On 29/07/2008, at 2:20 PM, Dan M wrote: >> As I have said before, the assertion that the USA is the world's >> engineroom is no longer true. > > It certainly isn't true as it was 8 years ago, but economists are > debating > how tied the world is to the spending of the US on credit cards (and > their > Fanny Mae equivalents.)
Not as much as the US is to it. > > >> An American crash or collapse might slow >> the rest of the world, but it won't plunge the rest of the world into >> recession necessarily any more. > > That's true. And, you see in my post that the consumption of the most > critical commodity (oil) is not what it was 30 years ago. > But.....there are > still a lot of unknowns. For example, the US has been running a > gigantic > trade deficit this decade....near 800 billion last year IIRC. A lot > of that > money is going into Fanny Mae and Freddy Mac bonds.....and these > institutions may be technically insolvent. Yep. > > > The US has to back them, it has little choice. But it will be much > harder > to arrange a soft landing for the US housing bubble for the world > economy > than the Asian bubble of '98. Banks will suffer. Stock markets will suffer (are suffering, in fact). There'll be a knock-on effect, but other economies are moving away from USD (and have been since the gold standard was dropped). If the USA does crash and the rest of the world takes a hit, I think it'll be the last time it happens with the US, 'cause with the level of globalisation business will just move. The Asia-Pacific boom is self- sustaining now, IMO. (Not sustainable, mind, but that's a different issue). > > > The fall of the dollar has been orderly.....but unless the trade > imbalance > fades with the dollar, there is a risk of a "run on the bank." Big time. > BTW, I'm not really arguing with you; I'm 90% in your corner in this > discussion....I just have some worries about short and mid term > problems. So do I. I don't think it'll be rosy. I think it's going to be horrific in the States, the UK will take a hit, Oz is taking a hit in the banking sector but the resources boom will get us through the worst. And this'll just drive business away from the States (especially money business) for a good while. World confidence in the USA is at an all-time low, much much worse than during Vietnam or the (last) Oil Crisis. A hell of a lot is riding on the next US election and the aftermath of it. > > In the long term, the continued improvement in productivity will > facilitate > economic growth.....but we could have a few rather unpleasant years. Could? Will. Sorry. :-( > It's > really unfortunate that Brad isn't an active member.....he could add > a lot > to this type of discussion. Let's page him. BRAD!!!! BRADDDDDDDDD!!!!!!!!!!!! Charlie. _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
