US economic power

[Schmedlap]

Two points...

1. If you owe the bank $100, then that is your problem. If you owe the bank $100 million, then that is the bank's problem. We owe trillions of dollars to the world. If something happens that makes us unable to make timely payments on that debt, then it will become the world's problem.

2. Too big to fail.
If the US ever suffered a significant depression or other economic calamity then the world would need to think of something quick, because our economy is "too big to fail." If we go down, then Japan and China are going to be holding some worthless paper, oil producers are going to see demand plummet, every country with a current account surplus is going to be living off of its reserves, Africa and the UN get no more money, South America gets the double whammy of no more aid and less demand for their illicit drugs, and Europe can try to piece it all together while supporting their welfare states.

If America is in decline, then the world is in decline.

[Shek]

Two points...

1. If you owe the bank $100, then that is your problem. If you owe the bank $100 million, then that is the bank's problem. We owe trillions of dollars to the world. If something happens that makes us unable to make timely payments on that debt, then it will become the world's problem.

2. Too big to fail.
If the US ever suffered a significant depression or other economic calamity then the world would need to think of something quick, because our economy is "too big to fail." If we go down, then Japan and China are going to be holding some worthless paper, oil producers are going to see demand plummet, every country with a current account surplus is going to be living off of its reserves, Africa and the UN get no more money, South America gets the double whammy of no more aid and less demand for their illicit drugs, and Europe can try to piece it all together while supporting their welfare states.

If America is in decline, then the world is in decline.

The financial version of mutual assured destruction (MAD).

[Schmedlap]

Browsing this old thread, I came across an earlier forecast. We are not in a depression, so I would not expect half of these to come true, but the economy is hurting and some have begun...

If the US ever suffered a significant depression or other economic calamity then the world would need to think of something quick, because our economy is "too big to fail." If we go down, then Japan and China are going to be holding some worthless paper

Japan's currency is now appreciating at a wild pace. Our currency may have begun a genuine rebound because other countries are feeling the pain that we have brought and our currency may be comparatively safer.

... oil producers are going to see demand plummet...

Price is down more than 50% off its peak just a few months ago, dropping into the low $60's per barrel even after the announced cut in production.

... every country with a current account surplus is going to be living off of its reserves...

Japan has just announced it's first trade deficit in 26 years.

... Africa and the UN get no more money...

Well, it probably will require a depression for that to ever occur.

... South America gets the double whammy of no more aid and less demand for their illicit drugs

No data on this, but I have seen reports in business publications that strippers and prostitutes are seeing significant (double-digit percentage) declines in their revenues. If that is the case, it seems likely that a similar decline in drug consumption is also occuring.

[slapout9]

No data on this, but I have seen reports in business publications that strippers and prostitutes are seeing significant (double-digit percentage) declines in their revenues. If that is the case, it seems likely that a similar decline in drug consumption is also occuring.

People laugh at this stuff but what street prostitutes are paid/or not paid is one of the most reliable economic indicators I have ever seen. Also the number of NEW prostitutes is a very good indicator. Drug demand/price is not so accurate as far as decline because theft/burglaries ususally go up to cover the cost of drugs (which is happening and not being reported much in the media IMO) also puts more presssure on Hospital ER systems as people try to quit.

[Schmedlap]

People laugh at this stuff but what street prostitutes are paid/or not paid is one of the most reliable economic indicators I have ever seen.

I definitely agree.

Drug demand/price is not so accurate as far as decline because theft/burglaries ususally go up to cover the cost of drugs (which is happening and not being reported much in the media IMO) also puts more presssure on Hospital ER systems as people try to quit.

If memory serves me right, this is kind of your area of expertise (the analysis, not the drug use). Here is one thought that I had on the topic - I'm curious as to your reaction... I can't see this as compensating completely for the loss in disposable/smokable cash, since the burglaries take time and are not always successful - there must still be some significant downward pressure on the price. If nothing else, the junkie can plead with his dealer, "everybody in this fricken neighborhood has got ADT, a shotgun, or both! I need more time or a more reasonable price!" If every one of his customers is pleading that way, the dealer needs to realize that it's a rough economy and face the unpleasant fact that he needs to lower his price.

Your thoughts?

When the downturn starts hitting the smut peddlers, you know that these are tough times. Last week I had to settle for an iPod Nano instead of the 160GB, full-sized iPod. Why isn't my Congressman doing something about this? I'm in law school right now and almost all of my classmates are worried about their student loans. After they drink a few hundred dollars per week at the bar and go out for dinner at a restaurant five or six times per week, they hardly have enough left over to pay the interest on their loans. I think that I can finally relate to what my grandparents endured in the 1930s.

[slapout9]

Schmedlap, hard drug use is what economist call inelastic demand. It is a physical need not a want as the softer drugs are. So there is tremendous pressure on the user to get the money no matter what. Dealers do not usually negotiate with anyone if they sell hard drugs, soft drugs yes. That is why I said this activity is not as good an indicator as prostitution but it does have merit , just not as much.

You are in law school? check out the number of students who are turning to escorting as a way to make ends meet! I would do this in a very non-threatening way or they won't tell you. You will probably be shocked at the underground activity going on in this area. I new several strippers who put themselves through school that way. They worked 2 days a week(sometimes less), the rest of the time they concentrated on their studies to get very high GPA's.

[Schmedlap]

You are in law school? check out the number of students who are turning to escorting as a way to make ends meet! I would do this in a very non-threatening way or they won't tell you. You will probably be shocked at the underground activity going on in this area.

I lived in an apartment building with lots of law students in DC and knew of several who were hard-working escorts. Here, my law class is very small, everyone knows each other well, and I am surprised that none of that is going on. They are all obsessed with just going out to eat for lunch and dinner and binge drinking all night - and complaining about the high cost of health insurance. If anyone is slipping out to do escort duty, then they're doing it at the expense of not sleeping AT ALL. I'm glad that our gov't subsidizes federal student loans for them and gives them grants. Otherwise, how could they ever afford the tuition? And we certainly need more lawyers, especially those with destructive spending habits and unhealthy lifestyles.

[slapout9]

and we certainly need more lawyers, especially those with destructive spending habits and unhealthy lifestyles.

The little laugh icon is supposed to be here but I guess it was his break time.

[120mm]

I lived in an apartment building with lots of law students in DC and knew of several who were hard-working escorts. Here, my law class is very small, everyone knows each other well, and I am surprised that none of that is going on. They are all obsessed with just going out to eat for lunch and dinner and binge drinking all night - and complaining about the high cost of health insurance. If anyone is slipping out to do escort duty, then they're doing it at the expense of not sleeping AT ALL. I'm glad that our gov't subsidizes federal student loans for them and gives them grants. Otherwise, how could they ever afford the tuition? And we certainly need more lawyers, especially those with destructive spending habits and unhealthy lifestyles.

I think you need to update your signature line to add another "post of the day" kudo....

[Shek]

Schmedlap, hard drug use is what economist call inelastic demand. It is a physical need not a want as the softer drugs are. So there is tremendous pressure on the user to get the money no matter what. Dealers do not usually negotiate with anyone if they sell hard drugs, soft drugs yes. That is why I said this activity is not as good an indicator as prostitution but it does have merit , just not as much.

http://www.youtube.com/watch?v=COf2bQEQ7Zw

[slapout9]

Shek, that should be SWC video of the week