Hey steph the USA produces things.
Not 
Worth and counting.
That is the problem.
That is one hell of a rubber check the USA has out there.
Dollar Collapse I was freaking right !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
by 5go 46 Replies latest members adult
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5go
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5go
The Looming Dangers of American Debt Wednesday, June 7, 2006 America has become a nation of debtors. Increasingly, that debt is held by foreign nations—some of which are enemies.
What does the term serf bring to mind? Poor, indebted, landless, forced labor—perhaps even medieval. Shockingly, serfdom is a reality many Americans may face in the future. Here is why.
The U.S. national debt now stands at more than $8.3 trillion , of which more than $2 trillion is owned by foreigners. Since 2000, the percentage of U.S. public debt owed to foreigners has doubled .
Take China for example. As of March of this year, China held over $321 billion worth of U.S. Treasuries, up from the $60 billion it owned at the end of 2000. Similarly, Japan now owns $640 billion worth of U.S. Treasuries, up from $317.7 billion in December 2000. Lately, however, America has also borrowed heavily from oil exporter nations (as defined by the Department of the Treasury), which include many nations that despise America. Luminaries such as Venezuela, Ecuador, Iran, Libya, Algeria, Indonesia and Iraq, and several other primarily Middle Eastern nations, now own $98 billion worth of U.S. debt.
According to Brad Setser, director of research at Roubini Global Economics, “The irony is that the three countries in the world adding to reserves the fastest and thus buying the most U.S. debt now are China, Saudi Arabia and Russia, none of them democracies. … We are increasingly counting on a group of creditors who are not our closest friends but have a bigger and bigger stake in America,” he says .
So America’s debt is growing, and a greater amount is in less reliable hands.
This creates two problems.
First, the value of the dollar is increasingly dependent upon foreigners. This makes the U.S. vulnerable to coercion and blackmail.
In commenting on this radical shift in holders of U.S. debt, Frederick Kempe of the Wall Street Journal says, “The more closely economists study that data, the more they worry,” especially over America’s “decrease[d] influence over … the world’s largest market, the $2 trillion in foreign exchange that changes hands daily. The dollar forex market can increasingly be shifted by decisions that foreign governments make about selling dollar assets. What’s also at stake is leverage on matters as diverse as U.S. home mortgage rates and America’s global political clout” ( May 9 ).
For example, remember what happened on June 23, 1997, when former Japanese Prime Minister Ryutaro Hashimoto wondered aloud about what would happen to the U.S. economy if Japan diversified and began to sell some of its, at that time, $300 billion in U.S. Treasury securities (remember Japan now owns more than $640 billion worth). Following Hashimoto’s remarks, the Dow Jones Industrial Average plunged by the largest single day amount (at that time) since the Crash of 1987. Aids to Hashimoto were quick to say that the comments were not intended as a threat. Since then, other foreigners have wondered aloud about dumping U.S. debt (Treasuries), also causing ripple effects through global markets (Moscow Times, May 11).
But what if, at some point, our debtors did want to influence American policy? In a potential conflict between China and Taiwan, would China stand idly by, holding $321 billion in U.S. debt, if the United States was to interfere to protect democratic Taiwan? Would Taiwan simply hold its $68.9 billion if China attacked it and America did not come to its aid?
What if China and Taiwan were to peacefully reunite? Together they would control $389.9 billion worth of U.S. debt. Since China also controls Hong Kong, you can add in an additional $46.6 billion worth of U.S. debt, for a grand total of $436.5 billion.
That is a huge chunk of potential economic or political influence. So much influence that if China even “reduces its Treasury purchases, the U.S. would run into difficulties” financing its debts, says the Nikkei Weekly. That same publication says Chinese leaders have boasted that because China is such an important lender to America, “Beijing is holding a dagger to Washington’s throat” (May 1).
The second problem with having foreigners hold so much U.S. debt is the risk that foreigners may choose to stop accumulating it and start spending it. As with any person, the more money you have, the greater the pull to spend. If foreign nations begin to spend their dollars, the increased supply of U.S. greenbacks in circulation would probably drive the value of the dollar down, making American possessions less expensive relative to assets in other currencies. Consequently, American corporations and businesses could increasingly become targets of foreign acquisitions.
There are signs that some of America’s top corporations are already being snapped up.
Last week, American-owned Engelhard Corporation, a strategic manufacturer of catalytic converters and precious metals processing, announced that it would succumb to German-owned basf ’s $5.6 billion hostile takeover—the largest-ever hostile takeover of an American company by a German corporation. Engelhard employs approximately 7,000 people worldwide.
In April, France’s telecommunications giant Alcatel sa announced it would acquire American telecom equipment maker Lucent Technologies Inc. for $13.4 billion. Since then, thousands of American workers have been laid off.
In February, Japan’s Toshiba Corp announced that it had purchased Pennsylvania-based Westinghouse Electric, the manufacturer of nuclear reactor technology, for $5.4 billion (Chicago Sun Times, February 7). Westinghouse had previously been purchased by a British-owned company.
That same month, Dubai Ports World, a United Arab Emirates company, announced it was trying to purchase the right to manage six of America’s largest port complexes, including those of New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia, from another British company. That deal later fell through due to national security concerns and congressional resistance.
During 2005, congressional opposition blocked another high-profile foreign takeover when Chinese-owned oil company cnooc proposed to buy out U.S. oil company Unocal for $18.5 billion (Financial Times, London, February 9). Slightly more than a month prior to the attempted Unocal deal, China’s Lenovo Group bought ibm ’s personal computer unit for $1.75 billion.
Unfortunately, American companies increasingly look like a smorgasbord ready to be gobbled up.
But what if Congress continues to block foreign acquisitions, as it did with cnooc and Dubai Ports World? Foreign investors might become less willing to lend money to the United States. If foreigners are prevented from spending their American dollars on American acquisitions, they might begin to ask themselves why they are purchasing and holding so many U.S. Treasuries—and decide to dump them. Not good news for an already weak dollar.
America’s indebtedness is endangering the nation. Edwin Truman, who directed the Federal Reserve System’s Division of International Finance for 20 years, is not a doomsayer, but even he is warning America that there is now a 10 to 15 percent probability of a “catastrophic collapse of the financial system.” Never mind about the regular-type collapses: He is warning about a “catastrophic” disaster on the scale of the Great Depression or worse (Wall Street Journal, op. cit.).
Overspending has indebted America to the rest of the world. We owe the world so much that the threat of other nations inducing a U.S. economic disaster by just refusing to lend us more money is now a reality. As such, as America’s indebtedness grows, America is less able to protect strategic industries from foreign takeovers.
Who is a serf? A serf is one whose destiny is owned by others. Someone else owns the land he slaves on. Someone else owns the profits and technology he develops. All the fruits of his labor flow to his owners.
Debt is turning America into a serfdom. -
Stephanus
You've got to calm down and see things more positively, 5go. There's an old saying about indebtedness:
When you owe the rest of the world $8m, you've got a problem. When you owe the rest of the world
, THEY've got a proplem!! -
5go
I know that but if somepeople break legs for $8,000 dollars what will some people break for -
Eight Trillion, Nine Hundred and Seventy Two Billion, Three hundred and Sixty Three Million, Sixty Two thousand, Three hundred Thirty Two dollars and Eighty cents. I hope you are right and the pen solves most of it even then you still have the problem of americans lifestyle that created it. Americans really like their lifestyle, and living conditions. All this money disapearing with the stroke of a pen will cause the greastest depression ever, and fall of living conditions the USA has ever seen. Even the world might feel it. To have probaly the greastest empire go from the greatest super power to zero over night is going to cause problems look at what happened after the collapse of the Soviet system.
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5go
By Emily Kaiser - Analysis
CHICAGO (Reuters) - Sound familiar? A financial crisis that has rattled Wall Street is gathering steam in Washington and could pile more pressure on an Iraq-weary President Bush.
No, it's not the savings and loan crisis that left Republicans and Democrats trading blame for the economic fallout that contributed to George H.W. Bush's defeat in the 1992 election.
This time the turmoil surrounds unconventional mortgages that threaten to force millions of Americans out of their homes, giving Democrats more ammunition to fire at Republican President George W. Bush.
Many economists say the parallels between the S&L scandal of the 1980s and today's subprime situation largely begin and end with the father-son connection in the White House, and the housing-related problems are unlikely to trigger widespread bank failures provided the economy stays healthy.
"If everything goes south, it would weigh on Bush the Junior for sure," said Austan Goolsbee, an economics professor at the University of Chicago Business School.
But Goolsbee noted a critical difference between the thrift crisis and the current subprime mess. With the S&L debacle, the government played a big role in creating the problem because it deregulated the banks while keeping government guarantees in place to bail out those in trouble, he said.
"The S&Ls could take risky bets. If they lost, they knew that they could dump it on the government," Goolsbee said. "That encouraged them to take the most insane risks."
This time, the problems stem from unconventional practices by mostly nonbank lenders, such as offering 100-percent financing, interest-only loans, and teaser rates that start low but then spike. Mortgage brokers made big profits off such deals, and there were few complaints until the housing market cooled and borrowers ran into trouble.
The Center for Responsible Lending estimates that one in five subprime mortgages written in 2005 and 2006 will end in foreclosure. Research firm RealtyTrac predicts that 1.5 million homeowners will face foreclosure this year.
WHAT IF?
With the November 2008 election cycle already in full swing, leading Democrats such as presidential candidate Sen. Hillary Rodham Clinton of New York have jumped on the issue.
Clinton accused the Bush administration on Thursday of overlooking problems in the subprime mortgage market, and said Republicans were too focused on providing tax cuts for the rich to pay attention to the growing housing problems.
Most economists, including Federal Reserve Chairman Ben Bernanke, argue that the housing slowdown is well contained and unlikely to sink the broader economy.
However, talk of a possible recession has picked up after Bernanke's predecessor, Alan Greenspan, said chances of a downturn could be as high as one-in-three.
"The economy is still pretty strong. We haven't gone into recession. The job market is still relatively robust. Interest rates haven't gone up," Goolsbee said. "If Alan Greenspan is right and we might be teetering near recession, it's going to get horrible," he added, saying a downturn could spark a full-blown banking crisis.
Greenspan said on Thursday there was a risk that rising defaults in subprime mortgage markets could spill over into other economic sectors, but said weakness in the housing market would be quickly resolved if home prices rose by 10 percent.
Nouriel Roubini, a professor at New York University and head of Roubini Global Economics, is one of the few economists who has been predicting a recession this year. He contends that subprime loans are only the tip of the iceberg.
"We're going to have a severe banking problem that at some point is going to lead to a government bailout like the S&L scandal," he said. "The cost to the U.S. taxpayers may end up being much larger than the $200 billion we spent bailing out the S&Ls."
Roubini argues that, like the S&L scandal, lax government oversight is at least partly to blame for the subprime crisis.
"We let mortgage lenders do anything they wanted for years," he said. "Regulators were asleep at the wheel."
If the economy slips into recession, as Roubini expects will happen by summer, "then you have a systemic banking crisis like we haven't had since the 1930s. The cost could be as high as $1 trillion," he said.
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whereami
Is this the big one? This self proclaimed prophet thinks so. http://e-jehovahs-witnesses.com/forum/index.php?s=9d925b93cbe8c20a93d8de6d47bd50aa&showtopic=701&pid=7346&st=0entry7346
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Cicatrix
Well the only person I blame for signing the papers on a stupid ARM is myself