Collapse of U.S. Economy Imminent

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I read that during the Great Depression, the money that the US loaned Germany to make reparations with for WWI which Germany agreed to do under the Versailles Treaty stopped, and this helped lead to Germany becoming bankrupt.

I'm wondering if the reason why it suddenly had money to be able to manufacture weapons, tanks etc was because they took lots of companies, banks accounts, gold, property etc etc from Jews; they did do this, and this is not in dispute, but did this enable them to produce the weapons and tanks etc?

Would the US do this to finance WWIII?

Also, in what way does WWIII generate money?

Furthermore, the article A Bankrupt Superpower
The Collapse of American Power - posted by Pietro_Mercurios - suggests that the British Empire died when it asked its former colony (the USA) for funds and help in fending off Hitler (of course, Britian did not have enough money so they had to pawn off scientific breakthroughs and innovations such as the jet engine).

I think that would be hard for the US to do, all of its colonies (if they are to be called that) have no money, or they have had their infrastructure sanctioned and bombed and crippled to hell so there is no obtaining funds from them.
 

lopaka

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Here, I guess (or 'The Dollar, the Euro...' thread). I know I pretty much never post here these days {waves} so you can take it for what it's worth, OTOH I never, ever have done such a thing before in my life, but, my fellow Yanks: if you have any money in the stock market, unless the company is in energy, agriculture, mining... GET OUT, GET OUT, GET OUT!!!

Convert some of your assets into cash/cash equivalents: US Treasury bills, Australian dollars, Swiss francs. Anything. Inverse ETFs. Hell, gold. I've been growing increasingly freaked out over this burgeoning meltdown for almost a year now and we're really teetering on the precipice. Run, run, run.

Thanks for reading. :)
 

Pietro_Mercurios

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Not quite the sky rolling up like parchment, or the seas turning the colour of blood, but close.
 

Pietro_Mercurios

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Time to throw a rock over the edge and wait for the splash.
http://www.guardian.co.uk/business/2008/sep/29/wallstreet.marketturmoil

Shares plummet as US Congress rejects $700bn bail-out plan
House of Representatives votes against plan spreading ripples of shock through the global financial markets

guardian.co.uk, Andrew Clark in New York. September 29 2008

The US government's $700bn emergency bail-out of the banking industry collapsed in disarray tonight as Congress voted against the plan, sending Wall Street stocks plummeting and spreading ripples of shock through the global financial markets.

Despite a round-the-clock weekend negotiating session, members of the House of Representatives ignored a last-ditch appeal from George Bush by rejecting the rescue scheme on an initial count by 228 votes to 205.

As Congressional leaders went back to the drawing board, the Dow Jones Industrial Average plunged on fears of further banking failures.

The blue-chip average closed down 7%, a 778 points drop which exceeds its biggest ever previous one-day points fall of 684 in September 2001.

The dramatic and unexpected show of political opposition came largely from the Republican benches, where a majority of congressmen opposed the measure citing concern among the public about the cost of the bail-out. The White House said Bush was "very disappointed" by the outcome.

The Republican leader in the House, John Boehner, pledged that political leaders would continue looking for a solution which could satisfy all sides.

"We put everything we had into getting the votes to get there today," he said. "I think we need to renew our efforts to find a solution that Congress can support."

On Wall Street, there were audible groans as traders gathered around television monitors to watch the vote playing out.

"Everybody just stood their with their mouths open," said Sal Catrini, an executive director at JP Morgan in New York, who predicted that uncertainty would send stocks falling even further. "We're seeing real selling but no buyers."

The price of oil plummeted by more than $6 per barrel on concern that commercial activity would wane, the dollar shrunk on worries about the future of the US economy and the price of gold leapt by 3% as investors sought safe havens from the storm.

In London, where the market closed before the outcome of the vote became clear, the FTSE 100 index dropped by 5.3%, shedding 269 points to close at 4,818.

But in New York, major indices were down even further. The technology-dominated Nasdaq exchange was heading for its biggest drop since September 2001 with a fall of 6.3%, while the broader Standard & Poor's 500 index dropped by 6%.

Lawmakers' negative vote came in spite of a spate of reminders of the fragility of the financial industry. Following the British government's nationalisation of Bradford & Bingley over the weekend, a US bank, Wachovia, was rescued from the brink of collapse by Citigroup today and the Icelandic government stepped in to rescue one of its leading banks.

The Democratic leader in the House, Barney Frank, said he would assess the economic reaction before deciding what to do next. He blamed Republicans for "killing" the bail-out. But conservatives said the Democratic speaker of the House, Nancy Pelosi, had caused ill-will by making a "partisan" speech in the closing hours of a debate on the plan.

The bail-out was conceived as a government fund to buy up toxic mortgage-related securities which have poisoned the balance sheet of leading banks, causing the collapse of Lehman Brothers and Bear Stearns and threatening other Wall Street institutions.

Over the weekend, leaders from both parties packed the plan with concessions in an attempt to win over sceptics. The Democrats inserted limits to pay packets for senior banking executives while the Republicans won the creation of a state-sponsored insurance scheme intended to guarantee against future defaults.

The Congressional vote amounts to a shattering defeat for Bush and for the treasury secretary, Henry Paulson, and will further undermine the White House's credibility in Bush's last months in office.

In an early morning address, Bush had appealed for approval from Congress: "With this strong and decisive legislation, we will help restart the flow of credit, so American families can meet their daily needs and American businesses can make purchases, ship goods, and meet their payrolls."
The Free Market magic pixie dust no longer does its magic mojo, not even Tinkerbell Bush can make it fly any more. :(
 

ted_bloody_maul

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I don't think it's anymore the failure of the free market than this bail-out plan would be Communism by the back-door. Unfortunately the solution in this case is scuppered by the implacable demands of frontier politics rather than Wall Street or Washington, though that's where the mistakes were made.
 

Pietro_Mercurios

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The magic of the Free Market just needs a few more tweaks. :rofl:
 

ted_bloody_maul

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Or just needs to be understood more comprehensively. ;)
 

Pietro_Mercurios

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ted_bloody_maul said:
Or just needs to be understood more comprehensively. ;)
That's what the little tyke needs, a little more understanding. :likee:

:rofl:
 

Pietro_Mercurios

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ted_bloody_maul said:
...

Which little tyke? :?
Why, that little fairy Tinkerbell, that is the 'Free Market,' of course.

A 'Comment' article, by controversial philosopher and former Thatcherite Libertarian, John Gray.
http://www.guardian.co.uk/commentisfree/2008/sep/28/usforeignpolicy.useconomicgrowth

A shattering moment in America's fall from power
The global financial crisis will see the US falter in the same way the Soviet Union did when the Berlin Wall came down. The era of American dominance is over

The Observer, John Gray. September 28 2008


Our gaze might be on the markets melting down, but the upheaval we are experiencing is more than a financial crisis, however large. Here is a historic geopolitical shift, in which the balance of power in the world is being altered irrevocably. The era of American global leadership, reaching back to the Second World War, is over.

You can see it in the way America's dominion has slipped away in its own backyard, with Venezuelan President Hugo Chávez taunting and ridiculing the superpower with impunity. Yet the setback of America's standing at the global level is even more striking. With the nationalisation of crucial parts of the financial system, the American free-market creed has self-destructed while countries that retained overall control of markets have been vindicated. In a change as far-reaching in its implications as the fall of the Soviet Union, an entire model of government and the economy has collapsed.

Ever since the end of the Cold War, successive American administrations have lectured other countries on the necessity of sound finance. Indonesia, Thailand, Argentina and several African states endured severe cuts in spending and deep recessions as the price of aid from the International Monetary Fund, which enforced the American orthodoxy. China in particular was hectored relentlessly on the weakness of its banking system. But China's success has been based on its consistent contempt for Western advice and it is not Chinese banks that are currently going bust. How symbolic yesterday that Chinese astronauts take a spacewalk while the US Treasury Secretary is on his knees.

Despite incessantly urging other countries to adopt its way of doing business, America has always had one economic policy for itself and another for the rest of the world. Throughout the years in which the US was punishing countries that departed from fiscal prudence, it was borrowing on a colossal scale to finance tax cuts and fund its over-stretched military commitments. Now, with federal finances critically dependent on continuing large inflows of foreign capital, it will be the countries that spurned the American model of capitalism that will shape America's economic future.

Which version of the bail out of American financial institutions cobbled up by Treasury Secretary Hank Paulson and Federal Reserve chairman Ben Bernanke is finally adopted is less important than what the bail out means for America's position in the world. The populist rant about greedy banks that is being loudly ventilated in Congress is a distraction from the true causes of the crisis. The dire condition of America's financial markets is the result of American banks operating in a free-for-all environment that these same American legislators created. It is America's political class that, by embracing the dangerously simplistic ideology of deregulation, has responsibility for the present mess.

In present circumstances, an unprecedented expansion of government is the only means of averting a market catastrophe. The consequence, however, will be that America will be even more starkly dependent on the world's new rising powers. The federal government is racking up even larger borrowings, which its creditors may rightly fear will never be repaid. It may well be tempted to inflate these debts away in a surge of inflation that would leave foreign investors with hefty losses. In these circumstances, will the governments of countries that buy large quantities of American bonds, China, the Gulf States and Russia, for example, be ready to continue supporting the dollar's role as the world's reserve currency? Or will these countries see this as an opportunity to tilt the balance of economic power further in their favour? Either way, the control of events is no longer in American hands.

The fate of empires is very often sealed by the interaction of war and debt. That was true of the British Empire, whose finances deteriorated from the First World War onwards, and of the Soviet Union. Defeat in Afghanistan and the economic burden of trying to respond to Reagan's technically flawed but politically extremely effective Star Wars programme were vital factors in triggering the Soviet collapse. Despite its insistent exceptionalism, America is no different. The Iraq War and the credit bubble have fatally undermined America's economic primacy. The US will continue to be the world's largest economy for a while longer, but it will be the new rising powers that, once the crisis is over, buy up what remains intact in the wreckage of America's financial system.

There has been a good deal of talk in recent weeks about imminent economic armageddon. In fact, this is far from being the end of capitalism. The frantic scrambling that is going on in Washington marks the passing of only one type of capitalism - the peculiar and highly unstable variety that has existed in America over the last 20 years. This experiment in financial laissez-faire has imploded.While the impact of the collapse will be felt everywhere, the market economies that resisted American-style deregulation will best weather the storm. Britain, which has turned itself into a gigantic hedge fund, but of a kind that lacks the ability to profit from a downturn, is likely to be especially badly hit.

The irony of the post-Cold War period is that the fall of communism was followed by the rise of another utopian ideology. In American and Britain, and to a lesser extent other Western countries, a type of market fundamentalism became the guiding philosophy. The collapse of American power that is underway is the predictable upshot. Like the Soviet collapse, it will have large geopolitical repercussions. An enfeebled economy cannot support America's over-extended military commitments for much longer. Retrenchment is inevitable and it is unlikely to be gradual or well planned.

Meltdowns on the scale we are seeing are not slow-motion events. They are swift and chaotic, with rapidly spreading side-effects. Consider Iraq. The success of the surge, which has been achieved by bribing the Sunnis, while acquiescing in ongoing ethnic cleansing, has produced a condition of relative peace in parts of the country. How long will this last, given that America's current level of expenditure on the war can no longer be sustained?

An American retreat from Iraq will leave Iran the regional victor. How will Saudi Arabia respond? Will military action to forestall Iran acquiring nuclear weapons be less or more likely? China's rulers have so far been silent during the unfolding crisis. Will America's weakness embolden them to assert China's power or will China continue its cautious policy of 'peaceful rise'? At present, none of these questions can be answered with any confidence. What is evident is that power is leaking from the US at an accelerating rate. Georgia showed Russia redrawing the geopolitical map, with America an impotent spectator.

Outside the US, most people have long accepted that the development of new economies that goes with globalisation will undermine America's central position in the world. They imagined that this would be a change in America's comparative standing, taking place incrementally over several decades or generations. Today, that looks an increasingly unrealistic assumption.

Having created the conditions that produced history's biggest bubble, America's political leaders appear unable to grasp the magnitude of the dangers the country now faces. Mired in their rancorous culture wars and squabbling among themselves, they seem oblivious to the fact that American global leadership is fast ebbing away. A new world is coming into being almost unnoticed, where America is only one of several great powers, facing an uncertain future it can no longer shape.

• John Gray is the author of Black Mass: Apocalyptic Religion and the Death of Utopia (Allen Lane)
My Emphasis. P_M

Is Gray right? We may find out very soon.

At the moment, the Free Market cargo cult's voodoo followers are still clinging to their beliefs, that's why the Republicans didn't dare vote for their own leader's legislation.

From 1979, when Thatcher and Reagan introduced their own brand of what even George Bush Sr. called, at the time, 'voodoo economics,' to now, 29, tempestuous, Society breaking, credit bubble blowing, years. The mess may take decades to clean up. The casualty list will be large.

Good riddance. But, I dread the human consequences. :(
 

ted_bloody_maul

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I doubt that the current difficulties will lead to the end of free-market principles governing many of the world's major economic powers. It'll simply lead to greater regulation of one particular albeit vital sector of those economies. Clearly the buck passing antics of the trade in credit will have to be re-examined although it should have been perfectly obvious that it was unsustainable.

The real upshot of it all will not be strictly economic, though. Of course other players like Russia and China will stregthen their position economically (although China's growth is down more to unsustainable borrowing than the American/British model is) but it's the next 2 or 3 years, when the gold rush is on, that will determine the geopolitical landscape. Russia's moves in Georgia, North Korea uncapping the nuclear seals, Iran's continued nuclear programme, Venezuela's desire to initiate one - it's hard to imagine that they would be pursued less vigorously now given the state of play.

As for the cargo cult and its voodoo followers - many of them are of a rather different stripe from the practitioners of Thatcherism and Reagonomics. Their brand of free market dogma has less to do with Wall Street than it does with constitutional fundamentalism.
 

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lopaka3 said:
I've been growing increasingly freaked out over this burgeoning meltdown for almost a year now and we're really teetering on the precipice. Run, run, run.
If we were teetering on the precipice in July - we're now bungee-jumping down into it without being 100% sure we told the instructor our weight correctly.
 

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Benjamin Barber can't be found here at the world-famous Fortean Times Forum, but I think he deserves a firm and honourable place out here.

https://en.wikipedia.org/wiki/Benjamin_Barber

before the twin-tower attacks in 2001 there were already very strong political tensions/pressure in the U.S. and the local, dutch television-station VPRO made a small documentary, including an interview with Benjamin Barber and some impressions of Flint, another General Motors factory-town, that had always relied strongly on the jobs in the local production-plant.
mr. Barber states that 'corporate totalitarianism' (by consolidation into McWorld/globalisation) was one of the main causes of 'jihad' and also has other detrimental side-effects. whether you take this as an economical or political statement or just a nice movie, with beautiful winter-scene impressions and soundtrack is up to you. (never mind any dutch comments, most of it is english)


 
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