Conquer Club

bedub1 wrote: Why do they think crashing the dollar is helpful? Are they idiots?

dewey316 wrote:I think we agree on a lot of the stuff there...so I'm not going to comment on the first part.

Fruitcake wrote:

dewey316 wrote:What scares me the most now, is that governments are doing what the private sector did, and got us here. They are borrowing money they can't pay back, they are trying to manipulate asset values, and keep the status que of the bubble going. I fear that we saw happen to millions of family's in the US, is going to catch back up to the governments that are involved in both the lending and borrowing of the bogus assets. If (or when) that happens, things will get bad, very fast.

The Governments have to borrow, simple as that. If they did not do so and let market forces resolve the issue completely, the natural law of nature would take place with the weakest literally not surviving the implosion. However, you are correct to concern yourself. Here are some interesting facts:

Why does the Government have to borrow?

dewey316 wrote:Snorri, I don't know that it will soften the blow. I think it will delay the blow, but it may not soften it. In fact, letting our shared economy's sit in a recession for an extended period of time, will likely cost more wealth, and more ills, than it is attempting to solve.

jay_a2j wrote:

bedub1 wrote: Why do they think crashing the dollar is helpful? Are they idiots?

You don't want to hear this but it's true. They are devaluing the dollar on purpose to bring a new monetary system, one that will know no boarders, a one world currency. That's why this "economic collapse" is not just a US problem.... it's a global problem.

PLAYER57832 wrote:Here's a thought. Why would the gold standard be better than any other currency?

Gold only has value because people assign it value. Yes, gold has uses. It is used in electronics, etc. and, historically, it was given great value for its beauty and durability. However, as values change, that is changing as well.

You can certainly argue that our paper currency is artificial. However, so was gold. Both only have value as long as we percieve them to have value.


I have other thoughts, more on the initial postings, but will have to wait to get into that.

dewey316 wrote:Snorri, I don't know that it will soften the blow. I think it will delay the blow, but it may not soften it. In fact, letting our shared economy's sit in a recession for an extended period of time, will likely cost more wealth, and more ills, than it is attempting to solve.

got tonkaed wrote:

dewey316 wrote:Snorri, I don't know that it will soften the blow. I think it will delay the blow, but it may not soften it. In fact, letting our shared economy's sit in a recession for an extended period of time, will likely cost more wealth, and more ills, than it is attempting to solve.

I dont disagree with your notion that in theory the gov. should be doing as much as possible to service the debt and structure our budget in order to make it less of an issue. However the realities show that this isnt really possible without a major reorganzing that im not sure anyone is capable of in the near future no matter who would have been elected. Simply looking as you have at why the debt is so high should show you why the good sounding theoretical position is in practice almost entirely unsupportable.

GabonX wrote:

jay_a2j wrote:

bedub1 wrote: Why do they think crashing the dollar is helpful? Are they idiots?

You don't want to hear this but it's true. They are devaluing the dollar on purpose to bring a new monetary system, one that will know no boarders, a one world currency. That's why this "economic collapse" is not just a US problem.... it's a global problem.

I try not to buy to deeply into all of these one world government conspiracy theories but I have to admit that this does make perfect sense.

Fruitcake wrote:So we are left with just Germany, USA and maybe Japan able to issue Bonds to raise funds to lend to the markets at anything like a real interest rate or to subsidise their spending programs. Meanwhile in the EU the clamour for the German Bunds to subsidise the rest of the Euro market is increasing daily, but the German Politicians (rightly inmo) are trying to avoid this as it basically means the German people will end up subsidising the whole of the EU zone!

Fruitcake wrote:I made a forecast of a 30% correction in global asset prices early last year, I have now upped that to 50% (yes that means assets will settle at just half what they were worth)

(meanwhile I'm off to watch the Rugby!)

GabonX wrote:I've thought of it myself and the conclusion I came to was that there is something inately and intrinsicly attractive to man about gold. Every ancient culture recognized it as being something valuable and that has never changed. The supply has always been lower than the demand and there are a number of industrial uses for it which are likely to drive the price higher. The computer you're using right now has gold inside of it.

While it may not definately always have such a high value, it is the most likely substance on earth to retain value. There are no absolutely sure things in life.

PLAYER57832 wrote:Why does everything have to be a conspiracy?

This is the result of the interconnectedness of business in today's world. It was not an intentional devaluing of the dollar, but yes, we are likely moving toward one universal currancy. It takes no secret plot, it just takes folks trading constantly and not wanting to hassle with issues of currency exchage.

PLAYER57832 wrote:

GabonX wrote:

jay_a2j wrote:

bedub1 wrote: Why do they think crashing the dollar is helpful? Are they idiots?

You don't want to hear this but it's true. They are devaluing the dollar on purpose to bring a new monetary system, one that will know no boarders, a one world currency. That's why this "economic collapse" is not just a US problem.... it's a global problem.

I try not to buy to deeply into all of these one world government conspiracy theories but I have to admit that this does make perfect sense.

Why does everything have to be a conspiracy?

This is the result of the interconnectedness of business in today's world. It was not an intentional devaluing of the dollar, but yes, we are likely moving toward one universal currancy. It takes no secret plot, it just takes folks trading constantly and not wanting to hassle with issues of currency exchage.

A summit of EU leaders in Brussels on Friday (20 March) was the scene of some confusion as to whether member states have agreed the bones of a eurozone bailout plan.

A senior German politician, Otto Bernhardt, member of the German chancellor's CDU party, told Reuters early on Friday that eurozone finance ministers agreed at a recent meeting the main components of a eurozone bailout plan that would see richer countries contribute to a special reserve fund to which struggling eurozone members could apply.

The ECB denied the existence of a rescue fund

However, German finance minister Peer Steinbrück was somewhat cryptic when asked about the funds existence at a press conference later in the day. "I can't confirm such a meeting or such conclusions," adding that no eurozone member currently had difficulties in meeting debt payments. "In the unlikely case that it did happen, the eurozone would be ready for action," he said.

Mr Bernhardt told Reuters that the fund has already been set up with the European Central Bank and is ready to help eurozone countries "at a moments notice", continuing that "we won't let anyone go bust." "We are in a position to act within 24 hours. The ECB would take immediate action," he said. "The ECB can make an unlimited amount of money available."

Ireland, which Mr Bernhardt said was in "the worst situation of all" immediately denied the existence of such a plan.

"Finance ministers didn't discuss anything to do with a rescue package for members of the euro zone" Irish foreign minister Micheal Martin told Irish radio on Friday morning.

A German spokesperson said "there is no such plan" and that Mr Bernhardt said he had been misinterpreted. European Commission president Jose Manuel Barroso said: "I am not aware of this kind of decision."

But Mr Bernhardt was quite precise in the details he gave to Reuters, speaking of a quid pro quo arrangement on corporate tax, something that has also been previously reported in Irish newspapers. "We would look very closely at past sins," Mr Bernhardt said. "We will not tolerate there being low-tax countries like Ireland for example. We will insist on a minimum corporate taxation rate." Germany has long been irritated by Ireland's low corporate tax rate, standing at 12 percent.

However, sweetners to business formed the backbone of Ireland's Celtic Tiger years attracting huge amounts of foreign investment and Brian Cowen's government wants to continue to use it to get the country – hit by a falling property market and plummeting exports - out of the financial doldrums. In a speech delivered to Microsoft's headquarters in Brussels on Thursday (19 March), Mr Cowen said the government plans "highly favourable business supports, tax regime and infrastructural supports," in a bid to turn Ireland into a "smart" economy.

Talk of a eurozone bailout have cropped up persistently in recent weeks. Earlier this month at a breakfast meeting at the European Policy Centre think-tank, economy commissioner Joaquin Almunia said the EU did have plan to help struggling eurozone states but refused to elaborate on the details. "It is not clever to talk in public about this solution". Last month, Mr Steinbrueck said that richer eurozone countries may have to come to the aid of single currency nations that are having problems. "The euro-region treaties do not foresee any help for insolvent states, but in reality the others would have to rescue those running into difficulty," he said on 17 February.

Meanwhile, the European Central Bank on Friday denied the existence of a rescue fund. "The reported information is for the ECB untrue," a spokeswoman for the Frankfurt-based central bank said, reports Bloomberg news agency. The euro dropped after the comment was published.

Source: EUobserver.com.

Can Europe act collectively?

The Federal Reserve's shock tactic of pumping more than $1 trillion into the U.S. economy through bond purchases -- after a similar move by the Bank of England -- has left the European Central Bank in a bind.

In addition, the bank's refinancing rate of 1.5% is one percentage point above comparable rates in the U.S. and U.K. -- despite forecasts that euro-zone inflation will hit zero this year and GDP will decline by as much as 4%.

Printing money is anything but a risk-free solution to the deflationary threat. But one immediate consequence of the Fed's action has been to further undermine confidence in the dollar at a time when the euro already looks overvalued.

That piles even more pressure on the ECB, which had been hoping that the stimulative impact of a weaker euro would help counter the disinflationary, if not deflationary, pressures it faces.

In its defense, the ECB hasn't been idle. Its less-closely followed deposit rate -- which banks receive on cash left overnight with the ECB -- now stands at just 0.5%, well below the overnight interbank rate of 0.9%.

The ECB hopes that will encourage banks to lend to one another and, more important, lend on to customers. The trouble is, with confidence shot to pieces, banks might continue to hoard cash regardless of the deposit rate.

Two things are restraining the ECB from more radical action.

One is philosophical: The ECB has inherited the inflation-fighting mantle of the Bundesbank, an institution committed to not repeating the Weimar Republic's disastrous experience with hyperinflation.

Another is the difficulty of building a consensus among the 16 euro-zone members, particularly when Germany feels it will pick up the tab for the reckless behavior of others.

That is a particular problem when it comes to quantitative easing, or using the central-bank balance sheet to buy government bonds. When the Fed and the BOE want to pump money into the economy, they simply buy U.S. and U.K. government bonds.

But the euro zone doesn't issue its own bonds. Instead, the ECB would have to buy bonds issued by member states, forcing it into a political minefield as it tries to decide whose debt to buy and how much.

Would it only buy bonds from Triple-A rated countries, such as Germany and France, whose debt is lowest risk and most liquid? Or would it buy the bonds of downgraded countries, such as Greece and Spain, thereby cutting their borrowing costs?

These are tricky questions. But unless the euro zone acts quickly to agree to some ground rules, it risks finding itself unable to act even if it decides that quantitative easing is the only option.