Global Debt Time Bomb explodes soon

[Old_Man]

Trifecta of bad news....Imports (correction) increased, Cost of food and fuel increase and unemployment increases (with possibly the largest weekly jump in Non-seasonally adjusted unemployment (+75,000) in the last decade).
http://www.zerohedge.com/article/trifecta-economic-horror-trade-deficit-explodes-463-ppi-rises-above-expectations-new-jobless

[Blacksmith]

I guess they will be getting what they wanted... inflation.

[phil_in_cs]

Exports increasing isn't a bad thing - we are making more and selling it to other people. The declining dollar helps, of course. China and other Asian nations have for years tried to keep their internal currency devalued to boost exports.

[Old_Man]

Exports increasing isn't a bad thing - we are making more and selling it to other people. The declining dollar helps, of course. China and other Asian nations have for years tried to keep their internal currency devalued to boost exports.

Yea sorry I was bassawkwards...Imports increased above last months rather high number.

[phil_in_cs]

Exports increasing isn't a bad thing - we are making more and selling it to other people. The declining dollar helps, of course. China and other Asian nations have for years tried to keep their internal currency devalued to boost exports.

Yea sorry I was bassawkwards...Imports increased above last months rather high number.

Imports increasing is bad - more money going out...

[Justin_Case]

Interesting times indeed.......

following are 24 statistics about the United States economy that are almost too embarrassing to admit....

#1 Ten years ago, the United States was ranked number one in average wealth per adult. In 2010, the United States has fallen to seventh.

#2 The United States once had the highest proportion of young adults with post-secondary degrees in the world. Today, the U.S. has fallen to 12th.

#3 In the 2009 "prosperity index" published by the Legatum Institute, the United States was ranked as just the ninth most prosperous country in the world. That was down five places from 2008.

#4 In 2001, the United States ranked fourth in the world in per capita broadband Internet use. Today it ranks 15th.

#5 The economy of India is projected to become larger than the U.S. economy by the year 2050.

#6 One prominent economist now says that the Chinese economy will be three times larger than the U.S. economy by the year 2040.

#7 According to a new study conducted by Thomson Reuters, China could become the global leader in patent filings by next year.

#8 The United States has lost approximately 42,400 factories since 2001. Approximately 75 percent of those factories employed at least 500 workers while they were still in operation.

#9 The United States has lost a staggering 32 percent of its manufacturing jobs since the year 2000.

#10 Manufacturing employment in the U.S. computer industry is actually lower in 2010 than it was in 1975.

#11 In 1959, manufacturing represented 28 percent of all U.S. economic output. In 2008, it represented only 11.5 percent.

#12 The television manufacturing industry began in the United States. So how many televisions are manufactured in the United States today? According to Princeton University economist Alan S. Blinder, the grand total is zero.

#13 As of the end of 2009, less than 12 million Americans worked in manufacturing. The last time that less than 12 million Americans were employed in manufacturing was in 1941.

#14 Back in 1980, the United States imported approximately 37 percent of the oil that we use. Now we import nearly 60 percent of the oil that we use.

#15 The U.S. trade deficit is running about 40 or 50 billion dollars a month in 2010. That means that by the end of the year approximately half a trillion dollars (or more) will have left the United States for good.

#16 Between 2000 and 2009, America's trade deficit with China increased nearly 300 percent.

#17 Today, the United States spends approximately $3.90 on Chinese goods for every $1 that China spends on goods from the United States.

#18 According to a new study conducted by the Economic Policy Institute, if the U.S. trade deficit with China continues to increase at its current rate, the U.S. economy will lose over half a million jobs this year alone.

#19 American 15-year-olds do not even rank in the top half of all advanced nations when it comes to math or science literacy.

#20 Median household income in the U.S. declined from $51,726 in 2008 to $50,221 in 2009. That was the second yearly decline in a row.

#21 The United States has the third worst poverty rate among the advanced nations tracked by the Organization for Economic Cooperation and Development.

#22 Since the Federal Reserve was created in 1913, the U.S. dollar has lost over 95 percent of its purchasing power.

#23 U.S. government spending as a percentage of GDP is now up to approximately 36 percent.

#24 The Congressional Budget Office is projecting that U.S. government public debt will hit 716 percent of GDP by the year 2080

Pulled from this site and article:
http://theeconomiccollapseblog.com/archives/is-america-in-decline-24-statistics-about-the-united-states-economy-that-are-almost-too-embarrassing-to-admit

[Blacksmith]

I have to wonder. Is the US falling or are other nations rising? There is a big difference you know. The US declining in arbitrary rank relative to other nations does not mean that quality of life has dropped. I would be a lot more concerned with the massive increase in poverty since 2009. More than double, that is scary statistic. And the government is worried that inflation is too low? Insanity.

[raptor]

Those are interesting facts.

I do not agree with all of them. I am not sure you can call projections facts but I guess that an economist predicted something is a fact.

However there are few things there that do stand out.

The trade deficit is due in no small part to the fact that the US imports approximately 60+% of the fuel we burn in our vehicles. A reduction of imported fuel alone would help our economy tremendously.

I agree our education system needs an overhaul.

As for Chines patents most of those patents are being filed by foreign companies trying (mostly in vain) to protect some of their intellectual property in China.

[raptor]

More mainstream press on the "bloody obvious".

http://money.cnn.com/2010/10/17/news/ec ... /index.htm

[TheGunslinger]

I have to wonder. Is the US falling or are other nations rising? There is a big difference you know. The US declining in arbitrary rank relative to other nations does not mean that quality of life has dropped. I would be a lot more concerned with the massive increase in poverty since 2009. More than double, that is scary statistic. And the government is worried that inflation is too low? Insanity.

I think you'll find it is probably a fair bit of both, really. The US is going through some tough times at the moment, that's no secret. But other nations are also starting to rise - being the only super power and with a fairly huge head start on the rest of the world (especially Europe post-WW2) gave the US a large lead. One that is shrinking at the moment.

China and India having a larger GDP than the US isn't too much of a surprise - their populations are what, 3 or 4 times the size? That still doesn't give a per-capita GDP greater than the US. I also don't really see it happening - rates of growth that predict those things are always best case/worst case scenarios. In that they assume that India or Chinese growth will remain as massive as it is now, whilst also assuming that the US's growth will remain as stagnant - neither of those things will be the case, especially not in the Chinese case, where they are already starting to see infrastructure building slow downs. They've built all the ports, railroads and highways that the country really needs - pretty soon they will face a construction bust, as property prices in Shanghai area already becoming well beyond what the average person can ever afford.

Additionally, the yuan is being gradually re-valued too - it is costing the Chinese an awful lot to keep the yuan at a low rate. They'll eventually have to start increasing it, which means that Chinese factories and work is going to move to Vietnam, Thailand, the Philippines and Indonesia and India soon enough.

The US is the opposite - yes, the dollar has been devalued a heap. The Australian dollar was at parity a few days ago which is amazing. That isn't a bad thing! The US need a weaker dollar - reduce your imports, increase your exports. It also makes it easier to repay debt. If it is done in a controlled manner, then it is an option to give the US some breathing space and it will also attract foreign investment.

I dunno. Take it all with a grain of salt - but it isn't as doom gloom and end of the nation type stuff as people would have you believe.

[Blacksmith]

Inevitably the Yuan will rise, and when it does; watch out. All that cheap Chinese crap that you can get at Walmart will be out of your price range, at least until someone else starts making it.

[Old_Man]

Today was crazy with the NY Fed, Pimco and Blackrock looking to issue mortgage putbacks on Bank of America. Potentially a death blow for the bank since surely this will unleash a mountain of lawsuits.
http://www.zerohedge.com/article/pimco-and-new-york-fed-said-seek-bank-america-repurchase-mortgages

A more ominous event was China halting rare earth exports to the US.(also via ZH)

HONG KONG — China, which has been blocking shipments of crucial minerals to Japan for the last month, has now quietly halted shipments of some of those same materials to the United States and Europe, three industry officials said on Tuesday.

http://www.nytimes.com/2010/10/20/business/global/20rare.html?_r=2&hp

[Blacksmith]

I am not sure how that is related to the topic but California has the capability to be a world leading exporter. The problem is it is just so cheap in China no one wants to pay extra for US labor (or even Brazilian or South African). But if there isn't any, than they will have to.

[raptor]

Today was crazy with the NY Fed, Pimco and Blackrock looking to issue mortgage putbacks on Bank of America. Potentially a death blow for the bank since surely this will unleash a mountain of lawsuits.
http://www.zerohedge.com/article/pimco-and-new-york-fed-said-seek-bank-america-repurchase-mortgages

A more ominous event was China halting rare earth exports to the US.(also via ZH)

HONG KONG — China, which has been blocking shipments of crucial minerals to Japan for the last month, has now quietly halted shipments of some of those same materials to the United States and Europe, three industry officials said on Tuesday.

http://www.nytimes.com/2010/10/20/business/global/20rare.html?_r=2&hp

Interesting story check out this article with alternate supplies of these rare earth minerals:

BTW Molycorp NYSE: MCP jumped 10% Tuesday despite the very bad market today.

http://www.proactiveinvestors.com/compa ... -9051.html

[Blacksmith]

Based solely on that article a China Embargo could really = $$$$

For a few Western companies.

[TheGunslinger]

Hell yeah it could.

Silly idea, they did it to Japan to make them give back their trawler-boat captain, not really sure what the game plan is doing it to the US and China.

Especially seeing as it will just open up mines elsewhere in the world to fill demand, which will mean more competition for the minerals.

[phil_in_cs]

Especially seeing as it will just open up mines elsewhere in the world to fill demand, which will mean more competition for the minerals.

China has been buying rights to those around the world for years. Especially in Africa.

[Blacksmith]

China has been buying rights to those around the world for years. Especially in Africa.

In the US this would not matter. The government can take them and sell them to a US Company if China were playing hard ball. I imagine other countries would have the arrangement.

[phil_in_cs]

China has been buying rights to those around the world for years. Especially in Africa.

In the US this would not matter. The government can take them and sell them to a US Company if China were playing hard ball. I imagine other countries would have the arrangement.

Maybe I wasn't clear - China owns the mines, mineral rights, pays the workers, pays bribes to the local governments, sells them military goods at discounts, etc. They won't sell where China doesn't want them to. China is playing hardball with the west, not with the Africans.

[TheGunslinger]

They don't only exist in Africa, either. There are massive deposits in Australia, which are currently not being mined.

[raptor]

Interesting story check out this article with alternate supplies of these rare earth minerals:

BTW Molycorp NYSE: MCP jumped 10% Tuesday despite the very bad market today.

http://www.proactiveinvestors.com/compa ... -9051.html

This article lists 11 companies with mines for these rare earth elements. One mine is in the US, a couple are Canadian and the rest are Australian.


This Forbes article discusses Molycorp. The Chinese visited the mine and were quoted as saying:

For his part, Bhappu does not believe the Chinese want to politicize rare earth minerals. In fact, earlier this year he helped host a Chinese delegation at Molycorp’s Mountain Pass mine. “It has been surprising, the Chinese are extremely supportive of us starting this mine, they have told us they don’t want to be the world’s sole supplier,” says Bhappu. “They are concerned they are going to consume everything they produce internally and they won’t have excess production to export. I think they want to save their own strategic minerals, not just rare earth minerals, for their own internal consumption.”


http://blogs.forbes.com/nathanvardi/201 ... ellighttop


Now do I believe that 100%..no. But there is logic to China preserving a rare material with strategic implications for internal use only.

Yes this means other deposits will be found and exploited elsewhere quickly but if there are strategic reasons for doing this it makes a lot of sense.

Keep an eye on these companies.

[Blacksmith]

Maybe I wasn't clear - China owns the mines, mineral rights, pays the workers, pays bribes to the local governments, sells them military goods at discounts, etc. They won't sell where China doesn't want them to. China is playing hardball with the west, not with the Africans.

I guess I was not clear either. Even if the Chinese owned all those in the US the government could take it away from them and sell it to someone domestically. At one time California was the world's largest exporter. But a miner in California making $25/ hr union wage can not compete with a Chinese prison laborer making nothing. Therefore so long a supply exists from China there is no reason to mine in California.

[Old_Man]

An analysis from Stratfor believes the issue is more supply for China than stiffing the US and Europe. It seems China will need all it produces for it's domestic manufacturing in country.

China’s domestic demand for the materials is growing rapidly enough as its manufacturing sector becomes more focused on producing high-tech goods. By 2015-20, China alone will likely be consuming the bulk of its REE production even if it were not deliberately attempting to constrain production to drive up international prices and gain leverage over trade partners (which it is doing). Hence, regardless of whether China has imposed an arbitrary cutoff, the supplies will dry up in the coming decade. This will leave western consumers who depend on Chinese supplies — primarily Japan, South Korea, the United States, France and Germany — to develop new sources of the material.

http://www.stratfor.com/analysis/20101020_dispatch_chinas_rare_earths_leverage

[NoAm]

I wanted to share this link "Geography of a Recession" showing the unemployment rates as they have grown from January 2007 until August 2010. Scarey and Informative

http://www.latoyaegwuekwe.com/geographyofarecession.html