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This cycle has to complete itself ...

And that "completion" looks like WHAT?

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Fri Sep 19th, 2008 at 02:01:22 PM EST
[ Parent ]
The completion would mean a separation of the financial system from the rest of endeavour - like a Friday night poker game.

You can't be me, I'm taken
by Sven Triloqvist on Fri Sep 19th, 2008 at 02:03:13 PM EST
[ Parent ]
Not sure I understand BUT

what is the possibility/probability we'll see this event prior to human extinction?

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Fri Sep 19th, 2008 at 02:06:25 PM EST
[ Parent ]
Read Chris Cook's diaries....

You can't be me, I'm taken
by Sven Triloqvist on Fri Sep 19th, 2008 at 04:42:24 PM EST
[ Parent ]
(Note: I am not an economist and have no access to special information. The following is just me thinking about what seems logical.)

If the U.S. were a smaller country, "completion of the cycle" would mean a combination of drastic currency devaluation, rise in that country's interest rates and imposition of "austerity measures" (to use the ugly World Bank phrase).

Things probably cannot actually turn out that way, because too much of the existing international trade structure depends on the value of the dollar staying within a range. Instead I expect to see some combination of the following:

The dollar tied to some sort of "basket of currency," with specific exchange rates subject to periodic renegotiation;

One or more black markets coming into existence, involving both international trade and movement of goods inside the US, especially energy-related goods such as petroleum products;

US interest rates rising significantly;

Several new and mostly secret bilateral agreements made between the US and other countries, involving both trade and military matters such as arms sales. Such agreements might impel the US to reduce its military presence in some areas, while increasing its presence in others;

A slowdown of US imports of crude oil and petroleum products. The price of other imported goods should also rise.

The other "normal" alternative would be war in some form or other. But war between the US and the rest of the world is simply not going to happen, mainly because it would cost too much.

by Ralph on Sun Sep 21st, 2008 at 08:41:10 AM EST
[ Parent ]

But war between the US and the rest of the world is simply not going to happen, mainly because it would cost too much.

I find this strangely funny.  Has Dick Cheney  read this sentence?  He may not be convinced.

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Sun Sep 21st, 2008 at 08:47:34 AM EST
[ Parent ]
Reuters: S&P says pressure building on U.S. "AAA" rating (September 17, 2008)
Pressure is building on the pristine "AAA" rating of the United States after a federal bailout of American International Group Inc, the chairman of Standard & Poor's sovereign ratings committee said on Wednesday.

The $85 billion bailout of AIG on Tuesday by the U.S. Federal Reserve "has weakened the fiscal profile of the United States," S&P's John Chambers told Reuters in an interview.

"Lack of a pro-active stance could have resulted in further financial stress and put pressure on the U.S. triple-A rating," Chambers said. "There's no God-given gift of a 'AAA' rating, and the U.S. has to earn it like everyone else."

No, it's not God-given, it's S&P-given. The credit agencies are punching above their weight and will have much to answer for when all is said and done.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Sun Sep 21st, 2008 at 08:49:56 AM EST
[ Parent ]
Off topic but relevant:

Suppose the US exchanges all of the bad debt from whatever for Communist Chinese ownership of all this foreclosed real estate?  The Chinese won't need a war to defeat the US.  They'll simply export Chinese citizens to the US who will vote out the Anglos/blacks/Latinos/etc.

Cool?

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Sun Sep 21st, 2008 at 08:57:42 AM EST
[ Parent ]
That's interesting, and not even off topic. It's one way we could pay our debts to the world, and much less dangerously than by arms sales. I wonder how many Chinese could move onto all that real estate?

Note to Barack Obama: be sure to consult

   THE Twank (paszeski_aaaaaaatttttt_yahoo.com)

when it's time to Pay Off the World.

by Ralph on Sun Sep 21st, 2008 at 10:47:08 AM EST
[ Parent ]
Well, I guess i should feel flattered.  I may have to start reading some of my SPAM.

They tried to assimilate me. They failed.
by THE Twank (yatta blah blah @ blah.com) on Sun Sep 21st, 2008 at 02:34:52 PM EST
[ Parent ]
On S&P country credit ratings, see FT and S&P - conventional wisdom : why we should care by Agnes a Paris on March 28th, 2006
S&P sets the sovereign rating of almost each country in the world, and a country that has no rating can hardly tap international finance markets. France, UK, the US, like most OECD countries, are AAA rated, which is the highest rating on a AAA to D scale.
If the rating of a country is downgraded by even one notch (for France it would be AAA-, this immediately triggers investor suspicion, money fleeing the country and increases cost of government debt raising.


A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Sun Sep 21st, 2008 at 01:11:13 PM EST
[ Parent ]
Talking about Agnieszka - what's up with her. She hasn't been around for ages, unless she popped up during one of my hiatuses.
by MarekNYC on Sun Sep 21st, 2008 at 01:12:44 PM EST
[ Parent ]
Last I know (from a year ago) is that she was going to move to NYC. It had been a while since she had lurked on ET already then.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Sun Sep 21st, 2008 at 01:17:33 PM EST
[ Parent ]

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