[Skybird]

Originally Posted by UnderseaLcpl

Not forever, but for the forseeable future. And besides that, you're missing the point. What you are effectively supposing is that some point in the future there will be no desire to sell goods to the US or invest in it, despite the huge demand. I doubt that will happen, even if people could afford to do so. The market is simply too large to abandon. There would have to be a major increase in disposable income elsewhere in the world amongst a large populace for the balance to change significantly.

I do not know how to put it well what I want to say , I mean something like this in reply to the above: when you have a strong branch on a tree, which may represent a given market economy, and you start raising pressure on it by pushing a weight away from the centre and towards the outside, the branch will bow, maybe swing a bit. The brtanch already is very severly bowed. There is a point, where you must not add all total power needed to break the branch in order to break it indeed - just one little push more is enough, and bam! That is becasue the conflicts of tghe situation already have mounted so much pressure and strored it as kind of potential destructuve energy, that it adds to that little push's energy. You argue as if you are not aware that the possible total limit of pressure on your economy is not present, and tghe needed total to make it break still would be needed to be accumulated. But that is wrong. I am not sure of my memory here, but both finance and economy guys say that I think just 5% or 7% of the internal market of a nation need to collapse to bring the whole hosue down. There is also mentioned a tipping point for a stes debt's, beyond which the debts never, never canm be comensated and neutrlaised again and interest will start to always eat up any future income of the state, no matter the economical situation (which is beinf feeded back upon by the debts, so the economy hardlky will explode to former glory again). That criterion is marked somewhere in the low 70% of the GDP, I think.

Mind you, first raing agencies threaten to lower America'S triple-A rating. The German triple-A also is under damage, so far nothing in comm ents from the rating gencies, but you can see it in the sudden explosion of interests Germany has to accept for new credits, they went up from 2.1 to 3.3% in less than the past 12 months. That is a clear sign that trust is being reduced, becasue Germany rasies debts in order to pay the debts of other nations in the Eurozone. We are already in a slide, still slwoyl but you canh alraedy see it moving. Our polticians deny that, and insist to accelerate this slide by rasining even more German obligations to come up for the debts of others. The piojn t is that our economy cannot burden the debts we already have acumulzaed over the Eurocrisis. And politicians deny it, because - they do not have any alternative solution. It's all praying and fatalism on their side.

The DM will not come back, the Euro will stay, but ins ome years it will be a totally different currency. Also, I am sure, within the next 5 years both Germany and America, also France, also England (no Euro country but extremely heavy in debts), will lose their top ratings, and will need to accept mounting interest indices for their bonds and credits. And I am anything but sure that any of these countries will be able to survive this for many years to come. I think it is possible that any of these countries sooner or later will end up in a situation comaravble to that of Ireland or Portugal. That includes the US. That includes Germany. The reasons are different, over here it is this damn Euro thing and the transfer union, in America is it life-threatening internal structural problems that the US endlessly denies to tackle.

And from whence do you suppose they will get their new demand? Not from Europe, certainly? The living standard there is generally lower than it is here. Not from the 2/3rds of the world that is so poor it can't even afford to feed itself? They won't be supplying their own demand unless the Communist Party expands SEZ policy or steps down, and I don't see that happening anytime soon. To whom will they sell their products?

When they formulated the new poliocy referred to, they explicitly made it a goal to boost internal demand indeed, to become less depending on foreign demand (the great weakness of the German and Japanese economies). And the time is ripe for that, for the general income on averga eis rising, industrialisation moves more and more into the rural places, and the expectations of people regarding luxuary and comfort are rising. The rtegime must deliver here, for pure self-intererst, to not allow the population bcoming rebellious and maybe revolting one far away day.

The message is that the are alreayd reducing their dependency from the US market, they are aware that theys are loosing welath by depending on their great dollar reserves, and the have set hlm to reduce both. Their currency policy that America anbd europpoe hates so much, is taolired since years to support their exports, but also to carefully prepare the Yuan to take over from the dollar. And it will happen - within the next 10-20 years I estimate. There are bankers who even estimate it to happen as early as 5 years.

Actually, the opposite is true. They'll sell it to those that are willing to pay the most, and they'll support the currency used by the same. Americans may end up paying more dollars for a gallon of gas, and it may take up a larger portion of their income, but they have the income to spare. Most other nations don't.

It is not different in America than in Germany. The middle class is shrinking, most falling pout of it become no rich, but poor. The ammount of national wealth at the growing bottom poart of the social hierarchy, is decreasing, but more and more of the national wealth is accumulated at the top, which is becoming smaller in personnel size. I know that diferent political camps give different statistics here, but the ones I pout my trust in when looking at the data basis and the calculation methods, support what I summarise here. Itrs been 2 years or so that I had any of these, but I cannot imagien that right in the crisis of the past 2 years the treend has changed. It seems to me that it has instead accelerated.

Sure, if you take that into account it would be true, but the Chinese government doesn't, and neither does anyone else.

Wrong, quite some independent analysts do include that, and in reality, behind closed doors, your and our government also do. Because it is the message that really influences the reality of the near future. The made-up numbers from the currency-distorted public model, is just this: a distortion (that your and mine givernmebt demand to be remioved by upvaluing the Yuan. The Chinese will not do that, at least not according to our timetables, but their own. They need to upvalue it and to let it float freely in order to take over from the dollar, but they will do it according to the timetable of their own, and only their own, preparations.) They will give in on small gestures, therefore, but remain adamant at the core issue.

Think about what you just said. The US has caused two major crises in the world economy in the span of three years. That's not even including the other crises we've caused over the past three decades. This is the point I'm trying to make. The US is a huge market. You can disagree with my take on economic theory if you wish, but it doesn't change the fact that the US buys and produces a great deal. One way or the other, the US is a huge part of the world economy, and that's not something that any other country, including mine, is about to overlook.

Yes, it is a huge market. A market that comnsumes more than it prouces, and in general is on the falling side of the wheel. The status is not the important issue here. The trend is. Also, that you are more and more unable to pay for what you demand to be delivered, your bonds are worth almost nothing, are a hail mary pass. Many funds in Germany have kicked US state bonds out of their portfolio. You put too much trust into the future by rasoniung about the past (which is, ironically, a classical military error many militaries have made over time: to assess the next war on basis of the past war where they won, and so they stay with overaged tactics or tools that are inadequate for the next conflict).

Its like with how you should invest in stocks: you do not invest in current good status, you invest in upwardly pointing trends.