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Coryoth's Journal: Elephants in the Living Room 37

Journal by Coryoth



















Elephants in the Living Room

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  • Having read every word from beginning to end, I see you have clearly research all of the topics presented extensively. Thanks for enlightening me further on such interesting topics.

  • by MsGeek (162936)
    Damn good essay...you should be writing professionally. I'm linking to this on my blog.
  • Paul Krugman [mit.edu] did a excellent commentary [marketplace.org] on this subject. It's pretty grim.

    BTW, great journal entry.

  • Terrific entry. Ive been talking with people about these issues for some time, but this brings things together very clearly -- kudos.

    If such an even DOES occur, how would a person defend his personal finances against it? Or even take advantage of the situtation?

    Invest in euros? Gold? Resources etc?

    If a quick adjustment of the US dollar does occur, what will both provide a safeguard and/or a personal-financial advantage (profit)?
    • Realistically your best option at this stage is just diversifying your investments, particularly any long term savings. For instance, find a mutual fund, or other investment, that has most of their money sunk into interests outside the US, or other means to juggle their money to avoid the US Dollar. In the end it is better to let the professionals do any currency speculation wherever possible.

      To try to take advantage of the situation involves large gambles - you have to bet that bad things will happen.
    • Holding some gold is an excellent hedge against a dollar collapse. I have found that e-gold [e-gold.com] is a low-cost solution. And for the truly paranoid/wise, a little bullion buried in the back yard is smart insurance.

      Another alternative is foreign currencies - especially from countries who are getting rich exporting commodities to Asia. You can buy CDs denominated in several different currencies from Everbank [everbank.com]. As a plus, many currencies are paying higher interest rates than you can get on dollars.

      For the brav
      • You have to be careful about using gold as a hedge. Realize that if you're not in physical possession of the gold, you're leaving yourself open to the possibility of getting burned. If you're buying gold shares, you have to be careful that the fund has a sacrosanct policy where they can physically back the complete value of their shares with gold. Some of them are "cheating" on that policy. Perfectly legal; the federal gov't doesn't even back their paper (the dollar) with any precious metals.

        Also, rea

  • Most of these concerns are actually irrelevant. World-wide consumption of petroleum products continues to grow but no new reserves are being found. Once production peaks, we will see a world-wide economic collapse that will make the Great Depression seem like a down day on Wall Street. Gasoline will be unaffordable for consumers; some form of rationing will have to be instituted for essential transportation of food, but then food production will also start to fall to 1880 levels. Large portions of the U
    • We're still a ways from hitting peak oil consumption, and already there is considerable research into alternative energy sources, and downstream dvices to make use of those new sources (and do so increasingly efficiently). Predicting disaster when remedies are being worked on, and the horizon is still distant is perhaps a little foolhardy.

      The US has immediate concerns in the here and now. Let me provide you a few links:

      BBC US Dollar movement:
      Decline begins [bbc.co.uk]
      Slide getting serious 10 Nov [bbc.co.uk]
      New low 17 No [bbc.co.uk]
      • The WSJ feels that our (national) debt is not a huge concern, as when you figure it as a percentage of GDP it's still fairly low. They ran a story lately comparing it to several European countries and our ratio is apparently significantly better. That said, they would like to see more being done to address the problem (in the form of reduced government spending). The export deficit they see as not a problem owing to our status as the biggest industial economy: they expect that when China and India catch
        • by Coryoth (254751)
          It is indeed a big game of chicken in many ways. China has their currency artificially pegged to the US Dollar. The more the US Dollar falls the more pressure there is on China because their currency is further deformed from its true market value. To try and remedy that China, and actually even more so Japan, have been buying up large on US bonds and securities, artificially propping up the value of the Dollar, and alleviating pressure while allowing them to keep a low relative currency and hence have a
          • Way way late in the game on this response.. but perhaps the weakening of the USD is on purpose?

            We have let our dollar fall from one of the strongest positions in many years to the lowest in a matter of 3 years. I think the US is trying to break the Chinese to stop devaluing their currency so as to even out trade deficits. As long as China pegs against the Dollar we can't close the gap easily.

            America has always been masterful at using its economy to defeat others. I recently worked at a large US corpora

              Certainly there is a certain amount of purpose in letting the Dollar fall, as you say it outs pressure on the Chinese to stop pegging their currency, and it eases the current account deficit. The problem is, as outlined, if the US Dollar alides too much it could break some of the props that have been holding it up. Right now the US is running a current account deficit of 6% of GDP, and it has been steadily in
    • Large portions of the U.S. will suffer malnutrition

      I'm sorry, but how is this a problem? Aren't many Americans already malnourished? And isn't the carb-reserves in America more than enough to last for at least a year of crisis? I mean if you lived off french fries you'd only need to ewat a few to get all the calories you need for a day. I just don't see Ethiopia happening in the states. Not trolling , just curious. IANADietician.

      • Did you see the movie, "Supersize Me"? First, you need more than calories, you need nutrition: vitamins, minerals, etc. A year's supply of One-A-Days would help, but once they're gone... Second, there's the transportation of the food. A year's supply of french fries aren't going to do you much good if they are rotting in a warehouse 500 miles away.

        I've seen estimates that without petroleum, the food-producing capacity of the US is only enough for 200 million people. The population today is 290 million

        • That's what the drugs are for, man.

          When the food gets scarce, you make sure there are drugs available for people as an alternative. Crack is especially good in this regard. After only a few uses, people will choose it over food anyway.
    • Maybe on ethenol or bio-diesel, maybe space-based power satellites.

      Scratch ethanol or bio-diesel. They're not self-sustaining methods of generating fuel. The big thing about "peak oil" is not that there won't be fuel for food transport. The big thing about "peak oil" is that we use A LOT of petroleum in order to generate the fertilizers & pesticides to create our technological crop yields. No petroleum, no ethanol.

      Me, I'm building an off-grid "vacation" home 3 hours driving time from the nea


        Both of our assertions are true. First, ethanol production doesn't have to be "self-sustaining" for ethanol to be useful. The production of batteries isn'

  • The huge federal deficits are not purely accidental. There's actually a method to the madness. There is a wing of the Republican party that believes in a strategy known as 'starve the beast'. This approach seeks to limit government programs by producing large deficits that make it impossible for the federal government to do anything but engage in little more than essential services.

  • At first I thought you were stealing a story from Kuro5hin, but now I see you are the same guy, so its all good. But why link to your /. journal in your sig instead of the story on kuro5hin where there is an active discussion?
    • Oddly enough the Slashdot sig character limit. The lengths of links counts into that, and a Slashdot link saves me a lot of characters, which leaves more room for actual text.
  • by killjoe (766577) on Tuesday November 30, 2004 @12:58AM (#10950040)
    Dear Sir,

    My name is George W Bush. I wish to inform you that you are very wrong. There is nothing wrong with deficits, increased govt spending, or the decline of the dollar. How do I know? Because God told me so that's how. Now who you gonna believe? Some liberal bedwetter or God?

    God will take care of it in the end. He will make sure his chosen people are OK and really who cares about the rest.

    I gotta go now, toby keith is on the radio.

  • Overall I like your entry. I had a couple comments while reading it. When expressing national economic statistics, it is more expressive to show things in proportion to the country. So for debt (or other stats), don't say 'The US debt is $413,000,000,000!' since that is worthless if you don't know the size of the US economy. Yes the US debt is rising, but let's look at the numbers in the right perspective. I got all this data the Economist [economist.com] (go to each countries Profile-Economic Data). Here we go, Public deb

    • It's also worth noting that while a deficit of 3.6% is too high to join the European Union (as per Maastricht), it is not that much too high. The cut off was 3%. In other words, even *with* the war, we are still at roughly the same deficit as the UK was when they were trying to join the EU. Without the war, the deficit would be 2.9% or 3.0%, within the EU limits. Not to say that the US wants to join the EU, just that it isn't that far off from the qualifications.

      When based on GDP %, deficits don't look

        :o) There are many other qualifications that would be required if the US wanted to join the EU. Apart from relocating to Europe, there is a lot of legislation about social welfare and workers' rights that would be very unpalatable to the current US administration. Oh, and a certain degree of transference of sovereignty to Brussels.

  • One - look at Fannie Mae and Freddie Mac. Dodgy accounting, increasingly risky position taking.

    Two - look at the credit derivative markets. How many trillion dollars ?

    Three - guess what happens if a major bank or institution gets caught on the wrong side of big currency swing (USD/JPY or USD/Euro). Credit event. Credit derivative market goes ape. Fannie and Freddie, and a bunch of others, feel real pain.

    Money available to borrow (households, corps) - nil.

    US growth - negative.

    US jobs - negative.

  • Just to add some more praise - excellent job mate!
  • by fishbowl (7759)
    Whoever keeps lending money to a bankrupt deadbeat NEEDS TO STOP.

    If the US is even ABLE to incur debt, that reflects much more on the lender (SUCKER), than on the US.

    • Whoever keeps lending money to a bankrupt deadbeat NEEDS TO STOP.


      For foreign countries Japan is the worst offender, with China a close second. They've been buying US debt because buy buying bonds and currency they can keep the US Dollar strong. As long as the US Dollar is strong they have cheap exports to the US. It's been working very well for them for the past many years. The problem is, if their bu

      • >So that sucker that needs to stop? That's YOU!

        Well, "borrowing" without express consent of the lender, is more correctly called something else.
        • I understand where you're coming from, but generally elections are considered to be the "consent" phase of the whole operation. Which, of course, is not to say that you consented, just that a majority of the population consented. Blame them.


            Ok. So either they are right, and it will all work out in the long run, or they are wrong, and the country is on the fasttrack to utter ruin.

            Either way, I'm satisfied. I know how to grow my own food, etc. Others can starve for all I care.
