[bymy141]

I travel a lot and news always is different in the various parts of the world.

Today, driving from Brussels home to the Netherlands, there was an elaborate analysis of the US economy on the radio.

The economists were openly speculating on a fore coming bankruptcy of the USA.

They combine a number of recent developments to substantiate their argument:
• a further and ever faster devaluation of the dollar,
• the still growing sub prime financial crisis,
• the fast dropping of US real estate prices,
• the rising cost of trade insurance with the US and wrong answer by the FED (decrease of interest instead of increasing interest),
• the unbelievable high and ever growing USA trade deficit, without a policy to correct this problem in the foreseeable future,
• the lowering of taxes instead of lowering national budgets and increasing taxes,
• the complete lack of trust in the banking system,
• the rising cost of oil,
• the growing industrial and financial role of India and China becoming more important to world economy than the USA.

Are there any Americans out there that would like to comment on this?
Do you believe it could happen? Do people hear such analysis in the US media as well?
Will you guys be able to allow yourself a K30D in 2009?

- Bert

[tybeck]

This sort of thing is quite hard to predict and I am suspicious of any projections. That said, the current trends in US economic and foreign policy do point toward a steady decline of her position in the world. I would not go to the point of saying that we are doomed to a country-wide bankruptcy because we still have accessible resources, top notch research, industry, a large consumer market, and a legal environment that promotes invention and entrepreneurship. I also don' t see the rest of the world allowing the US to fall too hard. National economies are increasingly interconnected and a fall in any major player, like the USA, will be felt throughout the economic network. If my nation is to remain at its current stature we need to make some changes to avoid a fall or lighten an inevitable one.

[flyer]

This sort of thing is quite hard to predict and I am suspicious of any projections. That said, the current trends in US economic and foreign policy do point toward a steady decline of her position in the world. I would not go to the point of saying that we are doomed to a country-wide bankruptcy because we still have accessible resources, top notch research, industry, a large consumer market, and a legal environment that promotes invention and entrepreneurship. I also don' t see the rest of the world allowing the US to fall too hard. National economies are increasingly interconnected and a fall in any major player, like the USA, will be felt throughout the economic network. If my nation is to remain at its current stature we need to make some changes to avoid a fall or lighten an inevitable one.

I think your view of the situation is pretty sound. I don't think any major player in the world can let a market the size of the U.S.A. go by the wayside. And, beside, those Americans are resilient. Trust them to turn a major crisis into something that will smell like perfume...
That said, somebody will have to do major political changes to right things (generally, that's where John Q. Public is called for a BIG contribution that hurts).

[Gooshin]

thanks to OPEC, oil is sold and bought using the US dollar

oil accounts for around 80% of the world economy

the US can keep printing money, because they can

the day OPEC collapses and each individual country can sell its oil reserves in the currency of its choice (Russia sell for Rouble, Canada for Canadian Dollar, etc etc), is the day that the entire american economy will collapse within a couple of minutes.

until then, live free and prosper.


america is running a huge deficit

they print american dollars

they buy shit from other countries with the american dollar

those countries then buy the much needed oil with the american dollar

the rising cost of oil doesnt mean anything, because the US just keeps on printing money, its a balancing act.

[Mallee Boy]

Hi Bert,
I think you have to be careful when listening to any sort of commentary these days, so many people have different agendas and will use any media to get their point of view across, to support that agenda. So without knowing who was speaking, who pays the radio stations bills, who was hosting the show and his/her money trail ...it is really difficult to draw any sane conclusion. The media seems to want to make or create the 'news' today, not report it.

Having said that, there is no doubt there are problems and I would offer that oil is at the core of those problems. If we were ever able to break our addiction to oil then the world will probably be a much better place.

In Australia we are facing increasing inflation, now managed by a new govt that increasingly resembles a rabbit caught in the headlights of a rapidly approaching truck, and oil prices that 'fuel' inflation as we are so dependant on road transport for everything. So we too, have some difficult times ahead that are going to require some innovative and careful management.

I still have enough faith in our fiscal & industry leaders to not hit the panic button........quite yet.

[falconeye]

I've read an analysis that events of a certain size will cause the global finance system to collapse.

One such event would be a strength 9 earthquake in Tokyo. A US bankruptcy would definitely fall into this category. No safe land out there...

Besides this, U.S. homeland security doesn't allow postings taking the US strength into question. The original poster is violating federal law. You better have no travel plans for the U.S. soon

[TomInJax]

Besides this, U.S. homeland security doesn't allow postings taking the US strength into question. The original poster is violating federal law. You better have no travel plans for the U.S. soon

I really don't think that the OP was questioning the strength of the US, we have the world's most powerful military! But, he was questioning the sanity of the economic governing of the US Government, which many Americans question as well!

One problem with our economic situation is the fact that so many in the US have ignored the situation and blame OPEC for high oil and petroleum prices. Blame is placed on greedy investors, corrupt politicians, and the war in Iraq. As true as these points may be, nobody wants to face the real reasons that we are in economic shambles. They ignore it just like they do when they encounter a deformed person on the street; they look the other way and pretend he doesn't exist. They refuse to admit that their own debt load has contributed greatly to the economic downfall. A majority of US is in debt up to their eyeballs! We have used the equity in our homes like it was an ATM machine dispensing cash for vacations, autos, cameras , paying off credit cards (then racking them up again), and buying all sorts of things that we don't really need.

I believe that it will take some sort of economic recession to get things back to normal. It is part of the healing process. Unfortunately, because the central banks are so closely tied together, it will negatively impact many other countries in the world.

[Kguru]

those countries then buy the much needed oil with the american dollar

I totally absolutely entirely disagree with this

Unit price is based on US dollar, but payments don't have to be in US dollars.
Besides, currencies are freely traded, freely converted from/to US dollars, so they don't need to own US dollars first to buy oil.

[Gooshin]

I totally absolutely entirely disagree with this

Unit price is based on US dollar, but payments don't have to be in US dollars.
Besides, currencies are freely traded, freely converted from/to US dollars, so they don't need to own US dollars first to buy oil.

you ever try to buy an oil barrel?

[Gooshin]

you can "disagree" with me all you want, the fact of the matter is that the OPEC cartel, the 22 some odd nations that are part of it, are not allowed to export oil for any currency other than the US dollar

if you want to convert a trillion AUD dollars into US, then buy the oil, go right ahead, but no matter how you spin it, you maintain the demand for the american dollar.

[Kguru]

you ever try to buy an oil barrel?

The operations I work for have sold millions of them
I have taken part in work that sees crude oil pumped from FPSOs to trading tankers to be taken to its destinations.

Tell you what ... just one tanker's load of 600,000 barrels can fetch you a K20D kit for every single day of your life, howzat?!

[bymy141]

There is a lot to read on this subject in various magazines, also american.
Most of the radio in Belgium and Holland is either state owned with little to no ties to politics.

You can find a lot of articles and video on the Internet covering the subject; F.I. YouTube - Tribute to Peter Schiff
Or have a look at this website: Trade Ticker - The Web's only up-to-the-second counter for the U.S. Trade Deficit

I agree with the statement that most people prefer to ignore what is happening and have a rock solid, however not based upon facts, trust in the "other" people, politicians, captians of industry etc to come up with a solution. I'd prefer to draw my own conclusion, isn't that what the Pentax crowd is alike?

- Bert

[PaulAndAPentax]

Personally I think the US needs to avail itself of its many resources. We could supply our own oil from drilling in our own lands if we would pass resolutions allowing us to do so. I am a nature shooter and ALL FOR protecting the environment, but the technology exists to take resources we need with VERY limited environmental impact....the US is too dependent on everyone else and now our dollar is weak. As far as the mortgage crisis goes, we brought that on ourselves. I am an investigator working mortgage and investment fraud and you would not believe the amount of people that got loans that never should have.

I think any major problems the US has coming in the future can be avoided, but wonder if we have the leadership to make the right decisions without regard to their popularity.

[Confused]

Hi Gooshin

Bearing in mind that this is supposedly a photographic forum, nevertheless when you said:

The US can keep printing money

Remember what happened to the German economy in the 1930's when their government adopted this particular risky business model in a futile attempt to combat inflation, resulting in ordinary citizens pushing increasingly worthless barrowloads of bank-notes around the streets to pay for goods ! Zimbawe is a modern day example of this kind of idiocy, with inflation rates running into telephone numbers.......that way lays total madness !

A majority of US is in debt up to their eyeballs! We have used the equity in our homes like it was an ATM machine dispensing cash for vacations, autos, cameras

Which puts the current U.S. sub-prime mortgage crisis into sharp focus....i.e. folks living beyond their means ! I generally dislike sweeping statements, but I fear that the truth of the matter is that 'certain pigeons are coming home to roost' and that the American economy is ultimately in long term decline. The growth areas are likely to be found in the emerging markets of China & India, so the potential for Pentax to make huge profits in these economies makes me question the wisdom of their current business strategy of clinging to America's coat tails, come what may ! The practice of offering rebates purely to U.S. customers frankly stinks and I hope that in future such discounts become available to people in Europe & elsewhere, where the currencies are stronger ?

Best regards
Richard

[falconeye]

I really don't think that the OP was questioning the strength of the US, we have the world's most powerful military!

Of, course I was making a joke in my original posting. However, military needs to get financed so the two would be closely correlated.


The topic is so serious, I coudn't respond in an appropriate manner and had to make jokes instead. Sorry about this.

The cruel truth is that a possible collapse of the U.S. finance system, and of the global finance system in turn, has been pointed out since the eighties but has never been as plausible as now.

And oil has nothing to do with it. The opposite it true. An increase of oil price is a good thing because of limited oil resources triggering investments to replace it.

The finance system is ill-constructed. Seen it 1990 in Japan, seen it 2000 in the west, see it again now. From an engineer's point of view, the finance system is like a feedback loop with missing damping. Such systems do easily fail and lack robustness.