On Wed, 2004-12-08 at 13:41 -0800, Jay P Hailey wrote: > > Sadly, I've been arguing this point pretty much solidly the last few > > weeks (when one of my CPUs wasn't on the fritz) and don't have much > > energy to put into it again anew. In summary, economists are wrong when > > they say there will be a sudden fall of the dollar and resulting chaos, > > yadda, yadda, yadda. > > > Over on the Smith2004 list the term coined for this was Disasterbation. >
Awesome! > BUT, what makes the U.S. Immune from the things that happened to Brazil in > the 1980s or Weimar Germany in the 1920s? There is a big difference between "immune" and "not gonna happen". That said, look at the differences in circumstance. It isn't the same situation. Neither of them were economic powerhouses. Neither of them (indeed neither did the US in the twenties) possessed the incredibly diverse economy we currently possess. The real strength of an economy is in it's resiliency. And we've seen (indeed it's one of the few aspects in Economics that common sense is right) that the more diverse an economy is, the better it can respond to "upsets" or "swings" w/o interference. The recent recession was numerically and mathematically worse than the Great Depression from a fundamental standpoint. But it was merely a recession. Why? Diverse economic structure. We were not heavily dependent on one or two heavy industries. The aspects and causes of the GD and the recent recession are strikingly similar. Yet the responses and reactions of the economy are strikingly different. Even Herr Greenspan has admitted to being suprised by how the diversity of our economy has turned what were disasters in the past to mere hiccups. Part of it is because we understand better what happens, as well as what happened. Granted many (especially those in government) years ago took the wrong lessons from the GD, but in the span of decades since we've figured out why they were wrong. This is one of the reasons the "Disasterbators" (hehehe) are wrong. They are trying to compare mono or dual-base economies of yesteryear to the single largest economy in terms of diversification. TO put it simply (or to try to anyway), envision each "industry" as a leg. The more legs, the longer you can stay standing and th harder to knock you over. We've built an economy of many strong legs, and it is getting stronger. We have a good manufacturing leg, a strong as hell service leg, a tech leg, a transport leg, and especially a trade leg. We also have education legs, and are currently developing what will be a massive leg: space tourism. In an interesting repeat of history, Russia may have been the first to do space tourism, but the US is the first to make an industry out of it. Another strong leg we have is "IP" or as I prefer to call it "new ideas". Another leg is Asian trade. Indeed, when you analyze the trade situation w/o political bias you see that China and indeed Japan as well, have a vested interest in the Dollar not crashing: it'll tank them as well. Now, China is on the verge of tanking IMO anyway, but they will still try desperately to avoid it. Japan is poised to see massive recovery over the next decade to more than surpass their "lost decade", so if/when China tanks again, Japan will be ready to take up the slack. Which leaves us with the Eurozone. They really don't have much to offer. The Euro is not fit to become the global currency. Why? Poor economic capacity, no history and no visible capacity to bail out other countries. These are requirements for a global currency as the USD is now, and the British Sterling before it. In order for the EU to provide an economy capable of becoming the one to base a global currency on, the EU member countries will *have* to make sweeping changes in both their government and economic structures. The EU is on the opposite path. The EU has a goal to make it's combine economy IIRC 70%+ a service economy by 2010. Remember my "little" point about legs to stand on? In case you didn't know, Eurozone as a whole is a "minor trade partner" in terms of volume with the US. So there you go, some explanation. From someone who *made* money from the recession because he saw it coming. But then again, maybe I got lucky. ;) Cheers, Bill -- Bill Anderson <[EMAIL PROTECTED]> _______________________________________________ Libnw mailing list [EMAIL PROTECTED] List info and subscriber options: http://immosys.com/mailman/listinfo/libnw Archives: http://immosys.com/mailman//pipermail/libnw
