Our economy is heading in a good direction.
Haha you guys are funny. Think of the housing market. It was a bubble, it popped in 07'. This "recovery" is a bubble as well. And this drop in gas prices is actually a sign of market instability.
Not to mention the fact that we still have a substantial deficit, and are very nearly $18 trillion in debt.
Nobody seems to know what that actually means. They see it and say "O ya there's that" but they don't grasp the severity of it.
Our dollar is not backed by anything. It is literally worth it's weight in paper. It has value to us because no one has questioned it. And it has value to the world because....well, that's the question.
That's the same with any currency.
Other currencies don't owe $18 trillion dollars
Or rather, other governments issuing their own currencies don't owe anywhere near the perceived value of $18 trillion dollars
Yes, but Japan is facing serious trouble. The Nikkei is at an 18 month low, and the BoJ recently failed to buy all the bonds it needed to remain solvent, which is a sign that the Japanese bond market is saturated, and the currency is critically weak.
They've been following a similar economic recovery path as we have, using quantitative easing and government investing, but their decline is happening faster than ours.
We'll be where they are by 2016.
Or, rather, during the 2016-2020 presidential term.
Japan never recovered from the 80s, but there are some similarities. eg. a volatile political environment where the party holding power switches too frequently for any plan to work.
We are in trouble if our next 30 years look like Japan's last 30.
Sorry, the correct response was "Pokemon."
Aside from that, it's true they have been doing this for longer than we have, but there's some speculation that we've just been better at absorbing or hiding the same trends because of our larger and more diverse economy.
So while we don't feel all the ups and downs, our economic collapse is as inevitable as theirs.
Japan has always had a debt equivalent to ours today.
Japan realizes that the govt isn't a business and not out for profit.
Japan is one of the few countries that is our technological rival, and doing very well.
Japan owes us a huge amount of money and we owe them a huge amount too :P
Japan actually has a national debt of around $10 trillion US dollars. It's in the ballpark, but it's still only 55% of what ours is.
Yes but per capita it's much more than outs. Every American owes 58,000. Every British person owes 170,000.
What do British people have to do with Japanese national debt, rota?
And every person from Luxembourg owes 3.6 million dollars USD in their countries debt.
* Not literally owe, but debt per capita
I was actually typing that out. Their gdp is 1/4 of ours, yet their debt is 55% of ours
Because Japan's debt per capita is about double of ours.
Well yeah. But if everyone is in so much debt, what does that mean for the future of the global economy? I'm not even sure I'd call it a bubble. It's like it's just floating over nothing.
Right, which is why they're collapsing now, and we'll be collapsing later.
And when they do go down, we'll write off a lot of that debt they owe us, and bail them out to boot, and we'll still owe them money, so we'll get dragged down 3 ways.
Wrong. The US is the worlds biggest debtor. Yet you're forgetting one key thing. The US is also the worlds biggest creditor and we are owed about 3-4 trillion less than 18 trillion.
In 2012, for every dollar borrowed the United States was owed 89 cents.
It'd be like a bank that gave out bad loans. If those countries economies collapse, it'd be the equivalent to someone going into bankruptcy. The bank loses that money.
Rota, it doesn't matter how much money we are owed if everyone is going bankrupt. The whole world is borrowing too much, basing it on the value of US currency, and the only thing backing the currency is faith in the currency.
That's why Russia and China are dropping the dollar in their trade with one another. They see where all this incestuous debt is taking us, and they're getting their lifeboat ready.
Interesting convo here.
Milkdud, faith is the only thing backing any currency. Its not as if gold (for example) has any inherent value.
Actually what's backing it is the ability of US workers & corporations to do work. The faith in their future that dollars. That's why it's a really bad thing that companies are starting to leave.
any non-bartering system is based on faith.
Where did you hear that? China actually has a massive debt problem that is comparable to ours. A change like that wouldn't help it,
If you read Chinese news sites (in English) they speak how bad their debt is. Every country does.
Also if they go bankrupt then we no longer owe them money either. So it's not so bad. If China went bankrupt then we would profit.
Actually I did read that about China and Russia. I seem to recall that Iran is talking about something similar, as well as a few South American countries.
Rota, News from China is tailored to giving western readers a false sense of confidence.
The bottom line is that even the middle and upper class Chinese are one or two generations past a subsistence economy, and most of the country is in poverty.
Really if China's economy collapsed then every consumer good in most of the world would go up in price like a rocket. It'd at least take time to find a replacement for that labor, and in that time stuff would be a lot more expensive.
People who are used to living in huts don't care about any of this. They can leave the iPhone factory and go back to working on the subsistence farm where they grew up. They'll be ok if their economy collapses.
We won't survive that.
Just because the economy collapses doesn't mean manufacturers are out of business. Prices go up but the labor and factories still use US money for the $2 a day workers to use the factories we practically own.
And, yes, every currency is based on faith in the strength of the economy, but that strength has typically been measured in some sort of tangible goods exchange, wherein the currency is a placeholder for actual real world commodities.
Also milkdud it's an English translation of their news sites. Not Chinese news for Americans :P
Our economy, however, is increasingly based on intangible goods- which have no real value on their own. Not just futures, but technology that depends on an increasingly expensive infrastructure to maintain its value.
China doesn't have that problem.
US dollars are used in trade, but the workers in China are paid in yuan. If their economy fails, short of the US economically annexing China, the money that they're paid with would still lose its value.
And rota, you misunderstood my point about "Chinese news for Americans."
No news coming out of China is independent. It's all state controlled.
It's all designed and packaged by their government to serve their political ends - and mislead us.
So when you read Chinese news coming out of China, you aren't getting a "true" story. You're getting the Chinese government's spin on the truth which, more often than not, is intended to present the message they want to a specific audience.
It's really easy to just say that "we're screwed," but what would actually happen if China's or Japan's economy falters? How would that affect the rest of the world?
Stocks would lose any kind of stability for starters, the price of tech & resources would rise by a lot. Their debts would be unable to be paid.
What happens then? We're all saying all this about how everything is all based on theory, but no one knows what the consequences would actually be. Would the global economy absorb the loss? Would it destabilize?
Another way to look at this is by considering what level of subsistence any given country is willing to tolerate before becoming completely unstable.
It's like playing limbo.
Our biggest economic competitor can maintain stability with much less.
So China can just ride the world economy straight down to the bottom with us. But they'll get back up a lot faster, and they'll recover a lot faster, and our people will still be wondering what happened to their welfare checks.
are you saying we are more socialist than China?
No, that has nothing to do with it. I'm saying our society is becoming increasingly accustomed to an easy lifestyle. The majority of Chinese society is living in poverty. They can't lose what they don't have.
So getting back to the original point, Rota's rebuttal to the inevitable collapse of our economy is that "everybody else is doing it." Which is true, but doesn't change the fact that the economy is collapsing.
It also means that you have to see who is setting themselves up to benefit most from a major collapse.
Right now, that's Russia and China. They know they can't beat us economically or militarily.
So they're choking us out, so to speak.
I'm not sure I agree that ours and the global economy are failing, but it has been an interesting thought experiment.
Time will tell.
Even if the economy isn't failing, China has set itself up as our manufacturing base. And we now depend on their low labor costs to maintain our economy. Eventually, their labor force will demand more money, and our economy won't...
...be able to handle it. There aren't anymore third world countries to export our labor needs to.
One way or another, they're putting themselves into a very strong trade and labor position in years to come.
And we clearly aren't.
In other words, we're heading for a collapse either way, and they stand to gain from either scenario.
I heard in NPR a while back that we no longer manufacture antibiotics anywhere in the US. That could ruin us in a global collapse.
I haven't heard that. It's an interesting idea, but I don't know how that would work.
Very slowly :(
If McCain had been elected, and for the last six years the economy had exactly the same results, would your vote be different? Does the party in charge of the Executive Branch influence your vote? ...it shouldn't. The president has little effect...
One step forward, two backward, government doesn't create jobs
Sanders. Only his Presidential hopes are. Actually, there's buzz about a Warren / Sanders 2016 ticket. I would definitely vote Dem for that.
I was thinking weekend at bernies
I would vote for the dead guy in weekend at Bernie's over Bernie sanders any day.
I know that think. It's just been a while since I have waived the liberal flag in one of your polls. ;)
Whoops! Thought this was your poll. Sorry Rotavele.
When you wave the liberal flag you wave it high. Lol.
In general, yes. Unemployment is down, consumer debt is much more manageable, housing prices are much more realistic, inflation is moderate, and confidence is up. Wages are lagging, but once the labor market tips towards employees, we'll be good.
Unemployment is down?
Yes. It is. 4.1 in MN.
I'm actually worried about housing. I think there's a big problem and this time it's based in the renters' market.
Yeah, it's down all around. Underemployment is up, but it's not as big of a concern as pure unemployment, and it's trending down as well. I agree though, there remains a number of issues in the housing market, but the overall trend is promising.
That is mainly because of people falling out of the workforce, rather than jobs being created. Workforce participation is at a historic low.
Workforce participation has dropped from 66% to 63% according to the BLS, and it's unchanged according to Gallup, since 2007. Although it's at the lowest rate since 1978, it's not a really concerning number for me. It's been lower.
So, 4.5 million jobs gained, 11.4 million fewer people in the workforce.
Remember, the population is aging fast. Baby boomers are hitting retirement a lot faster than our youth are starting to work. The participation rate is only going to keep going down for a long while, decades probably.
When Social Security launched there were twenty workers for every retiree. Now there are only three workers for every retiree, and the ratio continues to drop. So yes, we're losing people faster than we're gaining jobs. I'm okay with this.
Quite honestly, it's almost a good sign. It means it could become a worker's market a lot sooner than expected, which will push wages up and likely lead to a solid period of economic growth.
Well said, BJ.
Unfortunately, only approx. 1/4 of the loss of labor force is due to people retiring. A lot of those jobs are being eliminated after the boomers leave, and soon it will be 2 people paying in for every 1 drawing Social Security.
That spells a demographics disaster, since the surplus in Social Security has been spent, and there is nothing but IOUs left in the trust fund.
Well, that's true and not. Yes, it is a demographics disaster. It's completely unsustainable on its current course. That being said, there are more than just IOUs in the trust. In any case, it is still a major cause for concern.
Treasury bonds are nothing but IOUs.