[MrBill]

$this->bbcode_second_pass_quote('NTBKtrader', '
')Is the US gov trying to make it harder to 'financially' renounce US citizenship? If so, I didn't really find anything on that. I know the IRS is increasingly going after offshore tax shelters, but that is a different issue in my opinion.

[evilgenius]

The only option I can see to get out of this is for the Fed to continue buying bad debt from damaged financial institutions then turn around and package that debt as semi-sovereign property holdings and sell it to the Arabs and the Chinese. Let's say semi-sovereign means possessed of local voting rights and some other rights heretofore reserved for citizens only. That way the holders of the semi-sovereign debt can own the ghost towns and the strip malls. They will initially think that they are getting a good deal, until they want their capital out of it in order to finance improvements at home and discover the only way to realize anything from their investment is one month at a time in a very deflated percentage yield environment.

The sale of semi-sovereign packages would serve nicely to contract the money supply internationally. Coming on the heels of the deflationary contraction now underway domestically it would put an extended cap on the hyperinflation hypothesis. This would give the US time to try and complete its endeavor in the Middle East, to lock up enough production that it ensures the dollar as reserve currency throughout the end cycle of oil. After that is done reinflation is then possible and acceptable (will even be called out for by Joe Sixpack).

It will work until it enters the military phase. They have been naive to believe that they can control the Middle East. The very players they trust the most will undermine them. Not to mention the plethora of international enemies that such a policy will make as the screws tighten.

[Kingcoal]

I don't know, a turd is a turd, be it polished or wrapped in nice packaging. It still stinks, everyone knows it, no one will buy it.

[Heineken]

I agree. I think the era of the Chinese and Arabs etc. buying our crappy debt is coming to an end. They're not stupid. They'll make their own way.

Then the REAL trouble begins.

[cube]

$this->bbcode_second_pass_quote('evilgenius', 'T')he only option I can see to get out of this is for the Fed to continue buying bad debt from damaged financial institutions then turn around and package that debt as semi-sovereign property holdings and sell it to the Arabs and the Chinese.

[MrBill]

It may be more cost-effective to invade smaller countries - maybe Caribbean Islands or Latin America - and sell them off instead? Canada would fetch a good price and they do not even have ice breakers or submarines that are water-tight. Easy pickings. You'll be home by Christmas.

[Heineken]

It seems fantastic to contemplate, but I do think an invasion of Canada by a desperate America is a possibility in future. A starving populace would support any crazy scheme that promised dinner.

Canada is vulnerable.

[Kingcoal]

$this->bbcode_second_pass_quote('MrBill', 'I')t may be more cost-effective to invade smaller countries - maybe Caribbean Islands or Latin America - and sell them off instead? Canada would fetch a good price and they do not even have ice breakers or submarines that are water-tight. Easy pickings. You'll be home by Christmas.

[MrBill]

All it would take is one ugly international incident like the Canadian's deciding to bomb the Baldwin Bros., or Celine Dion releasing another bad album, and thus a war with Canada would quickly spiral out of control. Quite plausable. If you ever wondered about Canada's military capability just ask your grandfather. They are still using the same technology today! ; - ))




Canadian Sea King helicopter. Over forty years in service.



Used (leaky) submarine purchased from Britain.



Canada should have a half-dozen of these babies running on nuclear to patrol the Arctic, and do search and rescue off our Atlantic and Pacific coasts as well as control illegal immigration and fishing, but that's right, they never got built.

[MrBill]

$this->bbcode_second_pass_quote('Kingcoal', '
')Based on Roman history, that's not too far fetched. The Romans made nothing, imported everything and we able to do so by their constant annexing and conquering of neighboring regions. Oh yeah, I forgot, the Romans had gold/silver based money so maybe not such a good comparison.

[mobil1]

Yes, our Canadian military is relatively pathetic, at least compared to the US who we have traditionally depended on should Russia come over the pole for us.

On the plus side, we've been running budget surpluses for many years and our formerly pathetic Canuck dollar is now virtually at par with US.

[MrBill]

$this->bbcode_second_pass_quote('mobil1', 'Y')es, our Canadian military is relatively pathetic, at least compared to the US who we have traditionally depended on should Russia come over the pole for us.

On the plus side, we've been running budget surpluses for many years and our formerly pathetic Canuck dollar is now virtually at par with US.

[ROCKMAN]

Mr. Bill,

I do recall that years ago, towards the end of the Cold War , a comedian stated that Canada was essential to the US defense against the commie hord coming over the pole. In effect, we could use Canada as a free-fire zone.

And can you belive it...some folks actually laughed. Damn Yankees!

Back on point: as you have a much clearer view of the picture: should there be a serious seroius drop in worldwide GNP how would that impact the US ability to continue to float our debt let alone increase it to pay for then obvious need to modify our infrastructer/lifestyles.

Needles to say I'm jealous of any success the C's have had paying down debt.

[wisconsin_cur]

Barclays warns of a financial storm

$this->bbcode_second_pass_quote('', 'B')arclays Capital has advised clients to batten down the hatches for a worldwide financial storm, warning that the US Federal Reserve has allowed the inflation genie out of the bottle and let its credibility fall "below zero".

"We're in a nasty environment," said Tim Bond, the bank's chief equity strategist. "There is an inflation shock underway. This is going to be very negative for financial assets. We are going into tortoise mood and are retreating into our shell. Investors will do well if they can preserve their wealth."

Barclays Capital said in its closely-watched Global Outlook that US headline inflation would hit 5.5pc by August and the Fed will have to raise interest rates six times by the end of next year to prevent a wage-spiral. If it hesitates, the bond markets will take matters into their own hands. "This is the first test for central banks in 30 years and they have fluffed it. They have zero credibility, and the Fed is negative if that's possible. It has lost all credibility," said Mr Bond.

[mobil1]

I suspect the Canadian gov't will need some of that money to ease the pains of the hard times ahead. IMO we have reasonably decent social assistance programs, but in hard times, those programs will be stretched.

It may be tempting for our National Gov't to try to bring back something like the National Energy Program (NEP) that Trudeau created in the 1970s oil crisis. Albertans and the west of Canada has hated Trudeau ever since. This program effectively siphoned oil profits from Alberta and put it back in he manufacturing base in Ontario.

Retiring baby boomer problem too. Perhaps some more immigration will be considered for that issue. Hey if Chinese shipping costs go too high, we can just bring China here, one Chinese at a time. Strangely enough, I work for a company run by ethnic Chinese, who sponsor Beijing employees to North America.... (ah, so)

[MrBill]

Rockman, I have posted it before, but it is worth repeating:

Globally,

Current Account Surplus = Current Account Deficit

where

Current Account = Budget (surplus/deficit) + Trade (surplus/deficit) + Balance of Payments (surplus/deficit)

and

Trade Surplus = Trade Deficit

plus

Balance of Payment Surplus = Balance of Payment Deficit.

So anytime that GNP/GDP falls it translates directly into less capital to fund deficits regardless of who's they are. Less Asian exports means less capital to fund the US' current account deficit. High food and energy prices, however, are a wealth transfer from consumers to producers, and do not necessarily mean less capital to fund the US' deficits. But the only reason to invest in the US for foreign investors is if they believe that their capital is safe and that they can earn an attractive yield net of inflation. Those assumptions are fraying at the edges per Cur's post above.

The US currently consumes some two-thirds of the world's current account surplus or savings. We doubt they can consume 100-percent. Especially given a low growth environment and negative real interest rates. And we know the US cannot consume more than 100-percent of the world's savings. That is impossible. So we are currently somewhere between two-thirds and impossible.

[wisconsin_cur]

Interview on Bloomberg TV:

The interview is with Martin Hennecke.

1. We are already in a recession if you account for inflations eating into GDP numbers

2. The American government is in a worse position than 1929 due to unfunded liabilities

3. The expected depression will be worse than 1929.

4. Move out of the dollar, don't trust in Euros or oil, look to edible commodities as a way to preserve wealth.

I am having trouble linking the video. It can be accessed from the front page of the Bloomberg site. www.bloomberg.comwww.bloomberg.com

[MrBill]

$this->bbcode_second_pass_quote('', '4'). Move out of the dollar, don't trust in Euros or oil, look to edible commodities as a way to preserve wealth.

[Battle_Scarred_Galactico]

$this->bbcode_second_pass_quote('Heineken', 'I')t seems fantastic to contemplate, but I do think an invasion of Canada by a desperate America is a possibility in future. A starving populace would support any crazy scheme that promised dinner.

Canada is vulnerable.

[manu]

$this->bbcode_second_pass_quote('Battle_Scarred_Galactico', '')$this->bbcode_second_pass_quote('Heineken', 'I')t seems fantastic to contemplate, but I do think an invasion of Canada by a desperate America is a possibility in future. A starving populace would support any crazy scheme that promised dinner.

Canada is vulnerable.