Bean-counting

[Skybird]

Goldman-Sachs has told it's customers that the Euro-Zone (=the economical core of the EU) has taken over from the US as the world's biggest economic area, due to the sick dollar (according to information of theirs, given after the Euro's value raised beyond the mark of 1.56 Dollars end of last week).

The American GDP for 2007 was calculated to be 13.844 trillion Dollars, the 15 nations of the euro-Zone (not to be mistaken with the EU) produced a GDP of 8.848 trillion Euros in the same time (that is 13.880 trillion Dollars at the exchange rate from last Friday's climax so far).

The estimated GDP of all the EU with 28 nations for 2007 was estimated to be beyond 16.600 trillion Dollars, which made the EU with 31% of global production the largest economy in the world before, so the notification by Goldman-Sachs seem to be somewhat pointless. The euro-Zone has not overtalen the US, but the larger EU, if anything.

Damn the unhealthy dollar. For this top ranking nobody can buy anything. In fact, it costs us dearly. Many billions and billions, to be precise. I think the speculations that it is not a question of "if" but only "when" the Euro will take over from the dollar as the global reserve currency, will never fall asleep again, and become solid fact sooner or later. Euros and Gold are the things to buy. Dollars become interesting for paper-recycling companies. meanwhile, after one of the major American investement banks - Bear Stearns - had to be saved from the brink of extinction in last minute and caused european stockmarket indices to steeply fall, also raising doubts about the credibility of other major US banks, we finally had to hear demands to nationalize (? to put under state control?) other major banks in doubt and question (talking not about Venezuela, but America!), while the Fed has given signal to help inflation speeding up even more by cutting another 100 points. - Fasten your seatbelts everybody, its getting rough... I think, at this pace the Fed soon will reach the point when what is left of its ability to act and means to cast any influence at all, will have completely disappeared. The time after will become highly interesting.

[Onkel Neal]

I'm not an alarmist but the latest moves by Wall Street and the Fed have caught my attention. I do not agree with the point about gold, but certainly the dollar is in jeapordy.

Two weeks ago, it was a $200 billion cash-for-bond swap for the banks.

This past week, it was a $200 billion bond-for-bond swap for the big investment houses.

Now JPMorgan Chase & Co said it would buy stricken rival Bear Stearns for just $2 a share in an all-stock deal valuing the fifth largest investment bank at about $236 million. Under the deal, the Federal Reserve will provide special financing and has agreed to fund up to $30 billion of Bear Stearns' less liquid assets.

You know... I smell smoke... these are some pretty extraordinary events.

[NEON DEON]

"Standing afar off for the fear of her torment, saying, Alas, alas that great city Babylon, that mighty city! For in one hour is thy judgment come."



Is it time to bite the bullet and let interest rates rise?

I believe the harder you try and prolong the cycle by artifitial deflation of interest rates the worst its going to be.

Looking at gold now it is up 24 to $1,027 US an ounce yet the the 10 year bond is at 3.42%. I dont think that is natural.

If you have bonds, I would make sure they are rock solid and then be prepared to hold them for a long time. That or sell them now.

[PeriscopeDepth]

Smells smokey indeed: http://www.reuters.com/article/newsO...50564120080317

PD

[Wolfehunter]

Do you think the major banks are at it again to start another great depression?:hmm:

[Skybird]

Originally Posted by Wolfehunter

Do you think the major banks are at it again to start another great depression?:hmm:

It already IS in a depression. But nobody wants to admit. What the Fed is doing I do not see as the cure, but as preventing the necessary painful healing process, which necessarly will claim many victims especially amongst banks. So much for the often propagated self-regulation of the market. America accepted totally unhealthy finance policies for too long, and since very very long time lived beyond what it could afford. the mortage crisis is the most obvious symptom of this. The lousy stnadards for accepting credits. and now, slowly but surely winning in pace, the creditcard crisis. All this is a different name for one and the same desease: spending more than what one earns, living beyond what one can afford, living on tick.

almost all western nations live on tick and have significant debts, incrasing them from year to yar, they all spend more than what they produce in income. But nobody drove this behavior to such extremes, like america.

I am wondering, really, the lack of strategic awareness fascinates me. For those holding huge dollar reserves, like China, this policies and the situation today means they have losses countin in dozens if not hundreds of billions. how comes that America takes it just for granted that other nations have nothing better to desire to bleed for America this way, and will accept to bleed on in the future? Sooner or later the others will decide that they have enough of this kind of game that costs them billions and billions to their own disadvantage - and then they will get rid of their dollars, drown the market with them, and switch to euros or whatever. and when that happens and several actors do it within a significantly short period of time - it is day one for America. no, that is no wishful thinking by me (of which I often get accused), it is a reasonable conclusion. gulf states think liud about leaving the dollar. OPEC does not hide that it thinks about it. China already seems to have gone into the launching process for this operation, some economic and financial observes say. but America acts as if all these signals are either not there, or mean nothing. Instead one accepts the luxuary of waging two wars costing trillions of dollars (independant calculation that also take into account following costs for the national amerifan community come to numbers of 3-5 trillion dollars).

Whoever becomes the next american president - Americans better pray that he is aware of the link between economy, finances and the war. This administration is not, or it is unscrupellous enough to ignore it. McCain is quoted with having made statements saying something like that he cannot see what Iraq has to do with the american economy. If he was serious, then god may be merciful with you. If such a mind becomes president, then Prost Mahlzeit. But in the end, the world pays more for these wars, than America itself. Because america finances these wars with borrowed money, and selling more and more worthless treasury bonds.

It escapes my understanding how a power seeing itself as a superpower, can accept such lifethreatening strategic vulnerabilities, and even starts a competition with it'S own military by outsourcing srvrices to mercenary companies where the serviceman can earn ten times and more as much money than what his poendant in the armed forces earns. It makes no sense, and even increases the load of costs the ameircan tax payer has to come up for. and that means more cuts in other areas of civil society: health, traffic, education, etc, making more debts, borrowing more money - and again, in the end the international community pays the major load of the mess.

Some political, economic and financial decision makers seem to be completely disconnected from reality.

I do not even touch the issue of rotten morals to destroy the future perspectives of the young ones this way.

[Onkel Neal]

A New Depression might be a good thing for this country. Would clear out all those *&%&^$ Starbucks cafes and send the illegals home.

I wonder how much they pay in Mexico for oil analysts? :hmm:

[Ducimus]

Ok, i think ill be scared now.

[Tchocky]

Originally Posted by Neal Stevens

Would clear out all those *&%&^$ Starbucks cafes

Brilliant

[XabbaRus]

Time for a big war, methinks...

[Skybird]

Originally Posted by XabbaRus

Time for a big war, methinks...

the current one did not help, but even contributed it'S share to the detoriation of things in the past two years, especially the oil price. Before the invasion of Iraq, the oil price was calcuated to be stable around 23-30 $ for the next ten years AT LEAST- and the costs of risen Chinese and Indian demand already were included. the price we see today and that is obviously beyond 30$ is caused by one half by speculators and investors using oil business as an investment fortune - a relatively new phenomenon, since investors usually gamble with other kinds of enterprises - and the other half is caused by the Iraq war.

So if a new war should help in any way, this time it would need to be a worldwar against all creditor nations to destroy there demands by overturning these nations. While the US has waged many wars against small opponents that in the beginning were perceived as inferior since WWII, it always evaded bigger enemies that could strike back. So I would say the chances we see this scenario in action are relatively thin. It also would be beyond the capacity of the US military which is already stretched, and I assume the American people also would not play ball.

And China with it'S life-threatening dollar-reserves - China is not weak enough anymore to play it against the wall this way, or in any other way. The average American cannot afford to buy goods "made in America" anymore, and many therefore buy "made in China" for that reason - that tells us something.

[SmokinTep]

The US will bounce back eventually.

[Konovalov]

Originally Posted by Skybird

It already IS in a depression.

How do you come to that? You have to be in a recession first before you reach a depression. Technically the US is not in recession though I do believe that there will be a recession soon. Secondly it has to be a prolonged recession for a depression to exist. There does not exist massive unemployment. Half of all US banks have not closed as happened in the actual depression of the last century. In sort very few conditions currently exist that did back ten in the depression. There is NO depression currently.

[Tchocky]

Originally Posted by Konovalov

How do you come to that? You have to be in a recession first before you reach a depression. Technically the US is not in recession though I do believe that there will be a recession soon.

Ploink! Recession conditions are not present. Potential recession conditions are very much present. Recession can be avoided, but there are two factors mitigating against corrective action, and a fairly strong moral argument.
A - Current US budget/borrowing cannot support a proper solution. The political will is not there either.
B - The lax attitudes and wishful thinking that has created this mess needs a counter. The system can be bailed out, but those responsible must not benefit from their own failures.

[August]

Originally Posted by Skybird

So if a new war should help in any way, this time it would need to be a worldwar against all creditor nations to destroy there demands by overturning these nations. While the US has waged many wars against small opponents that in the beginning were perceived as inferior since WWII, it always evaded bigger enemies that could strike back. So I would say the chances we see this scenario in action are relatively thin. It also would be beyond the capacity of the US military which is already stretched, and I assume the American people also would not play ball.

Well if that's the way you think then go ahead and attack us and we'll see who wants to play ball and who doesn't....