malaysian could do the specs for a fraction of the compensation.
- Ninh, on 09/29/2008, -1/+8They'll sit on worthless paper and their main customer is broke?
- alamedaman, on 09/29/2008, -4/+11shocking. maybe because we don't listen to people like Ron Paul and Peter Schiff, and instead listen to ***** like Bernanke and McBama.
- kigcoopa84, on 09/29/2008, -0/+6China's top concern isn't catering to its own people. That would be in the bottom 10
- DD2CC2U, on 09/29/2008, -7/+13This is Bad. Very Very Bad. How did the United States go from a 6 trillion dollar budget surplus in the year 2000 to this in eight years?
- Charlotte_Web, on 09/29/2008, -1/+7@DD2CC2U:
You're right; this is about the sub-prime mortgage mess, and has been a domino effect through the economy. It started with the Community Reinvestment Act:
http://en.wikipedia.org/wiki/Community_Reinvestmen ...
The Community Reinvestment Act was a Carter-era law that Clinton put on steroids to create the sub-prime market:
Clinton revisions:
"In early 1993 President Bill Clinton ordered new regulations for the CRA which would increase access to mortgage credit for inner city and distressed rural communities. The new rules went into effect on January 31, 1995 and featured: requiring strictly numerical assessments to get a satisfactory CRA rating; using federal home-loan data broken down by neighborhood, income group, and race; encouraging community groups to complain when banks were not loaning enough to specified neighborhood, income group, and race; allowing community groups that marketed loans to targeted groups to collect a fee from the banks.
The new rules, during a time when many banks were merging and needed to pass the CRA review process to do so, substantially increased the number and aggregate amount of loans to low- and moderate-income borrowers for home loans, some of which were "risky mortgages."
George W. Bush era:
"In 2002 there was an interagency review of the effectiveness of the 1995 regulatory changes to the Community Reinvestment Act and new proposals were considered. In related 2003 proposals, the Bush Administration recommended that a new Department of the Treasury agency should supervise the primary agents guaranteeing subprime loans, Fannie Mae and Freddie Mac. Congressional support was approximately split along Party lines, with the Republicans in support of the changes and the Democrats against, and the proposal eventually failed."
http://www.ibdeditorials.com/IBDArticles.aspx?id=3 ...
The DEMOCRATS caused this crisis, and now we're supposed to give the DEMOCRATS $700 BILLION to bail us out?!? - spaceman84, on 09/29/2008, -0/+6The Chinese don't want domestically produced goods. They want imported goods because they're status symbols. That's why Buick is the top automobile brand there and GM has the largest slice of the marketshare. They love their Chevy's over there too.
- Suricou, on 09/29/2008, -0/+5It wasn't that big a surplus, but it was a surplus.
The answer isn't that hard. The reaction to 911 gets the blame - the massive increase in general military spending, together with the extremally expensive invasion and occupation of Afganistan followed by the even more expensive occupation of Iraq. You can debate the long-term effects on this on global politics all you want, and it probably will be beneficial to American interests eventually - but right now, the consequence of all this war is a very large bill. - kigcoopa84, on 09/29/2008, -0/+5ha
- mickstephenson, on 09/29/2008, -0/+5Alot of countries don't make much of anything and do fine, Britain and alot of European countries don't make alot of products anymore. The major issue here is a shift in power towards the Chinese and the folly of the US developed model of Ultra-Capitalism, whereby non of the big businesses have any allegiance to the US, and will thus happily screw the US over royally for the sake of a quick buck. In fact even the politicians who have the hands in the pockets of big business will screw their own country for a quick buck.
Prepare for the USA to suddenly find socialist ideals a lot more palatable in the next few decades. - muckemuck, on 09/29/2008, -1/+6but.. but.. debt is money! http://video.google.com/videoplay?docid=-905047436 ...
- howea, on 09/29/2008, -0/+5Nope, the true U.S. debt is much higher, about 59 trillion. This includes all the borrowing from Social Security and Medicare.
http://en.wikipedia.org/wiki/United_States_public_ ... - jasdf, on 09/29/2008, -0/+5Interesting stats.
- wadge22, on 09/29/2008, -0/+4It's better that we don't read, think, or talk about the situation... you know, since we're not professors.
- richmomz, on 09/29/2008, -0/+4We've had this coming for a LONG time (like since we came off the gold standard in 1971). The government has been pulling every string they can find to keep our baseless fiat system going ever since... and they just ran out of string.
- mahadiga, on 09/29/2008, -0/+4Can China export all its products (socks,toys,flat-screens etc) to USA without catering their own people?
- inactive, on 09/29/2008, -2/+6dugg for "Ron Paul turned me on..."
- CrushThemTorg, on 09/29/2008, -0/+4 Buick and KFC are two bizarre marketing success stories in China. Read about them and have your marketing mind blown.
- SpinningHead, on 09/29/2008, -3/+7Really? All you have left is calling the people who were right the past 8yrs socialists?
- richmomz, on 09/29/2008, -1/+5Who would want them?
- Jorlwind, on 09/29/2008, -2/+6Hm, here I thought that instability was the number one USA export. I guess that must be #2.
- FaithclubDotNet, on 09/29/2008, -0/+4I still don't get how the US government thinks it can let the budget go into deficit as much as the GDP is estimated to increase. You'd think a nation would save and get a surplus so it could live off the interest and then lower taxes. The biggest flaw I see with the US government is that people are only ever thinking for the short term and not our basic sustainability as a nation.
- OaklandNative, on 09/30/2008, -0/+3Woohoo... in your face Nicaragua!
- reggio, on 09/29/2008, -3/+6It's about time people are starting to catch on! Fiat currency is a disaster for America. The dollar is doomed. The only way to save your purchasing power is to buy foreign currencies or gold!
- kigcoopa84, on 09/29/2008, -1/+4shut up, Bush sucks but your an idiot and dont know what your taking about
- groverblue, on 09/29/2008, -0/+3Bushes? I guess, in a way, shrubs are running the White House.
- life38, on 09/29/2008, -5/+8Bushes foreign policy is to have the US in need of another counties money for its debt that he can make an excuse on why he did not make the harsh decisions. Oh, remember he flew all of the Saudi's out that same day and now flies other minorities to foreign countries for torture.
- inactive, on 09/29/2008, -0/+3new macbooks out already?
- dlstaifer, on 09/29/2008, -1/+4If you would like to read more about this, read "Bad Money" Kevin Philips.
- odigity, on 09/29/2008, -2/+5Excellent analysis, then you ruined it by blaming Republicans. If you had blamed both parties, I'd agree with you.
One more time for those not paying attention: There is no difference between a Democrat and a Republican. Two puppets, same puppetmasters. - Suricou, on 09/29/2008, -0/+3I think the final paragraphs are key.
There is a very simple solution to the problem in the long term - the government needs to get it's outgoing funds lower than incoming. Simple, and completly non-practical in political terms. It could only be done by a combination of raising taxes and cutting expenditure. The former is political suicide - can you imagine a politician getting voted in on a platform of higher taxes? The latter is broadly supported in vague princible, but when it actually comes to deciding what to cut, a similar situation arises. Cut military funding, be seen as weak on terror and unpatriotic. Cut social spending, be seen as anti-family. Cut industrial subsidies, and be blamed for the resulting price rises, plus get attacked by a powerful lobby. The only major area of spending I can think of that could be cut without public outcry would be science, because the voters don't see any immediate benefits from it - but that just creates problems in the future too, and it isn't enough to save $700b a year alone. There are things that *need* to be done to preserve the economy in the long term, but which have such unpopular immediate consequences it's impossible for a democracy to do them - anyone who tries will lose the next election. - defektiv, on 09/29/2008, -0/+3Whoever becomes our new masters, I hope they judge us according to our debt. I want to be rewarded for prudence for once.
- TalksInMaths, on 09/29/2008, -1/+4Some of us did go to college and get degrees and have real world experience, you know . . .
- Benholtz, on 09/29/2008, -0/+3Notice this quote regarding the deficit... "It grew from $114 billion in 1995 to $417 billion in 2000 to a record $788 billion in 2006 before falling to $731 billion, or 5% of GDP, last year."
Ok so get this:
from 1995 to 2000 it grew $303 Billion Dollars
then from 2000-2006 it grew $314 Billion Dollars
Other facts
Bill Clinton, President of the USA (1993-2001)
George W. Bush, President of the USA (2001-2008)
I'm not defending Bush... but it sure seems like he didn't totally "***** IT UP" like Obama keeps saying... - inactive, on 09/29/2008, -0/+3Well, Chinese Buicks are actually better than American Buicks.
For example, the Chinese and American versions of the Buick LaCrosse are radically different, and the former is actually a luxury car comparable to Lexus. - Apocolypse007, on 09/29/2008, -0/+3Eventually we will sell out so much that China will just buy the entire country. Sucks that a communist country is better at capitalism than we are.
- jmcneilly, on 09/29/2008, -0/+3Simple...
http://mcneilly.deviantart.com/art/700-Billion-993 ... - thereisnostate, on 09/29/2008, -0/+3and we have to pay for these wars for Israel somehow..
- charlietuna, on 09/29/2008, -0/+3Whoever dugg that down didn't watch the video. It is well researched and accurate. (and NO, I am not a Ron Paul acolyte).
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