[trespam]

I found this a shocking read. [link].

It's posted on PIMCOs web site. There are several points raised that require reflection: (1) Industrial policies as national defense; (2) US default on debt and capital controls to prevent capital flight; (3) Reduction of US standard of living and dropping of minimum wage by 50%; (4) cutting social services and raising of taxes.

There are some very extreme measures in his proposals. But there is also arguable merit in each and every one. The US standard of living is going to decrease, whether we like it or not. Social Security should be social ensurance for the poorest, not a retirement program. Offshoring manufacturing is putting the US into a strategically weak position.

Read and weep.

[MonteQuest]

Wow! The guy sure did his homework! I saw that I was on the same page with regard to "normal" interventionist policies of the FED no longer working to correct imbalances. I've been saying this since I started posting. Americans will have to take a major reduction in the standard of living, stop spending and start saving or lose it all. We will all live to witness the play-out of this global chess game, I am afraid. And it won't be easy to watch.

[Phil]

Notice how unemployment nearly doubled in shortlived trends that began in 1973 and 1979. Sustained 10% unemployment by when do you reckon?

[MonteQuest]

According to this we are already there.

$this->bbcode_second_pass_quote('', 'U')sing the seasonally adjusted total unemployment rate of 5.6% and adding to it "discouraged" workers, the rate grows to 5.9%. Factor in other groups of people who are underutilized in the work force, you can ratchet the number all the way up to 9.6%. And, for the sake of comprehensiveness, if you use the non-seasonally adjusted numbers, that rate would swell to 10.9%. So, those are the numbers, and I'll leave readers to draw their own conclusions.

[Jack]

$this->bbcode_second_pass_quote('trespam', 'I') found this a shocking read.

[Kingcoal]

A great, all-in-one article. Who will be the world’s next superpower? Might the task be shared amongst countries? Very good questions to ponder. I think that the Bush administration thinks as long as the US can keep the rest of the world relatively unarmed, then the restructuring can be orderly.

The British Empire was effectively ended by Hitler and a new world order emerged thereafter, though not the one Hitler was hoping for. Historically, these realignments are set in stone by major conflicts. Will the US face a major war causing it to draw back it's satellite bases around the world?

[bart]

Very interesting article, trespam.

Dialynas advocates that the US default on its debts and enforce this decision on the debtor countries at the point of a gun.
$this->bbcode_second_pass_quote('Dialynas', 'T')rapped by debt in a weakened state, the U.S. is now impelled to pursue unorthodox policies to relieve its burden, including military confrontation.

[Kingcoal]

I'm not living beyond my means and neither are most of the people I know. People I do know who live beyond their means pay dearly for it. When I was an employee, I was lucky to get two weeks vacation a year. I hadn't had a real raise when compared to inflation in years and I pay dearly for my health insurance.

My German friends get six weeks vacation a year starting on the first day of their employment. They are the highest paid workers in the world and enjoy free government provided healthcare, free college education (assuming they qualify) and a world class public transit system. On top of that, they rarely work past 12 noon on Fridays.

America has to reduce it's standard of living? I would gladly "reduce" my standard of living to match my German friends!

I'm tired of being told that I have to reduce my standard of living. I mean, give me a break. Everyone seems to think that we are all rich in this country. It's all relative.

[CARVER]

I don't know who dug this one up, but thanks for doing it! (Might be nice to make a habit of it, dig one up every week, for those of us who joined later and don't have time to dig through them all).

Anyway. I specifically wanted to lift out this bit:
$this->bbcode_second_pass_quote('', 'W')hat might motivate some members of the cartel of Asian central banks that hold massive dollar reserves to sell these assets, or buy fewer of them? Perhaps it is their belief that U.S. policy makers will be foolish enough to take them out of their positions as they choose to protect themselves. Perhaps they will determine that their industrial development is well enough advanced that they no longer need to support the U.S. dollar to maintain their exports.

[MonteQuest]

$this->bbcode_second_pass_quote('CARVER', 'I') don't know who dug this one up, but thanks for doing it! (Might be nice to make a habit of it, dig one up every week, for those of us who joined later and don't have time to dig through them all).

[donshan]

I share the concerns raised by Dialynas and the other posts here. The US has dug such a deep hole, and shows NO concern, SO it may be useful to look at this situation as a poker player who is holding a Royal Flush.

Just to play devil's advocate here let me list a 3 part question and a mind game?

What if the US has no intention of:

A. Paying off any of this foreign debt?

B. Allowing anyone to challenge the US dollar Reserve currency status?

OR

C. Allowing anyone else to control the world's oil, its price in dollars or its distribution, especially since the US government is populated by oil men who probably know more about Peak oil and Saudi Arabia than we do?

You may ask how can the US control all these events?

Remember that the US government is run by people experienced in the Soviet Cold War and the concept of "Mutually Assured Destruction", or affectionately known as "MAD".

I have just finished William Engdahl's excellent book "A Century of War" and just received William Clark's "Petrodollar" which on skimming seems to pick up on and extend Engdahl's book. The British played a game of hard ball geopolitics after their navy became dependent on oil, and the Brits then set up military bases in South Africa, Suez, Persia, and Kuwait, Hong Kong and then after WWI seized the Ottoman Turkish Empire (Now Iraq etc.) and the rest of the mideast. Their Empire depended on oil and control of the world trade sea routes.

Jump to today.

It is Engdahl's thesis that the US policy since Bush first took power to establish military bases in EVERY location to control access to all the world's oil if it were required to do so. The US military and the US economy requires oil, so let's not leave things to just to the free market, lets make sure of the outcome. We are the world's superpower, so act like a bully.

Remember "You are either for us or against us!"

The US navy now rules the seas even better than the British Navy did before WWI, during the height of the British Empire. No oil tankers could move, unless the US decides to let them. Both China and Japan are dependent on oil imports. Think intimidation.

Then thinking only their own self interest why would China or Japan or Europe WANT to topple the dollar when their own export economies would go into depression right along with the US? Their economies would tank too. The economy of China is expanding, so the Bank of China needs to issue more paper money too. The increased US dollars held are the "assets" backing this new Chinese money. We are doing the Chinese a favor, helping them expand, and we get all their toys imported into the US as payment. The Chinese government is conning their people too!

Thus we have a "MAD" stalemate. Everybody plays the game by the rules or,

Just a thought to get everyone thinking outside the box on how to restructure the world economy.

Just to be sure I am not misinterpreted, I am APPALLED that the US is taking this approach, and sincerely hope we can change direction to return to our values and International cooperation before MAD reaches its ultimate conclusion and the whole world gangs up on us as " The Allies", and we are the Evil Empire.

[Seadragon]

Regarding the military option, I think the U.S. has discovered the limits of military power in Iraq. A small insurgency has managed to stymie the world's most powerful military, and hasten the bankruptcy process in the U.S. at the same time. As much as the neocons or other warmongers in the Bush Administration would like to pick another fight to show what a dominant world power the U.S. is, they are constrained by public opinion over the Iraq quagmire. It will be a long while before anyone will support another foreign adventure, and any "reasons" given for any such will be looked at with a fishy eye.

[coyote]

Here's a related article from the president of the Economic Strategy Institute (whatever that is):

The World Is Tilted

Getting nervous now......

[cube]

$this->bbcode_second_pass_quote('Kingcoal', 'I')'m not living beyond my means and neither are most of the people I know....

[grabby]

Do a nice dead for someone today, and you'll be happier.

[grabby]

Do two nice deeds for someone today and you will be two times happier.

[MrBill]

Looks like the thread was dying, so since I am being boring today, watching Abenteurer Leben on Kabel Einz, I thought I might throw some fresh fuel on the fire.

A couple of things, the global economy has been restructuring and massively so in the past three decades since the absolute pinnacle of American prosperity, relative to everyone else, in 1973. So lesson number one, just because you're GM and sitting on top of the world, doesn't mean you're going to stay there unless you keep innovating and keep making products that consumers want to buy at a profit.

In the meantime we had Das Wirtschaftwuender up until the fall of the Berlin Wall and some pretty generous, but not well thought out choices that German politicians made and German workers are still paying for today. Lesson number two. A closed economy which is homogenous can be a blessing. But if you have a group of outsiders who have not contributed to the accumulation of wealth knocking on you door to share it, you have a problem (i.e. the grasshopper and the ants). It does not matter why or who is to blame?

We have had the rise of the Asian Tigers, following Japan, and then Taiwans, and then South Korea's rise to prosperity from very humble beginnings. Mostly through trade. China is basing their own economic miracle not on the failed policies of socialism, but on the successes of their neighbors. So lesson number three. If it doesn't work, throw it away. Learn from your neighbors. It certainly is not helpful to live in the past or to assert that 'the American way of life is not negotiable'. Chinese leaders lost a lot of face to give into a market based economy versus a centrally planned economy, but they are better off for it.

I had some other ideas, but my wife is calling me to dinner. Rule number four, don't piss the one off who is cooking your dinner if you want to continue to have her cook while you play! Hmm, he who has the gold, calls the tune? ; - )

Ah, back to Abenteuer Leben. Literally translated it means Adventure Living, but it is a program about people with unusual jobs. This seems to be very popular in Germany as there are several shows that feature this like Galileo. In any case, seems to me that it is beyond the state's control to think up 1000's (x10) of different professions and how to integrate them together, whereas the free market seems to accomplish this with ease via trade.

What integrates us brings us together. So the global economy is restructuring all the time. Also to less energy and higher costs when that comes to pass. Who are you going to trust to do a better job? Politicians or beaurocrats?

[evilgenius]

The Pimco link is a failure now. I get the picture, though.

Isn't it astonishing the parallels you can draw to what Bush is doing now and what Hitler did in the thirties? Aside from the camps (which some on the net say are coming, though not for death) both regimes staked all very early on capturing the oil high ground. Hitler wanted the oil in Baku. Bush wants to control the Middle-East. Hitler almost succeeded but Germany (the original synthetic gas from coal story) simply didn't have the resources. Bush thinks he can succeed. America will most probably find that it too doesn't have the resources.

Yes, I too believe that 2006 is the year. I believe that we have reached peak oil now! Oil isn't a hundred dollars a barrel yet, that only takes a broader realization, however. Basically the world can't get any more oil out of the ground per day no matter what it tries. As fast as they can update a big field for more production another smaller field somewhere else in the world is drying up. So, Bush wants to seize the big reserves.

The strategic pullout from Iraq and the big recession are coming. Both are con jobs. The first is to set up a reinvasion and the latter is to curtail demand until the spigot can be invested in and the daily supply affected. To do that the right people, the Sunnis, have to be in charge in Iraq.

What Bush hasn't counted on, and neither did Hitler, is losing.
With everything on the line, and the alternatives left untried past their breaking points, the reinvasion could fail. If it does you had better have already been in gold. And it wouldn't hurt to know a little bit about Central American geography as well.