Thread: The strongest economy in the world

^ Many people are buying their groceries at auctions now. Of course retail sales dropped -- who goes shopping when they are unemployed or in fear of losing their jobs? Many folks are only buying essentials now.

Originally Posted by Jet Gorgon

unemployed or in fear of losing their jobs?

you mean 'the losers', right jet?

Originally Posted by Boon Mee

Worth noting:

• If you’re a 50-year old-with a college degree, you will pay approximately $81,000 over your working life just to pay the interest on the debt in the Obama budget.

• If you’re a 40-year-old, you’ll pay $132,000.

• And if you’re a 20-year-old, just starting out after college, you will pay a whopping $114,000 just to service the interest on the debt created by the Obama budget

Important point, Boon, and thanks for noting it.

I've been talking about this for 17 years, but nobody was listening.

Why wasn't this discussed 17+ years ago?

Interesting article below. China, shifting out of dollars as it has been - but buying up copper, as copper is needed for hybrid vehicles.

A 'Copper Standard' for the world's currency system?

Hard money enthusiasts have long watched for signs that China is switching its foreign reserves from US Treasury bonds into gold bullion. They may have been eyeing the wrong metal.


By Ambrose Evans-Pritchard

16 Apr 2009


China's State Reserves Bureau (SRB) has instead been buying copper and other industrial metals over recent months on a scale that appears to go beyond the usual rebuilding of stocks for commercial reasons.


Nobu Su, head of Taiwan's TMT group, which ships commodities to China, said Beijing is trying to extricate itself from dollar dependency as fast as it can.

"China has woken up. The West is a black hole with all this money being printed. The Chinese are buying raw materials because it is a much better way to use their $1.9 trillion of reserves. They get ten times the impact, and can cover their infrastructure for 50 years."


"The next industrial revolution is going to be led by hybrid cars, and that needs copper. You can see the subtle way that China is moving into 30 or 40 countries with resources," he said.

Link & Entire: A 'Copper Standard' for the world's currency system? - Telegraph

Gerald Celente has been takling about 'ghost malls' and commercial real-estate problems:

Chapter 11 gives a company a chance to ward off creditors and re-organize. We'll have to wait and see.

Glendale Galleria owner files for Chapter 11

General Growth Properties, which owns or manages more than 200 malls in 44 states, owes $27 billion. The firm says it will continue operating all of its shopping centers during the bankruptcy process.[/color]

April 17, 2009

Saddled with billions in debt, shopping mall giant General Growth Properties Inc. sought protection from its creditors in Bankruptcy Court on Thursday, marking the largest Chapter 11 filing for a real estate company in U.S. history.

The bankruptcy filing by General Growth, owner of the Glendale Galleria, Northridge Fashion Center and other Southland malls, had been expected for months. In recent years, Chicago-based General Growth went on an ill-timed buying binge that left it with $27 billion in debt as shoppers and lenders turned stingy.

"They've been a problem waiting to happen, and the credit crisis brought the issue to the forefront," said Rich Moore, a real estate analyst at RBC Capital Markets. "Very few companies have the kind of debt that General Growth has.

Link & entire: Glendale Galleria owner files for Chapter 11 - Los Angeles Times

Originally Posted by Milkman

Gerald Celente has been takling about 'ghost malls' and commercial real-estate problems:

Chapter 11 gives a company a chance to ward off creditors and re-organize. We'll have to wait and see.

Glendale Galleria owner files for Chapter 11

General Growth Properties, which owns or manages more than 200 malls in 44 states, owes $27 billion. The firm says it will continue operating all of its shopping centers during the bankruptcy process.[/color]

April 17, 2009

Saddled with billions in debt, shopping mall giant General Growth Properties Inc. sought protection from its creditors in Bankruptcy Court on Thursday, marking the largest Chapter 11 filing for a real estate company in U.S. history.

The bankruptcy filing by General Growth, owner of the Glendale Galleria, Northridge Fashion Center and other Southland malls, had been expected for months. In recent years, Chicago-based General Growth went on an ill-timed buying binge that left it with $27 billion in debt as shoppers and lenders turned stingy.

"They've been a problem waiting to happen, and the credit crisis brought the issue to the forefront," said Rich Moore, a real estate analyst at RBC Capital Markets. "Very few companies have the kind of debt that General Growth has.

Link & entire: Glendale Galleria owner files for Chapter 11 - Los Angeles Times

Sorry to see this. Part of my 20's were spent living in Glendale and one of my childhood friends is the current chief of police of Glendale. It's a great city. 3rd. largest incorporated city within Los Angeles County.

OT, but I lived in Los Angeles close to Glendale and used to go to the Glendale Galleria occasionally. I was in Hollywood.

It now appears that deflation has occurred in the US. Historically deflation is followed by high inflation.

Here's an article by the Financial Times. This paper is usually negative towards the US, but it also has good info.

Inflation is looming on America’s horizon

By Martin Feldstein
Published: April 19 2009

The US last week showed its first signs of deflation for 55 years, prompting inevitable fears of further deflation in the future. Yet the primary reason for the negative rate of US inflation is the dramatic 30 per cent fall of commodity prices. That will not happen again. Moreover, excluding food and energy, consumer prices are up 1.8 per cent from a year ago. That is the good news: the outlook for the longer term is more ominous.

The unprecedented explosion of the US fiscal deficit raises the spectre of high future inflation. According to the Congressional Budget Office, the president’s budget implies a fiscal deficit of 13 per cent of gross domestic product in 2009 and nearly 10 per cent in 2010. Even with a strong economic recovery, the ratio of government debt to GDP would double to 80 per cent in the next 10 years.

Link & Entire: FT.com / Comment / Opinion - Inflation is looming on America’s horizon

^ Weird that consumer prices, ex food & energy, are up -- are they doing a Thai flip in the US? Nobody's buying, so raise prices?

^ No. Deflation started in the US a month ago. Deflation is a sign of coming inflation because of the increase in M3.

Long, but well worth a read.....

Banking System White Paper

Originally Posted by Jet Gorgon

^ Weird that consumer prices, ex food & energy, are up -- are they doing a Thai flip in the US? Nobody's buying, so raise prices?

Originally Posted by Milkman

^ No. Deflation started in the US a month ago. Deflation is a sign of coming inflation because of the increase in M3.

What are you on about?

Originally Posted by Jet Gorgon

Originally Posted by Jet Gorgon

^ Weird that consumer prices, ex food & energy, are up -- are they doing a Thai flip in the US? Nobody's buying, so raise prices?

Originally Posted by Milkman

^ No. Deflation started in the US a month ago. Deflation is a sign of coming inflation because of the increase in M3.

What are you on about?

Re-read my post.

US prices are not going up - they are declining. Then I followed up with my point from the Financial Times article I posted above. Other gov stats show deflations (decline in prices in the US).

Originally Posted by Milkman

Inflation is looming on America’s horizon

...the primary reason for the negative rate of US inflation is the dramatic 30 per cent fall of commodity prices. That will not happen again. Moreover, excluding food and energy, consumer prices are up 1.8 per cent from a year ago.

That's what I'm on about. Not consumer spending, consumer prices.

Inflation is something that has got to happen before things can get back in balance. Why do you think that the US government is printing and borrowing vast amounts of money at virtually zero interest rates. They have got to get the tradable value of the $US down to a reasonable level (like -30%) to stimulate export driven jobs and debt control.

^ When is that gonna happen, P? I doubt it will anytime soon coz then the value of China's debt holdings will shrivel up.

^ When will it happen? Who can put a date on these things? So long as the $US is the worlds default trading currency and the rest of the world holds faith in it, its tradable value will remain relatitively high. The only certain thing is that the general consensus is inflation is on the way due to mounting debt that cant be paid back at current exchange rates, and of course the creation of even more $USs which do not represent any increase in actual productivity. Creating money out of thin air to pay off debt only works so long as other countries are willing to accept that paper money and send real goods in return. Thats been going on for decades and thats primarily what has got the world into this financial mess we are all in now. The housing bubble/sub-prime/banking meltdown is nothing more than a symptom of a much bigger financial imbalance in the worlds economy.

If the $US is to remain the worlds default trading currency in the future it needs to be backed by productivity rather than spiraling debt if things are to work properly. The world might as well be trading in sea shells or cornflakes boxes if the US is just going to go deeper into debt and print more money to pay off that debt. Its a financial system built on faith alone rather than productivity. It cant go on forever. The sooner the worlds faithful figure out they are lending money to an unemployed guy who is paying off his bills on a credit card, the sooner we can get back to a functioning financial system based on productivity rather than debt.

As far as Chinas US debt holdings shrivelling up, -- well, thats the general idea. Good for USA, bad for China. In short, China managed to accumulate a lot of $USs by trading actual tangible goods for US paper money (or at least a promise to pay in $US paper money).

Thanks for the great info, Panda. I learn a lot from you.

I'll put the following short video on Bank Stress Tests here. Worth a watch. It seems to many in the industry that these "stress tests" are a sham:

^ Nice one MM.

Ohh dear, so that's how all those good Bank numbers have been made the last 2 weeks, I was wondering about that, how can they suddenly be so healthy when they just have received billions in aid, and they need 1 trillion more (at least) But somehow the stocks went up on those rosy reports, don't the stock market know what is going on ??

Originally Posted by larvidchr

don't the stock market know what is going on ??

No. And that's one of the reasons why we are where we are.

Also. +1 to Panda. Another excellent post describing the situation accurately.

Barney Fwank Announcing There Would Be No Collapse

Democrats must hate video. Here's prominent Dem Barney Frank, who put off Republican attempts to prevent the subprime catastrophe, declaring that the collapse wouldn't happen:





Fwank was not only being paid off by Fannie Mae and Freddie Mac, the horny old queen was literally in bed with a Fannie exec. This POS is still in office, having paid no price for the massive crisis he and his colleagues created...

Originally Posted by Panda

^ When will it happen? Who can put a date on these things? So long as the $US is the worlds default trading currency and the rest of the world holds faith in it, its tradable value will remain relatitively high.

Partly agree with you, P, but disagree on these points. Businesses (such as traders, ex-im) worldwide use the US$ (altho Russia et al have made moves to change the "world" currency and some ME countries are going for the Euro), but until they all decide on one trading currency, why bother? It's not that they have "faith" in the greenback per se, it's that it is the currency of trade. In that way, they do support its value.

Originally Posted by Panda

As far as China's US debt holdings shrivelling up, -- well, thats the general idea. Good for USA, bad for China. In short, China managed to accumulate a lot of $USs by trading actual tangible goods for US paper money (or at least a promise to pay in $US paper money).

? Not what I said. I am talking about China's holding of US Treasuries (ie, debt). You trying to tell me that this money is used for trading of goods?? In my view, most countries holding US debt are keeping the buck afloat coz if it falls, the principle of their investments fall, never mind the yields. Don't have the March stats to hand, but China did trim its US debt investment.
US Treasuries Investments: China, Mainland 2/09 744.2 1/09 739.6 12/08 727.4 (in US$ bils)

See all country US debt investments here.
http://www.treas.gov/tic/mfh.txt

Originally Posted by larvidchr

^ Nice one MM.

Ohh dear, so that's how all those good Bank numbers have been made the last 2 weeks, I was wondering about that, how can they suddenly be so healthy when they just have received billions in aid, and they need 1 trillion more (at least) But somehow the stocks went up on those rosy reports, don't the stock market know what is going on ??

I also beg to differ on the view of the econ prof in this video. Yes, the accounting "standards" changed, because...the FASB (the govt agency) changed the rules to allow banks to value their own assets. And, don't forget, the banks made bucks on refinancing mortgages and gee, borrowing $ at almost 0% from the Fed and lending it out at whatever rate they wanted. And credit card interest rates are going up -- sure, folks are screaming, but the banks also have to pay for the delinquents and the non-payers. I saw one news item where a couple were screaming about their credit card rate going up to about 16% (gee, that's cheap init? thought it was about 21%). Anyway, these nice folks had US$12,000 on their credit cards. What? Are they that stupid? Clean your credit card debt every month. Then no fees.

Here's Barney again. He's one of the major players in this fiasco and now he's blaming conservatives and saying that he is the one who is going to fix the problem.