[DantesPeak]

$this->bbcode_second_pass_quote('', 'T')he Day the World Ended
by Charles Mackay, Wednesday August 31 2005

The energy price shock wave, greatly amplified by the monster Hurricane Katrina, is blasting away expectations that the market forces will gently guide the US through the developing economic crisis.

The Countdown to Recession had already started, before Katrina was even a ghost on some weather person's radar screen. Yet after it was already apparent that Katrina would batter the southern Gulf coast of the US, the Wall Street Journal blithely announced on Monday (August 29), in a front page story, that "broader economic forces have been offsetting the oil shock." Outrunning would have been a better word.

Gasoline prices, barreling out of control like a run away freight train, are a warning sign that we are about to enter the twilight economic zone of energy shortages. Now, personal income gains will now fall well behind the accelerated cost of living. With no savings left to tap and our national credit card with foreigners just about run up to the max, the fast-paced, credit-backed spending spree of the last few years is over.

[killJOY]

Undone by a little air and water.



Weird, isn't it?

[hanrahan]

$this->bbcode_second_pass_quote('killJOY', 'U')ndone by a little air and water.



Weird, isn't it?

[aflurry]

$this->bbcode_second_pass_quote('killJOY', 'U')ndone by a little air and water.



Weird, isn't it?

[Euric]

The gods have spoken.

They his America right in the centre of its energy heart. They destroyed off shore rigs, oil refineries, and storage facilities. And to top it off, New Orleans will have to be razed to the ground.

No amount of terrorist planning could have achieved a better hit.

[UIUCstudent01]

$this->bbcode_second_pass_quote('Euric', 'N')o amount of terrorist planning could have achieved a better hit.

[Yavicleus]

$this->bbcode_second_pass_quote('Euric', 'T')he gods have spoken.

They his America right in the centre of its energy heart. They destroyed off shore rigs, oil refineries, and storage facilities. And to top it off, New Orleans will have to be razed to the ground.

No amount of terrorist planning could have achieved a better hit.

[KiddieKorral]

But it's true- nature always wins.

[Sencha]

Katrina hit America like a kick to the balls.

[rnc456]

In thinking about my post "Implications to Katrina", I can not help but feel that the nursery rhymn saying "and all the kings horses, and all the kings men, couldn't put humpty dumpty back together again". Seems to apply in so many ways to the US economy and President Bush, and Allen Greenspan.

I think in reading many of what people are saying in these forums see the writting on the wall for US.

rnc456.

[DantesPeak]

rnc456 - I've been thinking some of the same things.

Also, has the costs to the US economy been addressed? Who is going to pay the bill for up to $200 billion (per a LSU professor) of destroyed real estate value?

The US taxpayer will get stuck with the bill for supporting 2 million refugees, and they will end up covering most if not all the mortgage losses that Fannie Mae, Freddie Mac, and probably every other mortgage company will incur.

Otherwise Fannie Mae is bankrupt right now (it may be even before this).

The question is - how will the US pay for this when there are zero personal savings to do so? The simple, over-simplified, quick answer is deficit spending, to be monetzied (that is new money issued) by the Fed as new bill/bond issues hit the market. But before then, the economy may suffer a sudden loss in liquidity as consumers desperately sell liquid assets to help pay for sky rocketing energy bills, and those million that lost jobs, will be selling anything they own.

[generikan]

karma?

[Snowrunner]

$this->bbcode_second_pass_quote('DantesPeak', 'T')he question is - how will the US pay for this when there are zero personal savings to do so? The simple, over-simplified, quick answer is deficit spending, to be monetzied (that is new money issued) by the Fed as new bill/bond issues hit the market. But before then, the economy may suffer a sudden loss in liquidity as consumers desperately sell liquid assets to help pay for sky rocketing energy bills, and those million that lost jobs, will be selling anything they own.

[marko]

$this->bbcode_second_pass_quote('Snowrunner', 'A')ctually the bigger question is who would buy any additional US debt? Especially if the US goes into a Recession / Depression.

[DantesPeak]

Great summary marko.

Japan and China will not bail out of the dollar, but their combined help will fall well behind what is neede to sustain the US curent account deficit - that may be nearing $900 billion per year with current energy prices.

The inability and/or failure of private international investors to balance out the funding of the current account will cause the dollar to fall - and the Fed to step up and inflate more.

Obviously inflation will further discourage foreign investors, leading to a vicious circle of dollar depreciation and accelerating inflation, maybe even hyperinflation.

[jaws]

Dollar prices for foreign currencies today:
Euro: 1.25
Can: .8449
Yuan: .1235
The dollar rally that everyone was touting has been erased. We are right back at the low point of the dollar decline. Stop watching stocks, that means nothing.

The U.S. economy is going into the toilet. Good news for international oil buyers however.

[DantesPeak]

$this->bbcode_second_pass_quote('jaws', 'D')ollar prices for foreign currencies today:
Euro: 1.25
Can: .8449
Yuan: .1235
The dollar rally that everyone was touting has been erased. We are right back at the low point of the dollar decline. Stop watching stocks, that means nothing.

The U.S. economy is going into the toilet. Good news for international oil buyers however.

[falser]

And if the Fed stops raising interest rates, for even one quarter then that's it, game over for the US dollar.

[marko]

$this->bbcode_second_pass_quote('falser', 'A')nd if the Fed stops raising interest rates, for even one quarter then that's it, game over for the US dollar.

[Dukat_Reloaded]

I have a friend who we both help each other out finding good gold coins to buy. He sent me an email in response to some good gold I found, wanted to know if he wanted to go halves, here was his response.

"I've just bought myself new car (4X4 toyota), so I won't be spending much on gold coins for a while unless I spot a real bargain."

Pretty smart eh? especially at this current time in world events with record oil prices.

Oh well....