Where do think the economy is headed?

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Matthew
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Post by Matthew »

I am interested in where you think the US or global ecomony is headed.
I think the potential is there for either direction. I believe the general population is more than willing to be enslaved for instant gratification, so I think growth potential is great. I also feel that the next unemployment extension will be rejected, also making economics look good. Unfortunately, I also know that once unemployment is cut you will see forclosures and short sales skyrocket. This would make many defaults which could also bring a downturn (I think the gov is playing a game with crime/collapse that keeps them extending it). In the meantime it could go either way, but unemployment benefits are a drop compared to the bank bailouts.


George the original one
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Post by George the original one »

I think the US economy is headed sideways for at least another year. With the Fed still running the printing press, the dangers of deflation are kept at bay.
World economy... depends on if the world economy is still dependent on the US economy. And whether certain countries can avoid going to war (N. Korea, India, Pakistan, and Iran). China has loads of potential to become a driving force, but also many challenges. Europe will slog along as usual, neither too hot nor too cold, but always providing fodder for the pundits.
S. America has potential to rise if they aren't drawn into the political fray. Russia and (former) satellites seem to be doing okay, but not living up to their potential.


Q
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Post by Q »

The more things change the more they stay the same.
Now's the time to take advantage of the situation I guess...


JohnnyH
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Post by JohnnyH »

Hm... how do I say "toilet" in a verbose and grand way that makes me look smart?
Toilet.
Fundamental problems have not been fixed, only employment is govt, govt is doing stupid things and cooking numbers to hide inneffectiveness, powerful special interests are creating monopoly like barriers to entry/competition... widespread financial fraud, too big to fail.
Banks basically own both parties and real financial reform is not on the table... (ie: derivatives not addressed by joke of "reform" bill). At "best" the can will be kicked down the road for another generation.
No markets will escape unscathed, just like last crash. Just my opinion... FWIW, I missed most of the market rebound, but then I sold out of most equities when DJ>13000. I hate to admit I'm becoming kinda a perma-bear.


Sven
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Post by Sven »

I think it depends which economy you have in mind..
While studying at university, there was a professor that told us that one day there will be some equalization going on between the Western world and the other parts of this planet. This not in a communist way, but simply because you can't keep on acquire richness without having some balance. Go life a billion lifestyle in the poor areas of huge city and you will probably get into trouble one day!

So salaries in the Western world will drop and the ones in South-East Asia and South America will likely rise. And 5+ years later you can see this already happening in Europe (i don't know the situation in US, as i don't live there).
Where it will go the next years? Like already said.. probably sideways.. until the money dries up or the 'market' decides you don't deserve loans anymore. Afterwards.. the whole way down the drain!
Did it sound too bearish?! ;-)


Kevin M
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Post by Kevin M »

For the USA - The rich will continue to get richer, and the poor--->poorer. Corporations will continue to run the country indirectly through our politicians.
Growth will be slow or non-existent as no one but the rich is making more money, therefore has no extra disposable income to buy stuff.
At some point (maybe 25+ years), the rich will either have to pay more taxes to support the poor (the sheer volume of which drives the economy that lets them get rich) or there will be a revolution of some sort - either an economic civil war or mass exodus to other countries.
Sounds like fun!


Concojones
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Post by Concojones »

I think is obvious that the gap between the Western world and the rest of the world is narrowing. That doesn't mean however that we can't do well - in theory we can.
In practice however I think we won't, because of the astronomic debt we're racking up. It's suicide. Huge debt payments suffocate your economy, and I think that's what we'll see in the coming decade. To get rid of that debt they will have no other choice than to take some measures that are unheard of in our "modern, civilized" society.
So my take is sideways, with a lot of volatility.


jacob
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Post by jacob »

Hyperinflation/government default followed by riots?
First Iceland, then Greece, US next?


Sven
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Post by Sven »

I have been wondering why rating companies picked those small countries/economies, while everybody 'knows' that US floats on/drowns in its own debts. I suspect that the main reason is that the most influent rating companies have strong ties with the US (as they are based there) and you would simply be plain stupid to shoot the hand that is feeding you. Otherwise, to use terms from the recent financial crisis: US is simply too big to fail.. or at least to fail suddenly!


Night Runner
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Post by Night Runner »

@jacob:

Don't panic. :) As Warren Buffett said at this year's Woodstock for Capitalists, the United States will never go under as long as dollar is a major currency and we have the printing presses. The major difference between us and Ireland&Greece is that they can't print dollars. We can.
This country has had far worse crises in the past. As long as populists with no knowledge of economics don't acquire political power, all will be well.


HSpencer
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Post by HSpencer »

Financial Armageddon.com

The Coming Depression.com/blogspot

Rense.com

Beforeitsnews.com

Wideawakenews.com

DrudgeReport.com

AboveTopSecret.com

Intellhub.com

Gerald Celente.com
But before you go to to any of these make a tin foil T shirt and hat!!!


Q
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Post by Q »

You mean duck and cover doesn't work?!?


jacob
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Post by jacob »

@Night Runner - "the United States will never go under as long as dollar is a major currency" ... this is what concerns me. I might even strengthen the point by saying "the major currency".
I note that WB himself is diversifying out of country.


Night Runner
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Post by Night Runner »

Only because he has run out of companies to buy here in the States. :) You're a smart guy, Jacob, but some of the things you say sound so unsubstantiated that I have to wonder whether you get most of your news from FOX...


HSpencer
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Post by HSpencer »

In all seriousness, there is little need to worry about the financial stability of the USA. It will be maintained for some time, as the elites need our Military Industrial Complex for their future plans and operations. No other country comes anywhere close to providing them with the powers they need.

There is a lot of drum beating now about Iran. It was leaked that the Elites have decided to reduce them based on their so called Nuclear Threat. Of course the elites want the resources of Iran, and for at least now want the trading with them to be in petro dollars, and nothing else. Regime change will take care of it, and what better way to effect that change than to militarily attack the infrastructure and take out their forces. Although Israel may start the process, it will be left in the hands of the US to do the work. So as long as there are missions and operations of importance to the elite cabal, the US will be assigned to carry them out. Hence, the USA will be here. The balance of power in the Middle East will need to be kept in check, and the USA will do it. Be it diplomacy or bombs.


murpheyw
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Post by murpheyw »

UP. Do the opposite (in the stock market) of what everyone is telling you.
Except me.


Marius
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Post by Marius »

Regardless of whether the future is inflationary or deflationary, there’s plenty of deleveraging going on. The bloat has to get out of prices of things that were previously sustained by debt (stocks, real estate, etc.). Some markets are artificially propped up by stimulus though.
Meanwhile, safe havens like treasuries and gold are in a secular bull market. The worse things get, the more governments are tempted to destroy the currency (inflation, partial default, introduction of a world trade currency relative to which they can devalue, etc.).

Gold protects against many of these risks, but won’t go up forever, may be heavily manipulated and governments can ultimately decide to confiscate it because it competes with their debt/currency.
So ultimately it may be necessary to own paid off real things.

Investing in self sufficiency seems a pretty safe bet. Holding some physical gold outside the financial system and keeping it until the Dow/gold ratio drops to 2 or below (then switch to stocks for the long term, but what if demographics keep stocks low for many years? What if the ratio never goes down?) or the public stampedes into gold (then switch to what?) might be worthwhile.

Market timing is hard and dangerous, which is why I may decide to ease into something like the permanent portfolio.
(don't assume that I know what I'm talking about)


Matthew
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Post by Matthew »

@George
I agree that South America seems to be ready to boom. Many of the large companies (John Deere, Navistar, etc.) that I work with are requiring the company I work for to set up shop there. Beware of my tin foil hat, but I also think NAFTA ensures that this will happen, but I never invest based off speculation.


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