In response to a question about the US economic security:
"According to this article (http://money.cnn.com/2011/05/16/news...dex.htm?iid=EL), Tim Geithner believes that America will reach a financial bankruptcy unless the congress raises the debt ceiling. My question to you is, are you worried about what's about to happen and what are you overall thoughts?
I'm not trying to be malicious or anything. On the contrary, another financial crisis would affect the rest of the world as well."
My reply:
As long as Starbucks/Caribou/Dunn Bros continue to be successful selling $5 cups of coffee, we're fine.
In reality, while the economic indicators for the country are bad, those for the rest of the world are worse. Ultimately, the stability of a currency is backed by perception, and the US (for all its utterly stupid policies, co-opted legislators of both parties, truly f*cked spending priorities, etc.) is far, far more stable by any meaningful measure than any comparable state. This means that when the shat hits the fan, investors will continue to flee to the USD for security. Now, the almost-certain money-flood that's coming from Congress (inconceivable that they suddenly grow testicles and learn to spend only what they have) guarantees that the USD value will plummet in the short term, but the fear of bond calls is grossly overblown; China might as well put a gun in its mouth before it crash-calls on US bonds which would simultaneously destroy the US economy and vaporize a significant fraction of China's wealth.
Further, as much as we cry about energy dependence, the Saudis understand it far better than the US public (and some policymakers) - the US is energy dependent only as a matter of convenience. If I had any respect at all for our government, I'd say it was brilliant; the US has ample domestic coal, NG, and yes, even oil reserves for at least a century of current use. Consuming Middle-Eastern oil first that's hard to ship, hard to protect, and closer to our enemies would be a geopolitical masterstroke. Energywise, we're fine. Foodwise, we're abundantly secure, grossly so. In terms of strategic raw materials, again, we're amply supplied domestically, and only using those of other countries because their lower labor costs and our high environmental standards make them currently less-attractive to extract. So if tomorrow a wall dropped around each country at its borders preventing any international movement or trade, 10 years later the US would still be almost perfectly unchanged. I don't believe there are many other first-world states that could say the same thing. Finally, physically, we're totally secure from even such (seemingly outdated) concepts as invasion. There's no state (even China) that could credibly threaten the existence of the US for at least the next 50-100 years.
Such surplus and security has in fact probably allowed our government to survive such stupid decisions.
I could go on in detail for a while, but suffice to say that, barring some sort of threat of civil war, or a stunning change in circumstances for the EU*, Japan, Russia, or China, the US will remain the least-f*cked-up state with the best outlook in the developed world for at least 50 years.
* note particularly that the EU's prognosis is far worse than they let on; they are far less transparent than the US government, particularly in terms of the economic circumstances of the PIGS today. Further, the EU has gotten a free-ride courtesy of the pre-collapse Soviet Union; the raising of the Iron Curtain gave Western Euro companies a nearby hinterland full of people desperate to work hard for low wages to fuel Euro commercial growth. That honeymoon is almost over, as in the next decade workers in Poland, Hungary, and Slovakia wonder why they can't have the same standard of living, work, and wages of their French/German/British peers.
The histrionic pronouncements from Washington DC are politics, although the political brinkmanship is getting ever-more irresponsible. I'm not saying that this country isn't past due for some much needed economic suffering (one can only operate on a fiscal premise of 'denial' for so long), but the struts underpinning the country itself are the same sturdy footings that foretold the US Great Power future in the 19th century.
"According to this article (http://money.cnn.com/2011/05/16/news...dex.htm?iid=EL), Tim Geithner believes that America will reach a financial bankruptcy unless the congress raises the debt ceiling. My question to you is, are you worried about what's about to happen and what are you overall thoughts?
I'm not trying to be malicious or anything. On the contrary, another financial crisis would affect the rest of the world as well."
My reply:
As long as Starbucks/Caribou/Dunn Bros continue to be successful selling $5 cups of coffee, we're fine.
In reality, while the economic indicators for the country are bad, those for the rest of the world are worse. Ultimately, the stability of a currency is backed by perception, and the US (for all its utterly stupid policies, co-opted legislators of both parties, truly f*cked spending priorities, etc.) is far, far more stable by any meaningful measure than any comparable state. This means that when the shat hits the fan, investors will continue to flee to the USD for security. Now, the almost-certain money-flood that's coming from Congress (inconceivable that they suddenly grow testicles and learn to spend only what they have) guarantees that the USD value will plummet in the short term, but the fear of bond calls is grossly overblown; China might as well put a gun in its mouth before it crash-calls on US bonds which would simultaneously destroy the US economy and vaporize a significant fraction of China's wealth.
Further, as much as we cry about energy dependence, the Saudis understand it far better than the US public (and some policymakers) - the US is energy dependent only as a matter of convenience. If I had any respect at all for our government, I'd say it was brilliant; the US has ample domestic coal, NG, and yes, even oil reserves for at least a century of current use. Consuming Middle-Eastern oil first that's hard to ship, hard to protect, and closer to our enemies would be a geopolitical masterstroke. Energywise, we're fine. Foodwise, we're abundantly secure, grossly so. In terms of strategic raw materials, again, we're amply supplied domestically, and only using those of other countries because their lower labor costs and our high environmental standards make them currently less-attractive to extract. So if tomorrow a wall dropped around each country at its borders preventing any international movement or trade, 10 years later the US would still be almost perfectly unchanged. I don't believe there are many other first-world states that could say the same thing. Finally, physically, we're totally secure from even such (seemingly outdated) concepts as invasion. There's no state (even China) that could credibly threaten the existence of the US for at least the next 50-100 years.
Such surplus and security has in fact probably allowed our government to survive such stupid decisions.
I could go on in detail for a while, but suffice to say that, barring some sort of threat of civil war, or a stunning change in circumstances for the EU*, Japan, Russia, or China, the US will remain the least-f*cked-up state with the best outlook in the developed world for at least 50 years.
* note particularly that the EU's prognosis is far worse than they let on; they are far less transparent than the US government, particularly in terms of the economic circumstances of the PIGS today. Further, the EU has gotten a free-ride courtesy of the pre-collapse Soviet Union; the raising of the Iron Curtain gave Western Euro companies a nearby hinterland full of people desperate to work hard for low wages to fuel Euro commercial growth. That honeymoon is almost over, as in the next decade workers in Poland, Hungary, and Slovakia wonder why they can't have the same standard of living, work, and wages of their French/German/British peers.
The histrionic pronouncements from Washington DC are politics, although the political brinkmanship is getting ever-more irresponsible. I'm not saying that this country isn't past due for some much needed economic suffering (one can only operate on a fiscal premise of 'denial' for so long), but the struts underpinning the country itself are the same sturdy footings that foretold the US Great Power future in the 19th century.
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